HANGZHOU – Two brothers and their father were sentenced to death on Monday for cheating 15,000 investors out of over $1.1 billion in east China’s Zhejiang province. Ji Wenhua, president of the Yintai Real Estate and Investment Group, was sentenced to death for the crime
Dan Collins CMR “Gold going to $7,000″, an article today in the Chinese media is going viral and one of the most viewed articles in the financial press. The article references American Jim Rickards and his concept of comparing inflation-adjusted gold prices. Most Chinese economists
It’s not uncommon for the large Wall Street banks to combine in shorting an entire years supply of minded silver in a single day.The same goes for all commodities. Endless paper printing getting funneled to Wall Street has destroyed all real price discovery. Capitalism fails
Chanos is back! His short China thesis is very long in the tooth but as it goes with most ego maniacs he cannot accept failure or that fact that he might be wrong. Being wrong on an entire country where you have never visited and
Dan Collins CMR When I moved to China back in 1998 I was surprised to learn how highly the Chinese thought of America. Of course China was a much poorer place back then but coming from the Detroit area I couldn’t fathom where was all
You have to laugh at the whole “China will collapse crowd” on CNBC and even respected sites like Zero Hedge. Personally, I love the Zerohedge stuff. They understand the ponzi-financial fraud-money printing-welfare state economy that now envelops the West. But China is a real economy,
D.Collins CMR China’s cloud computing market is expected to be worth 37.2 billion yuan (US$6 billion) in 2017 as demand for the service grows, the Chinese-language China Securities Journal reported on Friday. Some American tech companies are watching the largest and fastest I.T. market in
Breaking News today that a Chinese vessel as rammed and sunk a Vietnamese fishing boat. All countries in the South China Sea and East China Sea are using fishing boats in a game of cat-and-mouse to challenge each other on their respective areas. This time
Scared of losing the Chinese tourist dollar, France has relented to China and will allow Chinese police on the streets of Paris. More signs of the benefits of third-world immigration into the West to the point where cultural breakdown has occurred and law and order
Gold has been flowing East for a decade. When the West wakes up to the fact that their gold is gone, they will no longer have sound money with which to back a currency. The world has only been off a gold standard since 1971
From the China Daily… BEIJING – China will lower banks’ reserve requirement ratio (RRR) by 0.5 percentage points starting May 18, the country’s central bank announced Saturday. The cut, the second of its kind this year, will drop the RRR for the country’s large financial
Is China tweaking its numbers on GDP? Probably. For twenty years Chinese GDP roughy came in right on the governments target. This would be an almost magical performance record considering economists in the West can predict absolutely nothing. For years, China most likely lowered GDP
Japan will learn the hard way that destroying your currency is not an viable economic strategy. Shanghai Daily JAPAN posted a record 1.63 trillion yen (US$17.4 billion) trade deficit in January as rising exports trailed surging imports of crude oil and gas due to rising
American GDP: The Fantastic Fiction of American Economic Strength By Dan Collins Is the U.S. economy still the most powerful in the world? That is what we are told as the United States does have by far the world’s largest Gross Domestic Product (GDP). In
Youtube, Facebook, and Twitter are all blocked in China. They have algorithms in place to disrupt Google service as well which makes it very annoying even using Google here. You get many dead links when the algo’s are working. Despite blocking American companies in China,
The sovereign man blog who writes some great stuff but hopelessly has
fallen hook, line, and sinker for the mainstream media narrative of
a collapsing China has posted this picture on his blog.
The billboard in Thailand sponsored by the Bank of China is
telling Thai citizens to start holding the world’s next global
currency. You don’t need to tell the Thai government, only a few months
ago they signed a 70 billion Yuan currency swap agreement with the
If your wondering who the Bank of China is, they are one of the big 4
state-owned banks each of which that make more then $25 billion annually.
The Bank of China alone has over $2 trillion in assets and had an operating
income last year of over $70 billion dollars.
“Wolf of the Northwest” next Chinese official to go down along with 30 other high ranking officials.
We are now into the 3rd year of the purge of officials on the wrong-side.
now its the PLA’s turn to face the transparency of the light and face time
for their crimes and corruption. Karma is a bitch.
Want China Times
Another 14 Chinese military officials have been put under investigation in the run up to the Lianghui, the annual meetings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), according to Duowei News, a media outlet run by overseas Chinese. The move comes after 16 high-ranking military officials were placed under a corruption probe before the Chinese New Year holiday.
The latest announcements included a much-anticipated probe into Guo Zhenggang, the son of retired vice chairman of the Central Military Commission Guo Boxiong, nicknamed the “wolf of the northwest;” the deputy director of the Air Force Political Department of the Beijing Military Region Chen Hongyan and the head of the Air Force Logistics Department of the Guangzhou Military Region Wang Sheng.
The authorities have announced the probes, apparently unconcerned at the possibility that they will distract from the upcoming national meetings. This has led to speculation that bigger moves may follow. The arrest of Guo Boxiong’s son suggests that Communist Party chief Xi Jinping is closing the net on Guo himself and a probe is expected to be announced within six months of the Lianghui, according to a source cited by Duowei.
