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Apple's plans to make the new iPhone 14 in India. Its efforts to bring NPI or New Product Introduction processes to India so that new iPhones can be built in a short time. This would mean not replicating production processes existing in China but setting up new ones from scratch. About 95% of iPhones are made in China. Only about 7% in India by year end which Apple plans to increase to much higher levels by 2025, as some of the supply chain for Apple shifts to India from China. The Modi government is setting up new infrastructure and logistics centers in India to prepare for India becoming a key part of the supply chain for the US and the European Union.

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Asking China to pay for part of the eurozone bailout is not in the interests of Europe, the U.S., or the world, says this New York Times editorial. China has said it expects the eurozone countries to stop criticizing China's currency policies in return for any help. It is not in China's interest to maintain these policies that create serious distortions inside China by tilting policies away from domestic savers with low interest rates and domestic consumption with higher prices. It maintains an export dependent model that is becoming harder to sustain as western economies face a slowdown.

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Friedman in the NYT says China overreached especially since 2012 on trade, technology transfers, and in relations with American allies Australia, India, Japan, and America underperformed for its people by not investing in infrastructure, in workers incomes and in health and public services, education. Underinvestment in the very structure and backbone of American society while billions were wasted in foreign wars and in misallocation of investments by Silicon Valley and other investors. The coronavirus failure to get adequate warning through WHO and China's cooperation for American teams to be admitted immediately after January 10 request by the U.S. for Wuhan was a turning point.  

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Chris Buckley in the NYT today makes no mention of the Bo Xilai episode in 2012 and what this meant for Xi's future policy actions. Cheng Li calls it the most significant happening since the Lin Biao incident in 1971 and Tianmen in 1989. Brookings Institution offers this discussion of the Bo Xilai episode with Cheng Li, China expert on its economic and political elites. Cheng Li rejected the idea that China at the time in 2012 reflected "resilient authoritarianism," instead anticipating problems such as Bo Xilai emerging as a demagogue putting China in an ultranationalist and uncertain direction. This happened during the transition to a new team of leaders led by Xi Jinping in 2012. Xi could see the corruption in the CCP and the hypergrowth in China causing problems of irreparable environmental damage (now climate change), regional inequality, and offering an opening for demagogues to step into this mix of problems. Xi  acted devising policy shifts away from Hu Jintao and Wen Biao of the Bush-Paulsen era and pushing away from focus on rapid growth, shifting to counter inequality, unstable dependence on construction and housing, and excessive debt of that period. Little mention is given to this in NYT Chris Buckely's version of US-China relations in today's NYT (November 13, 2023). ...

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Wang Yi, a senior adviser for China's decarbonization strategy and 5 year plan has this to say about China's approach to climate change. Yi says it is more important to focus on what actions are to be taken between now and 2030. Here he says China has outlined concrete steps that it will take that the world media has not covered in its coverage of COP26 Glasgow. Yi says China is making changes to its entire system not only its energy sector, across the whole society and the economy. Yet he says "nobody knows this." The working guidance document for carbon control China has put out says it will peak coal consumption by 2025.  Yi says it is unfair to ask China to close all coal powered plants, saying that if these plants with a life of 10 years were closed now who will pay for stranded assets and who will hire the laid off workers. He called attention to western nations failure to provide climate finance to China, India and developing countries. And he called attention to the the plans that by 2030 Chinese investment is to have 1200 gigawatts of installed solar and wind energy, more than the entire installed electricity capacity of the US. He says we are all in the same boat yet in different cabins, with some living in bigger space and consuming too much. ...

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The US tariff on China made EV"s imported into the US is 100%. The EU has a 10% tariff. It has now imposed additional tariffs that range from 17% to 38% depending on its investigation with Chinese companies on how much support they get from the Chinese government as hidden subsidies. This move is to level the playing field. The result is that BYD faces a 17% tariff because it has operated relatively on its own. For Geely and SAIC it goes up to 38%. The tariff on European companies making EV's in China and exporting them is additional 21%. US carmakers (GM and Ford) have only a small presence in the Chinese car market compared to the Europeans who  make and sell 3 million luxury cars in the Chinese market (BMW, Audi, Mercedes Benz). About 25% of EV's sold in Europe are now China made EV's. The EU wants to level the playing field so that local makers maintain a strong presence in their home markets. The US with no significant car manufacturing presence in China of Ford, GM to protect is taking stronger action. ...

