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Beijing's sensitivity to the Hong kong protests from the ongoing efforts to maintain economic growth in the face of the trade conflict with the U.S. and a tariffs war.

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As the coronavirus crisis continues the YMCA and Catholic Charities, other organizations helping the poor, are hit hard. YMCA lost revenues of $400 million in April across its 2700 U.S. branches.

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Indian PM Modi meets DJT on Feb 12-13, 2025, at the White House. Focus is on trade, and on defense issues. Shown alongside is the situation of illegal migration from India, mainly from the Punjab region of India and from Gujarat. India will make the case for its exports based on the new supply chain shift reducing overdependence on China, and the shift to Make in America for jobs and factories.

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There appears to be a conscious deliberate decision by the Chinese government and policymakers to shift the economy from low-end technologically unsophisticated and polluting industry, that pays low wages with little worker protections, towards technologically sophisticated, environment respecting, and higher wage industry. This does not mean textiles are out, but textile companies that are larger better managed, able to introduce newer technologies and produce higher quality product- that command higher prices in the world market and therefore also able to sustain decent wages and worker protection- are in. Phasing out the smaller shops and the poorly run or deliberately polluting and labor exploiting companies run from Hong Kong or elsewhere. The general shift is to be a leader in products which are value added either by technology or human capital, such as better trained more knowledgeable workers. This is similiar to the shift Japan made after the sixties, as it moved from a rural to a urbanized society and textile companies like Kanebo became technologically sophisticated, while small shops withered out, and Japan gradually shifted into automobiles, electronics and chip making. The noticeable difference is that Japan with a prewar industrial base and a smaller market protected its home market for Japanese companies, whereas China lacking this prewar industrial base let foreign investment and companies overseas bring in equipment and use low cost Chinese labor to supply western markets. And it turned a blind eye to labor protections, at least till it had built up its own industrial base and knowhow with policy requiring Chinese partners in industry and technology transfer. Economic winds are also doing the job. Inflation, Chinese goods prices increased by 4.6% in May according to the U.S. Commerce Department. This is a result of the Chinese government requiring worker protections and decent wages and stricter pollution enforcement resulting in increased energy costs. For years the U.S. and other countries depended on China for low cost goods and the demand for low cost goods depressed margins which resulted in legitmate costs such as pollution control technology, worker protection and decent wages, being ignored. China is now left with heavy environmental cleanup costs, and a bad image internationally as a heavy polluter. The huge external trade surpluses China has built up exceeding a trillion dollars have pushed up the value of the yuan making Chinese goods costlier in world markets, and apparel and shoe makers in developed countries seeing Vietnam as a better lowcost alternative. The story of this phase of Chinese industrial development can be seen in a town like Honghe, a 90 minute drive from Shanghai, which has half of its 100,000 residents working in 100 factories and 8000 shops that knit, dye, package and ship some 200 million sweaters a year, bringing in according to local government estimates $650 million a year. Now many of these shops are idle and mirant workers are returning home. To see the subtler signs of the Chinese policymakers hand note that even visa policies have been tightened to make it harder for foreign buyers to visit Chineses factories and trade shows. Also the Chinese government has raised the minimum age for workers in these factories from 16 to age 18 and so on. And the impact is being felt in places like Honghe near Shanghai, Shengzhou another city near Shanghai which makes one third of the world's neckties, and in Dongguan in Guangdong where its toy, shoes shops close. The change also shows how quickly things can change in the world economy. Only 3 years earlier in 2005, Jiaxing Yishangmei Fashion Company, a family owned company was booming and had just landed Walmart Stores as a customer. Now Walmart no longer sources from this company. Analysts say that the Chinese sweater industry was probably overbuilt, with about 6 cities in China claiming to produce more than 100 million sweaters annually. A wave of consolidation could boost efficiency, and bring pressures to innovate rater than compete only on price. And many Chinese economists, and policymakers think China has relied too much on cost-cutting and simple production models to increase exports. A researcher at the Chinese Academy of Social Sciences thinks such a high dependence on foreign trade is not good for China. For the US and Japan this researcher says that trade is equivalent to 20% of gross national product and by contrast for China trade is equivalent to an extreme of 75% of GNP. ...

