CHINADebate

Malcolm Riddell

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CHINADebate

The big event during our summer break from publishing was China’s drills around Taiwan following Speaker Pelosi’s visit to Taipei.

  • Besides the obvious implications of China’s efforts to change the ‘status quo’ with Taiwan, what struck me was the batch of commentaries that came out before, during, and after the drills.

These commentaries tell you, in turn, the drills’ aims were:

  • To head off Taiwan from declaring independence; to coerce Taiwan into ‘peaceful reunification’; to deter the U.S. from defending Taiwan from an invasion; to rehearse an invasion or blockade; to change the ‘status quo’ in the Taiwan Strait; to prevent the U.S. from continuing what China sees as an erosion of the ‘One China Policy; some or all of these - or something else besides.

As for the question will China invade?

  • They answer: yes, no, maybe.

And if China invades, when?

  • They say that could be in eighteen months, two years, 2025, 2030, or 2049 (I may have missed a few dates), or whenever Xi Jinping decides it’s time.

Perplexed yet? No? Then also consider their take on Xi Jinping’s reasoning. Here are just two:

  • Mr. Xi will invade Taiwan to keep his pledge to reunify China to secure his place along with Mao and Deng as one of China’s great (greatest?) leader.
  • Or, he will not invade Taiwan because the costs to China would be too high (would it destroy decades of economic progress?) and the risks to Mr. Xi and the Party too great (what happens to confidence in them if the PLA loses and tosses them out?).

All by way of saying, when it comes to China and Taiwan, nobody knows.

  • Except Xi Jinping, and he’s not talking.

This makes commentators on China easy targets (trust me, as one of them, I know).

  • But, in fairness, China does present a unique problem.

We know next to nothing about China’s elite politics and decision-making processes.

  • Most importantly, since he is China’s supreme leader, Xi Jinping is just as opaque.

I have often written here that to understand what’s happening in China and what will happen keep two tenets in mind.

  1. Take Mr. Xi at his word – he means it.
  2. Never underestimate the impact of Mr. Xi’s own ambitions.

But these can only take us so far.

  • Hidden from us are Mr. Xi’s motivations, ways of coming to a particular decision on an issue, and willingness to accept the opinions of senior cadre – to mention only a few.

The result:

  • Dazzlingly contradictory interpretations of China’s – and Mr. Xi’s – intentions.

That means when you’re reading a commentary by an esteemed expert, be cautious.

  • Most of the time, the conclusion vigorously asserted and soundly reasoned is based, no doubt, on a lot of speculation – informed speculation but speculation still.

Just how much speculation is admirably set forth in ‘Xi Jinping’s Radical Secrecy: It makes China harder to predict and the world more dangerous,’ by Richard McGregor of the Lowy Institute, where he writes:

  • Almost anything China does has global fallout these days.’
  • ‘But its internal debates and its decision-making processes are almost entirely hidden.’

All this reminds of the passage from the Analects of Confucius:

  • ‘To know what you know and what you don’t not know - that is true knowledge.’ [‘知之为知之,不知为不知,是知也’]
  • An excellent maxim for analyzing China.

More from Richard McGregor below.

Great new resource for understanding China:

Our friends at The China Project (formerly SupChina) produce these terrific video interviews with leading China experts who analyze issues vital to the decisions of CEOs and institutional investors. Check out the latest:

From the LA Times

1 | ‘The world’s most powerful man’

In a world of political hardball, investigative reporting, and tabloids, we know a lot (if not always accurate or unspun) about world leaders, especially those in functioning democracies.

  • Not so with Xi Jinping.

‘Xi Jinping has never given a press conference,’ writes Richard McGregor.

  • ‘He is the head of China’s ruling Communist Party—a colossal, sprawling political machine with 96.7 million members—yet he does not have a press secretary.’
  • ‘His office does not preannounce his domestic travel or visitor log.’
  • ‘He does not tweet.’

‘What are billed by the official media as important speeches are typically not released until months after Xi has delivered them in closed forums.’

  • ‘Even then, the published versions can be pallid reworkings of the documents that have been circulated internally and, very occasionally, leaked.’

‘The secretiveness of Beijing’s ruling party might once have been dismissed as a mere eccentricity, fodder for an industry of intelligence analysts and academic Pekingologists to sort through for clues about top-level machinations.’

  • ‘But with Xi now often described, without hyperbole, as the “world’s most powerful man,” and on the verge of winning a norm-breaking third term later this year at the party congress, Beijing’s radical opacity has real-world consequences.’