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The real estate bubble in China continues to grow even after th pandemic. Local governments depend on land sales for about 60% of their revenues. The government in Beijing also is unwilling to let prices decline too much because this could create unrest. As a result households have continued to add second, third homes in speculative investment. Unlike the U.S. where households invest in the stock and bond markets and residential property investment is one of several options, in China this is the only option people believe. The notion of continually rising prices is built into the mindset in China. This is happening even as those who do not have homes are still priced out of the market, and those with savings are pouring them into housing, more so as people save more in 2020. This can be seen in the vacant homes rising to about 40% for those buying second homes. People are also taking on more debt with consumer, mortgage and other debt of households getting close to 60% of the country's GDP, a high leverage ratio. This also means there is less capital to invest in productive investments in industry as more and more savings are tied up in housing with large vacancy rates meaning the housing is not even being used. Some of the speculative nature of this can be seen in this report in the WSJ for cities such as Tianjin, Shanghai and Shenzen. ...

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China's parliament meets this week for opening sessions. Premier Li Qiang tells parliament that China will set a 5% growth target. Facing deflation, implosion of the property sector, and declining manufacturing will make it difficult to achieve this target. 

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With the change in U.S. position on climate change, carbon emissions, and the move to raise tariffs on China's exports to the U.S. China faces a new dimension in its global relationships. Against this background China is shifting to a long term view of its relationship with India. China's new foreign policy leaders after the recent party Congress, vice president Wang Qishan and Foreign Minister Wang Yi, now see the need for new partners in a multipolar global world for the long term as China and India countries with large populations and a need for stable world trade share common interests. Wang steers the Central Foreign Affairs Commission with Yang Jiechi as director. China now sees " a lot of shared interests, concerns and positions," in the words of China's Representative Lu, in the long term issues of globalisation, urbanization, pollution, and concern for achieving stable development with high growth rates.  China now takes the long view looking back at the unprecedented change of the last 100 years, as it maps out its plans for the future. The U.S. has challenged the ideas in the blueprint for development of "Made in China 2025," particularly as it relates to western transfer of technology to China. This has created a new situation for which China is still looking for answers, and ways to come up with new strategies for development without the nearly unrestricted access to western technology of the last 2 decades.  Shared positions on world trade with India and India's close relations with the U.S. add credibility in China's  negotiating positions with the U.S.                  ...

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Washington Post looks at history of rare earths since 1945, and how the US EU and Japan let China become the sole supplier of rare earth minerals. This error is being corrected in 2025 and the US, EU, Japan remain vulnerable for the next 2 years till these countries build up an alternative supply of rare earths. It is a situation where vital national interests in the US and EU, Japan were lost sight of for three decades.

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People in China with 800 yuan or $114 can now invest in low cost mutual funds. They can invest in 5700 domestic mutual funds offered by Vanguard's partner in China Ant Financial Services Group. Vanguard offers investment advice in assembling mutual funds. The investment advice will depend on algorithms not people to provide investment advice.  Ant owns 51% Vanguard 49%. Chinese investors are known for speculative approach to investing and making risky investments. By contrast Vanguard's approach in the U.S. is more careful and makes a serious effort to reduce risk with its index based mutual funds which it pioneered. China is making an effort to bring American companies into its financial  markets as part of the opening up sought by the U.S. Vanguard CEO Tim Buckley says his goal is "to fundamentally change for the better how individuals in China invest." Vanguard says it has taken the long view having worked for a long time on getting regulatory approval and its own approach for investing to introduce in China. It studied the market since 2018 talking to industry peers, regulators and clients. It says Chinese regulators appreciate Vanguard taking the long view. Today Vanguard's office in China has only 20 employees, and it has stayed away from setting up private investment funds for wealthy individuals and institutions which is permitted for western firms in China such as Fidelity International.  Vanguard's Mr.Bogle pioneered low cost index mutual funds that follow and index as opposed to having mutual fund managers determine investments. This takes the guesswork and individual bias out of the equation as experience has proven that over the long run this approach works best. Vanguard now has $6 trillion in funds under management, and is by far the largest mutual funds company in the world. It now has the potential to tackle a huge market of 900 million individuals in China. ...

