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Forget Macron who is simply following French policy in the manner of De Gaulle, says Greg Ip in WSJ. The European Union has already set its policy to decouple its relationships in the supply chain from China, it just calls it something else -"de-risking." The EU he says is even tougher about this than the US. The EU's Leyen has stated: "The Chinese Communist Party's clear goal is a systemic change of the international order with China at its center... We need to ensure that our companies capital, expertise and knowledge are not used to enhance the military and intelligence capabilities of those who are also systemic rivals."  Mikko Huotari, the head of the Berlin based think tank Mercator Institute for Chinese Studies says that the US and the EU arrived at this through a process that went on in parallel. In fact the Scandinavian countries such as Sweden and Denmark, and the Baltic countries came across this much earlier before Biden became president because of acrimonious relations with China. This is also true of countries in Eastern Europe such as Czech Republic.  Germany's position is based on finding a transitional period for decoupling to reduce the impact on its economy. And even China is aware of this situation and looking for a transitional period for decoupling. More significant is the attitude of companies says Greg Ip- companies such as Tesla, Apple and even Airbus that have continued investments in China with little change. And it is this that president Biden is seeking to change with US policy positions. Another less observed aspect of this is the realization of both the US and EU, that the clear and obvious mistake of overconcentration of the supply chain in China was made under Merkel and the Bush-Obama adminstrations. China too realizes that it would have been better off - less recrimination from workers in the US,  and less costly damaging growth that led to climate change- if there was not this much overconcentration of the supply chain in China. In short it benefitted no one, and happened simply because companies sought to take advantage of attractive offers of building in China offered by local governments in China with subsidies from the Chinese government, and the manufacturing capabilities that kept expanding in a virtuous circle as better infrastructure and logistics were built over time. It goes to show that unless governments are vigilant and aware of these risks the unintended can happen with different consequences including destabilizing the social fabric and the political structure of western democracies.  ...

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An example of the kind of information spread even in BBC and American media about US inability to make the most advanced chips because TSMC founders have decades of experience. In fact TSMC founder Morris Chang acquired his experience in chips in the US. The decades of TSMC experience are merely since the late1990's. The US was the only country making these chips when China was mostly an agricultural economy in the 1990's. It is only because of hidden subsidies and bad economic theory, that US let the chip technology be outshored. As soon as the people of America make the decision, bad economic theory will be discarded, and US will support its own chip manufacturing under bipartisan support in Congress and the White House, with the full support and funding of the American government.  The US can get things done once it makes up it's mind as the whole Nation. Advanced chips will happen very quickly in the US with the process already under way and supported by the whole Nation. People forget that bigger than chips, bigger than technologies of today, the Industrial Revolution of the 20th century began under Frances Perkins and Franklin Roosevelt in New York during FDR's term as Governor as New York State. It was at that time that New York state  was setup as the model of industry and labor, with new institutions and industrial landscape engineered by FDR and Perkins. This was transferred to 50 states during the 1930-1950 period- this is the industrial structure and economic structure that brought the Second Industrial Revolution in the 20th century to the world. Taiwan did not exist till 1950's emerging from Japanese rule, China from Japanese occupation till 1945, not emerging till 1990. ...

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Yellen tells the governor of Guangdong that China's huge subsidies for solar, EV and other industries disrupts "the level playing field" America needs. In all previous administrations  of both parties American economic ministry heads stayed silent or said it in a way that they were ignored. A culture of government staying out spread like wild fire under Reagan and "free to choose" advocates such as Friedman who did not realize the grave dangers to American manufacturing and its workers inside America, and to the world's other manufacturing capable nations such as India with overconcentration in one location. It was America's misfortune that economists and business leaders in the US were not listening enabling China to ignore this. By offering huge government subisidized incentives China and Taiwan shifted manufacturing away from the US in semiconductors, solar, EV's. It started with Apple and is still going on with Tesla. Today economists such as Yellen say economic resilience and supply chains are at risk before they said it lowered cost for consumers and failed to wake up when advanced technologies were at stake, as economists never trained in manufacturing had no knowledge of how it works with learning curves and knowhow that is built over decades, once lost hard to regain. The message fellow Americans is that trust your instincts and common sense, and trust observation which is what the Renaissance in the 15th century was all about and which put Europe ahead of Asia, to the great misfortune of Asia. Japan, China, have learned these lessons well, America as an immigrant nation is different from Europe, and must use its good sense to keep open the opportunities for its people and workers, and the people and workers of all nations that are manufacturing capable. Yellen said- "Direct and indirect government support is currently leading to production capacity that significantly exceeds China's domestic demand, as well as what the global market can bear...Overcapacity can lead to large volumes of exports at depressed prices, and it can lead to overconcentration of supply chains, posing a risk to global economic resilience,"    ...

