Sinomania!

HAPPY CHINESE NEW YEAR!

2011-02-03T16:56:00.000-08:00

2011 Year of the (metal) Rabbit! I hope it is a great one for all of you. I know I am looking forward and anticipate some real positive change...

Media Coverage of Egypt Riots Uses 'Tam '89 Style Book

2011-02-03T16:41:00.000-08:00

Anglo-American media interpret the mobs that shut down Cairo and other cities of Egypt as "pro-democracy protesters" that riot for "freedom" leading Americans to believe that the most important thing to a poor Egyptian is whether he/she can Twitter without obstruction. The coverage of the riots in Egypt is shockingly sloppy - celebrity journos are all on the scene and as in the late stages of the Tiananmen riots in 1989 they report mostly from the top floor suites of luxury hotels overlooking and speculating on events on the ground. At what point will any real reporting be done about the true underlying causes of the frustration in Egypt? The grinding poverty that gives Egypt a per capita income about one half that of China and without the sizeable affluent class structure. And more importantly the population explosion underway in the country. Egypt's population is set to grow 94% and peak at 136 million by 2075 according to UN statistics making Egypt one of the 15 most populated nations in the world for the next two or three centuries! There are so many interesting stories behind the riots that could help us understand the changes going on in places like Egypt instead of nonsense about "marching for freedom."

Obama's Sputnik Moment Means Cold War with China

2011-02-03T16:25:00.000-08:00

It was extremely disappointing to hear President Obama talk only of competition with China in his 2011 State of the Union address to the American Congress. Chinese children learn science and math at an earlier age, Chinese trains are faster, and China's airports are newer we are told. It seems Obama's "Sputnik Moment" for the current generation is that we must compete with China. This is thinly veiled indication that we are in a new Cold War with China where we will compete for technology, resources (oil in particular), and the minds of our youth. And what an awkward Cold War it is - Beijing buys Washington's debts, essentially paying for its own containment. And unlike the previous Cold War there are no centers devoted to researching, studying, and understanding the Chinese. Worse Washington and the American people wallow in utter ignorance of what really makes up the vast nation we call China and its complex government. Congress calls Chinese President Hu a "dictator" while oblivious to the huge ideological differences between the four major factions within the 70+ million strong Chinese Communist Party and unaware of the Chinese political process from village election to the workings of the party conferences. Dangerous times are ahead....

US-China Summit: China Policy in Disarray

2011-01-18T21:41:00.000-08:00

WASHINGTON, DC -- On the 20th anniversary of the fist Gulf War crisis Chinese President Hu Jintao arrived today for a state visit. Chinese flags fluttered across the cold American capital as the usual China gatekeepers pontificated in print and airwaves about the need for China to be "responsible" and the importance of the stale policy concerns of Washington toward Beijing.

America's China policy is bereft of innovation and woefully outdated. Now defined by both State and Treasury Departments neither Tim Geithner nor Hillary Clinton offer anything new. Geithner continues to stress currency an issue where he knows the USA has no high ground (the USA is as much a currency "manipulator" as China or Japan or the EU) and Geithner knows full well the USA will never get China to budge on Yuan appreciation. As for State Hillary Clinton trotted out human rights concerns that sounded like leftovers from her time at the UN Conference on Women in Beijing. China's human rights record hinders investment she says. Really? Yet China remains the world's top destination for foreign direct investment.

The reason the unacknowledged anniversary of Gulf War I is important is because both nations are dependent on the steady flow of Persian Gulf oil - China even more so than the USA. In January 1991 China came out in full support of Kuwait and the rhetoric behind the air strikes against Saddam Hussein. Only a few months earlier in July 1990 Beijing established relations with Saudi Arabia and the quest was on for oil contracts Chinese leaders knew the country would soon need. By 1993 China became a net oil importer. Around the same time US oil imports grew faster as domestic production peaked and began a steady decline. Yet there is no talk of "peak oil" or the resource competition underway between our two nations - the world's top two energy users and polluters.

Meanwhile in the background the Pentagon and its friends in the Anglo-American media beat the war drums with scary stories about missile gaps (China's "carrier killer" missiles may make our 12 Navy aircraft carrier groups obsolete!) and Chinese planes that might achieve 1980s level technology.

