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Infrastructure, crumbling road and rail and transport systems, sewage systems, flood control systems, lack of high-speed rail, and the lack of good methods to finance are becoming an important issue right at the top with security and protection of banking and financial systems. America spends only 2.4% of GDP on infrastructure, compared to 5% in Europe and 9% in China. The existing methods of financing roads like the petrol tax are not working.

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Founded in 1880, Carl Welcker's company has seen the changing fortunes of manufacturing for over a century, during depression and after the wars. Still the 50% drop in orders for this company, which makes the machines that make 80% of the spark plugs in the world, is like nothing Carl Welcker has experienced. Its a tragedy he says. Its the speed of the manufacturing decline that is causing concern. In Europe where a fifth of GDP comes from manufacturing industrial production is down 12% from ayear ago. In Brazil it is down 15%, in Taiwan 43%. In China exports are down 25%. In the USA, industrial output went down by 11% in February 2009, according to the Federal Reserve. The pattern of this decline recalls the pattern of 1929, as tightening creedit and consumer fear reduces demand for manufactured goods in one country after another, creating a downward spirtal that reduces global trade. And of concern is that trade is declining even faster than manufacturing.German exports are down 20% from ayear ago, Japan's have plunged 46%, and in the USA exports fell at an annualized rate of 23.6% in the fourth quarter of 2008. A company like Schutte in Cologne, Germany, expanded rapidly as globalization opened new markets in Eastern Europe and Asia. Sales more than doubled in 5 years from 58 million euros to 100 million euros. Which suggests that the extraordinarily rapid expansion of the last few years may have its reverse effect heightened in a slowdown, as those additional sales to China and Eastern Europe disappear. For the USA manufacturing accounts for 14% of GDP, for the world 18%, and for China 33%. But this creates a misperception about the importance of American manufacturing exports. First, manufacturing contributed more to GDP growth than any other sector of the US economy, and accounts for two thirds of American exports, says the chief economist for the National Association for Mnaufacturers in Washington. America's share of global manufacturing output, he says, has remained steady at 20 to 23% for the past decade. This covers jet engines, locomotives, pharmaceuticals, and high tech products. For countries like India where manufacturing accounts for 16% of GDP, the last quarter of 2008 saw the first quarterly production decline in over a decade. And industries like handicrafts exports have fallen by 55% to $1.35 billion, and textile makers have cut half a million jobs. ...

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Neil Irwin of NYT provides some counter intuitive ideas on U.S. Fed interest rate policy. He says it can't be take as a given that the Fed will raise rates in 2017-2018. This depends on how much punch there is in the Trump economic policies for stimulus, and for infrastructure spending, tax cuts. He cites Senate Majority Leader McConnell who said he would like to keep "tax reform revenue neutral." Getting large spending and pushing up the deficit is likely to run up against Republicans in Congress who have for 8 years opposed large spending increases and large deficits. Trump has given few details about his stimulus or infrastructure spending plans. He says the scale of the spending might not match the talk. Irwin cites JP Morgan Chase economists who have kept their forecasts for GDP growth just under 2% for 2017 and 2018. And he points out that even Trump appointees at the Fed might act independently. The Fed might look at being cautious considering that increased trade tensions with China, and the unpredictability of a Trump administration could hurt growth. Irwin does not mention the uncertainty in other areas such as policy towards Russia on which the Republican party and Congress have very different views than Trump, tensions over Taiwan, that can also affect growth. ...

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Bangladesh is seen as doing better than India and Pakistan in life expectancy, hunger, fertility rates, and other key development indicators. The new Padma Bridge over the Ganges river operational in 2019 will link different parts of the country and is expected to add 1% to GDP growth. Other infrastructure projects are being planned with $30 billion in projects planned with China including a new port south of Chittagong. The Vision 2021 Plan plans to take Bangladesh out of the poorest nation group by 2021, the 50th anniversary of independence. Germany is the second largest donor and the gender equality in Bangladesh with coeducation in schools is seen by experts as unique among all Muslim countries. The growth of Dhaka and the social and economic change from 5 million garment workers, mostly women and rural could lead to social and cultural change that may be underestimated, says DW.com, providing the view from Germany. DW.com also warns that there are risks for Bangladesh in relying on remittances from Gulf countries, and in not diversifying so that it is not dependent on textile exports alone. Overall German view is that development aid works, and Bangladesh is welcomed from that perspective in Germany. ...

