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This NYT report covers the period around 2019 and since when Tesla established its first factory in China.  It is the remarkable story of how the intuition and rapid decisionmaking  of Huang Li, a top Shanghai official and now premier since 2022, helped China create its own EV industry from scratch. He did this by giving Tesla a start with a new factory in Shanghai with $1.5 billion in incentivized loans and building it in 1 year 2019-2020.  A top Shanghai official Huang Li hoped to attract Tesla to China in 2019 after contacts were opened through California officials. Tesla had its only factory at Fremont, California, and had worked with the state government on a program of emissions credits as a form of financing that it could use. California officials  advocated for a similar policy in China in 2019. With Mr. Li's backing the Tesla factory in Shanghai was built in 1 year, California style emissions credit were put in place in China. What Mr. Huang Li's intuition told him was that China was at a turning point it had to take strong steps for a emissions free auto industry to tackle climate change. A company like Tesla offered an opportunity to do this. The factory was built faster than Chinese time in 1 year and loans of $1.5 billion helped finance this. Li correctly sensed that local supplier chain had to be built giving China a way to build its own EV industry. CATL was a lead supplier to Tesla. By providing assistance to CATL and other suppliers and using China's rapid development model Li was able to build an entire EV vehicle industry from scratch. BYD became through work in the pandemic years the largest EV maker in the world, and CATL the largest battery maker. Tesla provided the impetus which Li took on with the idea of building its own versions to soon overtake Tesla in 4 years between 2020 and 2024. BYD went even further and developed its own in house battery technology to cut costs and bring prices down. ...

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Fears that another crisis like that of 2008 could emerge with asset bubbles in China and other countries. Also fears that policies of austerity in southern Europe and the UK, combined with Germany's tight control on spending, could lead Europe to years of slow growth or stagnation. It is a tricky situation especially in Europe, trying to avoid a Greece type situation, and at the same time not cutting spending to the point where it would lead to stagnation. Criticism of the German government's policy to cut spending and fears that the European Central Bank might follow Germany's policy to focus purely on the deficit. Lower US bond yields give the US some room for dealing with the deficit. The need for swift action in China to move the economy towards domestic consumption, and let the yuan strengthen so that China can absorb more of the world's exports.

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Serious problems are ailing the television channels in the US. This is because the siloing of channels into political spaces as audiences converge to watch particular channels is resulting in these channels unable to take positions based on the merits of issues. Climate change is one example- today no television channel in the US asks the question what would happen to the climate if the US loses another 4 years 2024-2028 in dealing with the climate challenge- makes no investment in climate change action. This is a grave and serious matter that needs to be at the top of discussions alongside the forest fires and floods that show up at the top of news pages every day. This is now the central issue at one of the channels as James Murdoch and his wife Kathryn ask this question of their own family business in television channels in the US and Europe. This is also a larger issue facing the television business.  Another issue is that internet business such as Twitter X, Facebook, TikTok are also concerned with ratings, and think mistakenly that being neutral about climate change action is acceptable, that it is someone else's problem, not theirs. It would cost upwards of 1 trillion dollars in 2028 for the US to simply to address the climate change problems arising from no action for the next 4 years. The problem may become hard to control by then regardless of how much money is put into tackling it, making life difficult on this planet. ...

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The monopoly over news publishing in the UK began in 1981 with the purchase of loss making The Times through negotiations with the trade unions.  As shown in The Guardian Rupert Murdoch met with Margaret Thatcher on Jan 3 1981 weeks before the matter was brought up by Thatcher at a cabinet meeting so that it would not be referred to the Monopolies and Mergers Commission. This is revealed in the Thatcher papers held at the Churchill archives in Cambridge 30 years after the event in 2012. This was the year Ronald Reagan's administration replaced Jimmy Carter's administration in 1981. In 2022 Tories Secretary Nadine Torries removed controls that protected the editorial independence of The Times. 

