Coronavirus recovery: why stimulus-driven inflation is not the biggest threat to markets
Worries about an inflation shock are way overdone, particularly given the scale and severity of the damage wrought by the pandemic. Markets should be more concerned about the ability of governments to control the pandemic and respond forcefully enough to minimise long-term scarring.
Coronavirus recovery: vaccine success can help make up for prevention failures
Economies that have failed to control the coronavirus so far might be able to compensate by running ahead with their rate of vaccinations. Those who can catch up at this part of the global race against Covid-19 have a good chance of emerging from the pandemic stronger.
Chinese banks cautious on bad loans despite bumper profits
Prudent stance compares with analyst and investor confidence for turnaround China’s largest banks, after posting their biggest surge in quarterly profit since the aftermath of the global financial crisis, are not yet ready to declare an end to bad debt increases. Soured loans, which include those officially classified as nonperforming, so-called special mention loans or lending potentially at risk of turning bad, rose to 6.5 trillion yuan ($990.22 billion) by the end of 2020, or 4.5% of total loans, from 6.2 trillion yuan a year earlier, according to data from the banking regulator. Rating agency S&P Global Ratings estimates forborne loans, where small businesses could opt to defer interest and principal repayments until March 31 amid the pandemic — amount to a further 3.5% of total lending and are being classified as normal. “The nonperforming loans that need to be addressed could increase further in 2021 and the situation may last until next year,” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said at a media conference in March. “We have the confidence and ability to deal with the issue.”
China will deliver €71.3bn in tax cuts to help support economy
China will deliver 550 billion yuan (€71.3 billion) in tax cuts to help support the economy’s recovery, a move that could also damage local governments’ finances further.
To counter China’s economic influence, rebuild the American Heartland
On first glance, a China-response bill—with its focus on international geopolitics and a faraway superpower—might seem like a shift away from President Joe Biden’s professed urgency about helping working families here in America. However, the emerging bill is emphatically not a shift of focus. Rather, it represents a serious effort to renew America’s economy by investing in the nation’s high-value, good-paying industrial economy, and so provide better livelihoods in more communities around the country.
China, after all, lies at the center of the U.S. advanced-industry competitiveness challenge, which has influenced so much of the nation’s pre-pandemic economic drift and division. Between 1990 and 2007, surging Chinese import competition played a large role in “hollowing out” the U.S. economy both nationally and locally, as low-cost imports undercut American producers and drove massive declines in decent-paying U.S. manufacturing jobs, especially in the heartland.
Since then, the initial China “shock” has evolved into an ongoing crisis exacerbated by a broader ebbing of U.S. advanced-industry competitiveness. China, for its part, has positioned itself as America’s main economic rival through an array of tactics, including unfair and illegal trade practices, intellectual property theft, manipulative terms of market access, and lavish subsidies for Chinese enterprises.
In any event, the need to counter China’s rising global power now stands as an urgent prod to revitalize America’s drifting, uneven economy. Hopefully, the fear of falling behind will provide enough motivation to spur that work even in a hyper-partisan time.
Scaling AI in the sector that enables it: Lessons for semiconductor-device makers
Artificial intelligence has significant value-creation potential in the semiconductor industry. How can semiconductor companies deploy AI at scale and capture this value?
China tests the long arm of its law in Xiaomi and Huawei’s international patent battles
Chinese courts are increasingly heeding calls by Beijing to protect the international interests of domestic companies China and other countries’ exertion of extraterritorial jurisdiction has alarmed legal experts around the world
Germany’s dangerous export fetish
The coronavirus crisis has exposed how dangerous the German economy’s over-reliance on exports really is. China shows how to do it better Such a mission may sound utopian, but it’s not. For example, in the last decade China has has quickly and sustainably moved away from its one-sided export orientation – China’s export share was still at 33.8 per cent in 2005. In the meantime, the Chinese economy has succeeded in rebalancing itself through a massive stimulation of domestic demand and high levels of investment in research and technology – without losing out in terms of export volumes. Rebalancing the German economy is therefore not only possible unilaterally – without protracted international coordination processes –, but would also enable Germany to gain a lot of international recognition. An increased demand via higher wages and state expenditure would lead to the reduction of Germany’s current account surpluses vis à vis our European neighbours and the US, an important act of solidarity to overcome the coming recession
CHINA’S ECONOMIC REBALANCING
We point out two major challenges in the rebalancing. First, the transition toward a less investment- and export-dependent growth model has been taking place from a starting point of exceptionally low consumption-to-GDP ratios. Besides high profit-to-wages ratios, low levels of public social protection and spending lead to high household savings. An additional challenge comes from the lack of progress in rebalancing between private- and state-owned enterprises, something that is taking a toll on productivity
Japan and US aim for chip supply chain deal in April summit
Working group on strategic technologies planned ahead of Suga-Biden meeting U.S. and Japanese governments will cooperate to secure a supply chain for strategic technology components such as semiconductors, Nikkei has learned. The semiconductor shortage became apparent in the latter part of 2020, after carmakers had trimmed their semiconductor orders in anticipation of a decrease in demand due to the coronavirus pandemic. In fact, the recovery in the auto market was stronger than expected, but semiconductor manufacturers were already responding to strong demand for laptops and smartphones due to remote working. Power outages caused by the cold weather in the U.S. and a fire at Renesas Electronics’ main factory, in northeast Japan, added to the woes. Japan and the U.S. are wary of the concentration of production bases in China. According to the Boston Consulting Group, the share of semiconductor production in the U.S. fell from 37% in 1990 to 12% in 2020. The market share of China, which invests huge amounts of subsidies in the sector, is projected to increase from 15% in 2020 to 24% in 2030, making it the largest in the world.
