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In this thoughtful essay Bob Davis of the WSJ asks whether the decision of the Clinton administration to admit China into the World Trade Organization was a bad one for the U.S.  Mr. Clinton in 2000 tried to persuade Congress citing words of president Woodrow Wilson that of a dream "of a world full of free markets, free elections, and free peoples working together."  Every year China would have its most favored nation status renewed with help from supporters in Congress. After WTO entry this was not necessary. Chinese leaders saw the entry into WTO as a way to knock down trade barriers, to act a wrecking ball for the planned economy, to give the economy a big boost.  In 1994 China was a relatively backward economy with 60% of the population living on less than $1.90 a day. Hard to imagine today.  Not everyone was convinced that it was good for the U.S. This included a trade attorney who had tackled a huge trade deficit with Japan in the Reagan period- Robert Lighthizer. Lighthizer was Deputy Trade Representative negotiating with the Japanese. His prediction was that no job in America would be safe once China entered the WTO, that China would become a dominant trading nation.  Robert Cassidy, 73, trade negotiator for president Clinton looks back on that time and says that he regrets what has happened, that all his work night and a day only benefited business and hurt workers. David Autor, MIT economist and his colleagues,  in a later study documented loss of 2.4 million jobs to Chinese competition between 1999 and 2011, in many manufacturing towns dotting the landscape of America, particularly in the midwestern states. And the expectation that the higher economic growth would lead to less political control did not turn out to be true.  In the process multinationals rushed to China after WTO entry and China became the world's manufacturing floor. By 2013 China's per capita income reached $7000, after years of fast GDP growth approaching 10% a year.  About 400 million Chinese were lifted out of poverty from living on less than $1.90 per day from 1999 to 2011, according to the World Bank. A big problem was that the U.S. did not plan for the change from WTO entry. No resources were allocated for the plan to let American workers adjust through worker retraining and special trade handicapped income support, to allow for a slow planned shift. Instead the pace of growth was faster than that which the U.S. faced with the Japanese export offensive in the eighties. China experienced double digit growth after 2000. The irony is that the Republican administrations that followed Clinton followed a policy of free trade to the advantage of China's state run economy when working class Americans voted mostly for the Democratic Party. Little was done and little said in the media from Democrats and Republicans in Congress and the establishment during this time even after Mr. David Autor documented the effects of trade in the U.S.  Till Mr. Trump recognizing the alienation in communities hit by job losses from trade upended American politics, shifted this part of the electorate to the Republican base. Mr. Lighthizer's view is that complaints about China should be left out of WTO because it is naive to tackle it that way. With a $375 billion China trade deficit for 2017 the challenge has to be met in a different way, and the U.S. has to rely on regaining its economic strength within a fair trading framework. Having negotiated with the Japanese Mr. Lighthizer sees the approach adopted then as the one right for today. During the long negotiations Lighthizer is said to have received many negotiating positions of the Japanese signifying no change in long sessions. He once simply made a paper plane and sent it right back, in one of these sessions. He meant that the U.S. was serious about reversing the imbalance in trade. ...

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The move by Peugeot and Fiat Chrysler to merge is seen as an effort to use consolidation as a way to tackle depressed demand. Ford and GM are struggling in foreign markets, as Toyota and VW have expanded in foreign markets, and Geely has expanded in China with stakes in Daimler and Volvo AB. Added costs for the shift to electric cars, higher emissions standards,  are also hurting car makers. Global new car sales of 96 million in 2018 are expected to decline by 4% in 2019, and remain sluggish, with the U.S. China trade war and Brexit taking its toll. Some car companies are particularly affected. Chrysler's European car factories ran at about 52% in 2018, well below European industry average of 73%.

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The opposition in China and South Korea to Japan's release of slightly radioactive water into the sea stems from a distrust of Japanese data that supported by the International Atomic Energy Agency says the discharge does not affect public health. By next March 2% of the accumulated water will be released. In all 1.2 million tons are planned to be released over 30 years starting August 24, 2023. That water contains small quantities of radioactive tritium which Japan says is less than what Chinese nuclear plants release into the sea. TEPCO which manages the Fukushima plant decommissioning says it will post the data on release and level of radioactive material on its website with comparison to the levels seen as not affecting health that WHO has set.

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Anecdotal evidence such as huge jewelry sales in Hong Kong and smaller repatriation of funds earned overseas by Chinese companies suggests outflow of funds from China is picking up. Also the quarterly pace of accumulation in foreign exchange reserves dropped by 74% over the course of 2008. In he 4th quarter 2008 it reached $40.45 billion, lowest point since 2004. Chinese government may be slowing its purchase of Treasuries. And policy may be shifting away from letting the yuan to appreciate as export industries are hit hard by lower foreign demand.