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Drone warfare of 2025 replaces mechanized regiments in Ukraine war says this report in  NYT 2025. Each side Russia and Ukraine plans to produce over 1 million drones in 2025. Abrams tanks are ineffective in this situation- it is World War 1 and World War II at the same time, trench warfare for inches of territory and drone warfare in the air and jamming of drones. There are newer fibre optic drones and AI drones that do not have radio signals that can be jammed. On an on it goes in this report in the NYT showing for the first time how this war has changed. What can be done to stop such a war? NATO was set up to oppose the Soviet Union. It was never reconstituted and changed to take note of the new situation. A new defense architecture's need was ignored when Russia was treated as insignificant for its GDP, just as China and India was treated for its GDP for most of the 20th century. A new defense architecture for Europe with new needs. After the end of the Soviet Union when the Warsaw Pact was dismantled did the NATO alliance that was set up to counter the Soviet Union also need to be dismantled as there was no more Soviet Union, no Warsaw Pact. The failure to integrate the European state in the East did not take place under free market capitalism. The warnings were ignored. Under Obama Russia was treated in terms of its GDP, a fundamental failure to grasp European history. As Le Monde analysis says the fall of the Berlin Wall was not understood in all its aspects including Russia's decision to forge a new path.   ...

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On foreign policy the new German government of Olaf Scholz seeks to build a stronger European Union. Scholz will also follow a policy of close ties with the US. On relations with China Scholz has not stated much. Greens party foreign minister Baerbock's views and Scholz's views suggest a close relationship with the US - a call with president Biden will follow visits to Paris and Brussels. Scholz says "It is now clear what binds us together," referring to democratic values.

Video of all members of the new German cabinet is shown in DW.com, individually with each minister's background, part of the new government of SPD's Olaf Scholz. Wolfgang Schmidt is Chief of Staff and Minister for Special Affairs for Mr. Scholz. Vice Chancellor and Economy+ Climate minister is Robert Habeck. Education, Digital and Transportation Infrastructure, Finance, went to the FDP. Other ministries were divided between the Greens and the SPD. 