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The lack of economic opportunities for an increasingly urbanized African younger generation is a major challenge. The median age of 19 makes Africa the world's youngest continent. Megacities are growing up in places such as Lagos and Kinshasha as millions leave subsistence farming to go to cities. Unlike Asia and Latin American countries men and women are coming to shantytowns in cities at a time when Africa is much poorer for a similar level of urbanization that Asian and Latin American nations reached decades earlier. In 1993 this WSJ analysis and graphs show the Asian emerging economies and sub Saharan Africa had similar GDP per capita of $2415, by 2019 this was $4000 for Africa and $12,000 for Asian emerging economies. Latin America was at $10,000 in 1993 and in 2019 was at about $15,000. The gap widened considerably between Asia and African countries. Asian emerging economies increased GDP to 5 time from the same starting point as Africa in 1993, Africa doubled GDP over the period of 25 years to 2019. Latin America started from a much higher point and increased GDP by only 50% over 25 years. Asian economies that performed better over this period did better because of stable even entrenched governments such as in Singapore with Le Kuan Yew and in China with stable successive governments under CPC leadership of prime minister Deng. The difference in Asia was a commitment across all classes and groups to development, a sense of development as a way to make up for the years lost under colonialism of foreign powers in the eighteenth and nineteenth centuries. A sense of correcting historical injustice and wrongs. This is a missing ingredient in the processes unfolding in Latin America and Africa in the last 25 years. ...

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The IMF's changing views on the value of fiscal austerity. In the current debate about the value of fiscal austerity, there is the IMF view, a German view based on its own experience, and the views of other countries in Europe. The IMF's view has shifted over time. The IMF World Economic Outlook 2010, describes its view of the effects of austerity measures in the form of spending cuts and tax increases- "Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1% of GDP typically reduces GDP by about 0.5% within 2 years and raises the unemployment rate by about 0.3% percentage points." Over the longer term there are benefits as the private sector is not crowded out in the search for captal funding by the excessive government borrowing. The IMF's economic models suggest that it would take 5 years before reaching the breakeven point when the benefits of austerity measures exceed the effects of austerity. The German view held by German central bankers is that the actions stimulate growth in the short term. Manfred Neumann, professor emeritus at the Institute for Economic Policy at the University of Bonn, says this is called the "German hypothesis" as it reflects the experience of Germany from austerity actions taken by Germany. Laurence Ball, professor of Economics at John Hopkins University, is critical of the "German hypothesis" and its application across Europe in different situations. Germany is a large exporting nation and exports helped counterbalance the effects of austerity measures. Within the eurozone with fixed exchange rates the exports of less competitive countries cannot be boosted through devaluing the currency to gain price competitiveness. The other problem is that with interest rates close to zero in the euro zone the central banks cannot cut rates aggressively to counteract the effects of spending cuts. The problem gets compounded when a number of countries are taking austerity measures at the same time accentuating the downturn....

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Elvira Nabiullina, head of Russia's central bank, is a think tank economist who was Economy minister before becoming chief economic advisor to Russian president Putin in 2012. She is one of the liberal economists in Russia who see the years of economic growth following ruble devaluation in 1998 as an example of how devaluation can actually help the economy. The devaluation lowers costs for manufacturing and agriculture, and is seen by some economists as having done more than oil price increases to help the Russian economy grow during president Putin's first term from 1999 to 2004. Nabiullina's position to support a free float after the sharp decline in the value of the ruble following the plunge in oil prices, is based on the need she sees to use the crisis to reduce Russian overdependence on imports. This policy had other advantages by reducing the need to tap Russia's foreign currency reserves to defend the ruble. Russia's gold and foreign currency reserves are at $385 billion. In Jan 2015 the central bank cut interest rates. A policy of increasing rates would trigger a sharper recesssion. Russia faces a unique situation in that the oil price decline and the decline in the value of the ruble occurred at about the same time of about 50%, so that the budget continues to be balanced. The number of rubles coming in from oil exports remains the same after the crisis. Nabiullina told Russia 24 television- "We have to live in a different zone, Russians should orient ourselves more toward our own sources of financing projects, and to give a chance to import substitution."...