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China faces risk of a surge inthe coronavirus in June 2021. The area in and around Guangzhou appears to be seriously affected. The city tested almost its entire population of 18.7 million between June 6 Sunday and June 8 Tuesday. This report shows pictures of a deserted Beijing airport, strict restrictions on foreign travel. The SinoPharm vaccine effectiveness against the Delta variant in India and UK is unknown. The government is locking down entire neighborhoods rather than entire cities or provinces.  As the risks of the Delta variant and other new variants increases most of the population even in the US and Europe have either no dose or one dose. Researchers at the University of New South Wales in Australia show the Astra Zeneca vaccine effectiveness with one dose at only 30%, only after two weeks following the second dose does the vaccine effectiveness reach about 70%. The population of China and India are so large that much larger parts of the population remain unvaccinated. In China with 1.3 billion people and even if the figure of 800 million doses stated by the government is accepted- it could be an overestimate as the US has only managed 300 million doses with many vaccines- most of the population is unprotected. Vaccine skepticism is high in China making vaccination an uphill task. SinoPharmvaccine is not as effective as Pfizer, Moderna, Astra Zeneca, or Covaxin vaccines, making the task even more of an uphill kind. ...

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11 Pacific Rim nations form the Trans-Pacific Partnership in 2018. The Obama administration supported the trade pact alienating supporters in its union base particularly in the midwestern states. Mr. Trump opposed the TPP in his election campaign and made it a significant issue for swing voters in midwestern states after job losses in the auto industry. With the opposition of president Trump the U.S. decided to withdraw from TPP.  The 11 nations agreeing to join a revised agreement are Japan, Canada, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. So far six countries have formally approved the deal, Australia, Canada, Mexico, Singapore, New Zealand and Japan, setting the stage for two rounds of tariff reductions starting December 30, 2018. Agricultural products duties will be duty free within 3 to 7 years including for Japan and Mexico. Australia, New Zealand, Canada are major agricultural exporters. Japan supported the deal as a way to counter China's influence in the region. In the U.S. the gains would be in intellectual property rights but losses for workers in the auto and manufacturing industries, a point Mr. Trump recognized in his election campaign as he campaigned in the midwestern states. Mr. Obama pursued TPP over objections of workers organizations and unions including auto workers union, with his advisors suggesting this as a way to counter China's influence in the region. By 2018 the Democratic party support base fractured on this as one of the major issues.   ...

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India imports 2 million barrels a day of oil from Russia. It now faces the need to address the problem this has created for Germany and US seeking an end to Russian missile attacks on Ukraine. Without other leverage DJT and indirectly Germany are putting pressure on India to shift these purchases to the US and cut India's $46 billion deficit with the US.  India needs to accept that the reprieve it got during the covid years to import from Russia to help it control inflation at home would at some time come under increasing pressure from the US. That time may be now as DJT and Merz see this as the only few areas of leverage they have to get Russia to reconsider its position for settling the Ukraine war entirely on its terms. Just as in the India Pakistan war the current talk of nuclear escalation resulting from the Ukraine war has to be a major consideration for US, EU, Russia, China and India, all the world's leaders, to step back and see ways to work for an overall interest than in time to come will help these nations national interests.  It will require brave moves from India, China, the US and Russia. Yet this is the new course that alone can bring a return to a world focused on modernization and improving the lives of the people of these nations. ...

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It is not clear how China's president Jinping's support for the idea of "China Dream," -of China as a world power on a level with the U.S.- should be interpreted. China will increase its defense budget and continue its efforts to be the dominant power in its region, even as the U.S. and Japan begin to build closer ties in the Pacific. Is it simply a new assertiveness for its rights in relation to territorial disputes with Japan, and a continuation of a policy of peaceful development of earlier leaders. The move could also be an effort to build close ties with the military as the new leadership of Jinping-Keqiang prepares to make major changes in the economy. A speech in Dec. 2012 to Communist party officials in Guangdong province by Jinping, on how the lack of unity with the military led to the collapse of the Soviet Union under Gorbachev, could throw light on the thinking. In a few days an old party was gone, as he put it. This also follows the Bo Xilai episode which involved contacts with the military and the risks of division in the military and political leadership....

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Closer economic cooperation between the Saudis and China expected after this weeks visit by president Xi to Riyadh. 20 initial agreements worth $29 billion will be signed.