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This WSJ story shows how China started its steel industry from small beginnings when Chinese leader Deng visited a Nippon Steel plant in 1978. He made the decision to go big with Baosteel, with an investment of $6 billion, with the words- "if we do it lets do it big." This was 36 times the Chinese foreign exchange reserves at the time. From 4% of steel production, this went up and up, passing the U.S. in 1993, past Japan in 1996, and in 2018 producing three times the steel of U.S., Russia and China combined, producing 923 million metric tons of steel in 2018, or more than half of world production of steel. With steel China was able to build its automobile industry, shipbuilding, bridges, infrastructure, high speed rail network. This was done using global demand, subsidies from the government, cheap loans and tax breaks. Markets worldwide were affected by substantial excess production in China. From Baosteel the spread of the steel industry to all 23 Chinese provinces led to China accounting for 25% of world exports. By 2016 5 million workers mostly from the agrarian countryside were employed in the steel industry, helping China transform itself into an rapidly urbanizing and modern economy. It was a period when the rail network was tripled between 1975-2017, with shipping companies that ensured access to Australian coal and Brazilian iron ore. From 2011 to 2017 Chinese steel dropped global prices by 57% triggering closure of steel mills in EUrope and the U.S. About a third of trade complaints since 2001 by G20 countries against China are about steel. After entry into the WOrld Trade Organization Chinese steel exports rose to 8% of GDP from 2%. Subsidies, cheap energy, and shift of agrarian workers to cities. U.S. investigations around 2006 showed Chinese steelmakers subsidies covered 30% to 45% of the subsidized value of steel pipes exported overseas. China's steel prices were set 20-40% lower than the U.S. China responded to complaints saying it was trade protectionism. The WTO rules call for full disclosing of all subsidies. This was disclosed 5 years after joining WTO in 2001, and only for central subsidies. Local government subsidies were not disclosed till 2016- the U.S. says 15 years late. Still the Bush and Obama administrations failed to take action. In 2018 Mr. Trump seized on this as a campaign issue that resonated with American workers in manufacturing communities across the U.S. In 2018 November president Trump announced a 25% tariff on imports of Chinese steel. A six month probe by U.S. officials had already shown 40% of sales value came from subsidies for corrosion resistant steel from China. The U.S. Trade Commission imposed tariffs of its own from 39% to 241%, with the Trump tariffs of 25% coming as an additional tariff to tackle the trade surplus with China. Meanwhile in China the government is closing uncompetitive smaller steel mills and in 2016 it combined baosteel with Wuhan Steel to create a larger company, and consolidate remaining companies. Baosteel now provides the steel for CIMC to dominate the steel container business, and to make ship to shore cranes, and make the San Francisco-Oakland Bay Bridge.  It also goes to show what can be accomplished from small beginnings for countries in the developing world from Asia to Africa and Latin America, with government and industry focussed on development and growth.   ...

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China's central bank the PBOC lowered the reserve requirement ratio for commercial banks, the amount of deposits set aside for financial safety, by half a percentage point to 19.5% on Feb. 5, 2015. The move is intended to get banks to lend more to stimulate growth. Growth is slowing in China, with GDP up 7.4% in 2014, and expected to go below 7% in 2015. With China's debt up to an estimated 282% of GDP, the PBOC has resisted efforts for monetary easing that would make the debt problems worse. The lowering of the reserve requirement ratio by half a percentage point gives commercial banks an additional 500 billion yuan or $81 billion to lend out to customers. Another 160 billion yuan comes from measures targeted at small business and agriculture. With the soft business conditions worldwide China's manufacturers may be reluctant to borrow more at this time, making it uncertain how much actual lending will take place following the move.

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This report shows how the H1-B visa system as it operated for many years till 2025 undercut wages of American workers in the computer and software engineering fields. Changes are being made to accomplish the original aims of such a program. More critical is the number of jobs over a span of years that are lost to US born citizens- in just 5 years 300,000 US born talented engineers and the 3 million workers they could train would simply not be there to power America's reindustrialization and re-modernization 2025-2030. The same is true for India as 300,000 India's talented engineers and the 3 million workers they could train would simply not be there to power India's industrialization and modernization 2025-2030. This hurts the modernization of the two of the most important economies of the world to the year 2030, which would be profoundly felt by 2035. As part of many actions taken by both the US and India this could lead to shrinking the development speed and development gap with China for the US and India to 2035. ...

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Compromise reached at the October 2010 G-20 meeting in S. Korea to reduce trade imbalances, and for countries with current account surplus exceeding 4% of GDP (China 4.7% and Germany 6.1%) to bring these balances down by 2015. Countries with large current account deficits, Turkey 5.2% and South Africa 4.3%, were expected to bring their deficits down and increase national savings. The US is at 3.2%. The US proposal for a target was accepted by Japan as long as it was not a fixed target but a reference point. Germany was opposed, saying it was a return to planned economy thinking. China did not comment on the issue. Canada, Australia and the UK supported the US position. The compromise was an effort to continue pressure on China to redirect its policies away from exports to increasing domestic consumption, while still refraining from a fixed target. It also takes some of the pressure off a fast track currency rebalancing, with China expected to increase the value of the yuan, but given more flexibility than the rhetoric would suggest....