The probe into Guo Zhenggang, the political commissar of the Zhejiang provincial military region, was announced along with probes into other officials, including a close aide to Guo Boxiong, Liu Hongjie, vice director of the Management and Security Department of the PLA General Staff Headquarters, on March 2. The number of senior officers that have been exposed as having links to Guo suggest that he was engaged in the same kind of cronyism as disgraced former general Xu Caihou in terms of personnel decisions, according to Duowei.
There is little information about Chen Hongyan or Wang Sheng or any reports linking them to Guo. The two officials were however linked to a major disruption to flights in China in July 2014 — during which flights at 12 airports, including Shanghai’s Pudong and Hongqiao airports and airports in Nanjing, Hangzhou and Hefei, were asked to reduce flights by 25% each due to “military exercises” — in a news report over Chinese New Year. After the vice director of the national-level office controlling China’s airspace Liu Zirong attempted to commit suicide by jumping from a building on Feb. 10, there have been rumors that this was because he knew the details of the mysterious disruption to flights or because he had helped a senior official to flee and was scheduled to be put under a probe. A source cited by Duowei suggested the reason for the major disruption to flights, which caused major delays and cancellations to flights across China, was to prevent Guo Boxiong or disgraced former Politburo Standing Committee member Zhou Yongkang from fleeing the country.
Only the probe into Wang Yi has not yet been confirmed and although there is no way to be sure if the probes are linked to the flight disruptions or of Guo’s involvement, the probes into Guo Zhenggang and Liu Hongjie suggest this is a major possibility.
On the afternoon that the probe into the 14 officials was announced, CPPCC spokesperson Lu Xinhua hinted at the link to the flight disruptions when restating the army’s determination to wipe out corruption and that no one was untouchable.
Although Lu made no explicit or oblique reference to Guo Boxiong, speculation among the media that he will meet a similar fate to Zhou Yongkang, Xu Caihou and former vice chairman of the CPPCC National Committee Ling Jihua is rife.
The media in China are said to have already prepared reports on the probe into Guo and are simply awaiting the nod from the central government and Xi Jinping is said to have already formulated a list of Guo’s crimes and is simply waiting for the right moment to go public with it, according to Duowei.
Guo is said to have been taken into custody last year after the flight limitations were lifted and the probe into his son suggest that authorities have already carried out significant investigations into the nature of his activities, said Duowei.
The campaign to root out corruption in the PLA is unlikely to end with the 30 or so officials announced before and after Chinese New Year, as members of the CMC including Fan Changlong, Xu Qiliang, Chang Wanquan, Fang Fenghui, Zhang Yang, Zhao Keshi, Zhang Youxia, Wu Shengli, Ma Xiaotian and Wei Fenghe recently visited major army units to reaffirm the necessity to purge the armed forces of the influence of Xu.
Ukraine Hikes Rate to 30%, Requires Corporations to Sell 75% of Foreign Currency Earnings; Miners Not Paid For 3 Months
In an effort to arrest hyperinflation and general panic over rising food prices, Ukraine’s Central Bank Hikes Benchmark Rate to 30 Percent.
Ukraine’s central bank will raise its benchmark refinancing rate to 30 percent from 19.5 percent, the head of the central bank said on Tuesday, as the bank tries to rein in rocketing inflation and persistent currency weakness.
The new interest rate, which comes into effect on Wednesday, is the highest for 15 years.
Lord Rothschild, the chairman of RIT Capital Partners, says the world is facing its greatest levels of geopolitical risk since the end of World War II. The statement accompanied a warning on the consquences of renewed quantitative easing efforts around the world.
In a statement accompanying 2014 results of the $2.4 billion global investment trust, Rothschild highlighted Middle Eastern tensions, rising unemployment in Europe, and disappointing global economic growth, among other concerns.
‘We are confronted by a geopolitical situation perhaps as dangerous as any we have faced since World War II: chaos and extremism in the Middle East, Russian aggression and expansion, and a weakened Europe threatened by horrendous unemployment, in no small measure caused by a failure to tackle structural reforms in many of the countries which form part of the European Union,” Rothschild said.
Despite the risks, Rothschild stated that equities could remain the preferred investment choice in 2015 given the continued commitment to near-zero interest rates.
Rothschild’s trust, which manages his family’s wealth and savings of private investors, said its share price total return for 2014 was 13.3%, while its net asset value total return for the year was 9.5%. This was roughly half of its 2013 performance.
The PBOC cut rates again over the weekend by 25 basis points to 5.35 percent.
The Yuan went slightly weaker to trade at 6.28 vs 6.26. Bloomberg and others
instantly hit the airwaves talking about a depreciating Chinese currency.
Its sad that this qualifies today as journalism. The West can not see outside
their own box of printed money and the danger signals of their own economies
which are out of control debt, money printing, a collapsed industrial sector,
and now negative interest rates.
Is China’s currency getting weaker?
