LyrArc Article Gist
Singapore Airlines and Temasek Holdings acquires 24% stake in China Eastern Airlines.

LyrArc Article Gist
China's state owned China Development Bank signed an agreement to finance a new pipeline that will carry 600,000 barrels a day of Venezuelan and Colombian oil through jungle and the Andean mountains to the Pacific coast. Colombia plans to shift its focus to export much of its 1 million barrels a day of oil production to China. Talks also were held with China on developing central Colombian coking coal reserves and building a railway to the Pacific coast. Colombian plans are based on slowing demand for Colombian oil in the U.S., with increased supplies of natural gas and shale gas in the U.S.

LyrArc Article Gist
Grades 1 through 9 in China are not for profit and China's education system is highly important and sensitive for Beijing. Particularly at this time with different ideas in Hong Kong compared to adjoining Shenzen. Uptil now private compnies were allowed to effectively control some schools with contractual agreements and funnel out money through service fees. This practice is now halted by tighter restrictions. Draft legislation is prepared and expected to be finalized this year. 

Earlier 25 companies in the education sector brought $3.8 billion of private capital through IPO's in Hong Kong and the U.S., according to Dealogic. These education companies are seeing shares drop by a half in 2018-2019, as China moves to protect its basic education from what may be seen as wayward ideas and thinking. More so today after the events at Hong Kong schools and universities.

LyrArc Article Gist
US to take stakes in American companies to help them achieve goals of Make in America with Intel stake the first action. The $8.9 billion Biden intended for Intel to make chips in the US will be handed over to Intel but for a stake in the company of 10%. For years Taiwan, South Korea, Japan and China have subsidized their companies in different and some hidden ways. Many times these companies have sustained losses as they built for the long term in volatile market situations. Nvidia now a trillion dollar company was at one time a company struggling to survive saved only by a Japanese corporate investor as shown in a recent WSJ report. The US has taken no such action losing its dominant position in many advanced industries including chips till the Biden and DJT administrations. Yet the media keeps voicing the old ideas of market capitalism as if there is such a thing when state capitalism operates with market capitalism in the Chinese model, and a form of semi state capitalism operates with market capitalism in Taiwan, South Korea and Japan with hidden subsidies by the state to build dominant positions in certain industrial sectors. Even US companies are willing to take such subsidies as when Elon Musk builds car plants in China with state assistance and support, which never comes up in the media even when the Chinese EV makers are learning from the Americans and Tesla is losing market share in China. Theory is for the textbooks and economists,  in business all forms of capitalism work including a mix of state and market, and America has to invent its way back to lead the way in advanced industries.  ...

