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Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries....

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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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With Ukraine unwilling to give up the Donbass and Germany/France/UK wanting to prevent Russian favored deal adverse for Europe, US focus on Monroe Doctrine and western hemisphere, Ukraine Russia war is likely to drag on. This is what one sees in Merz, Zelensky, Rubio speeches at the Munich Security conference. In 2026 Germany+ (that includes France and the UK) does not see it in the interests of Europe to allow a Ukraine capitulation to Russian attacks and Germany has already allocated funds to rebuild its military to prevent this from affecting Germany+ interests in Europe. Even though the winter attacks on Ukraine grid and electricity infrastructure leaves Kviv and other cities in a dire situation it appears that without the 20 year security guarantee or something solid Ukraine is not willing to sign an agreement which it fears Russia could turn around and start the war again. Germany+ which is the position of the major parties in Germany 60-70 % of voters for the SDP, CDU, Greens and others except AfD with 20-30% of voters. (AfD may have reached a ceiling as CDU under Merz is tough on migrants). Which means about 70% of Germans will support a policy of joining UK and France in resisting Russian attacks. Russia may have lost so much in manpower may see the war as a vindication only if it can hold onto the Donbass which may make it harder to reach a deal. Zelensky says Ukrainians live there and is unwilling to leave the Donbas region. The net result is that Germany+ and Ukraine are not likely to concede ground, the US reluctant to commit to 20 year security condition for Ukraine as it focuses energy on the western hemisphere and the fentanyl, drug traffickers in Mexico, Venezuela and Colombia, and their support structures in Cuba, in addition to Iran and China's plan on Taiwan sees limits to what it can do beyond limiting oil's funding the Russian attacks. It is amisrepresentation to say that the US is the cause, as everything changed the moment China became an industrial power with the help of US business interests and returned to its own story of being subject to British and Japanese incursions in the 19th and 20th centuries, and sensing that it is an industrial power in its own right by 2020 and insisting on framing its own policy in the world. Europe always had its own narrative since 1600 long before the US became an industrial power under Teddy Roosevelt in 1904. In that narrative which now plays out again different European powers band together to prevent any dominant power in Europe (Russia in 2026) from gaining dominance. ...

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WSJ Editorial Board looks at the reserves being set aside by banks and oil companies against losses in Russia as the situation in Ukraine worsens in April 2022, and has questions for CEO's that have not made preparations for a similar situation arising in China. Too much is being done on Russia "on the fly." For China 83% of American company CEO's have made no plans for supply chain action for China even after the pandemic hit and after the supply chain chaos from zero covid policies. JPMorgan, Goldman Sachs, and Citigroup have set aside $3.36 billion for Russia, according to Reuters. Shell says it may take charges of $5 billion to write down Russian assets. Exxon will take a similar charge. WSJ Editorial Board says the situation in China with respect to territorial claims on Taiwan are similar, and asks what preparation is being done for China risks. WSJ's Editorial Board says American CEO's should be calculating their supply chain and investment risk now in the event that there is a conflict in Asia. Some of this foreign investment has shifted it says as foreign direct investment as a share of China's GDP is down to 1.2% in 2020 from as high as 4.6% in 2005, according to the World Bank. Much remains to be done. Yet in 2021 despite the supply chain chaos from China's zero covid policies and rising geopolitical plus trade tensions, 83% of American companies operating in China were not considering or were not in the process of relocating their manufacturing or sourcing out of China, according to a recent American Chamber of Commerce in China business-climate survey. A figure that is the same as in 2019, a sign of complacency says the WSJ, one that could be costly, and with Russian write downs today a warning to executives that they should start preparing now for the danger that lies ahead. ...

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China's GDP growth rate slowed to 7% in the 1st quarter of 2015, compared to 7.3% in the 4th quarter of 2014. China's Office of National Statistics reported industrial production growth at 5.65% year over year in March 2015, and fixed asset investment in the 1st quarter at 13.5%. The statistics agency reported unemployment at stable level of 5.1% for the 1st quarter 2015. Experts say the low unemployment is the one positive sign in the economy, easing pressures on economic policymakers to take action considering the high debt levels in the economy. As a result China can pursue selective monetary easing efforts and smaller, selective, better targeted stimulus.