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Mark Frazier, a professor at the New School, is the author of the book "Socialist Insecurity: Pensions and Politics of Uneven Development in China." Here he describes the situation in China for the elderly and pensions. There is no Social Security Administration in China like the one in the U.S. Pensions are the responsibility of local authorites. Urban pensions were established in 1951. Pensions for rural areas and farmers came only in 2009. The situation in China for pensions is much like that in the U.S. before FDR's New Deal, being run by a patchwork of local programs- about 2500 county and city governments running pension funds. The problems of pension programs being run for the benefit of well connected groups and making risky investments exists in such local programs. Local governments taking on large levels of debt is a serious problem. The pension program in Shanghai came under scrutiny because of risky investments. A report in Dec 2012 cited by Frazer cites empty accounts at 2.2 trillion yuan or $353 billion. The National Social Security Fund has only $140 billion. Overall pensions account for about 3% of GDP in China compared to 4.9% in the U.S....

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The slowing growth in China is reducing growth and depreciating the currencies of iron ore producing countries Brazil and Australia. China makes 50% of the world's steel and imports 1.2 billion tons of iron ore traded annually. Australia exports 80% of its iron ore to China valued at $67 billion in 2013. Brazil sends 50% of production to China. For the first time in 15 years China's steel use declined 0.3% to 500 million tons in the Jan-Aug. 2014 period. The mining companies have invested heavily in ports and railroads for expanded production. BHP CEO Mackenzie says the strategy is to maximize production because reducing production increases costs on a unit basis. The result is a decline in price from $135 a ton at the beginning of 2014 to $69.80 on Nov. 28, 2014. Prices could decline to the $50 range in 2015, according to Citigroup analysts, because of an estimated iron ore surplus of 300 million tons by 2018. As China expands recycling of older cars and washing machines to produce steel this will reduce future iron ore demand in China. JP Morgan forecast for Australia reduces GDP growth to 2.8% from 3.3% for 2015, and Brazil reduced its forecast for 2015 to 0.9% from 1.8%....

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Japan's new LDP prime minister, Shinzo Abe, supports targeting the yen at around 90 yen to the dollar to support Japanese exporters. He sees this happening through monetary easing by Japan's central bank. At a rate of 85 yen to the dollar or above Japanese exporters would be in a position to become profitable and pay taxes. Abe says central banks around the world, including the U.S. Federal Reserve, are printing money to support their economies and increase exports. Switzerland and S. Korea pursued policies to keep their currencies from becoming too strong to support their exporters. China has managed its exchange rate to maintain export competitiveness. Exchange rate intervention has not been effective for Japan, and the focus now is on monetary policy and setting a 2% inflation rate target.

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Ian Talley provides this excellent account of how this drop in oil prices is likely to add to economic growth in major world economies, removing any ambiguity about the positive effect on the global economy. West Texas Intermediate crude dropped to about $65 from $105 between June and December 2014. The IMF estimates growth in 2015 will increase from 3.1% to 3.5% largely because of the lowering in energy costs. JP Morgan Chase economists see an addition of 0.7% points in global growth in the first half of 2015. ECB president Draghi sees the lower oil prices as an unambiguous positive. Estimates from Rhodium Group show major oil importing countries seeing import bills cut by $500 billion if prices remain low for 6-8 months, with $90 billion going into the U.S. economy. IMF estimate is that only 20% of the drop in oil prices is from lower demand, about 80% from higher fuel efficiency, increased supply using new technologies, decisions by OPEC to lower oil price, increases in supply. Based on estimates by the Rhodium Group, IEA and the IMF, the extra money flowing into the economies of the U.S., Asia and Western Europe from reduced oil import bills, as measured in percentage of GDP is: the U.S. 0.5%, Germany 0.8%, Japan 1.2%, China 0.8%, India 1.8%, South Korea 2.4%. Italy and France and other oil importing countries benefit. The impact comes at a time when Japan, China, India and eurozone economies badly needed a boost after significant slowdown in growth in 2014. It could not have come at a better time and because it is technologically driven as in the case of highly fuel efficient automobiles and new oil exploration technologies, a self sustaining process. The corresponding impact for oil exporters is: Russia -4.7%, Nigeria -5.4%, Venezuela -10.2%....