LyrArc Article Gist
Rising wages and rising production costs for Chinese exports of low tech products like shoes, clothing, toys, clothing, furniture, means a lot of these factories will shut down and move to lower wage countries like Vietnam and India or elsewhere. Elimination of rebates on more than 2000 export items raises cost of manufacturing 14-17% according to Guangzhou based American Chamber of Commerce in South China. And the the tough new labor law enforcing worker rights would increase manufacturing costs by 40% according to the Textile Council of Hong Kong. Additional costs would be incurred to meet tougher environmental controls and anti pollution laws and stricter enforcement. As a result of this Adidas wants its suppliers like Taiwan based Apache Footwear with 18000 employees in Guangdong to move as fast as they can to India where it opened a second factory. This process will unfold over several years till India and Vietnam bercome the new sources of cheaper goods because of the large supply of manufacturing labor for lower value added products, as it will take years to build the logistics and infrastructure for these plants in these countries. But because wages will also rise in India and the laws in India are more likely to be enforced than they were in the atmosphere in China where the Communist led government may have turned a blind eye to enforcement and worker rights in the interests of growth, the export of deflation to the west in the way of cheap Chinese products may be a thing of the past. China is doing this as a planned move it appears. Why? On the surface it makes sense that the heavily polluting factories making lower value added products like shoes, clothing, toys, furniture, would not receive rebates from te state and to improve living conditions and promote consumption at home the government woud pass tough new laws to ensure employee benefits and collective bargaining rights, and employee job security. It also reduces trde tensions at a time when the US economy will be in poor shape and jobs lost become a political issue in the 2008 presidential campaign. But there may bigger pressing concern and urgency in these moves after so many years of this being discussed and this may be that China finally may be at a moment when it is confronted with a sober fact that the US consumer is heavily in debt and may not support China's export growth model much longer and with it China faces a really significant slowdown in its growth rate from 11% to maybe half that if China does not develop its own domestic markets for growth. The old foreign investment model may not work anymore. See the link to Ireland where growth is falling off quickly. Higher wages and longer term jobs with benefits would enable a large middle class to develop from this huge manufacturing worker base especially as China moves to more value added products where even higher wages would be paid. This in turn creates a domestic market over time that would insulate China to some extent from the winds that would be blowing from a US economy suffering from a deep recession that may last several years. This may be evident in the words of the Governor of Guangdong when he says that the government is not abandoning the exporters but that selling domestically is good for the country and good for the people. Something deeper is at work here and one would expect an about turn in policy where instead of workers not receiving back wages and lax enforcement that went on freely in the last decade we would see an effort to build the kind of middle class that would provide the market for Chinese goods that would sustain growth at a more modest but sustainable pace. Which means in the short term all those workers at factories that make toys, shoes, clothing and furniture in provinces like Guangdong would be jobless. Some of these factories may move to provinces in the interior like Sichuan and Hunan provinces which may pickup employment. A report by the American Chamber of Commerce in Shanghai written by Booz Allen says that a fifth of the companies surveyed are considering relocating outside China, and that over half of foreign manufacturers surveyed think that mainland China is losing its competitive advantage to places like Vietnam and India....

LyrArc Article Gist
On problems such as student aid and China tariffs US president Biden is deliberative so he can get to the right results. After decades in which the problems became serious or were sidestepped the president wants to reach the right decisions and get solutions.

LyrArc Article Gist
Oil prices at the pump for automobiles are declining for the seventh straight week. Prices declined to about $4. In Texas the average is about $3.67 a gallon. California has the highest gas prices at an average of $5.46 a gallon. The price decline is a result of rapidly slowing growth in China. China and India are still getting oil supplies from Russia which frees up oil supplies for the US to import. 

Public in the US is also cutting back on driving and the miles driven is likely to see a drop of 5-10% this summer. There is better planning of trips to combine errands. This helps combating climate change through conservation efforts that were neglected during the last decade.

LyrArc Article Gist
China's growth will slow to about 3% in 2022 as the decisions made at the Central Economic Work Conference that ended on December 10 were to emphasize economic stability as the overriding goal. The goal of discouraging speculation in housing with the slogan housing is for living will remain in place in 2022. The goal of controlling surging debt that poses a serious risk to the economic future of China will also remain in place. The external environment remains uncertain and getting complicated with a change in the US and German governments in 2021 and shifts in policies.

A party congress will take place in 2022 in addition to the Beijing Winter Olympics. 

LyrArc Article Gist
The Trump administration is looking at proposal to stop deliveries of new jet engines from the U.S. by General Electric Company for a new airliner being developed in China. There is concern that China may reverse engineer the CFM engines if sent to China for the Comac C919 jetliner. The administration may decide to not issue the license letting CFM International a joint venture of GE and France's Safran SA, to export the LEAP 1C jet engines to China.

LyrArc Article Gist
The risks facing China of slow growth and a bubble economy as the new leadership of Xi Jinping takes over in 2012. The export model for the economy is coming to the end of its run and the new leaders have to come up with a new plan for the future. At the same time they face the interests of state owned companies, banks and local governments interested in maintaining the status quo.