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World leaders meet at the UN for action on climate change, especially Obama and Hu Jintao of China who represent countries that generate 40% of carbon emissions worldwide. Hu set the target for nuclear power at 15% of energy for 2020 from 8% now, and India set atarget of 20% for renewable sources of energy for 2020. President Obama said he saw the need for the developing industrial nations, by which he meant China, India and Brazil, to adopt targets for curbing emissions in any agreement, but Hu Jintao was vague about any specific targets. So the gap remains as the US goes to the Copenhagen talks on climate change in late 2009.

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Fears that India may be falling behind China, Mexico and Brazil in healthcare for the people. A planned budget increase was never implemented. Today the Indian government spends only $20 billion on healthcare for a population of over 1 billion people. Annual spending on healthcare is about 1.4% of GDP. Now the Indian government is planning to increase this to 2.5% of GDP. One senior health official Amarjeet Sinha, says other emerging economies such as Brazil, Mexico, Malaysia, now have better public health indicators than India. In 1990 India's public health indicators were similiar to those countries. Another serious problem in India is malnutrition with an estimated 4 of 10 children malnourished. Underinvestment in healthcare is a significant problem as needs grow but there is a shortage of resources and trained healthcare personnel. Arvind Singhal, chairman of consutancy Technopak, says India needs an additional 1 million doctors and 2.5 million nurses to meet the needs of the current level of the Indian population. To do this 600 new medical colleges and 1,500 nursing colleges are needed. The child care advocacy group Save the Children UK, points out that just to meet India's committment to reduce the infant mortality rate by two thirds of the current level by 2015- to meet India's commitment to the UN Millenium Development Goals- India will need 2.6 million additional trained health workers. This shortage is most acutely felt in rural areas, especially in the large states of Uttar Pradesh and Bihar....

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The effects of China's slowing economy on food exports of Argentina and Uruguay is likely to be small because of China's continuing need for imports and the food contamination from widespread pollution. Commodity producers of iron ore in Australia and Brazil see the rising wages in China and pollution controls reducing the gap between locally produced iron ore and imported iron ore.

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The Chinese Academy of Environmental Planning, under the Ministry of Environmental Protection, has estimated cost of pollution in a new study of the costs of environmental pollution in China. The cost is estimated at $230 billion for 2010, or 3.5% of GDP, and close to 4 times the cost in 2004, showing the rapid degradation of the environment from rampant industrialization. The first such estimates were made in 2006 and since then come out spradically from the Environment Ministry. For 2004 the Environment Ministry estimated cost of pollution was $62 billion, for 2008 partial cost estimate was $185 billion. Even the $230 billion figure fo 2010 is incomplete say researchers. Only after strong public protests over Beijing's air pollution have government officials allowed candid reporting on environmental costs. Environmental costs extend to food contamination. A report on China Central Television recently said farmers in a village in Henan province used wastewater from a paper mill to grow wheat, which was then sent to cities as farmers in the village grow wheat for their own use from well water. A Deutsche Bank report in Feb 2013 says there will be a continuing decline in the environmental degradation for the next decade under current policies, higher coal consumption and growth in automobiles....

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About 24,000 Chinese people from China took the route through Ecuador to the Darien Gap and then to the US border with Mexico. This is the fourth largest group after Venezuelans, Guatemalans and other migrants entering the US. Out of 1.3 million people in the US with orders to be deported 100,000 are Chinese, says this report in NYT.