‘How would Xi, for example, make any decision to invade Taiwan?’

  • ‘What would happen if the military pushed back?’
  • ‘Could the politburo vote to overrule Xi?’
  • ‘Does Xi feel pressure from the public to take the island?’

‘Almost anything China does has global fallout these days.’

  • ‘But its internal debates and its decision-making processes are almost entirely hidden.’

And ‘heaven help any Chinese journalist who might manage to publish a real-time account of Xi’s decision making.’

  • ‘At best, they would be out of a job. More likely, they would end up behind bars.’

‘Foreigners can simply be banned from entering the country ever again.’

2 | ‘Shining a flashlight into the corner of a dark room’

‘Xi Jinping’s personal story alone makes him a gripping subject,’ writes Richard McGregor.

  • ‘In Xi’s case, we know more about him than we do about previous Chinese leaders, in part because, before rising to the party’s top ranks, he talked about his upbringing.’
  • ‘The party itself has published a series of reverent oral histories on his years as a sent-down youth and as an official in the provinces.’

‘All of that can be illuminating as far as it goes—like shining a flashlight into the corner of a dark room and no farther.’

  • ‘These glimpses from his past encase his life in an official mythology and largely obscure, or avoid altogether, crucial questions about how he came to power and survived at turning points in his career.’
  • ‘But the real business of Chinese politics, together with the rest of Xi’s story, remains securely locked down.’

3 | 'A mystery to this day'

From reading his speeches and watching his actions, we can piece together an outline of how Mr. Xi consolidated power.

  • How he came to power in the first place is matter of speculation – but important to know as a baseline if we are to understand how much Mr. Xi has changed China’s politics.

‘None of the local or foreign books about him can explain with clarity how the party chose Xi as the nominated successor to Hu Jintao in 2007,’ writes Richard McGregor.

  • ‘Was it because Xi was considered independent of the party’s main competing factions?’
  • ‘Did his revolutionary family roots swing the vote in his favor?’
  • ‘Did a council of party elders support him? Who makes up the council of elders, anyway? Do they ever meet, in fact?’

‘Formally, the head of the Communist Party in China is chosen by the Central Committee, the roughly 370-member body that acts as kind of the expanded board of directors of China, Inc.’

  • ‘But there is no recorded instance of the committee ever exercising any genuine scrutiny of the party, let alone tussling over who should be leader.’

‘Nor do any writings about Xi illuminate whatever mandate he was given when he assumed leadership of the party in late 2012, amid evident political turmoil.’

  • ‘That mystery is a live issue to this day.’

‘Xi’s harshness shocked many in the system, and still does.’

  • ‘What deals did he have to cut to get his way?’

‘The Communist Party, after all, is a political machine before anything else.’

  • ‘If he went way past what his patrons had wanted him to do, we are, again, none the wiser.’

4 | ‘Like detectives in a dangerous, suspicious neighborhood’

Like those who airbrushed fallen Soviet leaders from the lineup at a May Day parade, Mr. Xi and his minions have rewritten Chinese history with narratives that burnish Mr. Xi and the Chinese the Chinese Communist Party.

  • And while these provide hints of Mr. Xi’s intentions, they otherwise obscure our understanding how he runs China.

‘Under Xi, the battle over history has gone to another level, both in service of his own career and to ensure that the party can dictate whatever version of events it needs to align with current policy,’ writes Richard McGregor.

  • ‘Formal restrictions on research are also getting tighter. Over the past decade or so, China has been restricting access to its archives.’
  • ‘The tightening of access to sources, official and otherwise, has run in parallel with the introduction of a new criminal offense of “historical nihilism,” which can be wheeled out to suppress any version of the past that the party doesn’t like.’
  • ‘With so many obstacles in their way, historians of modern China, foreign and local, are like detectives in a dangerous, suspicious neighborhood.’

‘Decades may pass before the archives are accessible again or another time when the Chinese themselves, who are either unable or afraid to talk, start to publish memoirs and the like.’

  • ‘Without that opening up, we will have little opportunity to gain deep insight into the inner workings of Xi’s rule.’

‘By then, our assessments will be academic:’

  • ‘Xi’s grand ambitions for China will have played out—with wildly unpredictable results, for his country and for the rest of the world.’

Until then, expect to continue to face dazzlingly contradictory interpretations of China’s – and Mr. Xi’s – intentions.

