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The South China Morning Post provides this view of China on the day of the 70th anniversary of the Communist Party of China, on the long road from the founding of the government in 1949 under Mao, the Cultural Revolution, and the shift to a state sponsored market economy under premier Deng in the 1980's.  From being at early stages of industrialization to a fully developed modern and industrialized country over three decades.  The challenges China faces are whether its growth will slow with a high debt situation, trade war with the U.S., aging population and the housing bubble that has created problems in Hong Kong. This could lead to a situation where its per capita income stays in the middle range at around $12,000 per capita, referred to as a middle income economy by the World Bank. Some experts believe that the factors that propelled China since 1990- a youthful labor force, globalization reducing tariffs and benefitting from entry into WTO, easy access to western technology, land sales for local governments to finance industrial development, rapid urbanization, and infrastructure investment in electricity rail and highways, are now reaching their limits with smaller incremental steps and growth in the future. The big gains made in the last three decades could be limited by other factors also such as the high debt economy, build up of industrial overcapacity, limited domestic consumption to take the place of exports facing high tariffs. Countries normally face some slowdown in such situation after a period of rapid growth, Japan and South Korea being recent examples. During the transition period to a new kind of economy from the manufacturing export push Asian model many unseen social and other problems emerge. The situation in Hong Kong shows how the housing bubble can also lead to problems that require resources and attention.  There are other social problems that continue to remain hidden. It does not take long for hidden problems to emerge as the situation in Brazil for lack of sanitation and epidemic prevention shows. In China the cost of too rapid development has led to pollution of rivers and land that will need to be cleaned up. The effect of contamination of food supply is an ever present risk with the contamination of land and water. Little attention is paid to prevalence of smoking and its damaging effects on health. The one child policy also brings with it cultural issues of how a whole new generation of children without siblings. Many other social problems that affect the quality of life become evident as growth slows and addressing these problems can actually benefit the country and its people. ...

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Black or illicit money in India is estimated to be $400 billion to $1 trillion, much of it in the domestic economy. About 30% of land transactions are in black money, and it is growing with 500 and 1000 rupee notes increasing in circulation by about 79% and 106% between 2011 and 2016, according to government sources. The Narendra Modi government has announced that 500 and 1000 rupee notes will no longer be accepted in transactions as of midnight. People have 50 days to exchange them at banks, and banks will keep records so that this money can be taken into account for taxes due. A senior official in the Department of Economic Affairs, Mr. Das, says-"You cannot have a shadow economy representing a substantial percentage of the real economy." Big banks will be closed on Nov. 9, and ATM's till Nov. 11, 2016. Mr. Modi, the prime minister said in a televised address: "In the last few years the specter of corruption and black money has grown." He cited "the challenges posed "by threat of terrorism, the challenge posed by corruption and black money." ...

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So much for political campaigning and talk of inflation, inflation comes in lower in September after DJT tariffs of 10-15% on EU, Japan and other trading partners. The higher tariffs on China are action needed to reduce trillion dollar trade deficits the world has with China, deficits that are economically destabilizing for the world economy, with supply chain concentration a serious problem. US inflation in September came in at 3.0 percent lower than expected.  One reason is that the headline numbers are high but in actual practice the tariffs are on average at 12.5% not 17% or 25% as headlines show. The tariffs vary by country and the US was careful to keep them at 10% for the EU and Britain and 15% for Japan, the key trading partners. China is an exception at 47% because it is US policy to reduce the world's 1 trillion trade deficit with China and cutting this is a major goal. For decades the US tried every possible way to bring it down to no avail till this effort with tariffs. Another is exceptions in products- for India this includes semiconductors, smartphones and pharmaceuticals. Another factor is that postpandemic inflation in 2021-2022 created higher profit margins in auto, retail and other sectors of the economy. As a result only 30-40% of the tariff gets passed onn to consumers. In autos only about 20% because buyers cannot afford the high prices. Some tariffs are still being negotiated and are a foreign policy tool to get India to stop funding Russia in the Ukraine war knowing that India was importing most of its oil from non-Russian sources till 2019. China is also funding Russia, that is true but the US can insist on exercising its leverage with Asian partners not China. With China the tariff on fentanyl and the overall 47% tariff- down from 57% after meetings in Busan, South Korea between Xi and DJT last month- shows the US takes the Chinese role in distorting world trade to its benefit seriously.  ...

