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The 40th anniversary of China's opening up to reforms and opening up the economy with Deng's initiative are being celebrated with a recognition that Xi Jinping has made some missteps in China's policy that led to the confrontation with the U.S. on trade issues. This is leading to policy uncertainty and Mr. Jinping has even appeared conciliatory, without giving up authority. There is a recognition that China must change policy to accomodate some of the concerns the U.S. has made over lopsided imbalances in trade.

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China's central banks cuts the reserve requirement ratio, the amount of money banks need to keep at the central bank, by half a percentage point. Banks are required to use the money that is freed up of $100 billion to help heavily indebted companies and small business lacking collateral to get new loans.

This is a response to the Trump tariffs on $100 billion of Chinese goods with a equal response from China and the trade war between China and the U.S., so that the Chinese economy can be bolstered before the impact of the tariffs hurts the economy. In the past China was reluctant to reduce the reserve requirement. Chinese debt soared with local government debt and debt accumulated from the 2008 large stimulus in the financial crisis.

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India is seen as critical for the US to develop alternatives to the existing supply chain where manufacturing is concentrated in only one country. US is positioning itself as a key supplier of defense needs of India through joint development and manufacturing in India. GE has a proposal to build jet engines in India, which Jake Sullivan, US National Security Advisor, calls just the kind of effort that will make it possible to rapidly build up the American relationship with India for advanced technologies and the supply chain in manufacturing. 

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The lockdowns and war in Ukraine are affecting gasoline and food prices in China. Vegetable prices are up annual 17%, fruit 4% and flour 5%. Gasoline prices are up 25%. Shenzen, Jinlin and Shanghai are in lockdowns.

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China is offering Germany narrow wins such as buying more Airbus planes while continuing to focus on another export expansion drive in European Union countries. As it pulls back from the American market  in the face of tariffs by DJT it is selling more automobiles and other products in Germany. China continues to focus on its core potential in electric cars, machine tools, robotics and other products where it competes with German products. German jobs are at stake as China continues its expansion into the European market. This is a big concern for Merz of the CDU as he visits China in Feb 2026.

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The People's Bank of China lowers the benchmark lending and deposit rates by 0.25 of a percentage point, and cuts the reserve requirement ratio by 0.5 of a percentage point. The PBOC said the move was designed to offset "the persisting downward pressures on the country's economic growth." It was also designed to offset the large volatility in China's stock markets. The PBOC also removed the upper limit on interest rates for fixed term deposits of more than one year, as part of interest rate liberalization. The move also counters the large capital outflows affecting China, as is happening for all emerging markets, of $70 billion in July. These outflows may have accelerated in August 2015 with declining investor confidence. Experts say the reserve ratio cut should inject about $100 billion into the banking system.

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The China port at Chancay, Peru, gives China access to Latin America for trade and infrastructure cooperation.

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Apple's effort to increase its market share from 15.9% in China will face stiff competition ofrom local brands that are offering new features comparable to the iPhone at half the price.

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Deteriorating China Iran relations as the oil imports from Iran for China face US tariffs of 25% on China's exports to US, and US economic relations far more significant for the Chinese economy. China gets somwhere between 1.4 to 1.6 million barrels aday from Iran (80% of Iran's oil exports) into Shandong refiners at $10 below Brent crude prices. Another 400 mbd comes from Venezuela to China. This means $30 billion comes to Iran from oil sales to China at $59 a barrel, and $8 billion for Venezuela from oil sales to China. This has financed much of the bellicose policies towards the US in the western hemisphere and in the Gulf region. Iran's bellicose policies in the Middle East, its nuclear policy, are now seen by China as a distraction and  detract from good economic relations with the US. China $400 billion oil deal 25 year cooperation agreement signed in 2021 was signed under the Biden administration and China today faces a completely different situation in 2026. Even China's relations with Russia are not the same as the US builds better relations with Russia. A wind down of the Ukraine war would change the situation completely and ensure peace in Europe including Russia, as the US works with the EU to meet future challenges having learned from this experience in Europe (Ukraine dividing Europe) and in the Western hemisphere (drug/ migrant. trafficking). When historians write this chapter of the inflows of capital from advanced West to Arab countries and the Gulf region they will write about the huge contrast between China/India's efforts to modernize and these nations where much of that capital was wasted in wars and conflicts and in grandiose projects that made no material difference to the standard of living and quality of life of the vast number of ordinary people. Once the oil dividend is gone with fossil fuels replaced with renewable energy by 2035-2040 this opportunity to advance is lost for the Arab and Gulf region. ...

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In December 2021 China's government ended tax cuts for buyers of automobiles, and ended long running electric vehicle subsidies. China's car sales are sluggish in 2023 leading to price cuts.