China's Bubble

There are so many articles out there about China's bubble. How it's the end of the world, and China is going to lead us into economic doom. This article is much more balanced, and points out how there are really two bubbles. One within China, the other the suppliers outside of China. From German high tech good, to raw materials from Australia and Brazil.

China does have a lot of challenges, but amazingly since Deng took power, China has prospered. I would not be against China, if I was a betting person.

The China Bubble - The American Interest

55 Comments, which add a lot to the discussion.

Labels: china's future, made in china

Wow!

The challenges are:

1. With increased urbanization the birth rate has fallen.
2. In India, you still have a surplus of males born. 
3. For a generation, there will be no matter what an imbalance of males to females.

China to End One-Child Policy, Allowing Families Two Children - NY Times.com

Labels: china's future

Interesting - reads like something out of Science Fiction. It's definitely thinking big - Which is very China!

Chinese launch floating fortress project - FT.com

When I do a Search on the term Chinese Floating Fortress, I get a lot of interesting images.

Labels: china's future

I was reading about an artist, Shen Jiawei, who originally painted for the Red Guard  and the PLA, and painted a famous painting "Standing Guard for Our Great Motherland". He moved to Australia, and has done a portrait of the Pope Francis.

From the Huntington Archives. More information on the poster. Note the word, Private Collection.

Private Collection
Shen Jiawei, like all young people of his age, had been sent from his home, which was in Zhejiang, to the countryside, where he cultivated the frigid soil of a military farm on the Soviet border with Heilongjiang. His heroic character is a border patrol, who stands in the freezing wind to guard his nation against a Soviet attack.
So who owns it? How did somebody purchase it? Mao had over 250,000 posters made of it.



The portrait of Pope Francis from Wikipedia:


Finally found an answer:
http://en.artron.net/auction/showpic.php?picid=art58430047

The paining went for auction in 2009. It had been returned to the artist, and then restored.

Sold for RMB 7,952,000. At the current exchange rate, about $1.2 Million dollars.

Labels: china's future, Chinese History, US Chinese Image

China denies suggestions it stole designs for new U.S. fighter - CNN

The article also states that Chinese aircraft, that resembles the F-35, is not capable.

My thoughts, sure on both statements...

Per Edward Snowden, Chinese hackers stole 50 Terabytes of Data on the F-35. The US government has also admitted the F-35 data has been hacked. Per another article, this may have saved the Chinese 25 years of research and development.

For Industrial espionage using the Internet, China has probably the best ability out there. The US does have a hacking ability, but it's not used for industrial espionage. In China, the relations between companies and the government is much closer, than in the US.

On the 2nd accusation, that the Chinese aircraft the resembles the F-35 is not as capable. I am not a huge fan of the F-35, and I marvel at what has been done politically by the manufacturers and the air force to keep it going. The last time a plane was designed for all services to do all things, was the F-111. The idea was one aircraft for all services would save money.  The result was the services, after the failure of the F-111, went with cheaper less functional aircraft such as the F-15, F-16, F-18, Harrier Jump Jet, and A-10. And now, all those aircraft, including the vertical take off aircraft are to be replaced by the F-35.

The requirement for the vertical takeoff, in my opinion, makes the F-35 probably less functional in many ways than the Chinese version.

In the Trenches with the F-35 - The American Interest

Labels: china's future, military

The anti-corruption drive of China's President Xi Jinping is getting results.

Ripples of the Purge - The American Interest that references this article:

No One Willing to Take Mother’s $16,000 as Graft Fear Hits China - Bloomberg

My question, is why would anyone in China admit they are willing to take a bribe?

China is currently number 100 for corruption, out of 175 countries per Transparency International. The United States is 17.

My opinion, is bribery happens when you have a society that has made it too hard to take action, and the result is bribery arises as a way to make things happen.

Labels: china's future, chinese corruption

Wow!

China Offers Iraq Air Support - The American Interest

So why is China doing this?

My guesses:

1. Keeping positive relationships with oil producing nations is very important for China.
2. Good publicity for the Chinese government
3. Good practice for the Chinese air force
4. They are worried about their own Islamic Fundamentalists
5. It's good for the Chinese government, internally. It shows China being a part on the world stage.