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Peter Morici is interviewed by Maria Bartiromo. He says the dollar should be devalued against the yuan by 40-50%. China by keeping the yuan undervalued has provided its exports with the equivalent of an export subsidy. China will only allow imports of solar panels with 75% domestic content, the US does not. The other problem is the banks and compensation. Morici says banks compensation should be like that of a regulated public utility. Can one imagine the head of Con Ed making the kind of compensation at the banks?

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Of 190 billion pounds of companies and other assets in Britain that are controlled by China, 51 billion pounds are owned by the Chinese government, says The Times of London. This includes power plants and schools. This includes Hinkley C nuclear power station 13.2 billion pounds, Heathrow airport $2 billion 9% stake, university accomodation holdings 40% stake in UPP at 1.6 billion pounds, Thames Water 9% stake at 1.8 billion pounds. The new Chinese embassy is being built on the Royal Mint this 5 acre site in London being worth 255 million pounds.

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China's prime minister Li Keqiang leads the task force tackling the coronavirus outbreak. He visits the city of Wuhan to calm anxiety and frustration about the outbreak. The lunar new year holiday in China which starts now is being extended to Feb 2.  Shanghai and Beijing city officials are advising returning workers not to return till February 9. The rural areas are a weak part of the link in the effort to stop the outbreak. Millions of workers return to cities after visiting homes in rural areas during this holiday period.

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NYT says DJT would use tariffs "as a economic sledgehammer to nations that refuse to meet his demands" and claims not to know what they are. Saying further that DJT has been far less clear about what those demands were. NYT has clearly not followed what DJT has said time and again. It is OK to use economic power when Canada and Mexico, and China have not taken the action they could have taken a long time back that they are now taking, and will take, after years of acting as if they could not see the fentanyl flows across its borders destroying America. These countries two land neighbors of the US and the last a country which from the open door policy against European colonial Empires and through the Joe Stillwell years in the War against Japanese colonialism in China, and in the years of China's building its economy in the 1990-2010 period, offered a helping hand. It makes the victim -and one that had reversed TR's advice about carrying big stick and speaking softly to its bitter regret- the bully, in the words of the NYT.   ...

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"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

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Without hydropower and the clean energy from dams estimates are for 10% more use of burning fossil fuels. China and Brazil have added 12.5 gigawatts of power from hydropower, 50% of this in the world for 2017. Africa added 1.9 gigawatts in this period and 6 countries depend on hydro for 90% of electricity production.  The entry of private capital and the financing from the government in the case of China and India is replacing the role of the World Bank. 

The effect of lack of electricity in India and Africa is underestimated in how it affects people's lives in these regions with lack of water supplies, and lack of electricity severely hurting people in large numbers who are marginalized or forgotten because they never had access to lighting at night before.

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UNICEF say 2.5 million children are not attending school in Syria and another 1 million are in danger of dropping out. And that one third of school buildings are destroyed. This is what is left after decades of civil war. The intervention of local and foreign powers in the Arab world has led to huge breakdowns in society, and massive destruction in countries facing civil war such as Syria, Iraq, Yemen, Libya. This is the kind of situation that happened in China's northern and southern provinces in the 1930's, and 1940's. A new pathway for peaceful development outside of ideologies and socialist movements, pan arabist or religious movements need to be found for the region, the Arab world in North Africa to the Middle East. China, Korea, and Vietnam found a way out after civil wars over 1940-1975. India is putting out a map for a course of action with Vikshit Bharat  or Developed India after two centuries of stagnation under the British Empire 1756-1947, and 5 decades of stagnation under the Congress Raj 1947-2000. The spirit of development and desire for modernization, for modern science and technology, good governance and institutions, must come from within.   ...

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Official currency reserves of developing world countries almost quadrupled over the last decade to $2.9 trillion. Reserves of industrialized countries went up by 150%. In 2005 reserves went up by 18% for developing countries and declined 1.5% for developed countries. 70% of total currency reserves are in developing countries. This is a huge accumulation of reserves by developing countries in a short period. In 2005 74% of overall reserves were in U.S. dollars. The reserves help countries pay bills and make investments. For developing countries having sufficient reserves helps in two other ways. The reserves are a buffer in emergencies , and means countries like Brazil and S. Korea don't have to turn to the IMF or the U.S. for assistance. Another way this helps is for countries like China to be able to use their reserves to keep their currencies from appreciating and maintain a competitive edge in exports.

