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This briefing in the Economist says China now faces a difficult transition to its next phase of development, in which the government is trying to change the model used by Deng Xiaoping of export led development to a consumption based economy. That model produced spectacular results between 2000 and 2015 when the middle class went up from 5% of the population to 25% of the population, as measured by people living on more than $20 a day in 2011 $ purchasing parity, as reported by IMF, EIU. The problem China faces is can this development stall if it fails to tackle problems in the next phase, with an aspiring group behind the new middle class left behind. Recent jump in the stock markets volatility, devaluing of the currency, and confusing signals sent by the government have hurt its credibility. Demographic issues with an aging population, the destruction of the environment with rampant development, and how to manage this next phase of development with respect for the constitution and the rule of law replacing the high corruption levels, are serious challenges. Experts say it will be difficult to manage a transition to the next phase of development without some degree of democratization. The rise of the internet and the social media have created more avenues for expression, which gives the government some guage of public opinion, especially in tackling pollution, mismanagement, and other problems. The government sees the need to manage things carefully, with rising unemployment posing a problem as growth slows and the government closes down inefficient manufacturing facilities. ...

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The unemployment rate drops to 7.8% from 8.1% in September according to the Labor Dept. The decline partly comes from people taking part time jobs because they are unable to find full time work. The establishment survey shows 104,000 jobs added in the private sector in September, and revises the figures for July and August to show 86,000 additional jobs created. Of the 104,000 jobs added, jobs increased in health care and transportation. Government added 10,000 jobs. Manufacturing jobs declined by 16,000, a cause for concern. A more accurate measure of unemployment is the underutilization of labor called U-6 by experts, this includes part time workers who would prefer to work full time- this has remained at 14.7% for Sept. 2012. The overall picture is that the job market remains sluggish. Because Labor Department numbers are prone to revision this could change in coming months. The slowing economy in China with the new stimulus in China coming in at one eighth the size of the old stimulus (1 trillion yuan over 4 years compared to 4 trillion yuan over 2 years 2009-2010) because of inflation concerns and risks of aggravating a property bubble, and the declining growth in the eurozone- France with zero growth in 2013 and Germany at 0.9%, Italy and Spain declining growth- means the prospects for U.S. economic growth will be lower in 2013. U.S. GDP growth was 1.3% in the second quarter according to the Commerce Department, and Macroeconomic Advisors predicts GDP growth of 1.5% in the third quarter in downward revisions. ...

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Immigration and drug flows became an explosive issue in the US by 2016, yet between 2016-2024 Venezuelan people outflows added up to 7.1 million migrants including about 1 million to the US, as Venezuela collapsed and Russia intervened to keep the regime.   None of this could have happened with major powers US Russian cooperation. The Monroe Doctrine of president Monroe, 1824, warned European powers to not restore colonial influence in the Americas. By 2024 Syria sent 14 million of its population to Europe, and Venezuela sent 7.7 million migrants to Colombia, Brazil, and the US, as their economies and democratic institutions collapsed. Missing was working cooperation with another military power Russia. Clinton, Bush, Obama, Western financial interests, failed to grasp the importance of US Russia cooperation and mutual respect. Obama denigrated Russia as insignificant because of its GDP.   Russia intervened in failing states but gained little, straining the good relations mutual respect from earlier periods of its history and interactions with the US.  DJT tariff on all importers of Venezuelan oil affect China to which Venezuela sent 55% of its oil exports over half a million barrels a day. It also affects India and other importers. These importers say experts, will shift to Russian crude preferring it to heavy oil from Venezuela. This is a sore point for Americans affected by violent crime from Venezuelan gang members reflected in recent election results. This also affects the sense of safety in American neighborhoods and in towns across America. The Linken Riley Act was passed in the US Congress as action on this issue. People in China, India, and in Europe, and some even in Silicon Valley in the US fail to grasp the way this has affected communities across the US when after decades of deindustrialization and shipping jobs overseas by American business, these communities are affected by a sense of lack of safety in their neighborhoods. There is also a failure to grasp the harm done by migration of 7.7 million people from Venezuela, almost a fourth of the country's population, because of mismanagement of the economy and crippling inflation, and the failure of democratic institutions to function effectively. A failure to grasp the extent of the economic and human disaster in Venezuela. DJT says- "Venezuela has been very hostile to the US and the Freedoms which we espouse...Venezuela has "purposefully and deceitfully sent to the United States, undercover, tens of thousands of high level, and other, criminals".    ...