  • Each based on a lot of speculation – informed speculation but speculation nonetheless.

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'The competitiveness of China is eroding.'

Understanding the drivers of China’s rise to supply chain prominence gives (me anyway) insights to help analyze the changes – or not – of ‘decoupling.’
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U.S.-China Relations: A Chinese Perspective

Wang Jisi notes that the views are his own, and certainly we don’t know how closely, if at all, they reflect the thinking of anyone in the leadership. But given his straightforward and thorough analysis, free of canned arguments and slogans, I hope they do. I also hope the Biden administration pays heed.
June 5, 2022

Is Xi Jinping China's Biggest Problem?

And while the impact of Zero Covid may be relatively short-lived, the impact of Mr. Xi’s return to the socialist path will be felt for a very long time, both in China and the world. So the impact will no doubt be felt as long as Mr. Xi leads China.
May 30, 2022

The Next U.S.-China Crisis: CEOs & Boards Are Not Ready

‘The bad news is that very few corporations engaged in China have contingency plans or long-term strategies to hedge against the downside risks of growing geopolitical competition.’
May 22, 2022

China GDP: 'A very long period of Japan-style low growth.’

Here are some of the insights from ‘The Only Five Paths China’s Economy Can Follow’ by Peking University’s Michael Pettis. This excellent analysis of China’s economy is worth a careful reading.
May 14, 2022

'Zero Covid' & the Shanghai lockdown

Joerg Wuttke is the president of the EU Chamber of Commerce in China - the 'official voice of European business in China.'
May 1, 2022

China: 'Sleep Walking into Sanctions?'

A looming risk is Russia-like sanctions on China. The sanctions on Russia are causing plenty of disruptions. But those disruptions would be nothing compared to the catastrophe of Russia-like sanctions on China. The good news is that if China does violate the sanctions, the violations would likely be narrow and specific - even unintentional. So secondary sanctions - if they come at all - likely won't hit China’s economy and financial system deeply – or (fingers crossed) U.S.-China relations.
April 17, 2022

China Coup: How Worried Should Xi Be?

September 26, 2022
‘Xi and the phrase #ChinaCoup trended on social media after tens of thousands of users spread unconfirmed rumors that the president was detained and overthrown by the China's People's Liberation Army.’
keep reading

'How do you spy on China?'

Many of you have asked about my own take on the issues I analyze in these pages and about my background. Today is some of both.I am honored to have been interviewed by the terrific Jeremy Goldkorn, editor-in-chief of The China Project. Below is part of that interview.
September 18, 2022

Xi’s Dangerous Radical Secrecy

In a world of political hardball, investigative reporting, and tabloids, we know a lot (if not always accurate or unspun) about world leaders, especially those in functioning democracies. Not so with Xi Jinping.
September 5, 2022

Building Biden's 'Great Wall' Around China

Whether you view it as an aggressive adversary or a nation asserting itself in ways commensurate with its rising status, China is creating risks – some subtle, some obvious - that, along with reactions of the U.S. and its allies, have to be factored, into every related business, investment, and policy strategy.
July 10, 2022

A Debt Crisis of its Own Making

Ever since Xi Jinping announced ‘One Belt, One Road’ in 2013, I watched it expand China’s economic and geopolitical influence and lay the foundation for projecting its military power – and become by many accounts an exploiter of the developing world itself.
July 1, 2022

No. Ukraine Won't Change Xi's Plans - or Timetable - for Taiwan

Ukraine won't speed up or delay Mr. Xi's timetable. (But it may cause him to work harder to strengthen China's military and insulate its economy from external pressure.)
June 22, 2022

'The competitiveness of China is eroding.'

Understanding the drivers of China’s rise to supply chain prominence gives (me anyway) insights to help analyze the changes – or not – of ‘decoupling.’
June 12, 2022

U.S.-China Relations: A Chinese Perspective

Wang Jisi notes that the views are his own, and certainly we don’t know how closely, if at all, they reflect the thinking of anyone in the leadership. But given his straightforward and thorough analysis, free of canned arguments and slogans, I hope they do. I also hope the Biden administration pays heed.
June 5, 2022

Is Xi Jinping China's Biggest Problem?

And while the impact of Zero Covid may be relatively short-lived, the impact of Mr. Xi’s return to the socialist path will be felt for a very long time, both in China and the world. So the impact will no doubt be felt as long as Mr. Xi leads China.
May 30, 2022

The Next U.S.-China Crisis: CEOs & Boards Are Not Ready

‘The bad news is that very few corporations engaged in China have contingency plans or long-term strategies to hedge against the downside risks of growing geopolitical competition.’
May 22, 2022

China GDP: 'A very long period of Japan-style low growth.’

