CHINAwatch

Debunking Myths about China's Economy

Drawing on his insightful book, Cracking the China Conundrum: Why Conventional Economic Wisdom Is Wrong (Oxford University Press, 21 July, 2017), Yukon Huang, Senior Fellow, Asia Program, Carnegie Endowment for International Peace, Washington D.C., summarizes in a full-length YouTube interview on World Affairs, on 1 December, 2017, a great deal of mind-opening insights on why nearly all of the conventional wisdom about China is wrong, including trade, corruption, debt, citizen protests, development., Belt and Road, Climate Change, and relations with the United States. It's a rare epiphany on how China works, or not, full of "aha moments". 

China's Electricity Sector - A Lantau Group Report, April 2018

Highlights are as follows -

• Unlike India, which still has electrification rates under 80%, China declared full electrification in 2012.
• Environmental performance is high on government priorities. Energy and carbon intensity levels have fallen. Small and inefficient plants have been closed. Efficiency levels have risen as pollution levels have fallen. The renewable sector – especially wind and solar – have experienced spectacular growth to become the largest in the world. By the end of 2020, non-fossil fuel sources of electricity are to account for 39% of capacity and 31% of generation. Coal consumption and polluting emissions are both to be brought down.
• However, that still leaves coal with a 60% share of capacity.
• Massive imbalances of supply and demand persist, owing to huge distances between resource location and resource use.
• End-user tariffs are regulated for the residential and agricultural sectors. Different provinces maintain different tariff structures. And administrative tools remain more favored than price signals
• A plethora of national and provincial administrative structures blurs responsibilities, such as the National Development and Reform Commission, the National Energy Administration, the Ministry of Environment Protection, the Ministry of Land and Resources, the State-owned Assets Supervision and Administration Commission, etc., to name but a few. 
• To fully realise the potential benefits of low-carbon energy sources, deregulation reform promoting price signals as outlined in Document Number 9 would be pivotal.

Download China's Electicity Sector - Lantau Group Report April 2018

Great Decisions 2018 - China and America: the new geopolitical equation

A presentation given by Dr. Richard Lacquement, Dean, School of Strategic Landpower, US Army War College at Carlisle, Pennsylvania, USA on 2 February 2018 traces the historical dominance of the Middle Kingdom in the past millennia, its recent centuries of national humiliation, the trajectory of China's Communist Party, and President Xi's China Dream of national renaissance. It outlines potential flashpoints in US-China relations and how both countries should understand each other's aspirations, concerns and redlines, including Taiwan, the South Chian Sea, and China's trade practices, with a view to managing the most critical "make-or-break" belateral relations set to define the world in the 21st century. 

 

How may China respond to a full US trade war?

The United States has imposed life-threatening sanctions against ZTE, one of China's leading telecom conglomerates. There is speculation that Huawei, China's high-tech crown jewel, could be the next target. On the cards is an all-out tariff list impacting on $100 billion worth of Chinese goods. Additionally, a new Taiwan Travel Act threatens the One China Policy. A loose Indo-Pacific "QUAD" alliance, partnering with Japan, Australia and India, pushes back against China's growing regional influence. A rally with the European Union is in the offing, questioning China's Belt and Road Initiative.

Treasury Secretary Mnuchin's proposed visit to Beijing notwithstanding, it begs the question whether the United States is hell-bent on checking China's Rise, instead of a mere trade war.

Leaving aside the question whether China's Rise can be arrested, there is no doubt that a trade war is likely to be mutually destructive. While its initial response against American tariffs has been fairly restrained, China has far more potent ammunition up its sleeve.

First, China's massive orders from America's Boeing could be diverted to Europe's Airbus.

Second, retaliatory measures could be taken on American giant enterprises in China, including Walmart and Apple.

Third, business prospects of the Trump family in China could be curbed.

Fourth, a large dangling carrot can be held out to America's powerful oil and gas conglomerates, Trump's main financial backers, that China is ready to buy huge quantities of shale gas from the United States, given a more friendly relationship. (Naturally, China doesn't need to give up its insurance policy of Belt and Road energy supply lines).

Fifth, subject to controllable risks, China could, over time, significantly reduce the purchase of US Treasury bills, thereby driving up US interest rates, dampening America's economic growth and Trump's prospects for a second term as President.