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The Venezuelan government provides gasoline to people in the country at a few cents a gallon- almost free. Even Saudi Arabia, the Emirates and Kuwait which have way better financial balances and dollar reserves do not provide gasoline at such prices. The result is chronic shortages of basic parts and other imports because the government does not have enough dollar reserves for imports. Venezuela devalued its currency by 32% recently, making imports more expensive and pushing inflation up even higher to 28%. The problems it creates are excessive and wasteful use of gasoline, and free gasoline that then provides consumers money to pay for surging cost of everyday imported products. Nullifying any real benefits when shortages, inflation, dilapidated infrastructure and lack of development and jobs, are taken into account. The lack of capital to invest in the oil industry has led to declining production making the situation unsustainable. Yet neither party of Maduro or Capriles in the upcoming April 14, 2013 election, following the death of Chavez, supports ending this subsidy. Efforts to end the subsidy by president Carlos Andres Perez in 1986 led to riots and about hundred deaths in police response, and a coup by Chavez, then a military officer, a few years later. Under Chavez the subsidy was extended to the level at which gasoline is about 4 cents a gallon. Compare this with the price in neighboring Colombia at $4.72 a gallon, and Brazil at $5.40 per gallon. Consumption per capita in Venezuela is excessively high, about seven times per capita than neighboring Columbia. The investment in infrastucture is hobbled by lack of capital, the capital Caracas dilapidated, and no major infrastructure projects taken up by the government. It costs Venezuela 8.6% of GDP or $27 billion to pay for the excessively high subsidy, compared to 3.2% of GDP going to healthcare spending and 5.1% for education. In comparison Indonesia, another developing country, uses 2.5% of GDP or 21 billion for its subsidy for a population of over 200 million. It is not that a fuel subsidy is provided, but the entitlement to free gasoline that makes Venezuela the lone exception. There is a reason why prices in Brazil and China, large developing countries, price gasoline to motorists at over $4 a gallon- to discourage excessive and wasteful use, and release scarce capital for infrastructure development, building dollar reserves for imports of machinery and equipment, and other uses in industrializing economies. Compare Venezuela with Bolivia under the socialist government of Evo Morales. In 2010 Bolivia increased its price of gasoline by 80%. The price in 2013 is about $2.00 per gallon. Morales cushioned the increase by increasing salaries in the health and education sectors, armed forces and police by 20%, and increasing prices of locally produced wheat, corn and rice by 10%. Morales said he did this to reduce state subsidies of $380 million for $660 million in gasoline imports, of which $150 million was siphoned off by smuggling gasoline to neigboring countries. Incentives were provided to oil companies to produce gasoline in Bolivia to reduce imports. ...

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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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Overall consumer prices were up 4.4% higher in October 2010, than a year earlier, according to the National Bureau of Statistics. Most of the increase in prices was concentrated on food and energy. China is taking action to limit price increases. During previous rise in inflation in 2004 and 2005, the government has resorted to detailed price controls. China's cabinet of ministers, the State Council, has issued orders that local governments and other government entities provide temporary subsidies to help the needy cope with rising prices and to increase allowances for needy students. Chia fears social unrest if prices go much above 5%. The Food and Agriculture Organization of the UN warns that food prices have gone up by 10% in the poorer countries. According to economists, China is effectively printing its currency renminbi to buy $1 billon a day worth of dollars to keep the renminbi weak, so that its exporters retain an advantage in overseas markets. The central bank takes away some of this renminbi but not all from the system, by selling bonds to state owned banks and increasing the amount of reserves required at the central bank. To keep the renminbi from rising, China's central bank buys up the investment dollars that are coming into the country, as well as dollars coming into the country from the trade surplus....