Labels: china's future, US Chinese Image

Should China have a sphere of influence? The US used to have the Monroe Doctrine, where Europeans were not allowed to interfere in North, or South America, or it would be seen as an act of war. The Obama administration has formally said the Monroe Doctrine is dead. Being truthful, since the Cuban and Nicaraguan revolutions the Monroe Doctrine has been unenforced by the US, Countries ally now with the US out of their self interests, the US does not force them to. The US has a strong isolationist streak, and the days of the CIA interfering with other governments as was done 30+ years ago is long gone.

Labels: china's future, US Chinese Image

It's easy to look at the news with mention of China individually, but when you start looking at a bigger picture I see China as thinking big, and trying lots of things that have risk, but also a high potential of paying off.

Some examples:

Free Trade Agreement with Australia
Panama Canal Competitor in Nicaragua
2nd $400 Billion Russia China Gas Deal
South China Sea
Mapping of US Electric Grid by two countries
Attacks on Corruption
Improving of China's Military

All of the above campaigns are thinking big, and all will have a potentially significant impact on China. It's hard to say which one would have more impact. The Gas Deals with China, at $800 Billion helps China's energy security tremendously. The efforts in the South China sea for securing resources is also big. Helping create a competitor to the Panama Canal in a Chinese politically friendly country would be historic. And the attacks on corruption may have significant impact on the current Chinese society.

I would argue, the one with the most potential is the campaign against corruption, and it's impact on China's military readiness. Historically, there has been a huge corruption issue in the Chinese military that has reduced it's combat ability. If the Chinese government can reform the Chinese military, and my opinion they will, this will be significant. There are two ways to look at a military force, one is by numbers and the other is by effectiveness. The US through training and technology achieved a military force in the Gulf Wars that shocked the Chinese military with their effectiveness. This forced many changes in the Chinese military to improve their effectiveness. China has been moving away from the idea of a peasant army, that would win through a battle of attrition, to one that can project forces outside of China. Chinese ships participating in the anti pirate campaign near Somalia are an example of that.

Labels: china's future, chinese corruption, Chinese Economics, free trade, military

Wow! I am surprised.

This is great for the Austrian economy, and also helps China.

Australia and China Secure Landmark Free Trade Deal - The American Interest

Labels: china economy, china's future, free trade

Interesting article worth a read, and don't forget the comments! My understanding of the article is that China is using this model with the US and other countries, but China is moving too quickly to stage 3 as seen in the South China Sea. My belief is China is doing a cabbage policy and being driven more by internal issues.

The Cycle / Stages per the article:

1. Start by conceding all that must be conceded to the superior power including tribute, in order to avoid damage and obtain whatever forbearance is offered. But this in itself entangles the ruling class of the still-superior power in webs of material dependence that reduce its independent vitality and strength.
   
2. Offer equality in a privileged bipolarity that excludes all lesser powers, or “G-2” in current parlance. That neutralizes the still powerful Other party, and isolates the manipulated soon-to-be former equal from all its potential allies, preventing from balancing China with a coalition.
   
3. Finally, when the formerly superior power has been weakened enough, withdraw all tokens of equality and impose subordination.

The Cycles—or Stages—of Chinese History by Edward Luttwak, Hoover Institute

Labels: china's future

China Military is growing, and I am not sure the US has adjusted. The Nuclear Treaties SALT etc. do not have as a party China. China's military is becoming more effective with a growing Chinese economy funding a growing Military budget, a focus on increasing the effectiveness of the Military Leader, and understanding that improvements will take decades. This is going to increase the assertiveness of China with dealing with other countries. An example of assertiveness is in the South China Sea. China has been more assertive since 1974 in the South China Sea. And this is combined with a huge change since the end of the Cold War, with more and more countries becoming nuclear armed and growing economies, makes for a much more challenging world that is not split into two factions, but many. The US is in for interesting times.

Some recent related articles:

Chinese Military Creates High-Level Cyber Intelligence Center - Washington Beacon

China's Missile Forces Are Growing: Is It Time to Modify the INF Treaty? - The National Interest

China’s Leadership Arrests General, Bans Ramadan Fasting - The American Interest

China Displays World’s Largest Conventional Submarine - The Diplomat

Labels: china's future, military

Great question! I am not surprised that Solar Panels manufactured in China are dirtier, than those made in Europe. The sad part is the huge environmental degradation done that is impacting the health of many Chinese people.

How “Green” are China’s Solar Panels? - The American Interest

Labels: china's future, solar

OK article, but not great.

U.S. Is No. 1, China Is So Yesterday - Bloomberg

My take away:

1. The author wrote The Myth of America’s Decline
2. The author belongs to the Hoover institue
3. The author mentions some of the major challenges China has such as wages have increased 19% per year and China will become old before rich.