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After denying clearances for development projects for three decades, the Indian Supreme Court green bench of Justices Gavai and Vikram Nath clears 118 development projects already delayed for 5 years for pending litigation. 118 projects were cleared, including 15 held up for 10 years, based on the "sustainable development" idea that takes a look at the bigger picture, the aspirations of youth, and the bigger possibilities for renewables and environment with a bigger economy. It shows how India which at one time in 1990 had about the same GDP as China, has today one fifth the GDP of China, and with it lacks the same scale of investment for renewable energy and climate change action that China has because of China's larger economy. In this sense the whole country of 1.2 billion Indians, including hundreds of millions of farmers and urban residents, the Supreme Court and India's institutions, have suffered more than the one lost decade the prime minister referred to in the Budget session of parliament. It is more like three decades since China pushed ahead after 1990. China having suffered from the Japanese invasion and civil war for three decades in the 1920-49 period and three decades of drift in economic direction following 1949. India faced its own period of failed governance that matches the failures in China by 1990. The SC bench stated- "The Supreme Court is flooded with applications after applications, seeking permissions to construct primary schools, public health centers, anganwadi centers, an other public utility buildings in remote areas. Himachal Pradesh is constrained to approach the Supreme Court even for seeking permission to connect villages in remote areas by roads. Needless to state, the citizens residing in the remote areas cannot be deprived of the developmental activities that are being done in other parts of the country."  The Supreme Court called it ridiculous that the states were required to rush to the Supreme Court to do the minimal developmental activities.  That the Supreme Court and other institutions have taken so long to say and do this is itself one of the reasons India has fallen behind China. It will need to accelerate its efforts, in the way that the rest of the country and the world is doing to create an environment in which development can meet the aspirations of the Indian people. Efforts for climate change action can take place at the same time with bigger investment capabilities from the larger economy and advanced technological capabilities. The two can and do go together, a point missed for far too long.  An approach even the US has grasped and is doing under president Biden. The US has gone through its own period of failed governance for four decades of neglect of manufacturing and infrastructure that president Biden talked about in his State of the Union address to the US Congress last week.  Biden now sees the problem itself as an opportunity to get it right. So can India.   ...

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Spain's central bank was lauded for macroprudential supervision before the housing bubble burst. Will China's central bank and financial authorites which have managed the housing bubble upto this point face similiar problems? Can China be the sole exception even as housing bubbles burst with wide repercussions in the U.S., UK and Spain? Nicholas Lardy, of the Peterson Institute of international Economics, says urban housing stock makes up 41% of Chinese household wealth in 2011. The same figure for the U.S. is 26%. Chinese buyers invest in homes because low interest rates on savings accounts cannot keep up with inflation. Real estate investment was 13% of GDP in 2011. Home ownership is a recent development in China, only since 1990, Chinese have never experienced large price declines. Household debt as a percentage of disposable income has increased significantly in recent years, up to 53.6% in 2011 from 31.3% in 2008, according to Lardy.

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The US envoy to Belarus responds to overtures from Belarus's leader Lukashenko for improved relations, release of hundreds of political prisoners including the husband of a opposition leader who is thought to have won the last Belarus open elections in 2020. Today it is not realized that politicians with lack of vision or foresight - Bush, Obama, Merkel, failed to grasp that in 2020 two events happened that were linked- the Belarus electons bringing another pro-EU government on Russia's border which was squashed before it could take office and the pro-democracy movement in Hong Kong also squashed in 2020 by China PRC. Crimea was made part of Russia in 2014 when Ukrainian protesters in Kviv and Lviv near Poland ousted the government of pro Russia leader Yanukovych in the Maidan revolution. Russia under Putin responded 2014-2020 with a simmering effort to take parts of eastern Ukraine that were close to and sympathetic to Russia. This was an effort to counter NATO or pro-EU countries coming to Russia's borders in the way JFK opposed pro-Russian regime in Cuba. Obama and Merkel never understood or grasped this or were too involved in the eurozone, migration crises (Merkel) or war in Afghanistan (Obama). The result was that in 2020 Russia helped squash the election results in Belarus with another pro-EU government impending. Within 2 years Russia under Putin with tacit Chinese support invaded Ukraine in Feb 2022. Belarus shares a border with Russia and it is closely allied with Russia in the Eurasian Economic Zone that includes former Soviet Bloc countries such as Kazakhstan. Gradually following the recovery of the Russian economy by 2010 the emphasis shifted to create something similar to the Soviet Union, a bloc of countries in central Asia and in Eastern Europe that are part of a Russian sphere of influence. For much of the period of the Obama/ Merkel administrations in US and Germany this was ignored as most of the politicians never gave Russia the importance it sought, not accepting that the economic power was not measured only in GDP- also in science and technology, nuclear technologies, space, in energy resources, and Russia's position in Northern/Central Europe and Central Asia since 1700.  It is this situation that the DJT administration faced with US challenges of the Mexican and Venezuelan drug and people trafficking in the western hemisphere has responded with the Monroe Doctrine to reassert American influence in Latin America by respecting Russia's effort to have some measure of influence on its borders, that the US seeks on it's borders. Without Russian or Chinese intervention in Latin America and with the the Monroe Doctrine in place America can protect the interests of the American people and the people of Latin America for free and good government. What Bush, Obama, Merkel lost sight of is that by each power having some strong measure of influence in their regions, and the tendencies for benevolent influence put in place, there is significantly more room for respecting the hopes and aspirations of people in their regions through democratic or other people oriented forms of government than by the situation in which economically the US was dominant after the fall of the Berlin Wall but other influences would lead to US decline- open but not free trade with China, and the recovery of the Russian economy, drug and people trafficking by gangs in Latin America where the Monroe Doctrine for US leadership had prevailed till the 1960's. ...