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Typical of so much of what is written about the World Health Organization and its role in the pandemic, this podcast in the WSJ fails to quickly convey the critical function of the WHO as an early warning system the world has depended on, including China. The H1N1 epidemic originated in Mexico. Asian countries including China and India depended on very quick response from the country where the epidemic originated  in allowing entry into the affected area for experts from advanced countries such as the U.S. The global response was then coordinated across countries quickly with complete transparency. The head of China's CDC himself faced a problem with transparency with the provincial authorites in Wuhan. 1.    Fundamentally this quick entry was denied the U.S. Request by U.S. to China was made on Jan. 6 for U.S. team to go to Wuhan, quick permission was denied and given only about 6 weeks later on Feb 16. This delay is the crux of the problem for the U.S.. Taiwan confirmed human to human transmission on Jan. 1, the WHO was saying this was not clear as late as Jan. 14. These costly delays are what the U.S.  letter is about.  The head of the CDC China Gao Fu called Dr. Redfield head of CDC in the U.S. on the next day after he suspected Wuhan provincial authorites were vague about what was happening. Gao Fu was alarmed when scanning the internet on December 30, 2019, about rumors of a vaguely worded lung disease in internal memos of Wuhan. He called Wuhan authorites and was not getting clear answers on that day, then deciding on December 31 to send his own team to Wuhan, as reported in German magazine Der Spiegel- Hackenbroch, Zand, 05/20/2020.  Der Spiegel says in its special report on the early period in Wuhan that Gao Fu was so alarmed about what was happening enough to be in tears in his series of calls with Dr. Redfield in the immediate days that followed. The date was shortly after the GAO Fu sent the team to Wuhan, December 31 and New Years Day 2020, as reported in Der Spiegel. See the link to Lyrarc gist of Der Spiegel's "A Failed Deception: The Early Days of the Coronavirus in Wuhan."  2.  President Trump points out the standards of the WHO- in the concluding point of his letter to WHO- when a three time prime minister of Norway, Gro Brundtland was head of the WHO during the SARS crisis of 2003. She acted quickly and decisively and no time was lost. It is this failure of the early warning system under the new president of the WHO after 2017 Dr. Tedros that alarms the U.S.  with about 100,000 deaths.  3.  This failure it can now be said was partly a result of a election in 2017 for the position of WHO president which was flawed. This was the first time a WHO head, an important position was put up for an election. The Executive Board was responsible for this appointment since the founding of the WHO as part of the UN, based in Geneva, Switzerland, after World War II. This system worked. The election was clearly a bad process for appointing the president of the WHO which should be done entirely on the capabilities of the person holding this position not on a flawed voting process. It is flawed because India and Bangladesh hit by a cyclone during the coronavirus have suffered greatly, as have other countries, but had only 2 votes for 1.5 billion people, when Barbados (385,000 population) and Laos (7 million) which had less than one  hundredth the population had the same number of votes. The U.S. had one vote. The election resulted in lobbying and a process in which many candidates stayed away because they simply would not go through such a process. The position was too important to the world- most of the advanced countries had forgotten about the danger of epidemics to let this happen by 2017, as shown in the way the austerity years led to cancellation of the preparations for pandemic in France and Britain. The austerity years and neglect of public health during these tech boom years in the western world made it possible for this to happen. 3.   Along with the 1 month ultimatum action is already being taken to restore the effectiveness of the importance of the Executive Board. The head of the health ministry in India, Dr. Harsh Vardhan, has been appointed the new chairman of the Executive Board on May 22. This restores the voice of billions of people in Asia in the process, and brings the major countries with the greatest risk in a pandemic into the decision process for tackling the pandemic, this includes the rest of the world.     ...

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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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Car size shrinks as the Focus, Spark, Aveo, Cruze small cars attract attention at the 2010 International Auto Show in Detroit. The big change is that these small cars are following the European small car in being refined and sophisticated, with a lot of features. This isn't the Chevette that Americans knew in the sixties and seventies, and the perception of what is the right size and comfort is changing completely as a new generation of buyers brought up in a world of pc's, i-phones, and globalized cultures is in the driver seat.

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By the end of December 2010, 2 million people in the USA are expected to lose their unemployment benefits, and and additional one million by the end of January 2011, according to the National Employment Law Project. This would happen if both parties in Congress fail to agree on extending unemployment benefits. The first week of December marks the expiration of federal programs that have extended unemployment benefits from 34 to 73 weeks beyond the 26 weeks given by the states. Republicans want to cut spending elsewhere to cover the cost. Democrats say $2 is returned for every dollar that goes into unemployment insurance because this money is spent quickly by needy families.