China’s currency is actually up 20-30% in the last 12 months against their
major trade partner currencies. The Chinese Yuan is up 20% against the Euro and
over 50% against the Russian Rubble. African and South American countries which
are much more important to China than the U.S. have also seen their currencies
devalue by over 20% against the Chinese Yuan. The Chinese Yuan has followed the
U.S. Dollar up almost in lock-step over the last 12-18 months as the world as
sold out emerging market currencies. This could spell trouble as China’s real
economy is productive driven and not used to high fluctuations with currencies.
Global supply chains could be disrupted very quickly. Exporters will struggle
and manufacturing should move back to the other emerging markets.
Despite a downtrend over the last several years the Chinese economy is healthy and
throwing of huge trade surpluses, 2014 was a new record, and the economy created
13 million jobs in 2014 in the cities alone. An economy such as China’s which is
now over a $10 trillion dollar economy growing at even 5% is substantial. Over the
years as the U.S. and U.K. have become “paper economies” with hordes of welfare
and unemployed and burned-out cities, China has remained focused on real economic
development. They are moving quickly to move from fixed asset investment economy
to a more balances technological, retail, and consumer services led economy.
Indeed, the rash rise of the Yuan may help this process along. The drop in oil and
commodity prices are also helping China more than anyone else,however, a 20-30%
appreciation of the currency will more than cancel out any benefits gained.
With China now moving to a middle market economy labor is much cheaper in other
areas of the world.Look for manufacturing sectors in places like Mexico and Brazil
to boom. Southeast Asia will also be part of the next manufacturing boom.
(Sorry U.S., with a 38% tax rate no one is moving plants to the U.S.)
2015 could prove to a major inflection point this year with the rapid appreciation of
China’s currency.It could be a major tipping point on allocation of productive capital
across the globe. Capital outflows from China will grow as exporters look to set up
Don’t expect a a large-scale devaluation of the renminbi in 2015 but it will get weaker.
Long term I expect the Yuan grow strongly against the Dollar but we first have to get
through the last gasps of illusion in the West that printing money is the same as
prosperity. Once that mirror breaks, the mantle of global economic superpower will
be handed to China and you will live in their world. They will make the rules, as it
is according to the golden rule,he who has the gold make the rules.
And they say China cannot innovate. It looks like they have beat the
American’s on this one with female “game casters” in China now making
millions and getting millions of followers on Weibo and Tencent social
media platforms. Companies are paying them to play video games as millions
of lonely men around the country sit staring into their computer screens
and game consoles.
Chinese video game streaming site Longzhu recently signed Han Yiying, a
female gamer better known by her online handle “Miss,” for a reported
17 million yuan (US$2.7 million) to be a gamecaster, the report said.
They are many other celebrity female game casters some with the names
such as “Miss War”. China has seen an increase in women streaming videos
of themselves, including those showing the video games they play and
explaining their tactics, following a government crackdown on porn
These female game casters are walking a thin line as many appear scantily clad
and one woman who streamed footage of herself changing clothes online, for example,
saw her video streaming site shut down as a result.
The U.S. is enforcing Hedge Fund debt strangleholds over Argentina while
the Chinese are offering Satellite stations. Not a hard choice. Even under
the heights of the Cold War did any significant portion of Latin America
go into the camp of the U.S.S.R. For a country the size of Argentina to
become such good partners with China should scare the hell out of planners
in the Pentagon.
Want China Times
Argentina’s parliament on Feb. 26 approved the construction of a Chinese satellite
station for lunar exploration on an area covering 200 hectares at Neuquen,
1.380 kilometers from Buenos Aires, according to Fox News.
The lower house of Congress passed the bill with 133 votes in favor and 107 against.
Some lawmakers oppose the facility on the grounds that it could be used in future
military operation and also over a tax exemption which will benefit the station
for 50 years. President Cristina Fernandez said that the satellite station is
a part of China’s program for a manned moon mission by 2020.
Under the agreement between the two nations, Argentina will be able to access at
least 10% of the antenna’s available time for research projects. Once the facility is
put into operation, it will be placed under the custody of the Gendarmerie which
is responsible for controlling Argentina’s borders.
Argentina last year launched ARSAT-1, the country’s first domestically built
communications satellite, the first satellite in Latin America to be constructed
with local technology.
If Chinese submarines outnumber the U.S. fleet globally, imagine what the
power discrepancy is in the Asia-Pacific. The U.S has lost control of the Pacific
WASHINGTON (Reuters) – China is building some “fairly amazing submarines” and now has more diesel- and nuclear-powered vessels than the United States, a top U.S. Navy admiral told U.S. lawmakers on Wednesday, although he said their quality was inferior.
Vice Admiral Joseph Mulloy, deputy chief of naval operations for capabilities and resources, told the House Armed Services Committee’s seapower subcommittee that China was also expanding the geographic areas of operation for its submarines, and their length of deployment.
For instance, China had carried out three deployments in the Indian Ocean, and had kept vessels out at sea for 95 days, Mulloy said.
“We know they are out experimenting and looking at operating and clearly want to be in this world of advanced submarines,” Mulloy told the committee.
U.S. military officials in recent months have grown increasingly vocal about China’s military buildup and launched a major push to ensure that U.S. military technology stays ahead of rapid advances by China and Russia.