Here are some of the insights from ‘The Only Five Paths China’s Economy Can Follow’ by Peking University’s Michael Pettis. This excellent analysis of China’s economy is worth a careful reading.
May 14, 2022

'Zero Covid' & the Shanghai lockdown

Joerg Wuttke is the president of the EU Chamber of Commerce in China - the 'official voice of European business in China.'
May 1, 2022

China: 'Sleep Walking into Sanctions?'

A looming risk is Russia-like sanctions on China. The sanctions on Russia are causing plenty of disruptions. But those disruptions would be nothing compared to the catastrophe of Russia-like sanctions on China. The good news is that if China does violate the sanctions, the violations would likely be narrow and specific - even unintentional. So secondary sanctions - if they come at all - likely won't hit China’s economy and financial system deeply – or (fingers crossed) U.S.-China relations.
April 17, 2022

Is China's Tech 'Crackdown' Really Over?

Today, I’m sharing with you a bit of Ms. Schaefer’s analysis of the tech ‘crackdown’ (but not of the AI and algorithm law). She explains why...
April 17, 2022

Russian Sanctions' Impact on China

In the meantime, some contend, China has a payment system, the Cross-Border Interbank Payment System or CIPS, that could make it independent of SWIFT.
April 5, 2022

Faint Cracks

For some time now we’ve taken it for granted that Xi Jinping has so consolidated his power that his will is China policy.
March 21, 2022

Is China in a Bind?

It wants to support Russia, but also wants to support the international order from which benefits and doesn’t want to alienate the major economies its own economy is intertwined with.
March 13, 2022

Under Construction: Two (Opposing) World Orders

Years ago, before the so-called ‘New Cold War,’ when asked what China issue interested me most, I said, ‘China and the liberal world order.’
February 19, 2022

'A Fateful Error'

As the 1904 cartoon from Puck magazine shows, this isn’t the first time in the past 100 or so years that Russia has shattered the peace. [Or has been defeated, as it was in 1905 by the Japanese in the Russo-Japanese War.]
February 17, 2022

Ukraine, Taiwan, & the 'Nightmare Scenario'

This in no way diminishes the calamity of a war with China. But the ability of the U.S. to wage that war would not be diminished by having to fight Russia at the same time.
February 2, 2022

This is Mr. Xi's Big Year - and Nothing Better Spoil It

Every politician going into an election wants a strong economy. Xi Jinping is aiming to be reelected (and all indications are he will be) to a third five-year term at the National Party Congress this autumn. So Mr. Xi will ease (and stimulate ) as much as he can without creating major headaches to deal with after his reelection - all in the name of 'stability.'
January 18, 2022

Bachelors, Mother-in-Laws, & China's Economy

‘In the long-term, demographics is one of the most important forces that will shape the growth momentum of China for the next decades. Two demographic features that are especially worth paying attention:’
January 5, 2022

Q&A 7 | Why Did Beijing Ban Online Tutoring?

‘Each policy in isolation – whether its banning online tutoring or protecting data or enforcing anti-monopoly regulations or any other - has its rationale.’
December 30, 2021

Q&A 3 | Property 2022: Stabilization or Growth?

‘The goal is to stabilize housing prices while having housing sector grow.’
December 30, 2021

What Are Your Top of Mind Concerns?

I asked the participants what are their top of mind concerns about China.
December 30, 2021

Q&A 6 | China Reverse Its Declining Birthrate?

‘A lot of people feel like the ideal, the optimum number of children is a maximum of two children. So it's not a surprise to me that the three-child policy hasn’t had a high response in the short term. But I think in the long term it will be much better.’
December 30, 2021

Q&A 5 | Will Xi Continue to Favor the State Over the Private Sector?

‘He wants to see a bigger role for the state in the economy. But in the last two years, he has done some course correction. For example, after talking up the role of state-owned firms and building stronger, bigger state-owned firms, he is talking about the equal importance for the private sector.’
December 30, 2021

Shang-jin Wei Presentation-1 | Drivers of Growth Momentum

‘In the last year and a half we saw a spate of government actions all contributed to not just falling stock prices for companies in certain sectors but a deterioration in investor sentiment more broadly. These include:...’
December 30, 2021

Q&A 4 | Is China Exporting Inflation?