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Baby boomers and older Americans are beginning a huge wealth transfer, the largest in modern history. Americans over 70 years in age had net worth of nearly $35 trillion, according to the Federal Reserve data. This is 27% of all US wealth, up 20% from 1990. This wealth is 157% of US gross domestic product, more than double what it was in 1990. Gift tax exemption today is $11.7 million for individuals and $23.4 million for couples. It is scheduled to go down to 2017 level of $5.49 million per person adjusted for inflation in 2026. Annual gifts were $75 billion in 2016. The Biden administration proposed reducing a $40 billion annual tax break in some of these wealth transfers. Some of this would go into infrastructure spending. Other ways the transfers could help the communities in the US revive after the twin crises of 2009 and 2020, one financial and one health, is how some of this money goes into funding many of the needs of communities in America today. $9 trillion is expected to go into helping communities from the $35 trillion. The Buffett children foundations have purchased farmland to create an agricultural hub in Kingston, New York, on the Hudson River north of New York city. They also set up a food cooperative in an old Honda dealership, and setup a ad free community radio station Radio Kingston. More of this kind of work is needed from individuals and couples in the American tradition of community awareness and solidarity, and in communities across Europe, Asia, Africa and Latin America during this pandemic following the same practice. ...

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Colonel Stevenson's efforts to limit features on a new bomber for the U.S. Air Force to replace aging B-52's and B-1's. Contractors added a kitchenette in one design which was turned down by Stevenson and senior officers at the Air Force. Senior officers were mindful of how it might be seen by the public and aware of the need to keep costs down during a period of austerity budgets. Barnes describes the efforts of Colonel Stevenson as he led efforts to limit the new plane to essential features, turning down contractor proposals for a plane that could be converted into a drone, reconaissance and cyberdefense features, and other embellishments that would drive up the price tag per plane. In 2011 budget negotiations defense officials agreed to limit the cost to $550 million per bomber, a third of the cost of the B-2 which cost $1.8 billion per plane. Because new planes take a decade or more to design and build with cost overruns, it is also important not to venture too far into technological unknowns. This adds more time to build and proves costly. The Long-Range Bomber project started in 2011 with Secretary Gates signing off on the requirements for it to give the president the option to move quickly in a matter of hours to penetrate distant airspace. The cost is $600 million spent till Oct 2013 for research, and $8.7 billion budgeted to 2018. The Air Force is sticking to existing engine design, and Stevenson says if the technology has not been tested the Air Force is not interested in experimenting with it. In the process Stevenson finds himself trying to change the culture at the Air Force, where putting cost as the top priority is a new concept....

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Lee, Nicholas and Harris of the WSJ describe the responses being considered by president Obama to Russia's hacking of DNC, and other cyberattacks during the U.S. presidential election. Obama said the goal will be "to send a clear message to Russia or others not to do this to us because we can do stuff to you." He said some of this would be done publicly and other things would be done where the Russians know but not everybody else. Mr. McFaul, a former ambassador to Russia, is cited here saying that declassification of intelligence by president Obama in the remaining weeks in office is needed so that all ambiguity about Russian involvement is removed. Elections are coming up in Germany and France in 2017 and both president Obama and the Republican Congress leadership see the need to prevent any further cyberattacks on the U.S. or Western Europe.

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How seriously are the Border Crossing encounters with migrants being taken by the Biden administration compared to the Trump administration, or earlier administrations Republican and Democrats. Pew Research Center provides these 7 charts and other data. In 2021 border crossing encounters with migrants were shown as 1.6 million. Of this 27% were repeat crossings a number much lower in previous years. It had fallen to just 400,000 in 2020 as the policy of expulsion put in place by the Trump administration was continued by the Biden administration. In 2019 the border crossing encounters with migrants after three years of the Border Wall construction under president Trump were 851,000. The Biden adminstration in 2021 had 52% expulsions compared to Trump administration 66% in April 2020 after invoking public health Title 42 which Biden continued. About 33% said the Trump administration was doing a good or somewhat good job in 2019 compared to 29% for Biden in 2021. But a much lower percentage of Republicans were saying Trump was doing a bad job than the 56% of Democrats saying that for Biden today. The previous surge in 2021 was mainly from Guatemala and Central America. The current surge is from about 400,000 migrants from Venezuela where expulsion does not work as well because the US has cut off relations with the government of Mr. Maduro in Venezuela, There are 7.1 million refugees from that country in Latin America. The Trump administration would have faced similar problems with the Venezuelan surge that the Biden administration is facing. The largest jump in 2021 is in Yuma Arizona 12 fold, two fold in Tucson and San Diego, three fold in El Paso, the Del Rio and Rio Grande up 5 times.    ...