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This is not just offering something to every group, it is rebuilding the middle class when seen in the larger context of rebuilding America's industrial base and taking  it to new heights after losing it to China under Bush-Obama 2000-2016. Under MAGA Trump inequality is tackled just differently from the way Democrats tackled it under Biden. The tax break for auto loans, interest on auto loans is deductible for taxes, is part of the new Tax Bill to appeal to auto workers. It is only applicable to US made cars and this promotes US made cars over foreign factory made cars such as the Germans and Koreans and some Japanese auto makers did before 2025. Reagan scrapped this tax break, it is back under Trump as the Republican base now includes auto workers and the now back to growth mode middle class. The deduction in local and state taxes increases to 30,000 to benefit small business owners. There is also the tax on tips which is removed. Retired people get an added $4000 deduction and not elimination of taxes on social security benefits entirely because of the Bryd rule that prevents changes to retirement with a simple majority vote not the 60 votes in the Senate.  ...

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India's demographics show one startling fact. By 2020, the average age of Indians will be 29. This is happening just as the rest of the world is aging very fast. In the next 15 years India will have 130 million more people in the 20 to 49 age group. This compares with a shrinking in population of 100 million in that age group in developed countries and China, according to the U.N. Population Division. The problem facing India is malnutrition that runs as high as 43% for children with half the mothers anemic, weak educational system at the primary and secondary school levels especially in the government run schools, lack of good governance in the most populated states such as Uttar Pradesh in the Ganges plains which has 200 million people, the consequent overburdening of cities which have no plans to manage the migration of the rural poor to the cities. India has to find ways to fill the huge gaps in getting better nutrition, education, dignity and sense of opportunity, and work for the growing numbers....

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As Huawei's young engineers go through a learning curve, the company faces challenges of giving them additional business experience. Huawei is working to instill western practices and culture in its enginers by expanding overseas, and hiring seasoned engineers in Europe to mentor the younger Chinese engineers. Of the 23 Huawei R&D centers, 13 are located outside China. Huawei adds engineers right out of college- 50,000 employees were added in the last 5 years right out of college. Of the 149,000 employees, half work in R&D. Average age at Huawei is 29 years. In this sense Huawei is unusual for a high tech company compared to western companies. It is a plus for Huawei in the long run, but it means a lot of training is needed. Lars Bondelind, the Swedish head of wireless marketing at Huawei, describes these challenges at the 2012 Barcelona Mobile World Congress. Bondelind says the Chinese engineers he works with have higher knowledge and expertise than newly graduating Swedish engineers, the challenge is training them in western engineering and business practices....

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Home prices are surging in Australia in 2015, with home prices in Sydney up about 39% since June 2012, according to CoreLogic RP Data. As a multiple of annual income home prices in Sydney are at 9.8, Melbourne 8.7, and Wollongong near Sydney 7.5, compared to 6.1 for New York and 8.5 for London, according to a 2015 affordability survey by Demographia. Australia's surging home prices are happening just as the mining boom that powered its economy is winding down and unemployment is up to 6.1%. Interest rates are down to 2.25%, and low interest rates with speculative purchases are likely to fuel the market up further, say experts. About 40% of home loans approved in Feb. 2015 were to investors, increasing from 31% in 2009, according to official data. According to Australia's Reserve Bank the wealthiest 40% of the population have 75% of the debt. This surge when the economy is feeling the effects of the slowdown in China, and the rest of the world is cutting down on debt, puts Australia in uncertain territory....