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US Trade Representative Lighthizer in the Report on China's Entry into WTO sees this as a mistake in the policy of president Clinton. Clinton has said that was a mistake. David Sacks raised this issue in a podcast with Larry Summers, an economist who was deputy to Robert Rubin and Deputy Treasury Secretary, then Treasury Secretary succeeding Rubin in 1999. Clinton on the advice of Rubin and Summers set up the framework for China to join the World Trade Organization without the safeguards and the setup that would prevent it using state capitalism and subisidies to build its own economy with exports, to ally with American corporations to support the outshoring of almost the entire industrial base of the US. Shocking as it sounds this has happened, had happened by 2016, when Donald Trump with the advice of USTR Lighthizer took the first steps to reverse this with Tariff policy, which was supported by president Biden, and continues in its new phase under DJT in 2025. Rubin and Summers had supported deregulation of financial markets and removal of the Glass Steagall Act by 1999. This was to led to the financial crisis of 2009 that was to be one of three body blows to the American working and middle class. The others China entering WTO without safeguards that led to deindustrializing US and loss of its manufacturing base, loss of 5 million jobs, tens of thousands of factories. And the third was the pandemic. “ . . .it seems clear that the United States erred in supporting China’s entry into the WTO on terms that have proven to be ineffective in securing China’s embrace of an open, market-oriented trade regime” 2017 USTR Report to Congress on China’s WTO ...

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India and China subsidize the cost of fuel to their people. In India kerosene is the urban poor's cooking fuel. It sell around Delhi at Rs 9 a litre compared to a market rate of about Rs. 25. Inida subsidizes kerosene and liqueefied petroleum gas directly and subsidizes diesel and gasoline indirectly by preventing the state oil companies from increasing prices, instead issuing bonds that help compensate the oil companies for their increased costs of crude. In October the Government announced it would issue bonds worth 235 billion rupees this fiscal year to compensate the oil companies for 43% of their losses, according to Lombard Street Research, a British firm. The fuel subsidies amount to a total of $17.5 billion or about 2% of GDP. The government which is a shaky coalition facing elections in the near fuure is unlikely to hurt election prospects by increasing oil prices, in addition to the facts that the country's poor depend on these subsidies to carry on their daily lives.

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Europe responds with platitudes and vague references to "benefits for everyone" and "detrimental" without facing up to the facts. How many American cars do you see on the streets of Germany? in Berlin or Frankfurt?- or Japan? in Tokyo or Osaka?-or South Korea? in Seoul? And how long has this been going on - since the 1980's. Europe's answer to the Marshall Plan and Japan's and China's to post war American help for recovery, was to exclude American cars and other products. GM and Ford have pulled out of China and so has VW. China's plan is to flood the world with electric cars, and Japan's to flood the world with hybrids. For far too long America has relied on capitalism that has no state involvement. In this kind of competition with hidden subsidies and national planning at the core of industrial growth in Asia. The US government has to have state involvement in it's auto, steel, aluminium, and chip industries, not to create trade disturbances but to create an even playing field for all, and rebuild a middle class destroyed by unfair trading practices of Asian nations and the EU, including Canada and Mexico which are simply used as bases to ship to the US. Ford makes 80% of its cars in the USA and GM can make the investments in new plants to raise its production from 60% in the USA to 80%. South Korea's Hyundai and Kia are investing $21 billion to make in the USA. Toyota and Nissan, VW, BMW and Mercedes can do the same.   ...