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Charlie Munger, vice chairman of Berkshire Hathaway, America's largest conglomerate with a trillion dollars in assets, says Crypto currency should be banned outright. He calls it not a commodity, not a currency, not a security, but a gambling contract with 100% edge on the house. It exists in the US he says only because of a gap in regulation. Munger says China has banned it, so has India with RBI calling for it to be banned. India's central bank RBI governor Shaktikant Das has called i "nothing but gambling" and their perceived value is "nothing but make-believe." He also has called for an outright ban on cryptocurrency saying that modern currency can only be issued by the central bank/government. The question remains why it took so long for Charlie Munger and the leaders in the financial sector in the US  to say this in the WSJ, as it only further damages the interest of ordinary Americans who dabble in these ventures.

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This report shows an alarming trend in China which is fueling a real estate bubble similar to the one that Japan, and more recently the U.S., experienced. State owned companies are actively speculating in real estate, and are buying real estate from local governments eager to profit from the real estate boom. Local governments obtain land and build infrastructure on it to raise the price that they can get for it in an auction. In many cases one state owned company outbids another state owned company from different sectors such as oil, chemical, military, telecom and highway. Land records reveal that 82% of land auctions in Beijing in 2010 were won by state-owned companies up from 59% in 2008. The National Bureau of Economic Research in Cambridge, Massachusetts, has estimated that land prices leaped by 750% from 2003, with half of this happening in 2008-2010. In many cities housing prices have doubled in the last 2 years. The National Bureau estimates that on average these state owned companies paid 27% more for the same piece of land than other bidders. China's $586 billion stimulus and its aggressive lending program by state owned banks may have helped in other ways after the 2008 economic crisis, but in this area it has fueled a real estate speculation boom, with the local government and state owned companies being the key participants in this speculation. Local governments earned an estimated $230 billion in land auctions in 2009. The demolition of older neighborhoods and poorly compensating residents are all part of the effort by local governments to profit from this speculative boom. The implications for the banks are serious. Local governments use other companies created for the purpose to engage in this investment in land. And off-balance sheet accounts create the danger that China's state owned banks may have enormous amounts of debt that is not showing up in the regular accounting. Analysts say that the $1.4 trillion in loans made by state banks in 2009 was twice that in 2008, and a large portion of this was diverted into real estate speculation with records set in land bids and booming prices. All this is happening as China's Ginni coefficient has deteriorated rapidly. And the simple fact remains that even as apartment prices exceeded $200,000 in Shanghai, the average disposable income is about $4000 per year. Prof. Shih of Northwesten University has followed the investment companies of the local governments closely and comes to similar conclusions about the size and implications of this real estate bubble in progress. Shih estimates LIC (local investment companies) debt owed to banks at $1.68 trillion or 34% of China's GDP. See the link to BW's Dexter Roberts. ...

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This report in the WSJ gives a detailed profile of Liu He, who as vice premier and top regulator is now a top economic official in charge of the financial system and the industrial sector. The appointment will be confirmed at the annual meeting of China's legislature in March 2018. Liu He is a classmate of Jinping at Beijing's Middle School 101, went to Renmin University for a degree in Industrial Economics, and studied at the Kennedy School of Government, Harvard. As the superregulator and overseeing the central bank, Liu He's team has set the goal of bringing financial risks in the Chinese economy under control in 3 years. This team also setup the 2018 economic blueprint that made "Xi Thought" the guiding principles for running China's economy. Financial risks in China's economy from the high debt to GDP ratio which worsened after the 2008 financial crisis and higher lending practices, are seen as a threat to the economy. Policy now is focused on stabilizing the economy and setting a long term path to slower but sustained growth, so that the entire country can share in the benefits of modernization that the coastal regions and parts of the country in the east have experienced during a period of rapid growth. Even the quashing of term limits for presidentcould be seen in the light of this economic blueprint as financial risks could lead to other serious problems if a stable path for the economy is not set and followed over the next decade. As part of this effort Xi Jinping has focused his efforts on corruption to improve perception of the party in the country. Liu He is the main economic official speaking for Jinping at Davos Forum. Another member of the circle advising Jinping is Wang Quishan, who has helped run the anti-corruption campaign. Both Liu He and Wang are expected to handle the future relationship with the U.S. Liu He's policy ideas are for strengthening the state sector with mega mergers, closing less profitable competitors, reducing industrial overcapacity, and making the remaining companies stronger and more profitable. This includes making firms more efficient, better run and more profitable- in the words of the economic blueprint to make "state capital stronger, better and bigger."   ...