1. The economic challenges the US faces.
2. How China has relocated entire ecosystems for manufacturing
3. How China is moving up the food chain in value. It's not all about cheap labor in China, but also increased efficiency.
4. China's popular view of the US
5. How many see China as bigger than the US
6. Many major issues in China were not mentioned, such as environmental and corruption.

Labels: china's future, US Chinese Image

Wow!

China on course to become 'world's most Christian nation' within 15 years - Daily Mail
The number of Christians in Communist China is growing so steadily that it by 2030 it could have more churchgoers than America 
I know a lot of Chinese and Taiwanese immigrants who have become Christians after immigrating to the US. In Rowland Heights, it's amazing how many churches there are. Yelp only has 3 churches, and I know there is more. Hmm.... A better list with 20 churches in Rowland Heights, which I still think missed a few. There is a huge church off of Fairway and Colima. 10 per Google Maps.

And this huge Buddhist Temple is being built in Rowland Heights.

Labels: china's future, Chinese Religion, Christianity, rowland heights

Great article that shows a huge amount of changes in how China works with other countries.

Jet Search Tests Beijing's Crisis Playbook - WSJ
China Has Proved a Forceful First Responder in the Hunt for Flight 370, but Also Reluctant to Partner Up With Others

Labels: china's future, US Chinese Image

Quite a few articles I have read recently comparing Europe of 1914 to the Pacific of 2014. China is a growing country, and it's being aggressive with neighboring countries on territorial issues. Some have characterized it as bullying. Germany before World War 1 had the world's leading universities, the strongest industries, and strong banks. World War 1 was started by a small incident, that was blown up through secret treaties and alliances. Could such an incident happen between the US and China in the Pacific?

My opinion, and hope is no. China and the US do not want war. It would be a lose lose situation for both sides. But, China's nationalism is rising, and there is a lot of determination within China that China will never again be humiliated, as it was with the Opium Wars, foreign spheres of influence , Japanese invasion of China, and the Boxer Rebellion Reparations to name a few.

2014: Good Year for a Great War? - The National Interest

China's Risky Flirtation With Military Adventurism - WSJ

Behind Japan's new military plans: China, nationalism, or both? - The Christian Science Monitor

Why Is China Feared? Resurgence, Pride and Uncertainty  - Huffington Post

How I Lost the Battle of the South China Sea - War is boring

Labels: china's future, Chinese History, US Chinese Image

A bit scary...

Chinese naval vessel nearly caused a collision with a U.S. warship in international waters - Daily Mail

A related note is I recognized the name Cowpens. It's a major battle of the US Revolutionary War, and when My family took our Southern Vacation, we stopped at the battle field.

Labels: china's future, US Chinese Image

China's Lunar Lander name is Jade Rabbit. China it the third nation ever, to land a lander on the Moon. I view this as exciting news, and a bit sad it's been 35 years since the last probe to the moon.

Another View, that China may make a territorial claim on the Moon. The US and China are two nations, that did not sign a treaty on mineral rights in outer space. Will China restart the Space Race? Beijing makes a territorial claim on the moon, it will reignite the lunar rush. Glenn Reynolds USA Today

When Chiang E arrived at the moon the magic potion (in some versions a pill) was coughed up and became the jade rabbit, and since then he has worked at his pestle trying to make the potion of immortality with no success. Coloring Page of the Jade Rabbit, Chinese Moon Festival

Labels: china space, china's future, Chinese moon festival, moon

Foxconn currently has 1.2 Million employees in China, and will be adding in 2013 100,000 robots per a 2011 article. Foxconn does not plan on laying off any employees. Per  June 2013 article they had 20,000. So why are not 100,000 in place? Per this article Foxconn decided to build their own robots, and this is a huge capital cost, and Foxconn has very low margins so they did not have the capital for this huge project.

So why is Foxconn not going to lay off any employees? Because in China their is a labor shortage of people willing to work doing assembly. Assembly is seen as a job having a lower level status, and white collar jobs are desired. This is a result of China's improving economy, as well as an increasingly educated work force.

This is still a huge amount of robots, and the robots are designed to replace a worker. Current costs are around $20,000 per robot, but as more are produced the cost will fall. Per an article in the Wall Street Journal, costs could be as low as $10,000 by 2016. And I would guess Foxconn is going to install 100,000 robots

Robots May Revolutionize China's Electronics Manufacturing - WSJ

Labels: china's future, made in china, robots