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(Article on TSM from NYT, February 22, 2023.) When Morris Chang setup his factories for chip production in Taiwan in the 1980's America was the leader in chip production. He tapped into American technology at MIT and other American research universities. Over decades of support from government subsidies and easy transfers of American technology Morris Chang built up what is TSMC today. Chang now sees the building of a plant in Arizona as a challenging task. Originally from Ninbo, Zhejiang province, China, and having survived the Sino Japanese war and civil war in China he went to Hong Kong in 1949. Without the bachelors and masters degree in mechanical engineering from MIT in 1953-54 and the first jobs at Sylvania Semiconductor in 1955, Texas Instruments in 1958-83, both pioneers in semiconductor production, Chang would not have been able to found TSMC. Mistaken laissez faire economic theory destroyed America's own semiconductor industry. Texas Instruments invested in Chang for him to get his PhD. degree from Stanford in electrical engineering in 1964 and enabled him to run its worldwide semiconductor business. Without this start enabled by companies at the cutting edge of US technological innovation and institutions such as MIT and Stanford, TSMC would not exist today.  Chang's approach was to price ahead of the cost curve which essentially means taking smaller profits in the short term to gain advantage over the long term. In this way he built TSMC with the help of support from Taiwan's government. About the Arizona plant Chang says it was similar to putting up a plant in Washington State, which he postponed after people, cost and cultural problems. A dream fulfilled became a nightmare fulfilled, he says and postponed that plant. This lack of enthusiasm shows a lack of memory an awareness of the difficulties that Chang himself must have experienced in 25 years of work at Texas Instruments- with cultural, cost and people problems, and the efforts at American pioneer manufacturing companies to assist Chang. Chang is reported to have said on a Brrokings Institution podcast that building a wafer plant in America will be "a very expensive exercize in futility," forgetting that he got his own start in America, with American engineers, American science and technology, and American manufacturing, and American workers. ...

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After the U.S. withdrawal from the Paris Climate Change Agreement, China and the European Union sought to fill the leadership on this issue. Yet the reality now looks to be different. China decreased coal consumption between 2014-2016. Now China is ramping up coal generation as it needs to provide stimulus to a slowing economy as trade relations with the U.S. worsening.  In 2017 the trend reversed with state backed loans to help economic growth and surge in provincial permits.  China is now moving forward with plans to add coal fired power equal to almost the total U.S. capacity, according to Coalswarm, which tracks power plants worldwide for coal use. This would push coal fired production to above the cap of 1,100 gigawatts China has set and its current cap. Its current production is already about half of the world's total coal fired generation and quadruple that of the U.S. In 2017 China made up one fourth of total CO2 productions.  Canada is missing its emissions targets and is not likely to meet 2020 targets say experts. In the EU members reliant on coal power energy oppose EU parliament efforts to end subsidies to the most polluting plants by 2025, seeking delay of one decade. At the climate change talks in Katowice, Poland, these changes are facing opposition. As a sign of how the situation is changing since the 2015 Paris Accords, the protests in France by yellow vest protestors started in opposition to a carbon tax intended to meet France's climate change targets. That tax increase is being withdrawn by president Macron. Families struggling financially had a different perception of the increase in the fuel tax and even young people who support meeting emissions reduction joined the protests, as reported in the New York Times and The Times. This tells a lot about how the issue of climate change has changed in the public perception in three years. ...