Sixth, China could invest savings from reduced holding of US treasuries in turbo-charging development of China's fifth generation computer chips based on artificial intelligence and quantum computing, on which China has already had a head start.

Seventh, China would open up its markets vigorously, offering very attractive opportunities to the world's best talents, barring those in the United States.

Eighth, encouraging and supporting visits to China of the hundred-odd American trade and business organizations which have petitioned against any trade war with China. They would be shown China's significant improvements in market access and better equipped to fight protectionism back home.

Ninth, China would invest heavily in those states less hostile to China so that they could exert a moderating influence on Washington.

Tenth, China would redouble measures to safeguard protection of foreign intellectual property. It should play a proactive role in international forums and institutions, upholding trade liberalization and curbing protectionist tendencies.

In any case, in what promises to be an Asian Country, China should keep its eyes on the ball, taking natural anti-China tendencies in its stride. Action always speaks louder than words. 

 

 

 

China Reinvests Itself but is unlikely to displace American global leadership

A six-part China Central Television (CCTV) documentary (Chinese language), first aired nationwide in January 2018, features some of the nation's jaw-dropping breakthroughs in digitization, new energies, manufacturing technologies, life sciences, space and sea explorations, and a confluence of game-changing innovations suggestive of a Rising China. The commentary soundtrack was dubbed from the voice of a deceased famed broadcaster using artificial intelligence. 

Episode One -    Information Technology, New Energies, Manufacturing, Life Sciences, Aerospace and Ocean Exploration

Episode Two -    A far-reaching revolution to capture the immense possibilities of Nature's energies

Episode Three - Game-changing manufacturing technologies including bendable ultra-thin glass panels, wide-body aircraft, super-high-precision machine tools,  world's tallest cranes, individualized 3-D printing

Episode Four  - Overcoming the challenges of aging, deceases, and death, including super-agricultural products and innovative foodstuffs 

Episode Five  -  Exploring the depths of space and the oceans 

Episode Six   -  A rising tide of transformative technologies including the world's most powerful space telescope, micro-lighting, genetic sequencing, ultra-high speed rail, suggestive of the rise and reinvention of an ancient nation driven by the innovation of every team, every project and every city. 

A glimpse of China's prowess in applied innovation and technology is embedded in my January 2018 feature article (starting from middle of third column, p. 37) of The Global Analyst, an Indian business journal, drawing on Chinese Business - Landscapes and Strategies, London and New York: Routledge, 2018.

Examples include the world's first quantum science computer, most technologically-advanced ship elevator, world's largest gene pool, and most powerful astronomical radio telescope. These are driven by the world's largest R & D personnel, numbering 3.247 million in 2012, 29.2% of the world total, drawn from some 7 million university graduates with 30,000 doctorates a year. The number of engineering graduates is seven times higher than in the USA. Supported these projects are the rise of China's patent-filing to 928,177 in 2014, ahead of the United States at 578,802 and Japan at 325,989. 

Another dimension of Chian's global heft is its worldwide connectivity. My August 2017 PowerPoint presentation details how the Middle Kingdom manages to connect the world.

According to a South China Morning Post article of 15 April, 2018 by David Dodwell, compared with the United States, China has become by far the more important market for imports and exports for the world's top 20 economies. This relative dependence is even more pronounced in the case of APEC Members.  Download Importance of China's economy compared with US

The above startling developments have fed into a rising frenzy that China is set to displace America in leading a regional, if not global, order. They have also led to intellectual debate in the West struggling to make sense of President Xi's worldview that drives China's trajectory in a "New Era". Click here

China still faces many herculean obstacles both internally and externally. Why China will not usurp American leadership anytime soon is outlined by Harvard University Professor Joseph Nye, former US assistant secretary of defense and chairman of the US National Intelligence Council, in his Project Syndicate article of 9 April, 2018.

China will struggle to close the capability gaps with the United States, thanks to its declining and aging demographics, continuing dependence on imported energy, American cutting-edge technologies, preeminent universities, predominant role of the dollar, a rich landmass strategically guarded by two oceans, and American alliances with many advanced countries integrated with creative talents in the liberal world. Hence, according to Professor Nye, America's global leadership is likely to endure long after the Trump years.