Mulloy said the quality of China’s submarines was lower than those built by the United States, but the size of its undersea fleet had now surpassed that of the U.S. fleet. A spokeswoman said the U.S. Navy had 71 commissioned U.S. submarines.
U.S. submarines are built by Huntington Ingalls Industries Inc. and General Dynamics Corp.
In its last annual report to Congress about China’s military and security developments, the Pentagon said China had 77 principal surface combatant ships, more than 60 submarines, 55 large and medium amphibious ships, and about 85 missile-equipped small combatants.
Mulloy did not provide details about the number of surface ships now operated by China.
He said the U.S. military did not believe China carried nuclear missiles on its submarines, but that it had been producing missiles and testing them.
The 21st century belongs to China: Why the new Silk Road threatens to end America’s economic dominance
- China holds more than $15 trillion in bank deposits, which are growing by a
whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion.
- The country still produces 80% of the world’s air conditioners, 90% of its
personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of
From 1980 to 2010, China’s urban population grew by 400 million, leaving the
country with at least 700 million urban dwellers. This figure is expected to
hit one billion by 2030
PEPE ESCOBAR, TOMDISPATCH.COM
Beijing is building a trans-Siberian railway system that rivals the Marshall
Plan in its ambition and global reach
BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.
“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.
Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.
Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.
To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.
And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.
Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.
China as a Mega-City
If you are following this frenzy of economic planning from Beijing, you end up with a perspective not available in Europe or the U.S. Here, red-and-gold billboards promote President Xi Jinping’s much ballyhooed new tagline for the country and the century, “the Chinese Dream” (which brings to mind “the American Dream” of another era). No subway station is without them. They are a reminder of why 40,000 miles of brand new high-speed rail is considered so essential to the country’s future. After all, no less than 300 million Chinese have, in the last three decades, made a paradigm-breaking migration from the countryside to exploding urban areas in search of that dream.
Another 350 million are expected to be on the way, according to a McKinsey Global Institute study. From 1980 to 2010, China’s urban population grew by 400 million, leaving the country with at least 700 million urban dwellers. This figure is expected to hit one billion by 2030, which means tremendous stress on cities, infrastructure, resources, and the economy as a whole, as well as near-apocalyptic air pollution levels in some major cities.
Already 160 Chinese cities boast populations of more than one million. (Europe has only 35.) No less than 250 Chinese cities have tripled their GDP per capita since 1990, while disposable income per capita is up by 300%.
These days, China should be thought of not in terms of individual cities but urban clusters — groupings of cities with more than 60 million people. The Beijing-Tianjin area, for example, is actually a cluster of 28 cities. Shenzhen, the ultimate migrant megacity in the southern province of Guangdong, is now a key hub in a cluster as well. China, in fact, has more than 20 such clusters, each the size of a European country. Pretty soon, the main clusters will account for 80% of China’s GDP and 60% of its population. So the country’s high-speed rail frenzy and its head-spinning infrastructure projects – part of a $1.1 trillion investment in 300 public works — are all about managing those clusters.
Not surprisingly, this process is intimately linked to what in the West is considered a notorious “housing bubble,” which in 1998 couldn’t have even existed. Until then all housing was still owned by the state. Once liberalized, that housing market sent a surging Chinese middle class into paroxysms of investment. Yet with rare exceptions, middle-class Chinese can still afford their mortgages because both rural and urban incomes have also surged.
The Chinese Communist Party (CCP) is, in fact, paying careful attention to this process, allowing farmers to lease or mortgage their land, among other things, and so finance their urban migration and new housing. Since we’re talking about hundreds of millions of people, however, there are bound to be distortions in the housing market, even the creation of whole disastrous ghost towns with associated eerie, empty malls.
The Chinese infrastructure frenzy is being financed by a pool of investments from central and local government sources, state-owned enterprises, and the private sector. The construction business, one of the country’s biggest employers, involves more than 100 million people, directly or indirectly. Real estate accounts for as much as 22% of total national investment in fixed assets and all of this is tied to the sale of consumer appliances, furnishings, and an annual turnover of 25% of China’s steel production, 70% of its cement, 70% of its plate glass, and 25% of its plastics.
So no wonder, on my recent stay in Beijing, businessmen kept assuring me that the ever-impending “popping” of the “housing bubble” is, in fact, a myth in a country where, for the average citizen, the ultimate investment is property. In addition, the vast urbanization drive ensures, as Premier Li Keqiang stressed at the recent World Economic Forum in Davos, a “long-term demand for housing.”
Markets, Markets, Markets
China is also modifying its manufacturing base, which increased by a multiple of 18 in the last three decades. The country still produces 80% of the world’s air conditioners, 90% of its personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of its shoes. Manufacturing accounts for 44% of Chinese GDP, directly employing more than 130 million people. In addition, the country already accounts for 12.8% of global research and development, well ahead of England and most of Western Europe.