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Vanguard economists using the work of Stanford Unversity economists Bloom and Baker and University of Chicago economist Davis have developed their own estimates of the cost of overall uncertainty to the U.S. economy. Bloom, Baker and Davis show the level of overall uncertainty in 2011-2013 is about 50% higher than the level seen since 1985. Vanguard's estimates are for a drag on the U.S. economy of about $261 billion in deadweight losses from this uncertainty- uncertainty in monetary policy, uncertainty in deficit reduction, uncertainty in business investment. Their estimates show 1 million jobs not created, job growth per month lower by 45,000 in the last 2 years, and gdp growth of about 3% per year in 2011 and 2012 in place of the 2% average recorded, in the absence of these uncertainty shocks experienced by the U.S. economy. McNabb points out that the market gains of the S&P 500 are based on an unstable foundation as long as this overall uncertainty is not lifted and create a serious disconnect....

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Under Article 23 of the Basic Law, Hong Kong's constitution stated Hong Kong would pass legislation to stop national security crimes such as treason, secession and espionage. The Basic Law also had a provision to grant universal suffrage. It is important that the universal suffrage or democracy was never granted or made a priority by Hong Kong people during the boom years under the British, as a French commentator for La Croix aptly points out in FR24. He says he watched incredulous as Hong Kongers selfishly pursued money.  The Article 23 also provides for the National Peoples Congress to add laws for national security. The last time that Hong Kong people were faced with the National Peoples Congress passing such laws was in 2003 when half a million came out in protest. This was shelved at that time. It is now law today. Why now? More protests are expected and an election in July would bring more seats in the legislature for the pro-democracy parties, says the WSJ. Another factor is that Hong Kong at one time represented 16% of China's GDP in 1997, today it is down to about 3% in 2019. It is no longer that important to China, even while continual protests from Hong Kong detracted from other vital issues facing China as it shifts away from its trading relationship with the U.S. and as the U.S. imposes strict conditions on trade, investment and technology flows. Under the Hong Kong Human Rights and Democracy Act passed by U.S. Congress in 2019 an annual assessment has to be made by the State Department whether "one country, two systems" is operating. This is why Mike Pompeo, U.S. Secretary of State has made his comments that "no reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China." The new assessment would diminish confidence among foreign businesses in the city, in addition to ending its special trading status with the U.S. ...

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In this WSJ column Russell Mead describes the Middle East as an opportunity when in reality it has done serious damage to the US and the European Union. With the shift to renewable energy and localized sources for natural gas and oil within EU and the US, the Middle East may no longer be relevant to the US and Europe. Afghanistan which has cost so much for the US and Europe in trillions of dollars that could have been invested in badly needed infrastructure is an extension of the Middle East. Iran is also part of the Middle East. These reserves of oil and gas in countries deeply imbedded with thinking and policy against modernization are more risk than opportunity for the US and European Union. The US and European Union need to look to bringing back manufacturing and renewing supply chains with India and Vietnam, the rest of South East Asia as an opportunity and shift mightily to renewables to fight climate change. This is the opportunity facing the US and the EU today. In a sense the chapter that started with the efforts of British oil companies in Iran in 1900 and Franklin Roosevelt's meeting with the Saudi King on an American ship during World War II is now coming to its closing and a new chapter has to be written on renewables and rebuilding US and EU strength in manufacturing in alliance with India and Vietnam, rest of South East Asia in what is called the Indo-Pacific.  ...

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The International Energy Agency estimates that a price of $100 a barrel would mean U.S. imports of oil at $385 billion, and European Union imports of $375 billion. This is $80 billion in addition spending on oil imports for the U.S. and $76 billion for the E.U., compared to 2010. The impact of a $20 increase in the price of a barrel of oil translates into a 50 cent increase in price per gallon at the gasoline pump. Economic estimates show a drop of 0.5% in GDP growth for the U.S. resulting from such a price increase of $20 per barrel.

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Wages remain stagnant, labor participation rate declines, and U-6 at 11.8%, as unemployment rate declines to 5.9% in U.S. labor market.