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The tariffs dispute with China escalates as China increases the tariffs on $60 billion of U.S. goods from 5-10% to 25% starting June 1st. The U.S. put its tariff increase on $200 billion of Chinese goods in effect on May 9, increasing it from 10% to 25%. The U.S. exports less to China than China does to the States by a wide margin making it possible for Mr. Trump to up the ante. Mr. Lighhizer's office says it is looking at tariffs on all remaining goods from China imported to the U.S. if China does not agree not to renege on its commitments and assurances to the U.S. in the talks on improper technology transfers and other matters. 

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When it comes to climate change China is the largest emitter of greenhouse gases in the world- more than North America, Europe, South America and Africa combined. It emits about one third of greenhouse gas emissions in the world. When it comes to climate change action China is meeting its 2030 targets 6 years earlier, and it is meeting all the increased use of energy through renewables. Yet there is another side and this is that China is building coal fired plants at a rapid pace to meet its energy needs. Xie Zenhua meets John Kerry at Sunnylands estate in southern California to discuss how China and the US can cooperate on climate change action. No two nations are so critical to meet the challenges posed by climate change from fires to floods and drought.

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President Trump extends the U.S. lockdown for social distancing till April 30, on the advice of health experts. China meanwhile resumes industrial production and schools reopen. Factories, offices and retail outlets were shutdown for 2 months nearly nationwide in China. The U.S. has a social distancing lockdown not a complete quarantine of hotspots such as New York, New Jersey. Mr. Trump planned to quarantine New York but faced opposition from the governors of New York and New Jersey, including possible legal challenges. U.S. governors have acted imposing travel restrictions to their states from hotspots in other places in the country, forcing people traveling to self-isolate, stopping vehicles with out of state license plates and asking them to stay away. The U.S. cases have jumped from 100 in early March to 143,000 as of March 28, 2020, and 2514 deaths, according to John Hopkins. New estimates from president Trump and his team of experts are for the peak to be reached by April 15, and recovery gradually taking place by June 1, 2020. Based on the timeline in China shown below the time from the first set of 27 cases by December 15 to March 28 when China's factories were back to work and schools reopened across the country, is a period of 75 days. Based on this president Trump's timeline of June 1 for recovery has some foundation. China quarantined strictly compared to the U.S. yet in the early days it had no warning which the U.S. had in particular from Italy. The Trump administration by extending social distancing and lockdown restrictions till April 30 without a strict quarantine of the East coast areas yet with states outside imposing their own restrictions for outsiders, is doing what other countries such as China, South Korea, have to control this epidemic. The first coronavirus case was reported on November 17, 2019 according to the South China Morning Post, By December 15, the number of cases had reached 15. On December 27 on a single day 180 cases were recorded and the Head of the Respiratory Department at Hubei Provincial Hospital reported this to health authorites in China, according to the South China Morning Post, based on data collected in China.   ...

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Shortages of natural gas lead to a 40% rise in prices. China is bidding high for gas supplies as it faces shortages of natural gas for heating during the coming winter. The UK and Europe also face shortages. Russia has the largest reserves of natural gas and is by far the largest producer. The start of the undersea Nordstream 2 pipeline avoids use of existing Russian pipeline through Ukraine. It is seen as a way to bring in more supplies to Europe.

Australia is another large producer of natural gas. China is now changing its import ban of Australian coal and natural gas as it faces a cold winter.

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Chinese sanctions against Micron will affect only 1% of its 10% of worldwide sales in China. Micron says it is committed to the Chinese market and plans to invest $600 million there.