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Of the 291 million migrant workers, people from rural areas who work in cities, only about 120 million have returned to work by Feb 14, according to China's Transport Minister. Workers can choose to stay in their home region or come back to the cities and face a 14 day quarantine before being allowed to go back to work. In Beijing the entire city of 22 million has a 14 day quarantine. Even if workers complete the quarantine factories may be closed.

This is likely to cut the growth rate by half from last years 6.4% to 3% for the 1st quarter GDP.

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At the current rate of reducing the 10% current account deficit by the central bank, it will be the end of 2013 when it could be brought down to 6%. This may not be fast enough as Turkey could face an external shock if sentiment of foreign investors changes before that. As Turkey partly depends on foreign investors for short term funding of the deficit, this is critical for Turkey's economy. Only one quarter of capital inflows are in the form of long term direct investment. As the situation in the eurozone worsens in 2012-2013, Turkey is in serious danger of a sharp downturn in the economy after years of growth. The IMF has cited Turkey in the list of countries where the credit growth to GDP has increased to the level of a warning light indicator. Other countries cited by the IMF are China, Vietnam, S. Africa and Brazil.

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China's National Bureau of Statistics made an announcement in Beiijing that 51.27% of the Chinese people now live in urban areas. In 1949 the figure was 10.6%, in 1979 it was 19%. In the space of three decades China has urbanized rapidly. This has brought with it economic growth, infrastructure development and increased employment in the manufacturing sector as new workers moved from rural areas to the cities. With it also come major problems for the country and the leaders of the Communist party led government. Of the 691 million urban residents, 253 million are migrant workers- 37% of urban residents and 19% of the population are in this grey zone described as the "hukou" or household registration system. Under "hukou" these migrants from rural areas cannot access public services in the cities, and have rights to access them in their own villages where they are registered. Integrating these migrant workers who are different than their more affluent and better educated neigbors in the cities so that they become truly a part of the urban areas will remain a huge challenge for China. One of the ways China is addressing this is with the plan to build 36 million units of affordable housing for these migrant workers by 2016. Ever so gradually Chinese officials are relaxing the restrictions on migrant workers- such as Shanghai Mayor Han Zheng's announcement for allowing all migrant workers to rent subsidized housing in the outer parts of Shanghai and committing to "increase the migrant population's involvement in the community affairs, cultural life and show genuine care for them." Food security is another issue as more development on prime agricultural land means less land available for agriculture. Appropriation of agricultural land for industrial use is bringing the country down to the limit of 120 million hectares of agricultural land needed for self sufficiency in food, according to the Land Ministry. At the same time China's leaders want to avoid what the World Bank calls "the middle income trap," where a country reaches a level of modernization and urbanization, and then stalls at that level- the level being around $3000 per capital GDP, which is China's GDP per capita today, according to the National Bureau of Statistics in China. Li Keqiang, who takes over from premier Wen Biao, sees the building of affordable housing for migrant workers as a critical way to continue the urbanization process, and shift the country from its export focus by increasing consumption and the development of industries that support this. A slowing economy dominated by state owned companies focussed on a decelerating export model and an aging but still growing population- NBS says China's overall population was up by 4.8% in 2011 over 2010 and has reached 1.35 billion- presents a tougher set of challenges to the new leadership in China than was faced by the current leadership....

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Savings for China and Japan by increasing oil imports at low prices could amount to about 1% of the economy for each country. Japan imports of oil are one tenth of total imports, and amount to $75 billion. At prices half of what they were before coronavirus the savings are about $40 billion a year. This will offset some of the drop in economic growth of about 3% in the year ending March 2021.

For countries where the coronavirus has been relatively controlled with manufacturing and infrastructure projects ready to go ahead the benefit is greatest. China expects to see about 7% decline in GDP in the first quarter resulting in minimal growth for the year as long as export markets in the U.S. and Europe remain weak. For India it depends on how long the lockdown continues and how quickly economic activity can resume under new conditions. 