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Samuelson says the bill in the U.S. Senate is symbolic because it allows companies to cite the undervalued renminbi as an illegal subsidy and have the Commerce Department impose duties on Chinese products. This would have to be done on a case by case basis, making it largely ineffective in dealing with the large trade deficit with China. He also cites the differences among economists that show a range between 1 million and 2.8 million jobs lost. The 2.8 million jobs estimate is from the Economic Policy Institute for the period 2001-2010. The 1 million is an estimate for 1990-2007, which estimates a loss of quarter of all manufacturing jobs. By WTO rules subsidies that are not targeted at specific industries or firms are allowed, according to lawyers. Which means China could appeal to the WTO, and impose retaliatory duties. In the meantime the trade deficit with China, with imports of $364 billion in 2010, and $86 billion in exports, would remain largely unaffected. This is the reason some Senators, including Republican Orrin Hatch (Utah), see this move as political posturing by President Obama and the Democrats, because the administration has no new proposals to address the trade deficit and the gradual erosion of America's manufacturing base. Samuelson cites Arvind Subramanium of the Peterson Institute, and his book "Eclipse: Living in the Shadow of China's Economic Dominance." Subramanium says what is at stake is not a temporary imbalance in world trade a happened with Japan in the 1980's, but a gradual shift to a system of trade in which China has preferential access to raw materials (oil, grain, minerals), subsidizes exports in new industries as it moves upscale from shoes and textiles to automobiles, aircraft and alternative energy, and changes the very nature of the global trading system as it becomes the dominant trading nation in the world. By Subramanium's estimate China's share of global trade increased from 1.6% to 9.8% in the 2 decades from 1990 to 2010. In two more decades he estimates China could increase this to 15% of global trade, significantly larger than the U.S. In a response to Congressmen, businessmen and policymakers wary of starting a trade war, Samuelson says there already is a trade war as a "fixed" system of trade undermines America's manufacturing and industrial base. The only difference being that today only one side is fighting that war, and America is slow to grasp the implications or its policymakers are clueless how to respond....

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About 500 million smartphones are expected to be sold in China in 2015, according to IDC. Xiaomi has gained a firm foothold in China among young people and a fan base similiar to the way Apple is seen in the U.S. The next phase of growth is in countries where there is still room to grow with a large number of people without smartphones. Founder Lin Bin is a former Google executive. He has hired another Google employee Hugo Barra to plan the next stage of expansion overseas. He says Xiaomi will continue to focus on areas other than Europe and the U.S. where there are weak telecom carriers. Xiaomi's pricing model is based on selling quality smartphones with many features at lower prices. In the U.S. and Europe where large service providers offer large subsidies to users of smartphones Xiaomi cannot compete because its pricing advantage disappears. This means taking on the market in places such as India, Indonesia and Brazil where there are many people looking for a smartphone at a smaller price. One obstacle is that Xiaomi has few patents, and competitors are likely to mount paten challenges in these markets. In India, the second largest market, Ericsson has mounted a patent challenge leading to a court order suspending sale of Xiaomi phones. Xiaomi's strengths in China lie in savvy use of the internet and media to market its phones, using some of the methods used by Apple. ...

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Jeanne Whalen on the Two Speed Economy in the US September 2025- diverging paths of low and high income Americans. With the new administration in 2025 priorities shift to immigration and what to do about 14 million illegal migrants from Latin America and other places, war on fentanyl and drug trafficking gangs with hundreds of thousands of lives lost to fentanyl and drugs in the US, crime and safety which includes the unprecedented illegal movement of drug trafficking in the Nation, and to a bold posture on using US advantages of its huge market to get European Union, Japan, South Korea, and China to level the playing field on trade bring jobs home.The Biden administration had already conceded to DJT's approach in its one term presidency by shifting on uncontrolled illegal migration but not fast enough, by not removing DJT's tariffs, and failing to take an aggressive posture on fentanyl and drug trafficking. Of the DJT plan US has tariff based revenues of 10--15% for all countries imports into US can that it redirect to groups to soften any effects of tariffs. DJT administration oil transition policy of stretching out the transition to give middle class and lower classes cost of living relief was also accepted by the Biden administration and is now the policy of Democrat run California state government.  The US economy was slowing in 2024 under the Biden administration. What has changed in 2025 is that the US stock markets are responding to steps taken by the DJT Republican administration to lower the cost of doing business by softening regulations, and giving US business the upper hand in different industries, and rebuilding the manufacturing sector with calls for EU and Japan/South Korea to invest more in the US as a quid pro quo for market access. This has led to increase in the value of market portfolios of the income earners above 250,000, or 10% of American households. As this happens the process of trade renegotiation has introduced some uncertainty in 2025 and businesses are looking for more clarity before increasing investment and slowing job hiring which hurts younger people entering the job market and lower income Americans. Were things better under Biden? Government Covid assistance and payouts in the early years 2020-2021 helped lower income workers, as this faded and the cost of living autos, housing increased sharply under Biden in 2022-2024 the situation deteriorated. The situation today is similar to the situation in 2024 with the difference in 2025 that inflation is coming down just as government help is receding. And added factor is the DJT administration plan to tackle head on the increasing cost of Medicaid to about $1 trillion by adding new requirements and reducing subsidies. The federal workforce had a disproportionate share of black workers and the policy changes to reduce the federal workforce have increased black unemployment from 6.1% under Biden in August 2024 to 7.5 % a year later. Hispanics have seen slight improvement in unemployment to 5.3% in 2025, and the middle class incomes also have held up and are holding steady. Meantime Bloomberg points out that one third of people in the top 10% are living paycheck by paycheck because of high cost of housing, university education for children, and inflation.     ...