LyrArc Article Gist
The tech boom bust since 2000 that has hurt America and Europe and which also laid the foundations for the loss of manufacturing and technology to China, ceding American leadership and critical advantage, is shown here in the WSJ. The role of the finance sector  is explained here. That has added one more factor to the factor of endless wars in the Middle East, where American and European investment in healthcare, education and new infrastructure was somehow diverted away, and much of America's and Europe's resources wasted- or not turned to the benefit of the people of America or Europe.  One financial firm that rode the tech boom to the hilt finds itself with unacceptable losses except in a severe recession. Tiger Global Management was using tens of billions of dollars from pensions, endowments and rich clients riding on some of Silicon Valley's hottest stocks.  With the plunge in tech stock values including startups in which Tiger pushed into aggressively now facing large losses after hyper valuations, Tiger's hedge fund which managed $23 billion at the end of 2021 was down 52% in 2022. Another of its funds that managed $11 billion has lost 62%. WSJ says this wiped out two thirds of the gains Tiger has made in the tech stocks since its founding. In addition large writedowns are expected on its venture funds valued at $64 billion at the end of 2021, says WSJ.  WSJ says cheap money (money somehow diverted from infrastructure and funding manufacturing in China instead of the US now goes by the misnomer cheap money) reshaped Silicon Valley in the last decade, as pension funds, rich investors and celebrities turned to well connected money managers such as Tiger to put money in tech stocks and startups. This WSJ report says compared to Sequoia Capital and an earlier generation of venture companies Tiger Global is simply not interested in management of companies it invests in, taking a broad brush approach, using Bain Capital for research, and trying to haul in a large load of fish like trawlers at sea hoping for some companies to make big gains. Many pension funds such as Calpers California's public pension fund invest in Tiger with a $400 million investment. WSJ also reports that Tiger Global's venture funds do not reflect the realities of the tech business as venture stocks will reflect the drop over 2022 and 2023, including its ByteDance Chinese tech investment which will need larger writedowns. Tiger has also not hesitated to get into cryptocurrency which has loss of about $1.5 trillion dollars. It is of interest to note that Julian Robertson, hedge fund manager of the 2000 period (when Clinton-Bush were US presidents) who ran Tiger Management provided the impetus for Mr. Coleman, then 25 years old, for the start of Tiger Global. Julian Robertson closed his fund in 2000 during the dot com bust. Coleman hired a Blackstone analyst and started on the next cycle of tech with social media platform Facebook now Meta, followed by China's JD.com as investments in a new China boom were started. The end result is that during a period of Middle East wars under Bush and Obama, and building dependence on Russian oil and gas supplies under Schroeder and Merkel, China was the gainer as the US and EU lost much of its manufacturing and technology to China. During this period US and Europe neglected investment in infrastructure that would benefit the people of America in ease of living and quality of life. Just as money was wasted in wars much of the tech investment was wasted. The companies that added value over time were started long before and relied on sales growth and new products that revolutionized their field such as Apple with smartphones that started well before the nineteen eighties, Amazon with logistics and its own style of management, Microsoft from an even earlier era. Tech monopolies Facebook, Google, and others would not be missed much in terms of real progress for the people of America. The cost is many decades of ceding manufacturing and technology advantage to China by US and the EU led by Germany. China 2030 and the war in Ukraine with China's support have shown how fragile the foundations have been with weak political leadership and a finance sector running backwards in terms of America's and Europe's strengths in new infrastructure, better healthcare, services and education for the people of America and Europe. Leaving it to the Biden administration and a new coalition of Greens and Scholz in Germany to begin the task of rebuilding America and Europe on strong foundations, including the dignity of the workers and families, that makes who we are and what we believe in, and why the free world believes in us. ...

LyrArc Article Gist
The Times of London offers this Analysis of Chinese president Xi's visit to Russia for a Victory Day Parade to be attended by 20 countries including Serbia, Venezuela's Maduro, and Brazil's Inacio Lula Da Silva. Soldiers from China will March in the Red Army Parade. Other countries attending are Indonesia, Egypt, Iraq.

XI and Putin have a new common view of the war as aginst the Nazis and Japanese Imperialism. The role of US Gen. Joe Stilwell in uniting Chinese forces to fight the Japanese is not mentioned in history books in China as the focus under Xi has shifted to increase the importance of the common fight in Russia and China aginst Germany and Japan.

