Category Archives: China

China Decides that South China Sea Oil is a National Asset

By John Daly, a non-resident scholar at the Central Asia-Caucasus Institute at Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies and chief analyst at OilPrice. Cross posted from OilPrice

While the Western press is fixated on both recent North Korean nuclear tests and Beijing’s recent skirmishes with Japan over the Senkaku (“Diaoyu” in Chinese) islands, other maritime issues have developed further south, where China is involved in sovereignty disputes over the Spratly islands’ 750 islands, islets, atolls, cays and outcroppings with the Philippines, Taiwan, Vietnam, Malaysia and Brunei.

Pettis: China and the History of US Growth Models

Yves here. This is an important piece, in that it bucks conventional wisdom about growth and economic development in several ways.

The Island Dispute Between China and Japan: The Other Side of the Story

By Robert H. Wade, professor of political economy at the London School of Economics. Cross posted from Triple Crisis

The current dispute between China and Japan over a few barren islands inhabited by goats – called Diaoyu in Chinese and Senkaku in Japanese – looks at first sight to be a mere territorial spat. But it has escalated to a very dangerous level in recent months — first words, then actions of police forces, now actions of air forces, and, behind all these, both sides have mobilised all their military, political, economic, diplomatic, and cultural energies to engage in the dispute. It is more fundamental than normal territorial disputes, because the very identities of the two countries are at stake.

China Economic Paradigm Nearing End Game

GMO, in a compelling analysis, not only confirms the skeptics’ case but provides reasons why the Chinese growth model faces an end game. While it may not be nigh, it seems to be closer than most people think.

Hugh Hendry: ‘We’re in the death spiral of mercantilism’

You have to give a fund manager points for admitting to having a “history of contentious posturing.” Hugh You have to give a fund manager points for admitting to having a “history of contentious posturing.” Hugh Hendry’s also a reformed gold bug, which shows an unusual flexibility of thinking (once people join the gold cult, they seldom leave). Even if you don’t necessarily agree, his talk will serve as a useful grist for thought (hat tip Ian Fraser). Hendry discusses the end of an broadly adopted national strategy, mercantilism, and what he sees as the implications.

Quelle Surprise! QE Zombifies Economies

Nobody has wanted to heed the lesson of post bubble Japan until way too late.

Has Chinese Currency Manipulation Succeeded in Breaking Japanese Manufacturers?

Tonight’s Financial Times has a eye-popping story, that the survival of Sharp, one of Japan’s top consumer products manufacturers, is in doubt:

Another Bearish China Signal? Expats Starting to Decamp

Sober Look has an intriguing little post up on how expats are leaving China and why that is a bearish portent.

Debunking the “It’s China’s Fault That American Worker Real Wages are Falling” Myth

Even in the cases where the outsourcing cost savings were significant, the idea that American wages were way out of line with Chinese wages and the only future for American workers was grinding wages lower and lower to compete with China has been oversold.

China’s Stimulus Headaches

By Zarathustra, who is the founder of Hong Kong blog Also sprach Analyst. He was educated at the London School of Economics and the Chinese University of Hong Kong and was once a Hong Kong-based equity research analyst focusing on Hong Kong real estate (which he did not really like), with a secondary coverage on China real estate sector (which he actually hated). Cross posted from MacroBusiness

To this date, there remains a lot of confusion about the ability of People’s Bank of China (PBOC) to ease monetary policy.

Michael Pettis: The Chinese Rebound Will be Short

Cross posted from MacroBusiness

Exclusively from Michael Pettis’ newsletter:

While analysts are still arguing over whether or not growth in the first half of 2012 was lower than the already-low reported numbers (I think it was, and for reasons see Kate Mackenzie’s quick summary in the Financial Times), I expect, as I discussed in the previous issue of this newsletter, that over the next three months we will see a rebound in Chinese GDP growth as investment expands. The leadership transition, after all, is in October, and no one in power wants to see the ten-year period under the leadership of President Hu and Premier Wen end with an economic whimper, especially after the very distressing political scandals we have lived through this year.

I don’t think, however, that any rebound or recovery will last more than one or two quarters, and even then it is going to be a very tedious and lop-sided recovery.
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China Will Get Old Before It Gets Rich

By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness

Yesterday, Houses & Holes stated that he was a long-term China bull, largely because of its status as an industrial powerhouse. Today I want to outline the reason why I am a long-term China bear: China’s rapidly ageing population.

Will China Face a Lost Decade?

Although various commentators (including our Marshall Auerback) have raised warning flags about the long-term viability of China’s growth model, the middle kingdom’s performance during the crisis seemed to prove skeptics wrong. Never mind that creditors like China tend to suffer most in the aftermath of major financial crises, or that no country has ever sustained such a high combination of exports plus investment (over 50% of GDP) for very long. And the ongoing reports of all those vacant cities seemed to be irrelevant.

The critics have been looking less off base of late.

Death of the China Cult

By Zarathustra, who is the founder of Hong Kong blog Also sprach Analyst. He was educated at the London School of Economics and the Chinese University of Hong Kong and was once a Hong Kong-based equity research analyst focusing on Hong Kong real estate (which he did not really like), with a secondary coverage on China real estate sector (which he actually hated). Cross posted from MacroBusiness

hile the mistrust of the political class of China continues in Hong Kong (and will certainly continue for much longer), the doubts on the strength of the Chinese economy and the doubts on the ability of the political class
to manage the economy have more or less evaporated after 15 years of Chinese rule.

No one would ever dispute the achievement of the Chinese economy….the extraordinary bull market and the seemingly unstoppable economic growth has created a China cult, a cult among the investing community that China is the best place to invest.

Satyajit Das: Personal versus Personalities

By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk (2011)

Jonathan Fenby (2012) Tiger Head, Snake Tails: China Today, How It Got There and Where It is Heading

Robert Frank (2011) Who Repo’d My Jet: the manic millionaires, and why they’ll lead us to the next boom and bust

John Coates (2012) The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust

Personal – relating to an individual or what serves the interest of that individual. Personality – distinctive assemblage of qualities which defines an individual, frequently in modern life conflated with celebrity. These three books deal with the ‘personal’ and ‘personality’ in the financial world.