TSMC to spend US$100 billion over three years to grow chip capacity
TSMC’s aggressive expansion is designed to capture rampaging chip demand Intel and Samsung are also investing heavily in semiconductor fabs
Xiaomi bets big on ‘smartphone with four doors’ despite huge challenges in electric vehicle market
Founder Lei Jun is hoping to turn cars into yet another connected device in Xiaomi’s IoT system The move from traditional cars to electric vehicles mirrors the transition from feature handsets to smartphones, analysts say
China chemical merger to create group with $152 billion sales
Shares in Sinochem International rose by their 10% maximum daily limit on Thursday after the company’s parent, China’s largest chemical group, won approval to merge with its main domestic rival, reported the Financial Times. The State-owned Assets Supervision and Administration Commission, or Sasac, overseer of China’s central government-backed industrial groups, said on Wednesday it would create a new holding company to absorb Sinochem Group and China National Chemical Corp, also known as ChemChina, said the FT. The move, which has been in discussion for years and will create an industrial powerhouse with annual sales of more than RMB 1 trillion ($152 billion), is the latest effort by Beijing to create state-backed champions to challenge international leaders. “The merger could help [China’s chemical industry] better handle pressure from the domestic expansion by foreign industry giants,” said Shanghai-based Huachuang Securities in a report. “It will allow China to play a larger role in the global energy, chemical and agriculture industries.”
China Puts Limits on Foreign Banks, Worrying Businesses
New rules, aimed at taming big money flows and possibly controlling the Chinese currency, could give domestic rivals a competitive edge and make international firms more dependent on local lenders. The reasons behind China’s new banking rules aren’t clear, though they appear to have little to do with the tense political environment. They seem to be aimed instead at stemming big, potentially disruptive flows of money into the country.
Analysis: In China’s small cities, home buyers suffer as debt-ridden developers fail to finish projects
In Zhuozhou, a small city in China’s north, Zhu has stopped making mortgage payments on her apartment after its developer did not build a promised rail line that would have allowed residents to commute to Beijing for work.
China threat: Australia responds to Beijing with huge $1 billion defence investment
AUSTRALIA will invest $1 billion into building new missiles and guided weapons to counter the threats posed by an increasingly militaristic China.
China still weighs climate summit RSVP a week after Joe Biden’s invitation
Collaboration on environmental issues might help the China-US relationship but larger unrelated issues could hamper their ability to work together, say analysts Beijing has declared it is willing to act, but the international community is watching to see how committed it is to achieving carbon neutrality by 2060
What is green finance, and why is it important to China’s carbon neutral goal?
China has quickly expanded to become the world’s second-largest green bond market after the United States To become carbon neutral, China must have policies for green and low-carbon development, Premier Li Keqiang said in his 2021 government work report
China’s grain reserves stable, sufficient: Government official
China’s grain reserves are stable and sufficient to feed 1.4 billion people, with the national grain storage surpassing 650 million tons and reaching an advanced level, an official at the National Food and Strategic Reserves Administration said on Friday.