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As exports and manufacturing decline, China is continuing to maintain high rates of fixed asset investment with the focus now away from factory construction to infastructure like roads, bridges and rails. The National BUreau of Statistics reported that urban fixed asset investment expanded 26.5% in Jan-Feb 2009, compared to 26.1% growth rate for 2008. Fixed asset investment was 42% of GDP in 2008, according to JP Morgan strategist Jing Ulrich. Now it could go up higher to 45%. China's growth has been off-balance say experts, now it is becoming even more so. As long as factory construction as fixed asset investment a lot of new jobs were being created in the manufacturing sector, now these jobs are not being created. China's small and mid sized companies that generated about half of the 4.42 trillion GDP, like GenTech of Mr Yu profiled in the other linked article in WSJ, and which created 90% of the new jobs, are now contracting. With smaller private consumption, and the efforts to improve the safety net and provide universal medical care inadequate and coming late, domestic demand will not help balance the economy and boost manufacturing. Private consumption is only 35% of GDP in China, a much lower percentage than India. The comparable figures for the US are 71%, UK 64%, Australia, Canada, France, Germany and Japan 57%. The balance is now heavily skewed towards government spending. Investment spending from HongKong and Taiwan, the home bases of industrialists with made for export industries inceased investment by 1% in Jan-Feb of 2009 from the year earlier, compared to 17% growth in all of 2008. And foriegn funded companies have comparable figures of 2% for Jan-Feb 2009 compared to 15% growth in all of 2008. Real estate investment growth also fell to 1% for Jan-Feb 2009 compared to 21% for all of 2008. In short the other pillars of growth in housing, and investments from Hong Kong, Taiwan and the West are declining. ...

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Increased bank lending in China with lending going up by 20% in January 2009, suggest that state owned banks are following instructions to increase lending from the government. As bank and household balance sheets are healthy and domestic debt has fallen relative to GDP in recent years, the bank lending situation appears healthy. Medium and long term lending has increased strongly. The central bank plans to finance only 30% of the stimulus spending of $585 billion infrastructure package, banks will provide much of the rest. According to ING analyst Condon, transport infrastructure spending was up 61% over ayear earlier in December.

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This WSJ analysis shows that in the counties that flipped to Biden in the U.S. election about 40% of the people had white collar jobs and were better educated and in metropolitan regions. Of the counties that flipped to Trump about 20% had white collar jobs with only 1.4% jobs growth whereas the improvement in the counties that flipped to Biden had much higher jobs growth of 5.3%. Where Biden prevailed 70% of America's GDP is generated, where Trump prevailed 30% is generated. One is white collar in metropolitan regions, in cities and suburbs, better educated. The other is blue collar, less educated. One blue collar is hit hard by the pandemic, the other is white collar but also includes some of the people hardest hit in the pandemic of minorities in the cities and suburbs. In truth none can benefit without bringing all along. And loyalties shift as most of the professional class was once with Republicans who were the party of business. The sending out of American manufacturing to China has not only affected the economy, it has also changed the parties as the Republicans took up the cause of American manufacturing workers changing the two parties. For most of the twentieth century this was not the case as FDR, Truman and Kennedy-Johnson, were Democratic presidents supported by blue collar workers.   ...