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Major decline in oil prices in Oct. 2014 as prices drop to $81 per barrel and are forecast to reach $70. U.S. oil production increased by about 56% or 3.1 million barrels a day since 2004. U.S. demand for gas and fuel declined 8% compared to 2004. Initially instability and wars in the Middle East sustained high oil prices in 2012-2013. Yet with growing output from shale and other sources in N. America and slowing economies of Europe and China, the situation reached a point in 2014 where supply exceeds demand. This shift more than offsets any instability in trouble spots. The situation affects the U.S. consumer favorably with an estimate of $1 billion in savings for American consumers with every one cent drop in price at the gas pump, by one estimate from Deutsche Bank analysts. Typical American families gained an extra $50 a month from the decline June to October 2014, according to analysts at Gasbuddy.com. The declines are a boost for the slowing economies of Europe, Japan, China, S, Korea and India. China's imports for 2015 are estimated at 61% of oil consumption, using official estimates. In the current slowdown the lower prices offer relief. India which imports 75% of its energy benefits signficantly, as this helps lower inflation and reduces cost of fuel subsidies for state run companies. Russia is adversely affected by the declines as it depends on oil and gas exports for 50% of the nation's budget. Estimates by AFK Sistema economists show the Russian economy contracting in 2015 with oil at near $90 per barrel (Brent crude is at about $85, and WTI at $81 in early Oct. 2014). Russia's former Finance Minister Alexei Kudrin reflects opinion among Russian executives and politicians, when he told state television that Saudi Arabia may be pushing prices lower to target Russia's oil resource based economy and Mr. Putin, in an effort to broaden the effect of sanctions. (The Saudis have strongly protested the Putin intervention in Syria.) Venezuela has used $120 per barrel and Angola $98 for its budget, leading to a strong hit for the economy. ...

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Building extensive subway systems in large cities is the next focus for China's infrastructure building effort. China's prime minister, Li Keqiang supports "new urbanization, with people at the center." Building convenient mass transit for cities with subways and light rail is seen as a way to improve living in urban environments. Other related priorities are water supply, garbage disposal and more sidewalks. Subway lines reaching further into the fringes of cities helps push population out further and lead to less overcrowding and pressures on limited space in core areas of cities This also takes pressure off increasing automobile use inside the centre of cities, reduces overall automobile use in urban areas, and frees up money for consumers to spend on products other than automobiles. This fits in with the plan to urbanize China, by taking pressure off property prices, reducing air pollution from automobile use, and improving quality of life. It is also seen as a way to stimulate economic activity in the fringe areas as subways extend further to outlying urban areas. An example is the $300 million three station line to Kunshan, an extension above ground to Shanghai's subway, which is expected to connect with a line to Suzhou. China's cities have spent about 22% of the total debt of $1.76 trillion in 2010 on transportation infrastructure, according to national audit. The subway and light rail effort is taking place in 26 cities with new or expanding lines, according to the Transportation Technology Development and Planning Research Center. Subways charge much less in China compared to New York- 2 yuan or 30 cents compared to $2.50 base fare in New York city, and will need local government and state subsidies. ...