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As appliance maker Fagor goes into bankruptcy with $1.16 billion in debt during Spain's long downturn, 1800 workers lose their jobs. Unemployment in the Basque town of Mondragon in northern Spain where Fagor is located, is up from 15% to 22%. Fagor was founded in 1955 and sold refrigerators, washing machines and televisions. Sales were 14 billion euros in 2012. An injection of 300 million euros from other members of the Mondragon co-op network and 80 million euros from workers failed to prevent the factories from closing. Decisions for international expansion with the acquisition of a French appliance maker created problems for Fagor because of the long economic downturn in the home base. Failure to move jobs to emerging markets with lower costs hurt Fagor, as Whirlpool and Electrolux moved jobs to China and other developing countries. Fagor's unique co-op structure of worker ownership made it difficult to move jobs outside Spain and France, and issuing new shares for capital is not possible under the co-op structure. ...

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Problems with China's health care system stem form years of underspending. About 1% of GDP went to healthcare in 2006,according to the WHO, ranking China at No. 156 of 196 nations. This underinvestment has caused great hardship to the rural poor who have postponed or been denied access to healthcare because of exorbitant expenses. It shows up in the number of trained medical workers- only 17% of China's medical workers are university graduates. In village and township clinics the number falls to 2%. The government has dedicated $121 billion for health care through 2011. But this may not be enough. Aobut 300 million in the rural areas have no coverage at all. The government's plan is to get farmers insured through county level rural- cooperative insurance plans. These programs begun in 2003, offer only scanty coverage. Outpatient services and medications are not covered and coverage varies from county to county for hospitalization bills. The goal of th health ministry is to get the coverage for hospitalization bills up to 50%....

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Stephen Miller, as both intellectual and organizer, is shaping policy on immigration at the White House as adviser to Kristi Noem, head of Homeland Security. He is a dedicated follower of DJT and White House deputy chief of staff. He also brought Prof. Navarro to the attention of DJT on trade policies.  He was a key figure in the first DJT administration at the age of 31 having served as communications secretary for Senator Jeff Sessions and developed his ideas during the period with Sessions. As director of speech writing and senior adviser to DJT,  he wrote some of president DJT's policy speeches in the first term, the speech to the Republican National Convention 2016 , and the Inaugural Address of 2017,  including the speech on Jan. 6th 2020 following the storming of the Capitol building.  Who is Stephen Miller? He comes from a Jewish family that immigrated in his grandfather's generation in 1903 to Ellis Island from Belarus, during a period of discrimination in Russian regions. During the period on campus at Duke University where he graduated in Political Science, Miller was a follower of a prolific author, David Horowitz. Horowitz was part of the Jewish leftist intellectual movement in New York in the post war period, but after the 1980's joined the Reagan movement and questioned the ideas he had believed in, questioned what he saw as the antisemitism on US campuses. At Santa Monica public school in California in 2000-2003 Stephen Miller questioned the multiculturalism that replaced the America of the founding fathers, that he saw at the school. It is this perspective that also underlies Stephen Miller's ideas about universities, about immigration, about the economy and China under Bush, Obama and Biden. Miller is also an organizer as he set up the America First Legal in 2020 with funding from donors on the right which has filed many lawsuits during Biden's term in office.  ...

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This is an interview with Columbia University economic historian Adam Tooze about the international trade and economic issues brought about by globalization. The rapid emergence of China in manufacturing and overcapacity in steel has led to action on steel tariffs by president Trump. Tooze is typical of opinion that sees action by Trump not as limited action to level the playing field  as proposed by Trade Representative for the U.S., Robert Lighthizer, but as reckless move on trade.  Lyrarc.com shows articles from the WSJ and NYT showing how opinion got to this point in the U.S., on Robert Lighthizer's views that the U.S. was not facing a level playing field, and  on how trade has hurt communities across the U.S. a long distance away from Silicon Valley. President Trump's views reflect a different perspective that says the U.S. has to balance the favorable situation obtained by China and the European Union through moves of its own to protect U.S. interests. Political commentary that the U.S. was starting a trade war is not supported by the facts showing China's response as muted and a willingness by China to negotiate a balanced trading relationship as its trade surplus with the U.S. continues to grow. The trade surplus is so large that the Trump moves do not tell the real story. They are likely to be overshadowed by the increasing value of the U.S. dollar leading to a continued favorable situation for Chinese exports and a larger trade surplus in 2018, regardless of Mr. Trump's action.  Trump's moves are more significant in other areas- limiting China's access to advanced technologies, with the European Union also taking the same action. This is now the new field of competition for the major world economies. ...