Yet the emphasis is now switching to a fast-growing domestic market, which will mean yet more major infrastructural investment, the need for an influx of further engineering talent, and a fast-developing supplier base. Globally, as China starts to face new challenges — rising labor costs, an increasingly complicated global supply chain, and market volatility — it is also making an aggressive push to move low-tech assembly to high-tech manufacturing. Already, the majority of Chinese exports are smartphones, engine systems, and cars (with planes on their way). In the process, a geographic shift in manufacturing is underway from the southern seaboard to Central and Western China. The city of Chengdu in the southwestern province of Sichuan, for instance, is now becoming a high-tech urban cluster as it expands around firms like Intel and HP.
So China is boldly attempting to upgrade in manufacturing terms, both internally and globally at the same time. In the past, Chinese companies have excelled in delivering the basics of life at cheap prices and acceptable quality levels. Now, many companies are fast upgrading their technology and moving up into second- and first-tier cities, while foreign firms, trying to lessen costs, are moving down to second- and third-tier cities. Meanwhile, globally, Chinese CEOs want their companies to become true multinationals in the next decade. The country already has 73 companies in the Fortune Global 500, leaving it in the number two spot behind the U.S.
In terms of Chinese advantages, keep in mind that the future of the global economy clearly lies in Asia with its record rise in middle-class incomes. In 2009, the Asia-Pacific region had just 18% of the world’s middle class; by 2030, according to the Development Center of the Organization for Economic Cooperation and Development, that figure will rise to an astounding 66%. North America and Europe had 54% of the global middle class in 2009; in 2030, it will only be 21%.
Follow the money, and the value you get for that money, too. For instance, no less than 200,000 Chinese workers were involved in the production of the first iPhone, overseen by 8,700 Chinese industrial engineers. They were recruited in only two weeks. In the U.S., that process might have taken more than nine months. The Chinese manufacturing ecosystem is indeed fast, flexible, and smart — and it’s backed by an ever more impressive education system. Since 1998, the percentage of GDP dedicated to education has almost tripled; the number of colleges has doubled; and in only a decade, China has built the largest higher education system in the world.
Strengths and Weaknesses
China holds more than $15 trillion in bank deposits, which are growing by a whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion. A definitive study of how this torrent of funds circulates within China among projects, companies, financial institutions, and the state still does not exist. No one really knows, for instance, how many loans the Agricultural Bank of China actually makes. High finance, state capitalism, and one-party rule all mix and meld in the realm of Chinese financial services where realpolitik meets real big money.
The big four state-owned banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China — have all evolved from government organizations into semi-corporate state-owned entities. They benefit handsomely both from legacy assets and government connections, or guanxi, and operate with a mix of commercial and government objectives in mind. They are the drivers to watch when it comes to the formidable process of reshaping the Chinese economic model.
As for China’s debt-to-GDP ratio, it’s not yet a big deal. In a list of 17 countries, it lies well below those of Japan and the U.S., according to Standard Chartered Bank, and unlike in the West, consumer credit is only a small fraction of total debt. True, the West exhibits a particular fascination with China’s shadow banking industry: wealth management products, underground finance, off-the-balance-sheet lending. But such operations only add up to around 28% of GDP, whereas, according to the International Monetary Fund, it’s a much higher percentage in the U.S.
China’s problems may turn out to come from non-economic areas where the Beijing leadership has proven far more prone to false moves. It is, for instance, on the offensive on three fronts, each of which may prove to have its own form of blowback: tightening ideological control over the country under the rubric of sidelining “Western values”; tightening control overonline information and social media networks, including reinforcing “the Great Firewall of China” to police the Internet; and tightening further its control over restive ethnic minorities, especially over the Uighurs in the key western province of Xinjiang.
On two of these fronts — the “Western values” controversy and Internet control — the leadership in Beijing might reap far more benefits, especially among the vast numbers of younger, well educated, globally connected citizens, by promoting debate, but that’s not how the hyper-centralized Chinese Communist Party machinery works.
When it comes to those minorities in Xinjiang, the essential problem may not be with the new guiding principles of President Xi’s ethnic policy. According to Beijing-based analyst Gabriele Battaglia, Xi wants to manage ethnic conflict there by applying the “three Js”: jiaowang, jiaoliu, jiaorong (“inter-ethnic contact,” “exchange,” and “mixage”). Yet what adds up to a push from Beijing for Han/Uighur assimilation may mean little in practice when day-to-day policy in Xinjiang is conducted by unprepared Han cadres who tend to view most Uighurs as “terrorists.”
If Beijing botches the handling of its Far West, Xinjiang won’t, as expected, become the peaceful, stable, new hub of a crucial part of the silk-road strategy. Yet it is already considered an essential communication link in Xi’s vision of Eurasian integration, as well as a crucial conduit for the massive flow of energy supplies from Central Asia and Russia. The Central Asia-China pipeline, for instance, which brings natural gas from the Turkmen-Uzbek border through Uzbekistan and southern Kazakhstan, is already adding a fourth line to Xinjiang. And one of the two newly agreed upon Russia-China pipelines will also arrive in Xinjiang.
The Book of Xi
The extent and complexity of China’s myriad transformations barely filter into the American media. Stories in the U.S. tend to emphasize the country’s “shrinking” economy and nervousness about its future global role, the way it has “duped” the U.S. about its designs, and its nature as a military “threat” to Washington and the world.