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Land reforms in China to improve rural incomes and increase agricultural production with larger farms to keep food price inflation down two key goals in today's China. And both long neglected in the headlong rush to industrialize and urban centred modernization which left a huge gap which now must be fixed that gap in incomes for the rural 700 million peopr in the countryside who have seen their incomes stagnat and the rural -urban gap widen with farmer protest against corrupt officials seizing land for factories exacerbating the situation for years. Only the 10-12% a year growth has kept the situation under some control as rural folk could depend on income from migrant labor or the young women who left the countryside to work in cities where factories for exports turned out goods for western markets. With this market in serious trouble in debt burdened western societies China may be looking at growth of half the previous rate down to 6%,and so this is move to change the focus to building a bigger domestic market through raising rural incomes as well as urban incomes and shift China's focus to the domestic and Asian markets like India and other Asian countries....

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World Bank forecasts show China's GDP growth rate in 2015 to be 7.9%, exceeding investment growth of 7%. In 2009, the situation was the opposite, with the investment growth of 18% driving an 8.9% growth rate. The World Bank expects China's growth rate to drop to about 7% between 2016 and 2020. It was 9.6% from 1995-2009. What this implies is China is shifting away from commodity intensity and wasteful use of energy, capital, and other resources. This means many of the existing forecasts based on continued commodity intensity will have to be revised drastically downward. Growth could be down to 6% annually by 2020, says Peaple, and half of the expected commodity demand would disappear in some forecasts. John Makin in an interview with Wessel of the WSJ, Dec. 30, 2010, says there is a 40% probability China will not make a soft landing in 2011-2012 from the excessive bank lending and inflation that is underway in China. This would mean slower growth much earlier than the World Bank forecasts....

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This report in WSJ says 4 months before becoming China's president in 2012 Xi Jinping issued a Communist party directive as head of the party committee overseeing the former British colony. The directive cautioned officials about a growing separatist sentiment in Hong Kong. It said "we must dare to struggle and be good at fighting," a retired official describes as Xi's approach. Another facet of Xi's views on Hong Kong are that his father as a party leader for the southern province of Guangdong in 1978 to 1980 near Hong Kong was the first after the Cultural Revolution to set up ties between the mainland and the British colony of Hong Kong. China was experimenting with a different model for the economy and Xi's father set up the early links with Hong Kong so that the flow of economic refugees from mainland China to Hong Kong could be reduced and the gap in living standards could be narrowed. He set up the first "Special Economic Zone" and met delegations to start the Sino-British talks on Hong Kong's future. Xi Jinping grew up in the turmoil of the Cultural Revolution. His father Xi Zhongzun, was jailed in 1962 in internal party struggles, and his family was persecuted during the Cultural Revolution that started in 1966. The Cultural Revolution that went on till 1976 ironically was an attempt to stamp out possible capitalist or imperialist influences from the colonial period and the opium wars with Britain. He was later rehabilitated under premier Deng. During the turmoil Xi with some difficulty was admitted to University after spending some years in the countryside. His father remained loyal to the ideals of the Chinese Revolution even though he had suffered from the internal party struggles, an experience remains a strong memory for Xi Jinping. It is as if the period is seen as a period of experimentation and failure for the party not for its ideals of China rising from the colonial period after its failure to engage with the world before the colonial period leading to backwardness. The unity of the country had to be maintained bringing Hong Kong and possibly Taiwan together with the mainland. Rejuvenation was happening and stability was essential for Chia to grow and emerge into the "China Dream" a word coined by Xi for its emergence in the community of nations as an equal to western powers after the colonial period of oppression and cultural backwardness. In this way he is different than other leaders before him who followed premier Deng who started the experimentation with markets and economic structures. The leader preceding him was party secretary in Tibet with a prime minister who was an engineer working on public projects, in sharp contrast to Xi who had the the sense of authority from seeing different phases of Communist party experimentation in his early years. The Bo Xi Lai incident during the transition before 2012 also influenced Xi. This was an attempt similar possibly to the attempt by Lin Piao under Mao to subvert Communist Party leadership into a new direction bringing China under Soviet influence after the break by Mao. Bo Xi Lai, a party secretary for an interior less developed region Chongqing, who rose from being Mayor of Dalien to governor of Liaoning province. Bo Xi Lai attempted to subvert the process operating since the Cultural Revolution of leadership by consensus within the party ensuring stability and continuity needed for development and pushing the trauma of the Cultural Revolution out of memory. He did this by seeking high party office for his own ambitions not for the party and China's interests that guided leaders after the Cultural Revolution. This incident and the period of two decades of growth of market economy had led to growing corruption and Xi was convinced that "corruption would doom the Communist Party and the State" and the resulting instability was bad for China. During this period in 2012 Xi Jinping said that it was necessary to remove "tigers and flies" who could endanger the party's ideals and the future growth and stability of the country.  About 10,000 party officials were removed for corruption, and the rule of Politburo Standing Committee immunity (PSC) of the party operating after the Cultural Revolution was removed. The PSC is the body that at the top of the organization structure that runs China. On Hong Kong Xi now believes that the problem is best tackled by the Hong Kong government not by intervening from Beijing. There is increasing perception in Beijing and Hong Kong that the local government, business leaders have messed things up, by getting into the habit of telling Beijing planners what they wanted to hear, and failing to communicate with the 7 million people of Hong Kong. These leaders are also in a bind because Xi believes that Beijing exercized "overall governance authority" over Hong Kong. A 2014 government white paper warns against "confused or lopsided perceptions" of Hong Kong's status, saying that its partial autonomy comes "solely from the authorization of the central leadership."     ...