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Italy is planning to place a quarantine in the north covering the region around Milan and 11 provinces nearby, in a draft decree from the prime minister's office, says this report in the WSJ. When a final decision is made the quarantine would go into effect March 8 and go on till April 3, 2020. This move is similar to the quarantine steps taken in China which helped limit the health crisis in China from coronavirus. The new decree also includes tight restrictions on travel in the affected areas. 

The new action is being taken as earlier measures have not limited the spread of coronavirus. They were requested by the government in Lombardy, which combined with Emilia Romagna and Veneto are the worst hit of the regions in northern Italy with about 85% of cases. It also means the industrial economy with 40% of GDP is affected.

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China Investment Corporation is completing a deal to take a 30% stake in GDF-Suez's exploration unit for 3 billion euros.

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Karishma Vaswani of the BBC points out that most of China's economic growth came with the shift to a market economy made by Deng Xiaoping in 1979, when he announced that China would follow a program of "socialism with Chinese characteristics." By comparison the 19th Party Congress is more about stabilization, preserving the gains made so far after Deng's opening up of the economy to foreign investment and technological collaboration. The placing of thought of Xi Jinping into the Chinese Constitution is more about setting a path of stable direction by the Communist Party than of major changes. The gains in the economy have come with some costs that will have to be addressed by an aging society. Particularly the problems of air and water pollution that other economies in Asia and Latin America following their own development paths would now strive to avoid. An anti-corruption drive was part of this effort for stable direction as the problems of debt to GDP ratio of close to 270% with an aging society remain to be tackled. There is still a large gap between the upper middle class and the rest of China as a result of the rapid growth. In this sense Jinping's effort at the 19th Party Congress is more about restoring the credibility of the Chinese Communist Party as China tackles the next stage of growth needed to catch up with Japan or South Korea. ...

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Nathaniel Taplin of the WSJ says the tariffs put on $50 billion high tech products by the U.S. and retaliatory tariffs on $50 billion products are not about a trade war but a way both countries will negotiate setting out their two positions.  A look at the role of foreign firms in China shows China has access to new technology using these firms as a conduit and these firms are also generating more jobs, being highly productive. These firms Taplin says will set back their investments if no agreement is reached or if it is harder to bring Chinese made products into the U.S. At this time China badly needs this investment and technology access because of their dynamism compared to inefficient state run firms as it struggles under a massive debt load with very high debt to GDP ratio.  A major issue is job growth as companies getting foreign investment are much more effective in jobs generation, delivering 10% of all urban job growth from 2007 to 2016, using just 5.5% of total investment. Return on assets at 9% compares to 4% at state run firms. If this dynamism is reduced or affected in some way China could have to provide more unproductive debt buildup stimulus.  For these reasons China has good reason to make concessions, says Taplin. Trump administration will ask for greater semiconductor purchases, much looser joint venture or foreign ownership requirements, higher Chinese payment for U.S. intellectual property. For all these reasons this is not about a trade war but about serious negotiations taking place so that there is a level playing field in the next phase of competition in high tech between the U.S., China and the E.U. changing the dynamics of the trade relationship in ways that reverse the trends of the past. ...

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The aggressive effort of the US central bank, the Federal Reserve, to increase interest rates to dampen inflation will have an effect on Asian currencies and trade. The Japanese yen lost 14% of its value and the Korean won 8%, Chinese yuan 5% since the beginning of 2022. This is a result of the widening gap between interest rates in the US and Japan where the interest rates have not been increased due to mild inflation.  Asian trade is done in US dollars and exports to the US are invoiced in dollars. Citigroup says about three quarters of trade in Asia-Pacific is invoiced in dollars. Weaker currencies would translate into higher effective prices for imported commodities - energy and food. This pushes up domestic inflation and hurts manufacturing.   Add to this a shift in the US demand from goods into services in 2022 and there is weaker external demand for the economies of Asia. This will exacerbate the slowdown in Asian economies. Many countries such as South Korea and Thailand have increased their external borrowing in dollars. Debt service ratio was 21% in South Korea and 14.5% in Thailand, according to Bank for International Settlements. Years of low rates allowed governments in Asia to borrow more without incurring high interest bills. Now that situation is changing quickly and will result in difficulties for South Korea and Thailand says this report in WSJ. In the last 10 years Asian economies excluding China increased debt to GDP ratios by 15 percentage points, according to Gavekal. The result might not be debt crises as in Sri Lanka but painful slowdowns in economy with combination of loss in external demand from the US and higher inflation, higher interest bills. ...