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What a change DJT's first 100 Days and actions on immigration and tariffs , Ukraine and Russia, have made in China's and World relations in Asia, and in Europe - all for the better, significantly better relations worldwide.  China has worked out a peace settlement in Ladakh frontier with India. It has come together in Tokyo with Japanese prime minister Ishiba and China's Foreign Minister Wang Yi holding hands, and South Korea joining, all three nations vowing to remember history and work together. In Europe Russia is being brought back into the community of nations for big power cooperation with the US after 3 years of war in Ukraine. And Germany has removed its constitutional brake on spending that frees up $1 trillion in funding for infrastructure to replace much of its rail and other infrastructure built in 1900. One would not know this reading the NYT on democracy or the WSJ on tariffs or the Washington Post on assault on federal workforce, or the Atlantic, Politico, DW.com or FR24, Der Spiegel, nor Le Monde, much of the world media slanted on way or another. One does not hear about military exercises so often as the world realizes that so called large economies China, Germany, Japan and India all depend on American goodwill and willingness to give rather than take for most of the post war period since 1950. For the last 6 years in the latter half of the Trump administration and the 4 years of the Biden administration during the pandemic relations between China and the US deteriorated and China first retreated into its own then opened up a bit. The initial idea that it could manage the DJT trade actions evaporated as Biden continued the DJT first round of tariffs. Now Navarro, Lighhizer, and his deputy Jamieson are all back advising DJT for anew round of reciprocal tariffs and tariffs on Canada, Mexico and China for not stopping fentanyl flows.  In 2022 in eastern Ladakh China's PLA had a big standoff with Indian forces in eastern Ladakh at Galwan and Pangong Lake. The Quad was active with Australia India and the US in Indo Pacific and China conducted military exercises close to Taiwan.      ...

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With Chinese overproduction of  electric vehicles and solar energy panels China needs the EU and US market for its economy. Now that it is more dependent on manufacturing for jobs and the economy, as its construction industry is in decline. The Biden administration by not adding new tariffs yet investing in production at home provides China and the US with a win-win relationship, that China seeks to maintain. This overrides regional tensions for the vital interests of the US and China to compete on a level playing field.

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China announced that it would make its exchange rate flexible, but also emphasized that it would do so gradually. What this means is that China will have a managed floating exchange rate. China followed a managed floating policy between mid 2005 and mid 2008, with a 21% upward valuation during that period for the yuan. During the 2008 crisis upto now the rate was pegged. The yuan was pegged at 6.83 yuan to the dollar. China is now rebalancing its economy so that it is not overly dependent on exports. The idea is to let domestic wages and domestic consumption pick up the slack in the markets of Europe and the USA. Europe is taking up austerity measures, and the mood in the US is shifting towards concern about growing budget and trade deficits. See the groups for "China wages" and "China workers."

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A scandal in China over cooking oil transported in fuel trucks that is shown in DW.com

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The threat of climate change is becoming real in China with drought and heat waves. The impact on agriculture is feared as it may affect the autumn crop. For the first time the awareness of climate change is taking on a new urgency, with state media reporting on it with new emphasis. China having to import grain would put pressure on world supplies of foodgrains. It is therefore imperative that China also join in support of keeping Black Sea ports of Ukraine free and able to supply Egypt and North Africa to reduce pressure on world foodgrain markets.  This could also help shorten the war with a return to work on  important goals of climate change, renewing homes and industry for conversion to renewable energy,  restructuring trade so that there is no extreme dependence, and social security, healthcare needs of the Chinese people.

