Bharat Rakshak

Austin wrote:The Davos Round table discussion I posted on China says China has many tools that can work in coordination for financial crisis

Suraj wrote:

Austin wrote:The Davos Round table discussion I posted on China says China has many tools that can work in coordination for financial crisis

Everyone has lots of tools before the crisis hits.

ArjunPandit wrote:^^the stole a robotic arm!!! I mean this is amazing they got away with that

Suraj wrote:

Austin wrote:The Davos Round table discussion I posted on China says China has many tools that can work in coordination for financial crisis

Everyone has lots of tools before the crisis hits.

President Trump and his team of trade and finance advisers had dinner with President Xi Jinping of China and his team.

The purpose was to discuss the ongoing trade war between China and the U.S. Trump’s team had presented the Chinese team with 142 specific trade demands.

The two sides went over the demands one by one during the course of their two-hour dinner. When they were done, both sides announced a 90-day “truce” in the trade wars. China agreed to negotiate in good faith on the demands and the U.S. agreed to delay the imposition of tariffs scheduled to go into effect Jan. 1, 2019, until March 1, 2019, to give the negotiations time to proceed.

This was not a final deal, but it did allow markets to breathe a sigh of relief. The initial response of the stock market was a rally.

But just hours after the Trump-Xi announcements, Canada arrested Meng Wanzhou, the CFO of Huawei, in Vancouver, British Columbia. The arrest was at the request of the United States, which had issued an arrest warrant for Meng last August on numerous charges including money laundering, espionage and selling telecommunications equipment to Iran in violation of U.S. sanctions.

Meng was arrested during a stopover in Vancouver on a flight from China to Mexico. She was avoiding U.S. territory but was apparently unaware of the U.S. arrest warrant and the degree of cooperation between Canada and the U.S. on criminal matters and extradition.Huawei is the largest telecommunications equipment manufacturer in the world and one of the largest tech companies in China. Meng is the daughter of Huawei founder Ren Zhengfei.

The arrest of Meng threw global markets into turmoil. The Dow Jones industrial average index fell over 1,400 points, a 5.5% swoon, from the close on Monday, Dec. 3 to the close on Friday, Dec. 7. As of the Friday close, the Dow was down for the month, quarter and year. By the way, as of today, Dec. 13, it’s still down on the year.

By Sunday, Dec. 9, Canada was asking that Meng remain in jail pending the outcome of a hearing on whether she should be extradited to the U.S. to face a criminal trial. Meng’s lawyers were arguing that she should be granted bail and was not a flight risk because she owned property in Vancouver. She also argued that her health would be adversely affected by further incarceration. The Canadian court took these claims under advisement and planned to rule soon on the bail and extradition.

The Huawei arrest was more than a shock to markets. It was also a shock to the U.S.-China trade war negotiations. Both sides pledged to keep the negotiations on track, but China was publicly outraged by the arrest.

China told the Canadian ambassador that there would be “severe consequences” if Canada did not immediately release Meng. China’s Vice Foreign Minister Le Yucheng told the U.S. ambassador to China that “the actions of the U.S. seriously violated the lawful and legitimate rights of the Chinese citizen, and by their nature were extremely nasty.” Le also said, “China will respond further depending on U.S. actions.”

The Meng arrest is significant in its own right, but is even more significant when taken in the full context of U.S.–China relations and the possibility of a new Cold War.

Huawei is not only China’s largest telecommunications firm; it is a leader in the rollout of 5G technology for mobile phones. Huawei is alleged to have deep ties to the Communist Chinese government and the People’s Liberation Army (PLA).

Huawei founder Ren Zhengfei started his career as a military technologist at the People’s Liberation Army research institute. U.S. intelligence estimates that Huawei is de facto controlled by PLA and has engineered trapdoors and other devices in Huawei equipment that allow Huawei to spy on customer message traffic and to capture private data.