The U.S. media has a China fever, which results in typically feverish reports that don’t take the pulse of the country or its leader. In the process, so much is missed. One prescription might be for them to read The Governance of China, a compilation of President Xi’s major speeches, talks, interviews, and correspondence. It’s already a three-million-copy bestseller in its Mandarin edition and offers a remarkably digestible vision of what Xi’s highly proclaimed “China Dream” will mean in the new Chinese century.
Xi Dada (“Xi Big Bang” as he’s nicknamed here) is no post-Mao deity. He’s more like a pop phenomenon and that’s hardly surprising. In this “to get rich is glorious” remix, you couldn’t launch the superhuman task of reshaping the Chinese model by being a cold-as-a-cucumber bureaucrat. Xi has instead struck a collective nerve by stressing that the country’s governance must be based on competence, not insider trading and Party corruption, and he’s cleverly packaged the transformation he has in mind as an American-style “dream.”
Behind the pop star clearly lies a man of substance that the Western media should come to grips with. You don’t, after all, manage such an economic success story by accident. It may be particularly important to take his measure since he’s taken the measure of Washington and the West and decided that China’s fate and fortune lie elsewhere.
As a result, last November he made official an earthshaking geopolitical shift. From now on, Beijing would stop treating the U.S. or the European Union as its main strategic priority and refocus instead on China’s Asian neighbors and fellow BRICS countries (Brazil, Russia, India, and South Africa, with a special focus on Russia), also known here as the “major developing powers” (kuoda fazhanzhong de guojia). And just for the record, China does not consider itself a “developing country” anymore.
No wonder there’s been such a blitz of Chinese mega-deals and mega-dealings across Pipelineistan recently. Under Xi, Beijing is fast closing the gap on Washington in terms of intellectual and economic firepower and yet its global investment offensive has barely begun, new silk roads included.
Singapore’s former foreign minister George Yeo sees the newly emerging world order as a solar system with two suns, the United States and China. The Obama administration’s new National Security Strategy affirms that “the United States has been and will remain a Pacific power” and states that “while there will be competition, we reject the inevitability of confrontation” with Beijing. The “major developing powers,” intrigued as they are by China’s extraordinary infrastructural push, both internally and across those New Silk Roads, wonder whether a solar system with two suns might not be a non-starter. The question then is: Which “sun” will shine on Planet Earth? Might this, in fact, be the century of the dragon?
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President Xi Jinping of China and his top graft-buster Wang Qishan may be targeted by assassination attempts from corrupt officials who have been allegedly buying high-powered sniper rifles from the United States, reports Boxun News, a US-based citizen journalism outlet with a reputation for releasing unsubstantiated “insider” reports on Chinese politics.
According to a Boxun reporter in Hong Kong, recent raids on the homes of more than one corrupt official unveiled evidence of a revenge plot to assassinate Xi and Wang with American sniper rifles.
Xi, who launched on ongoing campaign to take down all corrupt officials — regardless of whether they are lowly “flies” or high-flying “tigers” — back at the start of 2013, has reportedly been bolstering his security detail over the last six months after the conspiracy came to light, Boxun said. Safety measures at outdoor appearances have also been upgraded, with even vice-ministerial-level officials needing to pass security checks, Boxun said.
This is not the first time Xi’s life has been at risk, said Boxun, which previously published unconfirmed claims that fallen tiger Zhou Yongkang had twice tried to take Xi’s life back in 2013, shortly after the Communist Party chief ordered Wang, chief of the Central Commission for Discipline Inspection, to look into the rumors of corruption that have long plagued China’s former oil and security tsar.
The two assassination attempts were said to have taken place around the time of the annual Beidaihe leadership conference in north China’s Hebei province. The first involved a time bomb hidden in a meeting room, while the second was a poison needle during a health check at Beijing’s 301 Military Hospital, Boxun said.
Xi was able to evade death on both occasions, and as a result the 72-year-old Zhou, a former member of the Politburo Standing Committee, was expelled from the party in December and will become the highest-ranked Communist Party official since the Cultural Revolution to be prosecuted for corruption
As we enter “The second machine age” one dominated by smart devices,
big data, and bioinformatics the West is still stuck with a hopelessly
outdated 1900′s era financial system where a small group of men in a
room behind closed doors determine global interest rates for the
“market price” of capital. This capital then goes to banks with a license
whom then multiple it 9 times according to the fractional reserve banking
system. However, this system is breaking down as the capital is staying in
the banks and causing income inequality and massive Speculative Asset
Pricing Bubbles (SAP) across the world in different sectors.
And it has gotten worse, since the global economic crisis of 2008 the Central
Banks have completely taken over the world financial system by expanding
their balance sheet crowding out and mis-pricing risks in the
world’s capitalist economies. For proof of this , just look at the Bank of Japan
whose balance sheet is now half as large as the entire Japanese economy and has
enabled the Japanese government to reach 250% debt/GDP.
This system will collapse, to see the future of global finance you need to
look at what is happening in China with Ant Financial and Tencent. China’s
financial system has been locked up tight but they are now in the Vanguard of
creating a new 21st century financial system.