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US Secretary of Defense says Ukraine's spring counteroffensive will not be affected by the leaks in the classified documents at the US Department of Defense.

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The US is turning to an unusual source for oil supplies after banning Russian oil, says this report in the WSJ. US is turning to Venezuela.

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Increasing supplies of natural gas in the U.S. will play out over 3 decades and reshape industry and manufacturing in the U.S. A new study by the University of Texas and funded by the Sloan Foundation of the Barnett shale rock formation shows that large quantities of natural gas are available that can be drilled at a cost of $4 per million BTU. This is only slightly higher than the current price of $3.43. This makes the increasing supply of lowcost natural gas a multi decade development, according to the Bureau of Economic Geology at the University of Texas.

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German automobile companies have made some bad bets on China sales. Sales in China have collapsed for Porsche as Chinese are buying local Chinese products and local Chinese autos are competitive. NYT reports on Porsche and the bad bet on China sales, then as tariffs hit serious problems.

Oliver Blume Porsche CEO says-

"Our market in China has literally collapsed. U.S. import tariffs are weighing on our business.”

“We already faced massive headwinds last year — now we are experiencing a violent storm."

Audi, Mercedes and BMW have been caught in a storm by making most of their US sold cars in Germany. The warnings from the first DJT term were ignores as they were by Apple in the US which continued to make in China. These companies are now facing problems of acting within a short time to take action to build in America to avoid tariffs.

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U.S. imports exceeded exports by a record $914 billion in 2018, increasing from $859 billion in 2017, according to the Commerce Department. The trade deficit is now 16% larger than when Mr. Trump took office. President Trump's tax policies with large fiscal deficits acted as a large stimulus to imports. Companies imported more. 

The dollar strengthened as the U.S. fiscal stimulus came at a time when the rest of the world economy was slowing. As a result the U.S. imported more. 

The tariffs on $300 billion of Chinese goods had one benefit - it brought the Chinese to the negotiating table to cut imports. Yet the trade deficit has not narrowed as the president planned. 

 

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The Russian ruble goes over 40 to the U.S. dollar in October 2014, with the impact of capital outflows, the weakening foreign investment climate and western sanctions.

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Taylor goes over details of the Romney Plan and why it is better for economic recovery in the U.S.

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The actual text of the Feb. 1, 2025 Executive Order  from the White House and president DJT says about the flow of fentanyl that has taken the lives of more of America's young people than the wars- the Korean War, Vietnam War and the First World War combined. That is the astonishing story of what has happened to American society over the last two decades. "The influx of these drugs to our Nation threatens the fabric of our society.  The PRC plays a central role in this challenge, not merely by failing to stem the ultimate source of many illicit drugs distributed in the United States, but by actively sustaining and expanding the business of poisoning our citizens." What the US Supreme Court and Justices Roberts, Thomas, Scalia, Barrett, Alito, Gorsuch, Kavanaugh, make of this one can only guess. One has only to walk from the US Supreme Court Building to the faces from the 1950's at the Korean War Memorial to get a sense of what the Justices have to be thinking.  ...

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Reflecting with gratitude for things that have gone right on Thanksgiving Day in the US in 2025. Peggy Noonan asks us to follow Charles Dickens advice- Charles Dickens in “Sketches by Boz”: “Reflect upon your present blessings—of which every man has many—not on your past misfortunes, of which all men have some.” Thinking of old friends, of science that heals things, of the world outside and the joy of work. Knowing readers across different towns and cities around the world, and being able through Lyrarc.com "to provide a product that helps millions build educated mindsets that affects and shapes their lives that gives me inspiration for the effort." And the joys of Nature for me that include hiking in the French Alps near Grenoble and in the Austrian Alps near Innsbruck, and visiting simple churches in the mountains and in Munich, watching children in exercise in the gardens of Innsbruck. Like Peggy Noonan thankful to watch the World Series baseball the LA Dodger's Ohtani, and the 2 day Ashes Cricket Test with Mitchell Starc. ...