'‘China has its own issues. If you look at the CPI inflation, it looks more moderate. ‘If you look at the producer price inflation, it looks more severe.’
December 30, 2021

Q&A 2 | Will the Gender Imbalance Keep Housing Prices Firm in the Medium Term?

‘The part of housing prices caused by gender-ratio imbalance is not going to go away in the medium term. But the government has ways to create volatility in the housing market.’
December 30, 2021

Shang-jin Wei Presentation-2 | Gender Imbalance as a Driver of Housing Prices

‘Why does gender imbalance have such an outsize impact on China’s housing prices?'
December 30, 2021

Q&A 1 | How Much Does the Gender Imbalance Contribute to China’s Rising Housing Prices?

‘Gender imbalance accounts for about one-third of the increase in China’s housing prices in the last two decades or so.’
December 30, 2021

Shang-jin Wei Presentation-3 | Analyzing the Gender Imbalance Data

‘Compare these with graph showing the impact of the same factors on rental prices...'
December 30, 2021

Watch What Beijing Says - and Does

Besides listening to Xi Jinping, you can discern Beijing’s priorities and its likely actions through its big policies - and this is my point here.
December 7, 2021

Getting (Xi Jingping's) Priorities Straight

How do you make investment or business decisions in the face of the uncertainties created by Xi Jinping's reshaping China's economy? In this issue, I'll give you a few different ideas on how you might deal with that uncertainty.
December 7, 2021

Look Through the Rights Lenses

Getting down more to the nitty-gritty, if you’re evaluating a sector or a company, get your lenses right to get the details right.. Stonehorn’s Sam Le Cornu gives a good example of this in a Bloomberg interview.
December 7, 2021

Sometimes You Just Have to Roll the Dice

Telling someone to align him or herself with Beijing's priorities still is generally good advice.And, when I tell you what those priorities are, I know I am right - until I'm not.
December 7, 2021

'Xi Jinping has made sure history is now officially on his side'

‘While there are murmurs of opposition, the historic plenary session would suggest that the future is in Xi’s hands. However, when politics is so deeply personalised and centralised, there is only one person to blame if things go wrong. Unless, of course, we get a new resolution on history that tells us who led the party astray, despite Xi’s earnest attempts to keep policy on the straight and narrow.’
November 23, 2021

'Biden Has a Summit With Xi, but No Strategy for China'

‘Neither Taiwan nor strategic arms are a hot campaign topic, and China is not yet at the forefront of public consciousness. To ensure America’s eventual strategy is workable, political leaders need to debate the challenges so citizens can appreciate the implications of the choices they will have to make.’
November 23, 2021

Xi Jinping's Leadership: 'The Inevitable Outcome of History'

Mr. Xi is the hero of a Resolution on the history of the Chinese Communist Party that painted his leadership as the inevitable outcome of history and all but gave him his third term. Tony Saich of the Harvard Kennedy School did a terrific analysis on this - you'll find it below, after my take.
November 23, 2021

'America's China Plan: A Proposal' by Clyde Prestowitz

Outcompeting China and avoiding global extension of its authoritarian and coercive policies and practices is not really about China. It’s about America.
November 9, 2021

Why China Won't Invade Taiwan - Yet

Forget Evergrande and the energy crunch. After the recent flurry of alarming headlines, here’s the question I get most often these days from CEO’s and institutional investors: Will China invade Taiwan in the next few years?
October 27, 2021

An Energy Crunch. China's Latest Crisis. They Just Keep Piling Up.

‍‘Over the next six months or more, the energy crunch in China will be an even bigger challenge than Evergrande. Will make the Evergrande problem look tiny and has huge global implications. The lights go out in China!’ one experienced and very well-respected reader of long residence in China wrote to me in response the last issue on Evergrande.
October 17, 2021

Just How Contagious is Evergrande?

Just as a personal crisis can lead you to dig deeper into yourself, so the rapid-fire events in China - with trillions of dollars of business and investment on the line - have led us to (finally) go deeper into how China works – and to come to grips with uncertainties caused by Xi Jinping’s recent moves to reshape the Chinese economy and the Party’s social contract with the Chinese people.
October 7, 2021

'This Time Feels Different'

Just when we thought we were getting used to Xi Jinping’s tech reforms and social-engineering regulations, the Evergrande crisis heats up.
September 27, 2021

AUKUS: A New World Order?