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As the trade problems with the U.S. escalate in tit for tat tariffs, China looks back at its history for parallels. The period of the "unequal treaties" imposed by the Western powers on China in the period 1850-1900, the Korean War of the 1950's, and other analogies that come up to people. Yet China's planners and leaders are looking at another situation the Plaza Accord of 1985 in which the western nations pressured Japan into accepting a significantly higher exchange rate to reduce its trade surplus and the Japanese yen appreciated by 50%. Japan cut interest rates from 5% to 2.5%, and introduced huge fiscal stimulus, banks opened up to lend vigorously. The result was a boom by 1990's followed by a bust that led to another decade of lending to loss making firms called "zombie" businesses, that led to a stagnant economy. This has persisted for three decades. This China sees as an unacceptable situation when China has still not achieved developed economy status in terms of per capita incomes. It fears getting into a middle income trap as the economic growth slows and the aging population makes a recovery more difficult.  The difference with Japan in the 1985-1990 period is that Mr. Trump lacks the kind of five nation economic coordination that put pressure on Japan. Today there are differing views on China in Europe and the U.S. and different policies. Mr. Trump is known for his style of deal making and could settle early, as feared by some Republican leaders in Congress who see in China a challenge to America's technological dominance. There are no calls to appreciate China's currency. Only calls for China to change its state subsidies model and put in writing and through laws that change the way of doing business that does not require American companies to hand over advanced technology. This is also a concern for Japan and the European Union countries such as Germany, and is something all nations try to protect in global competition. Japan is still facing the consequences in creating a new competitor in high speed train technology after building the first high speed trains in China and transfer of the high speed train technology by Kawasaki. The Household Survey by the Federal Reserve showing the financial fragility of 40% of American families shown on this page today shows how this situation is likely to evolve as working class families in the U.S. support a trade stance that protects American jobs and technology. Job losses over three decades and a $891 billion trade deficit in 2018 are seen as unacceptable to the U.S. in 2019. A stronger U.S. dollar helped increase the U.S. trade deficit by 10% in 2018, nullifying some benefits of Mr. Trump's trade actions. Mr. Robert Lighthizer was a negotiator in the trade dispute with Japan in 1985, and runs the negotiations with China with support from president Trump. This alone has kept the Japanese situation in 1985 uppermost in the minds of China's leaders as they try to come up with a way to settle the trade dispute with Mr. Trump.     ...

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China's plan to lift all birth restrictions by 2025. The one child policy was replaced with a two child policy, and now with a three child policy in 2021, as China's birth rate declined below the level needed for a stable population. The plan now is to lift all restrictions as the decline in population is expected to be very steep. Not enough young people to support a growing elderly population is a major problem for the economy. A mindset has developed over 70 years for one or two children that is seen as hard to change. Women now work and pursue careers, their expectations in life have changed. Couples are also finding it hard to get access to schools and afford the costs of education and home space needed for larger families. Housing in most cities is costly, making it harder to raise families. Attitudes are hard to change. Experts see little impact of the new policies. The three northeastern provinces suffered most in the shift to a market economy. This is where the drop in birthrates is very steep. The government will remove all birth restrictions in the northeast before applying it to the whole of China. ...

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The European Union's trade relations with China, and the trade and industry relationship between Germany and China built during the Merkel years is a part of the overall trade setup of the Free World that is likely to be questioned by Habeck, Baerbock of the Greens and chancellor Scholz after Mr. Biden's launch of the IPEF economic alliance for Asia. During her period in office Merkel also built the German trade relationship with Russia leading to Germany being dependent on Russia for 51% of its oil and natural gas supplies. The German dependence on Russia for energy is now being reversed by the efforts of Economy Minister Habeck of the Greens party in the Scholz coalition. The supply chain renewal and redesign by president Biden is likely to be followed by Germany and France and the EU. With it more investments will be shifted back to the US and the EU and allies in Asia such as India that offer a large pool of well trained workers similar to China's. In this sense the IPEF arrangement will be repeated in European Union's new relationships with Asia under the Greens SPD German coalition's leadership. ...

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US and China agree on the first step to a broader trade deal. US offers to take in Chinese students at American Universities, something DJT says he was good with.  “Chinese students using our college and universities,” adding that such attendance has “always been good with me.”  China for its part will not slow move export of magnets and rare earth minerals on which it has established a near monopoly of the supplies. These rare earth minerals are needed for technology products made in the US. US tariffs of 55% will still say in place as "deterrance" that the other side keeps its promises and to cut the trade deficit with China not simply talk about it has has happened for a decade of Bush, Obama, Biden. Treasury Secretary Bessent and Jamieson Greer US Trade Representative were at London talks with Commerce Secretary Howard Luttnick to find ways to get an impasse resolved. Both sides lack confidence in what the other is doing so that theis the first step to clarify the direction of talks for achieving a broader deal.  ...