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Foreign demand for US manufacturing exports especially in emerging market economies such as China, India, Mexico, the Middle East and South America, will help cushion the US economy from the effects of the housing market deterioration and the credit squeeze. Some of the figures point to a vigorous demand for US exports that will sustain the US economy in the years ahead as poorer countries around the world industrialize, urbanize, build infrastructure, and improve the living standards of people in their countries. First the world is less sensitive to US slowdown. Cooper cites numbers to show that the US contributionto world growth has declined from 19% to 12%. And in the past 10 years USA growth declined from 3% to 2.6% annually but the global economy accelerated from 3.2% to 4.4%. (Statistics from IMF?) IMF in World Economic Outlook estimates global economic growth in 2008 to slow from 5.2% to 4.8%, and the US in 2008 to be 1.9% same as 2007. Excluding the US, growth in the world economy would be 5.5%. China's imports of US goods is up 25% annually over the past 5 years. The proportion of US goods going to emerging markets is up to 45% from 38% in the past 2 years. And economies of countries like India and Mexico are sustained by internal consumer demand so they are stronger than before. Another way to see this happening is the US corporate earnings from overseas being up 22% from last year, and domestic profits up only 1%. Over the past year profits from foreign sales have accounted for 80% of increase in overall profits. So foreign trade and its continued expansion will act as a stabilizing effect on the US economy and US products especially in infrastructure development and related areas will help the developing countries make major improvements to living standards and infrastructure. ...

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US president Biden's 2024 Budget places great emphasis on aid to workers and families in the US and shores up the Medicare hospital-insurance trust fund. He will do this by raising taxes on the wages, investment gains and self-employment income of people making more than $400,000 a year. Additional savings come from increasing the drugs on which Medicare can negotiate prices from 20 to 50 drugs.  Childcare- families making less than $200,000 a year will get subsidized child health care, the lowest income families paying nothing. Housing- Building and preserving 2 million housing units. Series of tax credits to make buying homes more affordable. College education- Reducing the cost of going to education with $12 billion allocated for this. Offering tution free community college. Family and Medical Leave- Federal paid family and medical leave program. Retirees- a $2000 cap on out of pocket cost of prescription drugs for retirees. Reduced taxes for under $400,000 income households- This would be done without increasing the deficits to extend the tax reduction from the 2017 tax cuts to households making less than $400,000 a year.     ...

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Krugman says there is cause for concern from May's U.S. jobs report of only 38,000 jobs added- low even with Verizon strike jobs added back in- compared to the 200,000 a month average since Jan 2013. One cannot read too much into one months report, yet the political uncertainty in a election year adds to the problem. The low interest rates near zero offering little possibility for rate cuts, make it difficult to come up with a policy response. Under a Clinton administration the infrastructure spending option would face Republican resistance.  It is not clear how a Trump administration would respond. Krugman says the jobs figure reflects a stronger dollar- a result partly of the Fed's plan to raise rates- that is hurting U.S. exports.