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The title of this BBC report is a misnomer as the content of the report is that India and the US are actively negotiating a Trade Agreement after some disagreements on Indian oil purchases from Russia bumped up from 2% before 2019 to about one third to 40% of its imports by 2024. This is being rapidly reversed and some estimates by consultants CLSA show India only made $2-3 billion from Russian discounted oil sales, a miniscule amount. On American interest in agricultural exports India can take in some products other than grain which it sees as important to feed 1 billion people and food security.  DJT says the "special relationship" between India and the US is important, and says "there's nothing to worry about. We just have moments on occasion". India has much bigger stakes in trade with the US. In fact it's growth into the third largest economy in the world means doubling or tripling its trade with the US and the European Union in the next few years. This would narrow the difference in GDP and per capita between India and China, as India and China started at the same GDP and per capita in 1950. Only in 1990 with China's trade with the US has the Chinese GDP and per capita income increased to create the huge gap with India. ...

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Experts say China's official GDP figures are unreliable and cannot be verified. Transparency is sorely lacking. The methodology, inflation assumptions and other basis for the calculations are not presented, so that many of the numbers cannot be reproduced. The official figure for 1st quarter GDP growth is 7%, from China's Bureau of National Statistics. GDP growth estimates developed by Capital Economics show 4.9% growth, by Citi 4.6%, by the China Center of the Conference Board 4%. Since 2012 the Capital Economics estimates are just above 5%, and the Conference Board estimates about 4%, showing that the growth rate has slowed markedly since 2012. As Communist party chief of Liaoning province, the current prime minister showed serious doubts about the GDP numbers and preferred to rely on figures for rail cargo, electricity consumption, bank loans.

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The yuan is up 5.5% since the peg to the dollar ended in 2010, reaching 6.469 to the dollar. But this is not helping the U.S. trade deficit. The U.S. Bureau of Labor Statistics shows the price of imports from China are up 2.8% in May over the same month prior year. And the trade surplus for China in the first four months of 2011 is higher than the same period in 2010. What is happening? The improvements in productivity of Chinese manufacturers and the acceptance of lower margins is reducing the effects on trade balance of a small appreciation of the yuan, so that only a fraction of that appreciation is showing up in higher prices for Chinese goods. Also significant is that the yuan's small appreciation against the dollar is not enough to make up for the dollar's fall against other currencies. The yuan is down 8.3% against the euro and has actually declined 3.7% on a trade weighted basis in the last year.

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Greg Ip of the WSJ says a second term of former president Trump would look very different from the first. Republicans achieved their goal of tax reform in the first two years of that term. Following that trade tariffs ensued against China creating a different environment in world trade. A second term would lead to more action on trade and more tariffs. Ip says the former president could impose tariffs on all Chinese imports and this would lead to retaliatory tariffs from China and be met with EU retaliatory action in a tit for tat manner. The result would be disruption in world trade and affect the world economy. Higher inflation could also be result of such disruptions.

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China's efforts to rescue the housing industry and construction industry will be limited as the government is now concerned not to set off another bubble like that in the past. Assistance will be limited to unsold apartments which local governments can now buy to use for affordable housing, and $42 billion is provided for a central government fund to buy apartments that are unsold. This will reduce excessive inventory and the government will stop at that point no wanting to create new bubbles. Attention is now focused on increasing manufacturing of electric vehicles for export and other manufacturing in solar, renewable energy.

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Krugman points out that some depreciation in the value of the dollar is welcome because it would make US exports more competitive and reduce our trade deficit. He says China's policy of keeping the yuan pegged to the dollar actually devalues the Chinese currency and makes it possible for China to siphon off growth from other countries. So what should America do. By putting pressure on China to revalue the yuan upward would America be risking China responding by selling some f its $2.1 trillion in dollar assets. This would not be such abad thing if the Chinese sold some of their dollar assets says Krugman, as lowering the value of the dollar at this time is not such abad thing. Malpass and Alan Meltzer of Carnegie Mellon, point out the importance of maintaining the value of the dollar in a separate piece. There the idea is not to have sharp fall in the value of the dollar that could economic disruption because of loss of confidence in the currency as opposed to a gradual decline.

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The approval of 254 investment projects in China, accelerating investments in infrastructure and construction as part of a second stimulus plan in 2012, folllowing the first stimulus in 2009. The risks are higher this time because of the inflated housing prices in China, the increasing lack of affordability of housing for average families, and the continuation of policies that emphasize infrastructure spending at the expense of consumption and earnings on savings for ordinary families. With that kind of spending has come increased levels of corruption. The glut in the steel industry will grow worse with more spending on steel plants.

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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. ...