How deadly floods in western China could threaten new Silk Road
Global warming is greening the deserts of Xinjiang as rising temperatures lead to doubling of rainfall over half a century, researchers say Scientists warn infrastructure planning and quality standards need to be updated to prepare for ‘lots of water’
China begins survey of Yellow River sewers to find sources of pollution
Inspections of the sewers are expected to be completed within two years It is the latest effort to gauge and control the pollution in China’s major rivers
Overuse of antibiotics threatens China’s fish farms, scientists warn
Researchers say the practice could damage the industry and increases the risk that drug-resistant superbugs will develop Use of drugs in overshore fish farms is subject to less stringent regulations than on land
Can fintech open new doors for infrastructure financing in Asia?
As the infrastructure investment needs of emerging Asian countries continue to grow, obtaining financing is becoming increasingly difficult. The COVID-19 pandemic has exacerbated issues and highlighted the importance of broadening infrastructure financing options in Asia. Fintech is presenting itself as one potential solution. The public sector continues to finance the majority of infrastructure in Asia, although the private sector is becoming increasingly involved through public–private partnerships (PPPs) and privatisation. Approximately 70 per cent of Asian infrastructure funding comes directly from the public sector. The private sector contributes about 20 per cent and multilateral agencies such as international development banks contribute the rest.
As China pushes for a high-speed railway economy, who pays the price?
Greater connections disproportionately benefit bigger and more powerful cities, allowing them to siphon off talent and capital from all over the country
Hong Kong’s elites should think about an exit strategy
Beijing already moving to sideline China loyalists within the city’s establishment The most serious concern for Hong Kong’s elites is the impact on their interests if China’s economic integration plan is fully implemented. Hong Kong’s tycoons may see this plan as a great opportunity and believe that their connections on the mainland will help them. But they may be in for a rude shock. Beijing wants to integrate Hong Kong’s economy not to enrich its tycoons, but to make the city’s economic future even more dependent on the motherland. In this process, Beijing would understandably give preference to mainland players, in particular state-owned enterprises, at the expense of Hong Kong’s businesses. Most of Hong Kong’s pro-Beijing elites may feel puzzled, even upset, by their marginalization. After all, they have been faithfully toeing the CCP’s line and, in the case of crushing the pro-democracy movement, doing most of its dirty work. But they mostly have themselves to blame. If they paid any attention to the party’s record, they would find that the party does not trust anybody who is not groomed, tested and promoted within its own system. Even China’s richest and most successful private entrepreneur, Jack Ma, is not trusted by the party. Ma may be a party member, but his rise to stardom took place outside the party’s control. If the party would not trust Jack Ma to run his business, it is hard to imagine that it would trust Hong Kong’s elites to undertake the task of turning their city into just another party-controlled Chinese town. In the coming years, Hong Kong’s elites will have to make a painful decision. If they don’t’ want to accept their marginalized status and growing insecurity, it is time to draw up a Plan B. Those still unsure may want to hear from their elders who fled the victorious Communists marching into Shanghai in 1949.
China backs Asean meeting to mediate in Myanmar crisis
Beijing tells Southeast Asian foreign ministers that it supports the bloc’s intervention but does not want outsiders ‘meddling’ in Myanmar’s internal affairs China has also stepped up patrols along the border following a Covid-19 outbreak in the city of Ruili
Fears of an Imminent Chinese Invasion of Taiwan Are Overblown
The top U.S. military commander for the Asia-Pacific region, Adm. Philip Davidson, raised eyebrows at a recent Senate hearing when he suggested China could invade Taiwan within the next six years. The nominee to replace Davidson at the head of U.S. Indo-Pacific Command, Adm. John Aquilino, then went a step further, telling the same committee last week that in his view, “This problem is much closer to us than most think and we have to take this on.”
What will it take for the world to cooperate on Covid-19 vaccines and passports?
Without working together, there is little hope of tackling unprecedented vaccine supply challenges, waiving vaccine patent rights and agreeing on vaccine passports
Why China’s space program could overtake NASA
China has a good chance of becoming the dominant space power in the 21st century, and it’s not just looking to copy NASA on the way to the top. Instead, the country is paying close attention to what innovative US companies like SpaceX are doing as well. To get ahead in space, communism is learning from capitalism. For now, the US and NASA have the advantage of a more robust space program and a stronger commercial space industry. But for the last decade, the US commercial space industry has succeeded despite Congress, not because of it. Unless Congress and NASA more closely embrace commercial space and follow a bold plan of exploration, China’s constancy of purpose and mimicking of Western strengths will overcome this head start.
Focus Less on Getting A’s, More on Catching Z’s, Ministry Says
After nearsightedness, will sleep become the next battleground for the physical and mental health of China’s children?
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