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The government sets a goal of reducing the number of automakers in China from 70 currently to a much smaller number by 2015. With slower growth in the Chinese market, 55 of these companies sell only 11% of the total cars sold, and no sales for 10 manufacturers. Foreign car companies are investing heavily and control 58% of the 18 million cars sold in China. Domestic car companies are faring poorly. Cherry sales dropped by 30% in November 2011 acccording to the China Association of Automobile Manufacturers. Changan, Guangzhou Automobile Group and BYD have seen sales declines of 10% in 2011 for domestic sales.

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The midwest and east coast of the U.S. is hit by record low temperatures not seen in decades. Temperatures reached a minus 30 degrees Fahrenheit on January 31, 2019. WIth windchills temperature of about  negative 50 degrees Fahrenheit. Extremely low temperatures hit states such as Michigan Illinois, Indiana and Minnesota.

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In a 50-50 Senate to pass president Biden's $3.6 trillion Families and Workers plan requires the vote of Kyrsten Simema, Democrat of Arizona. Simema is the lone holdout in the plan to raise $540 billion by increasing corporate tax rates to pay for part of the plan. Tax rate increases on capital gains would raise nearly $300 billion. A law passed by president Trump lowered corporate tax rates to 21% which would go up to 26.5% under the Biden plan. The top individual rate lowered to 37% would go up to 39.6% and capital gains rate from 23.8% to 28.8% under the Biden plan. Democrats say these new rates are fair considering how much wealth distribution is skewed and how much workers and families have failed to benefit in the policies pursued by different administrations since Reagan, through Bush, Clinton, Obama and Trump.

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Ford does not have a good idea why customers buy the F-150 truck even though its a big seller for years. Automakers believe personal -use buyers of the F-150 truck are one fourth to one third of the truck market. Its surprising that Ford does not have a detailed idea of who buys its truck and why for every 25,000 customers breaking it down into smalll segments so it can see it by demographics and other ways so that it can find out where its losing sales, when trucks are down by 41% in June for Ford how much have each of these segments lost in sales volume. Personal use buyers Ford analysts think are buying cars and these customers will be lost forever.

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Le Monde France celebrates 80 years 1944-2024.

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Even after bankruptcy of Takata, this WSJ article points out that the job of replacing 54 million defective airbags in just the U.S. could go on and on for many years. Honda the carmaker most affected has set aside $4.9 billion over 2 years to cover recall costs. The airbags failed because of manufacturing defects.

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PM Modi of India interacts with Mayur Patil, a young engineer in India who developed air filter technology to reduce emissions on existing motorcycles and buses by as much as 20-30%. Patents were granted and NITI Aayog granted a 90 lakh rupee grant for mass production. India faces a real need for job creation through the development of new companies and new products to hire hundreds of thousands of engineers and other graduates graduating each year.

