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Concern about slowing growth in China with rising inflation. The problem of opaqueness of the financial system and of banks that are both listed companies and run by the government, and how this could accelerate a slowdown at some point with accumulated problems in the financial system. A sense that China's growth model has reached a limit, and whether there will be a soft landing.

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In the next 15 years approximately India will have a higher percentage of working age population to non-working age population than China, based on information from the UN and Morgan Stanley. The number of people over 64 and under 15 has declined from 69% to 56% in 2010, according to UN figures. By 2020 the working age population will increase by 136 million in India, compared to 23 million in China. From this it can be seen that a huge demographic change is playing out. As China's economy matures and with the one-child policy in place, China's working age population is expected to decline; just as India's working age population picks up. This should give India momentum in the next 15-20 years, and lead to an increasing growth rate in India, just as China's growth rate slows. India's weak areas are infrastructure, and education. Infrastructure development will accelerate nevertheless, with larger private investments and participation in projects; and India will move up the experience curve as more projects are completed. Education for the poorer classes and in public schools will remain a problem. Private schools are making up for the weakness in this area, and private schools now make up 20% of attendance even in the rural areas according to one estimate. The strong points are democratic structures and the rule of law, private enterprise and private companies, English speaking middle class, and smart initiatives by business to develop low cost products that are affordable for all segments of sciety in India. For instance a $35 laptop developed by the IIT and Indian Institute of Science researchers, and Tata Chemicals development of a filter for 30 rupees or 65 cents that would filter water for a month for a family of five. This will bring the benefits of development to all segments of society as development progresses, and is crucial for balanced development in the poorer parts of Asia. Tata Motors 1 lakh ruppees car concept and the Tata Nano as its tangible product, is another verson of this kind of development being pioneered in India. Being a democratic country makes some processes slower, yet at the same time the private initiative enabled by democratic processes -cultivated over a long period from British times -enables a creative sort of development that could be turned into a distinct advantage....

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Investors in China fear that the overheated economy and property bubbles, may see a sharp turn with excessive tightening of monetary policy. China rebounded quickly after the 2008 crisis, but did this with a huge stimulus and by encouraging excessive lending levels. Some of this local government lending is suspected to have gone into low quality projects with the danger of bad loans. Inflation was 2.8% in April, and as lending tightens the Shanghai Composite Index has fallen 16% in the last month. The crisis in Europe, the extremely short 2-3 month horizon of mainland Chinese investors, the excessive supply of shares- attempts to raise $74 billion in share issuance in mainland and Hong Kong markets and an IPO of $30 billion for Agricultural Bank of China- all put pressure on stocks. OECD index of leading indicators for March 2010 show a drop from February, and the Chinese economy grew 11.9% in the first quarter 2010.

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The annual report on China by the IMF points to a diminishing margin of safety and higher risks for delays in needed economic changes from earlier infrastructure and construction focussed policies which neglected Chinese consumers and savers. The IMF pointed to risks from the shadow banking system and the real estate bubble that need to be addressed.

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A shift in priorities away from focussing on high growth to lower sustainable growth was announced by China's premier Wen Jiabao at the National People's Congress, China's parliament, in March 2012. This shift will reduce investment in infrastructure, power generation and exports, which will affect the level of imports of commodities from commodity producing nations in the Middle East, Australia, Canada and Brazil. It should increase imports of software, computers, entertainment, tourism and high tech goods from the U.S. and Europe. Chinese leaders have said they would make this kind of shift for some years now but growth has consistently increased more than the target rate, and domestic consumption as a percentage of the economy has actually decreased in the last decade. Now 9-10% growth rates may be a thing of the past and the target of 7.5% set this year may be actually closer to the real figure. The Chinese leaders have belatedly realized the need to make these changes now because slowing markets in Europe -which is seeing declining growth and high unemployment- and in the U.S., make the issue impossible to avoid. Wen told the Congress: "Accelerating the transformation of the pattern of economc development... is both a long term task and our most pressing task at present... Domestically it has become more urgent but also more difficult... to alleviate the problem of unbalanced, uncoordinated and unsustainable development." This is his way of saying that its unavoidable and better to start in earnest now, and at the same time recognizing the resistance to change from the stateowned companies and the other interests who have benefitted from surging growth, and now occupy a central role in the power structure. An opinion article in the People's Daily, China's official newspaper, said: "imperfect reforms are to be preferred to a crisis caused by no reforms." The World Bank's president Zoellick is respected by the Chinese leaders. He also urged them to make changes now. The recent report of the DRC, China's planning research arm, and the World Bank, also laid out the new direction away from a focus on infrastructure to domestic consumption. The fear is sudden deceleration in the absence of policy action. The impact of this will be negative for commodities over time, leading to slower growth in Australia, Brazil, and Canada. It should boost imports from Europe and the U.S. of high tech, consumer, pharmaceutical goods over time....