‍In case you passed over the news of AUKUS, the new strategic alliance among the U.S, the U.K., and Australia, here a few headlines to encourage a deeper look.
September 19, 2021

Xi Jinping: Today, video games. Tomorrow, well ... just be good.

Today's issue is a heads up on what may be Xi Jinping's efforts to reshape Chinese society.
September 7, 2021

The Taliban: 'China's Perfect Partner'?

Breaking through the blow-by-blow reporting that started when the Taliban began its sweep to victory are the geopolitical analyses of who gains and who loses in Afghanistan.
August 28, 2021

'China Signals More Regulation for Businesses in Coming Years'

‘The State Council’s statement provides a guiding context to interpret current regulatory thrusts. The blueprint as an attempt by Chinese authorities to help investors understand the motives behind the regulatory push.’
August 15, 2021

China Economy: Industrial Production Down, Demand Resilient

China’s industrial production down 10%. Demand resilient.
August 15, 2021

'Xi’s Dictatorship Threatens the Chinese State'

‘Mr. Xi is determined to bring the creators of wealth under the control of the one-party state.’
August 15, 2021

'Are you tired of losing yet, America?'

As I write this, Taliban forces have entered Kabul and are reportedly occupying the Presidential Palace.
August 15, 2021

‘Global investors shocked to have discovered that China is run by Communists.’

‘Global investors are shocked to have discovered that China is run by Communists.’
August 5, 2021

'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'

‘While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors.’
August 5, 2021

'China Wants Manufacturing—Not the Internet—to Lead the Economy'

‘Social media, e-commerce and other consumer internet companies are nice to have. But in his view national greatness doesn’t depend on having the world’s finest group chats or ride-sharing.’
August 5, 2021

Don't Say Xi Jinping Didn't Warn You

‘Global investors are shocked to have discovered that China is run by Communists.’
August 5, 2021

'Xi's Four Pillars of Regulation'

‘Broadly, Beijing is concerned about four pillars of stability: banking, anti-trust regulation, data security and social equality. All of Beijing’s major interventions reflect these concerns.’
August 1, 2021

'Why China Is Cracking Down on Its Technology Giants'

‘Why, you may ask, is China crushing some of its most innovative unicorns? We’re in a new era led by President Xi Jinping, and politics are in command.’
August 1, 2021

China's Tech Crackdown: 'Nobody Saw It Coming.' — Huh?

‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders, and regulatory changes rip apart the old playbook,’ writes Reuters’ Tom Westbrook.
August 1, 2021

'The most significant philosophical shift since Deng'

‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook. According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’
August 1, 2021

'Stock Market: China Doesn’t Care How Much Money Investors Lose'

‘Does Beijing not care how much money foreign investors have lost? Does the government really want to close China Inc.’s access to the deep pool of global capital? The short answer is, no, the government doesn’t care.
August 1, 2021

How China's Middle-Class China is Transforming China and the World

‘Among the many forces shaping China's domestic transformation and its role on the world stage, none may prove more significant than the rapid emergence and explosive growth of the Chinese middle-class.’
July 25, 2021

Part 2 | The DiDi VIE (as an example)

‘The prospectus has a diagram, above, of the corporate structure, which looks almost normal. But everything below the double arrow — the actual ride-hailing business, etc. — is slightly askew.’
July 22, 2021

Part 3 | Revising the Rules

‘The Chinese government could declare “all these VIE contracts are actually a disguised form of foreign ownership, which is not allowed by the rules, so they are all void and your Didi and Alibaba shares are worthless.” ’
July 22, 2021

Part 1 | 'Owning Chinese Companies Is Complicated'

‘ “Variable interest entities”(VIEs): The problem with this is that it sort of sounds like you’re kidding. But this is a standard method for mainland Chinese internet companies to go public, and the market has come to accept it.’
July 22, 2021

China: Signals Blinking Red & Oops, We Missed the Risks

I had intended to make this issue all about ‘Variable Interest Entities’ (VIEs) and the emerging risks to about $1.8 trillion dollars’ worth of Chinese shares listed on U.S. exchanges – that is, 4% of the capitalization of the U.S. stock markets.
July 22, 2021

'Crackdown on US listings: Will China close $1.6tn VIE loophole?'