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Pearlstein lists the names of insider investors for Facebook- Peter Theiel and Founders Fund, Jim Breyer and Accel Partners, Greylock Partners, Microsoft, Li-Ka-shing, Bono and Elevation Partners, Alisher Usmanov and DSL. For full disclosure he states Washington Post Co. chairman, Donald Graham, is on the board of Directors of Facebook. Venture capitalists are leveraging their position in Facebook to get new investors, share prices of companies involved are up. Goldman benefits by the $60 millon for placing client money in Facebook, a cut of 5% from any profit they earn, and the hundreds of millions of dollars from being a lead underwriter for Facebook's IPO. What all this does is create the conditions for a bubble for internet stocks similiar to the bubble in late 1990's, with insiders reaping most of the benefits and the public taking on most of the risk as the internet stock loses its dominant position with the entry of new technologies and competitors in the market or a change in consumer preferences. As was evident in the earlier bubble this is not hard to create. Some of these bubbles are in fact already taking place for Chinese internet stocks on US stock exchanges, with investigation staking place into accounting practices of some of these companies. With the financial electronic media and analysts doing their part in the hype and sell such a bubble is underway, just when the debt burdened US middle class can ill-afford any losses that may take place. ...

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Brazil president Lula at COP30 Belem, Brazil- mixing oil drilling plans with plans for climate change for Amazon forests. This is not a contradiction in today's world as many nations including China, India are depending on coal and moving forward with solar and wind energy, and the US is also drilling for oil and it's private sector continues moving forward on renewable energy. In 2025 cost of living action for working class families means getting cheaper sources of energy, and at the same time climate change requires new invention and scientific advances in developing solar, wind, nuclear and other renewable energy. US Biden administration accepted this combination approach and it is also practiced under the current US Republican administration with different degrees of emphasis to meet current and future challenges in the best way possible.

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Passage of a spending bill in the U.S. Congress in December 2014 to avert a government shutdown. The $1.1 trillion spending bill funds the U.S. government through Sept 30, 2015. It was achieved by Speaker Boehner gaining the support of Democrats in the House of Representatives. 56 Democrats joined 162 Republicans for passage of the bill 219 in support and 206 against. Tea Party members joined Liberals in Congress under Minority Leader Nancy Pelosi to oppose the bill.

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One reason why outside of the midwest there is not as much concern for Ford, and GM, is the entry of foreign automanufacturers. Good jobs are being created in the south by foreign auto companies, even as Ford and GM close plants there. And the appreciating won makes it more attractive for South Korean companies to build plants in the U.S. Kia Motors Corp. said it has chosen West Point, Ga., as the site for its first U.S. factory. The investment provides good news for a state that has heard both Ford Motor Co. and General Motors Corp. say they will close plants there as they restructure to cut costs. Also note the forecast of sales at 800,000 in 2010 for Kia, up from 275,00 in 2005, moving market share from 1.6% in 2005 to almost triple that. Where will it come from?

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Britian's Chancellor of the Exchequer, George Osborne, on the economic recovery in Britain. He points to total public spending under control, with it dropping from 45% when the Tories entered government to 36.4% in 2015. He also points to the drop in the unemployment rate and the economic plan to cut the remaining budget deficit and show a surplus. This puts Britain in the best position to spend more on defense, says Osborne. Osborne makes a commitment to spend 2% of national income on defense, and raise Britain's defensive and offensive capabilities. This includes buying 138 F35 aircraft from the U.S. manufactured in the U.S. and Britain, and a fleet of maritime patrol aircraft, increasing cybercapabilities by over 75%. It would be backed up by spending 0.7% of national income on overseas development to back hard power with soft power.

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President Trump plans to sign the trade deal with China for Phase 1 on January 15, 2020. Under the deal the U.S. will not go ahead with a new round of tariffs on $156 billion of Chinese goods- including smartphones and consumer electronics- set for December 15, 2019. Tariffs set in place on September 1 on $120 billion of Chinese goods will drop from 15% to 7.5%. The earlier tariffs in place on $250 billion in Chinese goods including machinery and electronics are still in place. In exchange the Chinese will increase purchases by $32 billion in U.S. agricultural goods over the previous levels in the next 2 years.