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China is exceptional in the speed with which it is moving on infrastructure projects. And this bodes well for American exporters like Caterpillar which is seein g big jump in excavator sales, and for China which may see thre fourths of the 6.5% increase in GDP in 2009 coming from infrastructure building. Fortunately there is still a need for alot of infrastructure development in China. Typical is the approval and start of work on the $930 million Xiangshan Island Bridge which will extend over the East China Sea and through mountain tunnels. Caterpillar CEO James Owen says of approval and start of construction as fast, "its something like nine months in the USA versus 9 weeks " in China. China has agood pipeline of projects and alot of planning work has been done for many years. For Xiangshan Island Bridge this goes back to1994. Liu Cijun completed a PhD dissertation in 1999 on bridge wind resistance, and the Ningbo native is now Chief Engineer for the project. Preparatory work on the bridge goes back to 2004 and the stone cutting ceremony in 2006. In August the bridge's feasibility report won approval from aplanning agency in Beijing, and in December approval by the Ministry of Transportation. Construction started in just 11 days after the Chinese government approved the project. China's investment in infrastructure has jumped by 102% in the 1st quarter of 2009 from a year earlier, according tho the National Bureau of Statistics. By comparison Washington has distributed $69 billion of its $787 billion in stimulus fundsto states and localities, which have spent $14 billion according to the WSJ....

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With the decline of its hardware business making iPhones Apple is looking at other fields. It is launching cheap online TV subscriptions in streaming wars in competition with Netflix and others. Apple is launching a new TV streaming service Apple TV+ in 100 countries for 4.99 British pounds a month undercutting Netflix's price of 5.99 pounds. The new service will be started November 1, 2019. Disney plans a streaming service for 7 pounds a month starting November 12. This service is alongside iPhone 11 launch and anew iPad, a new iWatch. Buy any new Apple device and you get a 1 year streaming service free.  Sales of iPhones fell 14% in the April to June 2019 quarter to 39 million units. Samsung's business is growing by 4% to 75 million units and Huawei by 16% to 58 million units. Apple sees the need to increases its services business with a target of $50 billion in 2020. Apple sees itself more as a media and cloud services company as it makes this change. In markets such as India Apple's growth is limited by its failure to lower prices on new iPhones. In China it faces strong competition from Huawei. The trade tensions are increasing the strength of Chinese brands in the Chinese market. The market in U.S. and Europe is saturated after years of expansion. New iPhone models are costly and bring peripheral advantages such as more and better cameras and features such as screens that are not breakable- for the iPhone 11- not dimensions that are critical for making a costly purchase. After years of growth tech companies such as Apple, Google, Alibaba, Amazon are reaching a point where incremental growth is not what it used to be and most of the rapid growth behind them. Trade tensions are also limiting the outlook in the Chinese market, and pricing remains a major factor in the Indian market. Western markets are saturated. There are fewer and fewer substantial new ideas from these tech companies. ...

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Bhutan is a small mountain kingdom in north eastern India, bordering Tibet. Historically close ties with Tibet continued after China's takeover of Tibet following the coming to power of China's Communist Party in 1949. This led to a friendship treaty with India in 1949. A narrow piece of terrritory with 34 square kilometres is part of the dispute between China and India. India opposed the move to build Chinese roads in the area leading to a standoff that is now over 50 days. This territory is significant because it connects India's central plains to the northeastern states. Bhutan opposes the Chinese road work but tries to maintain friendly relations with China. The close relationship between India and Bhutan is part of the situation that emerged after China's takeover of Tibet. The Royal Bhutan Army's salaries are paid by India, road construction is done by India, and subsidies for food and kerosene were provided by India. A parliamentary democracy with a monarch was established in Bhutan under king Jigme Wangchuk, and elections were held in 2008, 2013. This has led to more openness towards China, leading to concern in India.  Bhutan is a popular destination for Chinese tourists who pay $250 for a visa. Indians do not need a visa. ...