The U.S. has already refused to allow Huawei to make acquisitions of U.S. companies and has banned Huawei from sales of equipment to the U.S. government. The U.S. has also urged its intelligence partners in the “Five Eyes” (U.K., Canada, Australia and New Zealand) to do likewise. Huawei’s business is suffering worldwide just as the 5G tech implementation begins.

The next steps in the case are still pending. The British Columbia court needs to decide on bail and possible extradition. If Canada extradites Meng to the U.S., she will almost certainly face a trial on criminal charges unless a plea deal can be worked out. In a worst case, Meng will spend years in a U.S. prison. At best, the case will inflict major damage on U.S.-China relations and the prospects for peace in the trade wars.

In the meantime, the 90-day “truce” that Trump and Xi negotiated in Buenos Aires is still officially in force.

The Chinese could offer token concessions and use the 90-day window to cook up new happy talk. Their hope will be that after 90 days of negotiations and some minor concessions, the U.S. will be reluctant to break the peace or impose the additional tariffs.

The 90-day period will also give the Chinese lobbyists time to gin up opposition to tariffs from U.S. agricultural importers. This is an important political constituency for Trump as we move closer to the 2020 presidential election season. Trump needs support from agricultural states like Missouri, Iowa and Wisconsin to win his second term as president. It seems the Chinese understand U.S. politics better than most Americans.

The Chinese are also notorious for saying one thing and doing another. They will gladly sign an agreement that calls for reductions in the theft of intellectual property and then turn around and keep up the thefts (perhaps with a more covert method).

The Chinese have consistently broken their word when it comes to trade, beginning with their admission to the World Trade Organization in 2001. They will do it again once they tie the U.S.’ hands on tariffs.

The good news for the U.S. is that the Chinese tricks are fairly well-known by now. Trump’s most trusted and powerful adviser on trade is ambassador Robert Lighthizer, who was at the dinner. Lighthizer sees the Chinese for what they are and knows the litany of broken promises and lies better than the Chinese leadership.

If substantive improvements with adequate verification cannot be agreed upon with the Chinese by April 1, 2019, Lighthizer is ready to immediately raise tariffs on China. President Trump agrees with Lighthizer and will not hesitate to raise the tariffs. At that point, the trade wars will be back with a vengeance.

Closing thousands of such companies – consistently unprofitable firms that remain in operation only because of government subsidies or regular loans from state-owned banks – in less than two years would be an extremely ambitious undertaking in a strong economic environment.

But doing so in the midst of an economic slowdown, exacerbated by the ongoing trade war with the United States, raises questions as to how much the Chinese government can actually accomplish.

China’s economy is growing at its lowest rate for three decades, but analysts have warned that unless it addresses issues of debt and inefficiency, the slump will be prolonged.
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However, the closing of thousands of these companies could dramatically increase unemployment at a time when joblessness is already on the rise.

It is unclear if the services sector would be able to produce enough new jobs to absorb these laid-off industrial workers.

“The disposal of state-owned zombie enterprises is closely related to the core tasks of supply-side structural reform, such as reducing excess capacity and deleveraging” excess debt and risky lending, said Chen Dafei, senior financial analyst at Shanghai-based investment bank Orient Securities.

“The risk associated with [closing] state-owned enterprises is unemployment, but a bigger risk with the move is that it will mistakenly hurt small and medium-sized private enterprises,” Chen warned.
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However, in a recent report on bankruptcies, Maxime Lemerle, head of sector and insolvency research at trade credit insurer Euler Hermes, suggested that the total number of zombie state-owned enterprises may “exceed 20,000 cases according to some studies”.

A report by China’s Renmin University in 2016, meanwhile, listed the industries with the highest proportion of zombie companies as steel (51.43 per cent), real estate (44.53 per cent) and architecture (31.76 per cent).

The United States will remain the world’s only global economic superpower until 2035 even though China’s role in the world economic landscape will become more important, according to Beijing’s latest predictions, in an apparent toning down of the mainland’s public ambitions for its future role in global economy.