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Seen as a rural urban divide, less educated and well educated and tech workers the situation in France looks similar to that in the US in the elections of 2016 and 2020. With business in the US and European Union shifting manufacturing to China and the governments neglecting rural areas, decline in standard of living for people on pensions that have not kept up with the cost of living, the situation in France as in the US is decades in the making. Bernie Sanders and Melenchon were appealing in different ways to younger people yearning for change and a system that would correct these changes.   Melenchon coming this close to less than one percentage point of Le Pen in the first round of French elections shows that a straight Macron Le Pen version of what has happened is an oversimplification, just as seeing the changes in America under president Biden vs Trump would be a simplification, as voters for Sanders who voted for Biden are changing the Biden agenda and setting America on a new path. A path to reshoring jobs that were sent to China, rebuilding American manufacturing, increasing workers wages and restoring workers leverage for higher wages, investing $2 trillion in child care, housing, supporting worker incomes and families, supporting older Americans on pensions. In the same way beneath the idea that nothing has happened after the yellow vest protests for cost of living, that has not only not gone away- but increased in the concern for cost of living in this election with the surging inflation - new developments are happening.  Even as Germany under Merkel appeared not be changing in 2020- 1 year after Merkel the situation will have changed completely to address social concerns that were ignored earlier and to invest in infrastructure in a big way. Behind this is a fundamental change that is taking place. Facing a challenge from totalitarian states the fabric of society in the free world, the US, Germany, France, other EU states, India, and nations in the free world will have to respond with changes that restore the fabric of society to what it was before this kind of fracturing, bringing all parts of society together to bring all the energies in place for rebuilding, investing in infrastructure, restoring local manufacturing and renewal. It requires a unified effort to be put in place to respond in the right way.     ...

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This editorial in the WSJ says the resignation and downfall of Boris Johnson in Britain comes from the dissembling that resulted in loss of confidence in his Conservative party, but also in a larger sense from the failure of his agenda to revive Britain.  Not much has happened in the promise to invest in and revive the failing economy and social setting in the north of England. Inflation was hitting British households hard with inflation at close to 9% in 2022. Home electricity and natural gas prices spiked 54% in April and are expected to go up 40% in October. Johnson raised the payroll tax 2.5% to fund the NHS. Corporate tax rate was to go up to 26% from 19%. Green taxes helped energy prices go up, and Johnson did not cut the consumption tax or green taxes on gasoline or diesel or household energy says the WSJ, and kept the household income tax brackets the same even with inflation so households would see a large tax increase. In this sense Boris Johnson with his exuberant personal style and enthusiasm promised a lot after taking Britain out of the European Union with Brexit. Yet as the months dragged on and after the worst of the pandemic found there was little he could show that would convince Britons of a brighter future. Not for the North of England, not for Britons in other parts of England and in London, and with high inflation and lacking the investment that could change Britain, not much to show for infrastructure improvement or plans for the future. The dissembling and eroding credibility led to the situation that only half way through his term in office his absolute majority in the 2019 election could not keep Boris Johnson in office, and the Conservative party was losing the confidence of the British people.  ...

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Ford Motor Company will be a much smaller company and this looks like a structural change not a cyclical one as more automobiles are made in the developing world and fewer automobiles and smaller automobiles are made in the mature US market and like Germany and Japan the market here may have peaked. This would be seen in the employee numbers also. Ford had 34500, salaried workers in 2005, now its down to 23,700, with another cut in salaried workforce cuts by 15% by August 1, 2008, recently announced and even more cuts in 2009 if the market numbers fall further, the salaried workforce may be below 20,000.

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The 2016 Republican platform is written to express the ideas in the Republican Party for family values, child rearing using the Bible and traditional values, calling pornography a "public health crisis."  The Family Research Council and tradition or family focussed groups played an important role in writing it, with Mr. Trump playing less of a role. Instead of "physical barrier" with Mexico, it says "a wall"  should be built in a taking up Trump's idea, but in general it is a clear expressing of traditional family values that Republicans have supported for years and expressed frustration with the movement of social lives in an opposite direction. The same sex marraige decision by the Supreme Court and transgender debate were not present in 2012 election, so in that sense the Republicans see the country as moving in a different direction. More of the pendulum having swung too far in another direction is how Republicans perceive it, and their response is to go back to how things used to be and the world they knew, based on what they see as positive outcomes for the whole of society. Hence language that encourages teaching of the Bible in public schools, condemning pornography as a menace particularly for children, and insisting on "man made laws being consistent with God given natural rights." A good understanding of the Bible is considered "indispensable for the development of an educated citizenry."   Amendments opposing gay and transgender are being added. ...

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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."     ...