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China's goal of creating 10 million new jobs each year.

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The small rate hike of 0.25% by China's central bank, as the first step in a long process of curbing inflating and reducing bank lending. The preference for better quality growth around 8%. Inflation is rising and was up 3.6% in september 2010. The rate hike increases what savers get from their deposits from 2.25% to 2.5%, to help deal with inflation, a small step but it appears that this is part of a long term process.

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A 35 year old Engineering professor from Texas who studies how transportation systems propagate infectious diseases and her 2 graduate students from China started and since January maintain the database of coronavirus confirmed cases and deaths. This is one of the widely used databases, also used by public health officials in the U.S. The database was started with a hunch from one of Lauren Gardner's students from China Ensheng Dong who comes from Shanxi province, north of Wuhan. A geography and mapping specialist he had studied in the U.S. since 2012, and spent many hours inputting data by hand following his classes. This WSJ report says the website was built in 1 day and was launched on January 22, when the coronavirus cases were practically nonexistent in the rest of the world and were concentrated in the Wuhan area. This report says behind the data reported in the media everyday is a complicated supply chain filled with challenges that come with data, what is reported, underreported and with what assumptions it is reported. Dr. Gardner says she is dealing with so much data on her dashboard, 4000 points of data, that its hard enough to pull all the data scraped together from different sources, its impossible for her to check the assumptions behind the data for consistency and trying to figure out facts underlying the data.  One of the ways the virus developed in the rest of the world is the surprise with which it caught western countries and then the rest of the world. As a result something that the government authorites would do such as the Centres of Disease Control is being done in a totally ad hoc manner. The U.S. government uses the University of Washington Health Metrics database, and in turn the University of Washington Health Metrics database takes some of the data from the John Hopkins database. Because a complacent population in the western countries were relying on numbers counted as cases to know how serious this epidemic was or whether there was an epidemic, the significance of data count from China assumed a signifcance far out of proportion to what it might normally be. This was because the western countries in Europe and America never encountered an epidemic of this kind in living memory, the last one forgotten from 1917 hundred years ago. Researchers in Gottingen University study in Germany conducted analysis of data in studies of cases published in Lancet Journal and found that only 6% of cases were being shown- that a much larger part of the population was infected. A researcher at Princeton University Ramanan Laxminarayan says countries tend to delay reporting until a problem becomes certain, because telling others comes with economic costs such as a rapid drop in trade and travel. Yet he says early warning systems are key to prevention. Early warning from the different publicly available data bases was not possible for many reasons. Relying on such ad hoc data was hazardous considering that as the NYT reported recently when there was the first confirmed detected case reported in New York there were already 10,000 persons estimated to be undetected. James Glanz and Benedict Carey, say in the NYT.com on May 7, that hidden outbreaks spread through U.S. cities far earlier than Americans knew, estimates show, which makes the publicly available databases giving a false sense of security, and not acting as an early warning because of the inadequacy of the resources for this task for individual researchers to handle. Not depending on  hurriedly put together databases with inadequate resources and having an independent sense of what the danger was as German chancellor Merkel described it in her first coronavirus address in March, was a better early warning signal than the databases in retrospect. And this too had come late. The reason is that the response had to be fast, very fast, and public perceptions had to be shaped quickly about the magnitude and speed of enormous proportions of the coronavirus, so that actions could be shaped quickly and executed quickly to stop it in its tracks.    ...