LyrArc Article Gist
Lower prices have boosted unit sales for Microsoft and Autodesk for Chinese operations. Autodesk now sells its software for about half the price in the USA. Autodesk saw a doubling of licenses in China to 300,000 after slashing prices. Microsoft sells Windows 7 Home Basic for 399 yuan or $59, a third of the price in the USA. By reducing margins, Microsoft makes up for it in volumes, says Microsoft's China CEO. IDC and Business Software Alliance estimate that 79% of the PC software installed in China in 2009 was pirated, down from 86% in 2005. Lower prices make Chinese buyers more willing to invest, and education helps to increase the value of using legitimate copies. China's PC market is expected to be 67 million units in 2010, behind 78 million in the USA, but software sales in China are only $5.8 billion, behind the US sales of $143.6 billion. This makes the potential for software sales large at the right prices.

LyrArc Article Gist
Ashton Verdery, a professor of sociology at Penn State University, says his simulations shows a severe impact for the nuclear family in China by 2050. By 2050 living parents and in laws will outnumber  children for middle aged men and women, he says in the WSJ. Verdery says policy planners have not anticipated or prepared for this unexpected even counterintuitive situation in China. This is a result of the one child policy and women's unwillingness today to have more children, prioritizing careers over children, which will not only impact the number of retired people supported by younger people, but also the family itself.  Because of the surfeit of baby boys during the one child policy this research shows that by 2050 18% of China's men in their 60's will have no living descendents, compared to about 9% today. This impact of defamilizing in China, can have an impact on the risk propensities of people, leading to risk aversion and impact the guanxi networks that propelled business during the 2000-2015 period when the family peaked. He calls it a kin crash between now and 2050 compared to the kin explosion that happened after 1980.   ...

LyrArc Article Gist
China after American and European offshoring of supply chain and manufacturing over three decades is going through a rapid reversal. People to people contacts are also falling off a precipice as it were, showing how badly structured efforts by business focused on profit and not people to people fail miserably, hurting the long term prospect of peaceful cooperation. Foreign Investment that was $100 billion in the first quarter of 2022 is now $20 billion. Tourism down by about 80%. At Zhangjiajie National Park goes from half a million foreign tourists to 50,000 last year. It is typical of this staggering change.  People are not going from America and Europe to China unless they have to. It shows the complete failure of a purely business relationship such as offshoring manufacturing when it hurts workers and families in America and Europe, who turn against it leading to a free fall in relations. American and European business and the governments allied with it failed in this sense to build a world of better interpersonal relations between Asia and the western world. China's experience with industrialization and modernization begun in 1990 is now a cautionary tale for other regions such as India and the Middle East that are planning their own modernization. Much of it happened less from a people to people relationship than from an effort by US business to seize the opening of China after Mao's revolution to offshore American manufacturing as if realizing a new opportunity without understanding its long term consequences for the American people. European business followed American business in this offshoring. It damaged the basic structure of the American and EU peoples based on locally based supply chains and manufacturing at home needed for strong healthy communities, leading to this situation today. The rancor and deeply seated discontent all across America and Europe from communities losing factories and the jobs and wealth coming from it from offshoring by business interests has created this situation.  ...

LyrArc Article Gist
The Financial Times looks at the logistics logjam worsened by the Shanghai lockdown in China. A greater economic fallout is also expected on the long supply chains that are now becoming unworkable, leading to the rebuilding of new shorter supply chains. And bringing manufacturing back to Europe and the US from overstretched supply chains in China.

LyrArc Article Gist
The U.S. is falling behind China in the race to setup 5G technology networks. This requires government collaboration with private industry that was missing in the U.S. China has taken the lead by prioritizing 5G global leadership through central planning, subsidies, university training, and recruitment of tech talent. 

In the U.S. a small group of activists made net neutrality an issue says the WSJ leading to extensive proceedings at the FCC and acting as a distraction from the task of setting up 5G capabilities. The U.S. now has to catchup in this field using its strong 4G network for upgrading to 5G and its innovative tech culture for the apps needed.