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Key takeaways from XI's speech to the 20th Party Congress of the CCP, China's Communist Party, are shown in the Guardian. Xi presented a vision of continuity. Goals that were seen as significant were self-reliance in science and technologies and building China's capacity for innovation by building up its capabilities in science education. This was stated as the main driver of future growth. It does not favor decoupling with the US even though the US sees it in its own interest and that of its working class to bring home manufacturing and rebuild supply chains for American self reliance - the pandemic showed the weakness of free markets approaches that ignored this. A promise to step up regulation on income distribution and wealth accumulation, to cut down the growing inequality gap that developed in the last two decades of hypergrowth.  To focus on the quality of economic growth after lessons learned on climate change. To double down on the zero covid policy. He lauded the "all out war on the virus." To continue the battle against "corruption on a scale unprecedented in our history." "Corruption is the biggest cancer that harms the vitality and affects the combat effectiveness of the party, and anti-corruption is the most thorough self-revolution. As long as there is the soil and conditions for corruption, the fight against corruption will not stop for one moment." ...

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China plans $29 billion of local bond sales (200 billion yuan) through the central government, to meet the needs of cash strapped local governments. Its proceeds would go to projects approved by Beijing, for airports, power plants and railroads. In earlier year local governments depended on land sales as abig source of money. China's tax system sends most revenue to the central government, while provincial and municpal governments are left to handle most of the spending on education and healtcare, which is why these needs may not be getting the funding they need. Land sales are now drying up as asource of money as the property market declines. This does not mean that the local governments are not indirectly taking on debt. Chinese law prohibits cities and provinces from taking on debt without Beijing's approval, but companies owned by local governments have borrowed heavily to fund public works projects. Shanghai Chengtou Corporation, a municipal government company that builds infrastructure has taken on 200 billion yuan in debt in 15 years. Economists say this kind of debt may be 20% of annual GDP, which added to the central government debt of 20% of GDP, would bring the combined debt to 40% of GDP. What this new effort does is make the taking on of new debt official and more transparent. The principle behind the earlier tight control of debt issued by local governments was to prevent local governments going overboard and the central government having to take responsibility, as happened in the 1990's in India, Mexico, Russia and in the USA....