China’s overseas property investments have jumped 24 fold, from US$600 million in 2009 to US$15 billion in 2014, with insurance funds having been the most active, Beijing-based Securities Daily reports, citing global real estate consultancy Knight Frank.
China’s overseas property investments focused mainly on Australia, the UK and the US, with capital flows entering those three countries jumping five fold from 2012 to 2013, said Wang Jiaming, senior director at Knight Frank Australia.
Knight Frank believes China’s first round of overseas investment followed the active investments by sovereignty wealth funds in quality assets and banks’ purchasing their own properties. In the second round, large-sized property developers began developing overseas properties and sought diversified expansion. In the fourth round, domestic investment funds and insurance firms have been seeking investment opportunities in core and high-returns properties.
Now the fourth round of overseas investment is emerging, including investors such as ultra-high-net-worth individuals (UHNWIs), mid- to small-sized state-owned enterprises and private developers.
Wang attributed the high growth of the mainland’s overseas property investments over the past six years to slowing domestic market demand as well as the fact that overseas markets offered higher investment returns. The central government’s encouraging attitude is another reason why China’s institutional investors, banks and property developers have been active in overseas property investments, the report said.
Domestic property investments have seen lower returns with shrinking profit margins while financing costs have stayed at high levels. By comparison, overseas property investments have seen lower loan rates, thus helping upgrade profit returns.
Wang said, for example, Australia’s commercial loans can reach about 70% of the real estate project’s total worth, with loan costs at around 4%-5%, while investment returns in Australia have been able to stay at about 6%-7%. Thus, no matter how much cash Chinese businesses have, they typically will choose investments with mortgages.
Four out of the 15 insurance companies with premium income over US$1.1 billion have already conducted overseas property investments, with eight more saying they are interested in doing so. Of the four, Anbang Insurance Group plans to buy the Waldorf Astoria Hotel in New York for US$1.95 billion, China Life Insurance and Ping An Insurance have purchased London properties, while Sunshine Insurance has announced to buy Sydney’s Sheraton on the Park for A$463 million (US$362 million).
According to Knight Frank, 40% of China’s top 20 insurance firms are considering investments in overseas real estate, indicating insurance funds will stay active in overseas property investments in the future.
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A global currency war is looming after numerous central banks around the world introduced new rounds of quantitative easing (QE) monetary policies in light of the rising US dollar and the sharply falling euro, the 21st Century Business Herald reports.
Many experts have expressed optimism on the outlook of the Chinese renminbi despite the developments, and predicted that the central bank may cut the banks’ reserve requirement ratio and/or interest rates, according to the report.
The world’s central banks had mapped out long-term strategies to cope with fluctuations in the real economy and the capital market in anticipation of a stronger greenback after the United States began phasing out its QE monetary policy. These banks appear to have been required to change their plans to adopt more relaxed monetary policies due to declining crude oil prices since the second half of 2014. This resulted in sharp fluctuations in foreign exchange markets around the world.
Singapore’s central bank is the latest to engage in “competitive monetary easing.” The Monetary Authority of Singapore (MAS) announced on Jan. 28 that it will reduce the slope of its currency band–its main monetary policy tool–to slow the appreciation of the Singapore dollar.
The MAS also cut its 2015 all-items consumer price inflation forecast to -0.5 to +0.5 percent, which was recorded in October 2014 as ranging from +0.5 to 1.5 per cent.
Exchange rate management against a basket of currencies from Singapore’s main trading partners is the central bank’s primary policy tool. The MAS allows the rate to fluctuate within a certain band that it periodically reviews to promote price stability, according to the report.
Statistics showed that Singapore is the ninth economy to be forced to adopt an accommodative monetary policy in the first month of 2015.
Approximately a dozen central banks have launched varying accommodative monetary policies since last year to cope with the risks in the capital market and the economy.
Among the most remarkable developments is the recent move of the European Central Bank (ECB) to unleash a QE monetary policy in a bid to revitalize the eurozone economy and counter deflation with a €60billion-a-month (US$58 billion) bond-buying program that was far larger than the investors had expected.
The move caused a sharp drop in the euro while the main stock indexes in Europe surged sharply.
The effects of the European QE measures will notably determine whether the ECB will expand the scope of these measures and extend the period for implementing them.
Experts on Wall Street maintained a reserved attitude over the effects of Europe’s QE policy. Ethan Harris, the co-head of Global Economics Research at BofA Merrill Lynch Global Research, said it is unlikely to considerably stimulate the economy.
Feb 18 2015 | 1:27pm ET
By Katherine Burton and Margaret Collins (Bloomberg) — Soros Fund Management, the family office of billionaire hedge fund manager George Soros, cut holdings of U.S. stocks in the fourth quarter and shifted assets globally.
Soros, which manages almost $30 billion, moved about $2 billion into companies in Asia and Europe, according to a person familiar with the strategy. The New York-based firm returned about 8 percent in 2014 and is up 1.5 percent this year, said the person, who asked not to be identified because the firm is private.