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Chinese government data show that inflation was 3.1% in May 2010. The spread of wage increases in manufacturing after a series of strikes at Hon Hai and Honda Motor suggest that price pressures will grow even further. Analysts warn that China's central bank will have to raise interest rates to control the boom in the economy and property markets; that merely reining in credit will not work. They also suggest the need for swifter action in revaluing the yuan. As wage increases spread throughout manufacturing, this will eventually be reflected in higher prices of end products.

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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Sternberg points out that China's banking system lacks the experience in consumer credit and consumer finance products that would provide the impetus to a surge in consumer spending in China for imported products from the US or Europe. Outstanding consumer credit in China is only 13% of GDP, according to a 2009 study by McKinsey and Company, compared to 48% in Malaysia and 70% in S. Korea. China has lost a decade or more he says in allowing foreign banks to develop a consumer-finance market, and Chinese banks have little compettitive pressure to serve lower income consumer borowers. The Dutch PPF Group was allowed into this field for the first time in November 2010 to introduce in-store financing for durable goods purchases, something available to consumers in Brazil and other developing countries for many years. Large banks have an entrenched mindset to lend to businesses, and especially to state owned enterprises which have the collateral and government guarantees and support to obtain this lending. Risk averse banks in a financial system that lacks the kind of credit ratings system for consumers that the US and Europe have, prefer to lend to make loans to state owned enterprises where the government guarantees the loans. Interest rates on deposits are low and the government deliberately allows a wide spread for the banks so that they can ensure enough earnings to pay for non-performung bad loans, both from the last decade and from the binge in stimulus lending in 2009-2010. This reduces consumption by reducing the earnings on savings for consumers and households. These problems can only be solved gradually if the government and leadership want to change course, but this oddly enough is not happening. Other problems are that China's export factories are part of a global supply chain in which other countries do the product development, logistics, marketing, and retailing. Chinese firms lack the experience in these areas to shift to domestic consumers. As a result, says Sternberg, to lose a foreign customer can mean going out of business. Without government leadership and new direction through large scale re-allocation of capital and labor to the small scale businesses that serve consumers in the domestic market, all the talk of rebalancing will be just that, talk only and no real rebalancing....

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Dow Chemical CEO Liveris says he sees signs of recovery in China in 2013. He says small and medium sized businesses in China have better access to financing in Dec. 2012 after a period of destocking and hard times accessing credit.

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Andy Grove makes this passionate plea for the dignity of workers in America in 2010. It is worth reading in 2020 what this founder of Intel Corp and pioneering spirit of Silicon Valley has to say. Andy Grove of Intel says there is something seriously wrong when the unemployment rate in the Bay Area is higher than the 9.7% national average for the USA. American companies have added jobs like crazy in Asia, but things are sputtering back home. Hon Hai has 800,000 employees and makes most of the electronic and computer products for American companies. Grove says startups are not the answer, unless they scale up and create jobs the way Intel did starting back in 1968, with a $3 million capital infusion by investors. The move from the first production model to mass production is critical, as companies hire thousands of people. Innovation and scaling up have to go together. He makes his point clearly by pointing out that Apple has 25,000 employees. For every Apple employee there are 10 employees in China working on Apple iMacs, iPods, iPhones. And he adds that the same 10 to 1 relationship applies to other U.S. tech companies. And here Grove asks the tough question by first posing an answer. He says it sounds like- no big deal, we keep the high paying jobs, we keep most of the profits, but what kind of society are we going to have with highly paid professional workers and lots of people unemployed? And he doesn't mention that there are a lot more young people unemployed. He says the US has become very inefficient at creating tech jobs, and it would be a great mistake not to act decisively early on. And adds that the investments in such areas as solar power and electric car batteries have to be made early on to maintain leadership in these areas. Grove faults academics like Alan Blinder and others who say loss of manufacturing jobs and whole industries was no big deal. The U.S. has forgotten the value of manufacturing jobs. He wants to see America focus on jobs and rebuild its industrial base. And less of transferring engineering knowhow and new technologies overseas, technology that can help bring innovation and scaling up of factories at home. In his view individual companies doing their own thing, in a misguided fashion that jobs don't matter, is not the answer to the situation we face. The industrial economies of Asia, China at the present day, have focussed on jobs and technology, and scaled up. Grove reminds readers of the situation in America in 1932, when jobless veterans demonstrating outside the White House in large numbers were dispersed by soldiers with live ammunition and fixed bayonets. This makes him shudder at the very thought of it, and brings back memories of his early years in Hungary, as a young man in 1956. Are we listening? ...