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With so much coverage of other aspects of China,  to really understand China and Xi Jinping one has to understand the rural urban situation in China. Xi's long experience as a teenager in the cultural revolution of Mao was in rural areas, the 8 years he spent there till the age of 22, as this report by James Areddy with help of Yijun, Cheng and Qi aptly shows. It traces the shift and mass migration to cities starting with Deng's modernization drive in 1979. This shift of labor to city and town factories as the U.S. and Europe shifted factories and production to China is the story of our times. How it has both helped and hurt China and how it has become the dominant issue of our times, and a lesson for India in the middle of its own modernization and shift of labor to cities. It has helped China modernize with the shift during 1979 to 2016 and run into a road block with president Trump leading a movement in the U.S. of people most hurt by the outsourcing of factories and production to China. It was not meant to be this way. Yet the shift also led to ripping up the fabric of communities and towns with loss of factories across America over three decades. Because China is a large country the impact was huge decade after decade, leading to a backlash against lost jobs in the U.S. and in Europe.  Xi Jinping has romantic view of rural China as he spent 7 years in Shanxi province rural areas during the cultural revolution under Mao. During this period he toiled as part of farm labor alongside villagers which allowed him to get to know villagers and farmers in the countryside well, and formed his view of the world around him. As it is described in a description of the man in Chinese sources- "He arrived at the village as a slightly lost teenager and left as a 22 year old man determined to do something for the people."  China's system separated migrants from city dwellers not  giving same rights to better education, to schools and housing, and official documents separating the two, city dwellers and migrant populations from rural areas. As a result as China modernized and population shifted -shown here in excellent graphic charts over four decades- in 1979 from about 80% in rural areas and 20% in urban the shift goes to 50-50 by 2001. Today it is 40-60 with 60% in rural areas but a population of 40% suffering from severe inequalities and  low incomes. So that GDP per capita of $10,000 for China is deceiving. The real incomes in average disposable income is about $4300 in urban and $1700 in rural area, according to National Bureau of Statistics. High school education is hard enough to get in rural areas, medical care is very basic and the $1700 would hardly get a room in low income housing in a large town in China, says premier Li Keqiang. Keqiang did his masters thesis on urbanization and has studied this shift from his college days. Just as in Gandhi's India, Mao's China is the story of the villages, with 128,000 villages for 600 million people in Mr. Xi Jinping's anti-poverty drive. Hong Kong other issues have to be understood in the context of these concerns of China's leadership today- the sense that strong central leadership alone can keep the country together and bring a decent life to the people in the villages and in the countryside outside the cities.  Modernization of cities still set in the context of China's vast rural population and essential to its full uplift and progress. Xi has allocated $80 billion each year to bring roads, schools, medical facilities, and other amenities including electricity and modern heating. The idea now is to shift people back to the villages, find opportunities for jobs and livelihoods in farming, tourism with guesthouse facilities, and other occupations in the villages. The villages are being turned into attractive places to live one by one in this party drive and providing new enthusiasm and support for the party's efforts. India can learn from this experience in China. The western nations of the U.S. and Europe can no longer and will no longer undertake the wholesale shift of factories with loss of jobs to China or India to offer the prospect of bringing these countries to the kind of urbanization and overall prosperity of small nations like Japan and South Korea, which are a tiny fraction of the population of China and India+ Pakistan + Bangladesh. As a result China is changing strategy now with a return to some aspects of the informal economy in Chengdu with street peddlers and tiny retail, and return of migrants back to better built and improved villages in the countryside. A better life than in cities is possible this view says for people from these rural areas, if the rural areas are given modern facilities and construction and resources are allocated, job creation locally tackled. The villages can offer better air quality, better quality of life where villagers who earlier migrated to cities with ownership of land, when they are modernized with better roads and have better facilities for education, housing and healthcare, better amenities. The new approach is to strike a good balance for urbanization, by modernizing and investing in villages and small towns, so that cities can cope and overall life can be better than with mass migration and wholesale urbanization. It is also a balance that works well for the U.S. and Europe which can redirect manufacturing to their home regions as part of a better distributed and balanced supply chain than the one that was unwittingly built over the last three decades.    ...

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Former president Lula da Silva of Brazil is sentenced to 10 years in prison on corruption charges. The charges are that Mr da Silva and his wife were illegally given about $1.1 million in improvements from a construction company for a beachfront apartment. The construction company was able to get lucrative contracts from the state oil company Petrobras. Many of Brazil's politicians are under investigation. The former speaker of the Brazil parliament, Eduardo Cunha, was sentenced to 15 years in jail for money laundering and corruption. The current president Mr. Temer is also under investigation. A culture where such activity was accepted had developed, and this effort started with a small investigation called "Operation Car Wash" in a smaller Brazilian city named Curitiba. Young lawyers determined to set a higher standard and fight Brazil corruption pursued the case that led upto the higher echelons of Brazilian government, the construction industry, and the state oil company Petrobras. ...