Other big hedge fund managers made a similar call on U.S. equities as a slide in oil prices hammered energy holdings. Hedge funds held about $1.6 trillion of U.S. equities at the end of the year compared with $1.8 trillion in the prior quarter, according to data compiled by Bloomberg, based on 886 filings.
David Tepper’s Appaloosa Management had $2.74 billion less in U.S. stocks in the fourth quarter, a 40 percent drop from the previous quarter. Louis Bacon’s $14.8 billion Moore Capital Management had $2.3 billion in U.S. equities at the end of the year, about 25 percent less than the end of September, according to regulatory filings.
Some managers, such as Leon Cooperman, 71, remain bullish on the U.S., while predicting bigger gains elsewhere. “We expect the European and Japanese equity markets to outperform the U.S. in the coming year,” Cooperman, who runs Omega Advisors, wrote in an investor letter last month. Anticipation of more stimulus from the European Central Bank, along with a weaker euro and expectations of solid earnings, has had an affect on sending money overseas.
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The scale of China’s wealth management market is expected to increase from 46 trillion yuan (US$7.4 trillion) in 2014 to 227 trillion (US$36.3 trillion) in 2020, indicating strong growth potential, reports the China Business News.
According to a survey by CITIC Securities, private banks and wealth management companies will provide high-income clients with customized products, while middle-income clients with an annual income of US$100,000-$1 million will be offered standardized products.
Chen Xiaosheng, director and general manager of Shenyin & Wanguo Securities, said at an annual forum on Jan. 30 that the wealth management market in China is undergoing a rapid expansion, with its total value (deducting the overlapping assets) exceeding 25 trillion yuan (US$4 trillion) in 2014.
The rapid growth of the market signals a strong need for health management units to go international.
Ma Xutian, an executive at the Bank of Communications, agrees. The time has come for “the opening of the wealth management of local banks to the world,” he said. Although the scale of these wealth management units has increased 10-fold to 15 trillion yuan (US$2.4 trillion) over the past 10 years, the pace is still slower than that of global mega management companies,” he said.
Now is the time for Chinese wealth management firms to go international and expand their business scope, Ma said.
Wan Fang, president of Ping An Asset Management, said “assets worth 500 billion yuan (US$80 billion) are currently under the company’s management, over 90% of which is from institutional customers. We are keen to enter the private wealth management market…”
As the wealth management business continues to boom, there is a need to further explore products for retail customers, which means wealth management companies will have to adapt to customer needs, said the report.
Citing an insurance consultant, the newspaper said that with the increasing demand for diverse wealth management, attention must be paid to customer needs for comprehensive products that include education, immigration, healthcare, retirement and overseas investment.
Lin Jing, president of China Industrial International Trust Limited, said the “globalization of wealth management is an important trend. With a growing awareness of and need for overseas investment from high-income clients, wealth management companies have to provide them with more diverse investment products and channels.”
According to McKinsey & Company, some 60% of China’s high-income earners have assets abroad, and their overseas investments account for 10% of their total assets.
Hedge funds, securities and credit loans are the three investment channels most favored by high-income earners in other countries, statistics show. But stocks, private equity, real estate, and holding cash are the most popular areas of investment among high-income individuals in China, according to the report.
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Hong Kong-based Horizons Ventures, run by Solina Chau, the director of the Li Ka Shing Foundation, has invested in only one project in mainland China, Guangzhou’s Time Weekly reports.
The venture capital firm, which first gained prominence for its US$120 million investment in Facebook in 2007, currently has 63 projects, including 24 in Israel, a country favored by the company, the newspaper said.
Statistics from the Israeli research firm IVC showed that Horizons Ventures was the second most active venture capital company in the country in 2012, investing in a total of 10 startups in Israel that year.
Wave, a company working on brainwave-reading technology, was one of the Israeli startups Horizons Ventures invested in, and it proved to be a successful venture for the Hong Kong firm following Google’s eventual acquisition of the startup, the newspaper said.
Chau’s interview with Forbes’ Asia edition last year revealed that she established the firm in 2002 with her long-time business partner, Debbie Chang, while Li Ka-shing became an investor two years later.
“He (Li) loves disruptive innovations and sees it as kind of a predictive lens into the future,” Chau told the magazine in the 2014 interview.
The photo of Li and Josh Tetick, CEO of Hampton Creek, released last year, which featured the two frying synthetic eggs developed by the Silicon Valley startup, indicated the Hong Kong tycoon’s interest in meeting with innovative entrepreneurs.
Chau also earlier said that her firm would continue focusing on startups developing irreplaceable advanced technology to create benefits for businesses run by Li’s companies, including Cheung Kong Holding and Hutchison Whampoa.
Union Mobile Pay, set up jointly by China Mobile and China UnionPay in 2003, is the only Chinese company currently invested in by Horizon Ventures, the newspaper pointed out.
Union Mobile Pay is one of the companies in China that began operations in payment services, and its main businesses include payment processing, information services, and payment-related e-commerce, the newspaper said.
Imagine your one of the 17 people sitting in this meeting. Your thinking
this guy is nuts. Only 15 years later, he would be worth $25 billion.