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Sandhya Sharma of The Economic Times puts a spotlight on the dominant role of China in global shipping by 2005. In 1980 China had a tiny role in global shipping, with bicycles a dominant form of transportation in Beijing. By 2019 this role had expanded to dominant position in all the largest modern technology container ports with global shipping volume having more than doubled since 2005. Much of this was done by working with major providers of container port technology such as Maersk of Denmark and other European shipping companies, with imported technology playing a critical part. India is starting from basics in its effort to develop its shipping in the Indian Ocean region with its large coastline facing the Suez Canal and the eastern coastline facing Malaysia, Indonesia and Australia. This was evident during the recent "Atman Nirbhar" global shipping meeting in Vizag- the Maritime India Summit 2021. The goal is to make the next decade one of rapid development of the maritime sector to secure India's position in global shipping particularly in the Indian Ocean region. Collaboration with major European technology providers will play a key role in developing container ports to the levels required for India's future role in global shipping. Sharma discusses the visit of premier Boris Johnson in April 2021 to India to forge strong trade ties.  The Indian prime minister held virtual meetings with premiers of Sweden and the Netherlands, two major maritime nations in Northern Europe for stronger trade and technology ties. These ties are part of the broader effort by the US, UK, and European Union countries to forge strong trade and technology ties with India now that it is clear to them that new supply chain will be needed over the next decade as China disengages from that level of its trade ties with Europe, US and India. New global supply chain means new global shipping container ports and global shipping links of India, Vietnam, Malaysia, Indonesia, with the US and Europe. Looking at what happened between sometime in 1995 and 2005, and in 2005 to 2009 when the global financial crisis hit, when China went from a miniscule level of world trade to predominance. And the years of the Obama administration 2008-2016 when this simply continued without any understanding of its implications for both sides, to levels of China's predominance in world shipping that can only be considered as unbelievable. Growing at over 12% through continued use of  imported technology from Europe and the US. Looking back at what happened one sees that this made China over dependent, its economy too intertwined with Europe and the US. This also made the US and Europe over dependent on China in its supply chain. It took the pandemic and the one term Trump administration, the crisis in Hong Kong, the situation in Ladakh and India's norther border, the South China seas and Vietnam,  for both sides to realize this was not in the interest of any of the countries involved.   ...

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Compared to the situation in 2008-2009 during the global financial crisis with the excess supply of labor, China in 2012 faces an excess in demand for labor. In 2009 about 20% of migrant workers were unemployed when the crisis hit, and wages dropped 10% for migrant workers, according to the Chinese Academy of Sciences and Stanford University. The situation three years later is one of tight labor markets and higer wages. A large stimulus in not only not needed today in the way it was in 2008-2009 as a way to maintain social stability, it would reduce the benefits of the anti-inflationary steps taken in 2011-2012, by putting more pressure on wages and prices. Manufacturing sector wages increased by 20.1% in 2011, according to China's statistics bureau. This may be why the Chinese government is taking measured steps to avoid creating more bad loans through indiscriminate lending, and being more selective in accelerating development projects in the pipeline. According to Hong Kong's new Chief Executive Officer China plans to have about 7% growth. This shift in approach would help China refocus on growth strategies recommended in the recent Development Reform Commission and World Bank Report on China....