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This important WSJ report shows how the CDC labs failed to come with the test after contamination of a component and failure of the third part of the three part test components. In the absence of a working test from CDC where delays cost three weeks of February the private labs all over the country and state labs could have developed their own test, yet HHS and FDA required approval for these labs to develop their own test and use it. From Feb. 8 when state and city public health labs detected problems with the CDC test to Feb 29 when solutions were developed including simply excluding the third part of the three component test, and letting labs around the country do their own test, were 3 crucial weeks that let the virus spread out of control. The CDC, HHHS, and the FDA and their managers and heads of departments bear responsibility for these errors. Week after week the delays continued, instead the two component test which detects if the genetic material in the sample is coronavirus material, could simply have been approved at the outset instead of the approval for this given weeks later. The third component of the test checks if the virus mutated, according to this report. There is no explanation why the labs all over the U.S. were not allowed to go ahead on February 9 itself or within a few days after that to develop their own tests once it was clear the CDC test did not work on that day. CDC officials failed to recognize that there was a possibility that they may not be able to fix the faulty third component of the test and the risks if they gave false reassurances. There is also no explanation of why a German designed test was not used once the CDC test failed on Feb. 9, which would be a proper way for action considering that this pandemic had already shutdown parts of China by this time. Alarming also is the mention in this report that on Feb. 22 a FDA official in charge of lab diagnostics  flies to Atlanta where the CDC Respiratory Diagnostic lab which developed the test is located. His boss FDA medical device center director is cited from later information as describing the lab as "filthy" meaning the lab had the potential to contaminate, and going so far as saying that if it had been any other lab it would have been shut down. Considering that investment in public health has deteriorated over the last two decades and that there has been a massive misallocation of capital in the country away from public infrastructure this is appalling. The thought of critical labs for emergency health needs as not being up to high quality standards in the U.S. as a result of two decades of misspending, that this shows, is very disturbing.  This WSJ report is based on interviews with people who know about the testing crisis, and undisclosed emails, correspondence on the issues involved. Community transmission began in January 2020 in the U.S. These delays were costly in February and could have been prevented either by going with the German design on Feb 10 or asking labs across the U.S. to develop their own test, and letting other labs immediately use the modified 2 component test of CDC that worked instead of doing this action weeks later. Mardi Gras on Feb 25 and other places where large crowds gathered in sports stadiums could have been stopped had testing gone forward and shown the true extent of the community transmission in these critical weeks.  First China delayed a U.S. team of experts coming into the country for weeks, and then the CDC, FDA, HHS, failed to get testing started, creating  a false sense of complacency. Two crucial errors outside and inside the country that caused so much damage to America and the world.   ...

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The U.S. and China sign Phase 1 of the trade agreement in a sign of reduction of trade tensions between the two countries. Difficult issues of state subsidies under China's state enterprise model of development, and technological competition were put off for the future. China made the deal possible by agreeing to double its purchases of agricultural products, and offering to purchase about $200 billion in American goods and services over the next two years. This gives relief to farmers, a key part of Mr.Trump's support base. This also helps achieve a key Trump and U.S. goal of cutting the U.S. trade deficit with China quickly, just as happened decades ago with Japan.  See the related article and link on how for the first time in decades China's trade surplus with the U.S. is now set on a path for permanent decline. It dropped significantly in 2019 by 12.5% even though China's imports from the U.S. dropped by 21%, based on Chinese customs data released for 2019. With China increasing these imports significantly and the U.S. holding on to tariffs of 25% on $250 billon of China's exports to the U.S. which are outside the Phase 1 agreement, the downward course is set for the next few years for correction of a dangerous trade imbalance. That imbalance was allowed to develop over successive Republican and Democratic administrations. China already has the European Union as its first leading trading partner and south east Asia as its second. China plans to not be so closely intertwined with the U.S. in trade, and yet preserve its state sponsored development model and drive to compete in technology. China's increased purchases from the U.S. of $200 billon are broken down in terms of farm products- $32 billion, manufactured goods- $80 billion, energy products- $50 billion, services $35 billion. In effect the U.S. gets its goal of cutting the unsustainable China trade surplus quickly and with certainty in 3-5 years. China uses the period to transition for less trade linkage with the U.S. yet preserving its state sponsored model of development and drive for technological advancement.   ...

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The People's Bank of China's decision to reduce the reserve requirement for deposits at banks by 0.5% is not likely to have much impact, as banks already have enough money to lend. The problem is more a lack of demand for loans as the economy slows. Inflation fears restrict the use of growth tools such as lowering interest rates and the housing bubble limits the use of construction spending to increase growth. Political uncertainty with a leadership transition, and economc uncertainty in Europe also limit options.