‘If Chinese authorities start to question “Variable interest entities”(VIEs), amid the crackdown that has already battered ride-hailing company Didi Global -- another VIE user -- the resulting loss of investor trust could send shock waves through global financial markets.’
July 22, 2021

'China Plans to Exempt H.K. IPOs From Cybersecurity Reviews'

‘China plans to exempt companies going public in Hong Kong from first seeking the approval of the country’s cybersecurity regulator, removing one hurdle for businesses that list in the Asian financial hub instead of the U.S.’
July 18, 2021

'I will aim for Mao's Status.'

‘There on the gate was Xi Jinping, Chinese president and party general secretary, in a gray Mao suit. Just below his feet was the portrait of Mao Zedong, also dressed in a gray Mao suit.’
July 18, 2021

Why the U.S. Lacks Leverage over China

During the celebration of the Chinese Communist Party’s Centennial celebration, Mr. Xi stood in the same place on the balcony facing Tiananmen Square where Mao Zedong stood when he announced the founding of the PRC; Mr. Xi wore a gray Mao suit, among a sea of blue western suits; and he centered himself right above the portrait of Mao, who is similarly attired.
July 18, 2021

'Biden’s Warning on Hong Kong'

‘The pretense of Chinese and Hong Kong authorities is that their crackdown on the rule of law and dissent will have no effect on Hong Kong’s viability as an international center for trade and finance.’
July 18, 2021

Hong Kong and the Limits of Decoupling

‘The United States’ inability to make China regret—much less reverse—its transgressions in Hong Kong suggests that financial separation, sanctions, and economic barriers are less reliable tools than many in Washington believe.’
July 18, 2021

'US warns companies of risk of doing business in Hong Kong'

“In the face of Beijing’s decisions over the past year that have stifled the democratic aspirations of people in Hong Kong, we are taking action,” said Antony Blinken, US secretary of state. “Today we send a clear message that the US resolutely stands with Hong Kongers.”
July 18, 2021

'What's Wrong with Biden’s new China doctrine'

‘Mr Biden’s aides invariably start any discussion of China strategy with the need to restore American greatness after decades of decline.’
July 15, 2021

Part 2 | Joe Biden is determined that China should not displace America

‘Mr Biden’s aides invariably start any discussion of China strategy with the need to restore American greatness after decades of decline.’
July 15, 2021

The Biden Doctrine and Its Discontents

President Biden has framed China as a threat both to the U.S. and the liberal world order.
July 15, 2021

Part 1 | 'Joe Biden is determined that China should not displace America'

‘Biden’s emerging China strategy, while still protean, sounds of a kind with Mr Doshi’s prescription for “blunting and building”.’
July 15, 2021

Didi: Xi Surprises Us Again

Beijing shocked the financial world when it pulled the rug out from under Didi days after its IPO on the New York Stock Exchange and also announced new regulations reigning in overseas IPOs and Chinese companies already listed.
July 8, 2021

The Chinese Point of View

Here are a few of my thoughts on the importance of Wang Jisi’s ‘The Plot Against China.’ Yuen Yuen Ang’s ‘The Evolution of Chinese Corruption’ speaks for itself - but note especially how Mr. Xi's anti-corruption campaign could hurt China's economy. I have now lived long enough that when a friend complains about his or her spouse, I say to myself, ‘There are no doubt two sides to this story.’
July 4, 2021

'How Corruption Powers China's Economy'

‘China has managed to sustain four decades of economic growth despite levels of corruption that even Xi has described as “grave” and “shocking.” Why does it seem to have bucked the trend?’
July 4, 2021

'How Beijing Sees U.S.-China Relations'

‘In Chinese eyes, the most significant threat to China’s sovereignty and national security has long been U.S. interference in its internal affairs aimed at changing the country’s political system and undermining the CCP.’
July 4, 2021

Five Themes that Point to Where the Chinese Communist Party & China are Heading

As the Chinese Communist Party begins its second century, it’s useful to identify enduring patterns that might aid us in understanding China today and the directions it might be heading.
July 1, 2021

From Rebel to Ruler: One Hundred Years of the Chinese Communist Party by Tony Saich

‘In our discussions, you've identified five themes that have been more or less consistent throughout the history of the party but have oscillated between different points on a continuum:’
July 1, 2021

'From Rebel to Ruler': Tony Saich on Chinese Communism at 100

‘At so many points during its century-long existence, the CCP appeared to be in its death throes, whether as a result of external attack or self-inflicted internal strife.’
July 1, 2021

'Jimmy Lai & the Death of Free Speech in Hong Kong'