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This story in the WSJ shows how the Phase 1 deal between the U.S. and China was negotiated in November and December 2019. As a bargaining chip for negotiations on a Phase 2 deal the U.S. has preserved tariffs of 25% on $250 billion in imports from China, and the reduced tariff  of 7.5% on $120 billion of imports. In Phase 1 Mr. Trump convinced the Chinese leadership that he was serious about going ahead with further tariffs to cover all of China's exports to the U.S.by a December deadline. This was also Mr. Kushner's message to the Chinese ambassador. In talks China gave easy concessions on agricultural imports and offered to buy twice the amount of soyabeans and other food imports- which helps Mr. Trump with farmers in the U.S. At the same time difficult concessions on enforcement to change subsidies to Chinese state owned companies were put off. China formally says it is an issue of Chinese sovereignty. It is also seen as a part of the Chinese business model that is working and China is in no hurry to change this. It has offered to step back from asking foreign companies to transfer technology in exchange for market access. On technology issues and subsidies the tough negotiating issues on which the U.S. has insisted for changes, China has held back. Phase Two is not likely to happen at least not till after the election, as China wants to be able to develop its own technology rivaling the U.S. and Europe, without the kind of formal enforcement the U.S. is demanding. In the long run it plans a shift to an economy that is less dependent on the U.S. for imports which may be in the interest of both countries, as U.S. manufacturing has shriveled over two decades hurting American jobs as a result.   ...

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Chavez wins 61% of the vote to Rosales' 38% and wins reelection for a six year term. Social goals will continue to dominate in Venezula's oil based economy. Importance of cooperatives for poorer classes. Development of a Bolivarist class of businessmen who support social goals with freedom to operate and benefit from oil resources fueled economy. Are their similiarities in a sense to pursuing welfare and equity goals to the elected government in Iran? Both are oil based economies and large producers with exploration and production issues, how do these similiarities and policy differences with the US affect oil access and prices?

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"Defend blue sky and breathe together" says a painting on a brick wall in the coal producing region of Shanxi, northern China. China is finally acting seriously to impose strict environmental rules from the top. Old coal stoves are thrown into a dump as China shifts away from coal stoves to heat homes. So many new homes shifted to natural gas in Shanxi province. population 37 million, that demand overwhelmed natural gas supplies. Results are to be seen in cleaner air in Taiyuan, capital of the province and in Beijing itself.  President Xi's commitment to climate change accord reached in Paris is seen as firm in this report in the NYT. The head of the gas, coal and power markets division of the International Energy Agency, Mr. Peter Fraser, says that even though homes use only 6% of total coal used in China, the effects are disproportionately high because homes do not have any emission reduction mechanisms. Natural gas demand has increased by 16% in 2017 as provincial officials eager to meet the demands issued in Beijing to cut coal emissions even let some homes and schools go without heat in an early winter spell. This extraordinary report shows how in cities in northeastern China the people welcome the change to natural gas and cleaner air. Even in coal country, in cities like Linfen population 4.4 million, the change is seen as people welcome the clean air and officials build natural gas connections to execute the plans issued in Beijing. In Beijing itself Greenpeace estimates show 54% reduction in PM 2.5, harmful particulate matter for breathing by 54%, a startling fact showing Beijing's determination and effectiveness of its actions. Natural gas is more expensive and citizens do not complain in neighboring provinces near Beijing because the state provides adequate subsidies to compensate people. Decrees are being enforced to avoid coal stove use with people knowing they could see action by authorites if reported. Compare this to the problems of crop burning around New Delhi, in Haryana and Punjab provinces, and one can see that centralized control and direction has advantages when used in the right way for a good purpose and supported by people who want to breathe clean air. ...

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Erdbrink describes the evolution of trade relations with China which helped Iran during the period of western sanctions. Because of trade with the U.S. and western partners, China was careful to use the Bank of Kunlun, created to handle financial transactions with Iran, for import of oil and export of automobiles and other products.

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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....

LyrArc Article Gist
The U.S. Senate voted 79-19 to go forward with a bill on sanctions against China for undervaluation of the yuan. The IMF says China's currency is "substantially undervalued."