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A senior Indian diplomat, and former ambassador to China, Gautam Bambawale, says China's action in the June 15 clash at Galwan Valley was the worst violence since 1967. He sees it as a premeditated and well thought out action. His view is that India's relations with China will deteriorate further. That this was an action by the PLA to take territory to what it sees as the LAC or border. For small tactical gains he says "China has strategically lost India." This will impact trade and other relations going forward in his view.  Nothing of this sort was expected says Bambawale. All the agreements put in place since 1993, everything for tranquillity at the border, all the mechanisms, have now collapsed. Bambawale has provided a very lucid and clear account of the relations and the border issues. He goes on to say that Chinese observers have given reasons for the Galwan clash with PLA- that India should stay away from the US and other democracies such as the European Union. Some reflection shows that the opposite has happened. And further reflection would show that the same situation was repeated in the period of transfer from British Empire to Republican India, and from Nationalist China to Communist China from the period 1947 onwards. Different perceptions and different leaderships that gave the perception of gaps between the two countries. In the 1950's after the Korean War Chinese perceptions about India could have led to the incursions that brought China to the borders of India in 1950, similar perceptions of gaps in development and capabilities could have led to the conflict in 1962. From 1993 peace prevailed with India after China entered the World Trade Organization under president Clinton in 2001 following a 10 year effort. Because the focus in China was on development after a series of crises, internal sense of a widening technological gap with the US and Europe, disagreements with the Soviet Union, and the experiments with market economy, internal struggles for democracy. With that period coming to a close as the new trading relationship has led to working class losses in factory jobs in the US, China is faced with protecting its economy as it and the US look at changing supply channels and how it affects both countries. It is a critical time for China as it faces governments in US, France, UK and Canada determined to protect their own interests in manufacturing jobs, renewing supply channels, and in technological advancement. The response is similar to that in 1962 when seen from the Communist party perspective as a gap has opened up with India following China's progress in the 30 year trading relationship with the US and Europe. That gap and the difficult situation China faces today with the US and EU in trade and technology has brought forward the Galwan clash and future clashes in Ladakh and at the border.  As Mr. Jaishnkar, India's Minister of External Affairs as well as former ambassador to China,  has pointed out this is a very different aspirational India that China faces. The same kind of grassroots development that happened in China and rapid pooling of capital, human resources and technology inputs for development is taking place in India, and will continue for the next two decades, quickly bridging any gaps in modernization between the two countries. The difference between a youthful population in India and aging population in China and Japan, is likely to add another dimension. China's Buddhist culture that came from India is not likely to go away, more likely is that China will see a revival of Buddhist ideas of wellness and living more as culture than religion. The experience with British colonialism that prevailed both in India and China, and which from its base in India caused so much grief to China during the Opium wars will recede from memory. Extending borders from historical memory of Japanese incursions into border areas in Manchuria could have led leaders after 1950 in China to extend borders to remote areas in the Arunachal region of India and communist theory books may have created the perception of defensive moves. In the context of an aspirational India similar to China, and no real intention on the part of India to extend itself in any way to China's provinces in Sichuan, this extending of borders as a defensive move will be seen as stemming from memories of Japanese incursions in the 1930's, but simply costly and not relevant in any way to China's own aspirational development and progress. ...

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China's GDP declines by 6.8% in the first quarter 2020 year over year, and 9.8% from the previous quarter, the first such decline since 1992, even going as far back as 1976 with the passing of the Mao era. It is not power production or coal consumption which have returned to prior levels. It is the demand from the U.S. and Europe, other countries which are in lockdowns. Estimates are that 80 million people in a population of 900 million working age people lost their jobs, with another 10 million expected to be lost, about 10% of the total. Global trade companies are hardest hit.  Consumers inside China are reducing spending. Some are using only the small government issued vouchers designed to get people to go out and spend.  The Trump administration plans to bring back some of the production lost to China in essential areas such as public health and security back to the U.S. The supply chains are already shifting to other countries from U.S. tariffs. As a result some estimates show zero growth in 2020 for China. Financial instability and prior leveraging concerns remain to prevent any serious stimulus. By contrast the U.S. is cushioning the impact with $2 trillion aid package benefitting from a strong dollar and healthy economy before the virus. ...