Jimmy Lai’s tabloid, the Apple Daily, with its peculiar blend of scandal, gossip, and serious political reporting, was Hong Kong’s indispensable voice of free speech. Now that voice has been silenced, and Lai is in prison with others who tried to protect the right of Hong Kong’s citizens to speak and write freely, to be ruled by law, and to vote for their own autonomous government. Their politics are diverse Yet they stand together. When freedom is under siege, people cannot afford the narcissism of small differences that is tearing apart liberal politics in countries where people think democracy can be taken for granted.
June 27, 2021

'European Companies in China: Between Decoupling and Onshoring'

‘Instead of leaving the market, European companies are exploring ways to separate their China operations from their global ones.’ ‘Following the Covid-19 outbreak, European companies in China spent the first few months of 2020 solemnly appraising their investment strategies.’
June 27, 2021

'How China & America Should Compete'

‘China and the West urgently need a new framework for understanding the state of the world and their place in it. Such a framework must recognize, first and foremost, that properly regulated economic competition is not a zero-sum game.’
June 27, 2021

European Chamber in China: 'Business Confidence Survey'

A mere 9% of European companies are considering moving any current or planned investment out of China, the lowest level on record. Instead, companies are strengthening their positions in JVs, onshoring supply chains and increasing spending to secure market share. The ambition not only to stay but also to expand their China footprint is more than justcapital flooding in due to optimism about growth. Companies are taking action to secure their operations in China and mitigate exposure to geopolitical trends in order to have a better chance of navigating a future that looks to be fraught with risk, at least in the near- to medium-term.
June 27, 2021

Bitcoin’s growing energy problem: ‘It’s a dirty currency'

“Bitcoin alone consumes as much electricity as a medium-sized European country.”
June 24, 2021

The End of 'Apple Daily' - and Freedom of the Press in Hong Kong

Through arrests and freezing of assets, Beijing has forced the closing of Hong Kong’s last pro-democracy newspaper, the Apple Daily.
June 24, 2021

'Hong Kong’s Apple Daily newspaper folds under government pressure'

Apple Daily was much more than a newspaper. To its fans, it was a defender of freedoms. To its foes, it was the defiler of national sovereignty.’
June 24, 2021

'Congress on China: Then and Now'

‘With the Senate voting on June 8, 2021, to adopt the United States Innovation and Competitiveness Act, it is safe to say that this is the most comprehensive action by Congress on China policy EVER.’ ‘The language of the United States Innovation and Competitiveness Act is about a long-term competition with China as opposed to war with an enemy.’
June 24, 2021

'China steps up crackdown on bitcoin mining industry'

‘China’s latest intervention places further pressure on what was once one of the world’s most vibrant markets for trading and mining digital currencies.’ ‘It comes at a time when many governments are scrutinising the industry’s effect on the environment and determining the types of financial oversight that should be applied to cryptocurrencies.’
June 24, 2021

'Apple Daily closed, but press freedom stays in Hong Kong'

‘Freedom of the press is a good thing. The West's freedom of speech must be consistent with national interests and public security.’
June 24, 2021

‘Why do business and political leaders in the West persist in getting China so wrong?’

From that I suggested that to invest successfully in China, you have to understand – and be aware of - what those differences are.
June 20, 2021

‘Why do business and political leaders in the West persist in getting China so wrong?

‘Why do business and political leaders in the West persist in getting China so wrong?’
June 20, 2021

Part 2 | 'Is China exporting inflation?'

“Is China exporting inflation? In renminbi terms, it’s not so obvious. But in U.S. dollar terms, it starts to get more sizable.” ’
June 17, 2021

Part 1 | 'Is China exporting inflation?'

‘Beijing is moving swiftly to protect its factories and workplaces from rising costs.’ ‘Still, rising prices in China, by far the world’s biggest manufacturer and exporter, could be felt around the world.’
June 17, 2021

'Back-to-Back Rebukes of China Mark a Turning Point'

‘The one-two punch of public criticism smacks directly into Mr. Xi’s assertion that China won’t stand for lecturing by other nations, suggesting anxiety in key capitals is prompting governments to seek alignment with the U.S. over attempting to manage the relationship with Beijing on their own.’
June 17, 2021

Bernie Sanders: 'Don’t Start a New Cold War With China'

‘The pendulum of conventional wisdom in Washington has now swung from being far too optimistic about the opportunities presented by unfettered trade with China to being far too hawkish about the threats posed by the richer, stronger, more authoritarian China that has been one result of that increased trade.’
June 17, 2021

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