While the report by the Development Research Centre of the State Council (DRC) does not directly address the rivalry between China and US, it does attempt to project a relatively low profile role for China over the next two decades.

It is often assumed that China will overtake the US as the world’s number one economy, or at least gain the same prestige as a global economic superpower, within the next decade.

Standard Chartered Bank predicted in January that China would overtake the US as the world’s largest economy as soon as 2020.

While the DRC report did not specifically mention the ongoing trade war it did make allusions to its impact.

“We must make clear the international situation, steer the development direction, make full use of our advantages and increase our competitive edge internationally,” the report read.

It added that the yuan will not challenge the dominant position of the US dollar in the international money system and that Shanghai will not replace London or New York as the key global financial centres in the period to 2035.

…………… On average, the annual real GDP growth was overstated by 2 percentage points between 2008 and 2016. The official real GDP is 16% above our estimate in 2016. ……………….

Satellite imagery monitored the intensity of night lights in more than 3,300 cities and towns between 2013 and 2016
In 28 per cent of cases, the intensity of lights had dimmed, but urban planners are still assuming China’s urbanisation will continue, research shows

Long told a seminar in Shanghai last week that he is looking forward to China’s 2020 census to see whether the trend of China’s shrinking cities is confirmed.

Most Chinese city planning is detached from the reality of today, Long said after his team reviewed ambitious urban development plans for more than 60 cities. The plans usually include key infrastructure projects, as well as industrial, commercial and residential developments that may diverge significantly from the demographic trends.

His team also conducted a survey of 80 urban planners from China’s north-easterly rust belt, where a large number of the country’s shrinking towns are located.

Over half of the planners worked under the assumption that the local population would grow, while nearly 90 per cent said they faced pressure from local officials to use optimistic assumptions when drawing up blueprints.
Long said urban planning is often based on population and economic data provided by local authorities. In many cases, these data have been inflated
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China's #economy is facing a national emergency—a #zombie apocalypse! Zombie corporations are state owned companies that are propped up by state socialism, even though they're not profitable. And that's bad for the Chinese economy and markets. With the US China #trade dispute, will this added stress cause an economic collapse or financial #crisis and recession?

Austin wrote:https://twitter.com/graham_euan/status/ ... 4316176384

No kidding. A major scalp for Xi. Not just a G7, NATO member. Italy’s inclusion within BRI/OBOR crowns China’s southern access into the EU, on its own terms. Call it geoeconomics or strategy, just treat it with the seriousness it deserves.

chola wrote:

Austin wrote:https://twitter.com/graham_euan/status/ ... 4316176384

No kidding. A major scalp for Xi. Not just a G7, NATO member. Italy’s inclusion within BRI/OBOR crowns China’s southern access into the EU, on its own terms. Call it geoeconomics or strategy, just treat it with the seriousness it deserves.

They are grabbing all the insolvent PIIGS (Portugal, Italy, Ireland, Greece, Spain) who nearly brought down the EU.

Greece was their first beach head and Ireland had already declared itself as Cheen's "new trusted friend" in the Belt and Road after Brexit. Portugal had jumped onboard. Spain is the only holdout.

Chinis love pork so much.

chola wrote:

Austin wrote:https://twitter.com/graham_euan/status/ ... 4316176384

No kidding. A major scalp for Xi. Not just a G7, NATO member. Italy’s inclusion within BRI/OBOR crowns China’s southern access into the EU, on its own terms. Call it geoeconomics or strategy, just treat it with the seriousness it deserves.

They are grabbing all the insolvent PIIGS (Portugal, Italy, Ireland, Greece, Spain) who nearly brought down the EU.

Greece was their first beach head and Ireland had already declared itself as Cheen's "new trusted friend" in the Belt and Road after Brexit. Portugal had jumped onboard. Spain is the only holdout.

Chinis love pork so much.