So can we expect more of the same stupid discourse on China in the 2012 election cycle? Unless something different emerges from this week's meetings I fear we will again kick China policy and our need for cooperation further down the road to mutual destruction.

Guess What? China Didn't Collapse!

2010-12-28T10:23:00.000-08:00

I am back from China and have much to say but first the holidays! 2011 will bring many changes to the Sinomania! website.

This past Spring the China doomsayers called for a collapse by end of the year. Well it didn't happen and most likely won't happen for a very long time. Yet mainstream media continues to broadcast and print coming collapse of China pablum. Fortune magazine just featured Jim Chanos on its cover. I believe we may well be in an age of Chinese exceptionalism much as America created its own trends throughout the 20th Century with global implications. Must we fear this new environment?

I thoroughly enjoyed my trip and the warm hospitality of the Chinese people. If more Americans actually went to China our perceptions would change immediately. The ghosts of two Chinese giants from the past century (both born in the 19th Century) - Mao Zedong and Henry Luce -continue to haunt our thoughts of China. Yet their world is long gone for better and for worse.

A new China policy is needed in the USA one that works constructively to foster change in China. Without positive increased cooperation with China fearmongers will propel us to nuclear war. Politicos of all stripes in America are gearing up to blame China for all of the USA's problems in the 2012 election cycle. Yet their arguments are almost entirely based on myths. The time has come for the USA to stop blaming China and stop misunderstanding China.

Is the Mekong River Shrinking?

2010-10-12T07:25:00.000-07:00

The New York Times says the Mekong is shrinking and China may be hoarding its flow but from where I sat for lunch today along the river at the Laotian border it is very high and rising....

Sinomania! On Assignment

2010-10-12T07:17:00.000-07:00

Exploring Chinese influence in southeast Asia before making my way through China until I reach Chongqing. I will be posting as I can....

Chinese Household Wealth May Double in 5 Years

2010-10-08T16:16:00.000-07:00

A new report by Credit Suisse says Chinese personal wealth my increase to $35 trillion by 2015 second only to the USA. The huge number of Chinese with increasing discretionary incomes will reshape the global economy according to the private bank. Sectors expected to see significant growth in China include transportation & communications, recreation & education, housing & utilities, and healthcare....

US China Policy Should Be Campaign Issue

2010-10-06T11:21:00.000-07:00

Christine O'Donnell the much maligned Republican nominee for Deleware's open US Senate seat says China has a secret plan to take over America. O'Donnell made the claim in a 2006 debate for the nomination. The transcript of her remarks obtained by The Washington Post contain several lies about China that have currency in anti-China circles: China is "taking American oil" by drilling off the coast of Florida; in China you are "not allowed to be Christian" or read the Bible. But the flap over her remarks do point out the necessity to bring US policy on China and Americans ignorance about China and Chinese people into national focus.

China policy should - must - be a national campaign issue in the next election cycle in 2012. See my new group Americans for a New China Policy....

China Saves Greece

2010-10-04T12:01:00.000-07:00

Chinese PM Wen Jiabao is touring the EU on feel good missions to assure China's support for the region's economies and currency. Wen will attend an East-West Summit in Brussels and meet with German Chancellor Angela Merkel. Over the weekend in Greece Wen announced that Beijing would buy Greece's debt in a confidence bid on Greek turnaround. One commentator sees opportunity with recent Greek programs to push solar power. As regular readers know China is developing container terminals and greatly expanding the port at Piraeus in a larger shipping and logistics strategy. You can read my 2008 report on it here....

National Day 2010: To the Moon and Beyond

2010-10-01T16:47:00.000-07:00

Amid quiet celebrations for the 61st anniversary of the founding of the People's Republic the Chinese space program launched the Chang'e II lunar probe. The probe will eventually settle into a close orbit around the moon to survey a possible landing site. It will eventually either crash onto the moon or be sent into the solar system. The rocket launch was broadcast on national television and took precedence over reports of wreath laying at the Monument to the People's Heroes at the center of Tiananmen Square in the national capital.

For perspective, Russia and the USA achieved orbiting lunar modules almost a half century ago in 1966...

China Moves Towards Credit Default Swaps

2010-10-01T16:25:00.000-07:00

Two significant reforms underway this week in China: Beijing approved expanding Shanghai's interbank market to a "National Interbank Loan Trading System" with 21 big banks signed up for interbank lending and word in Lujiazui is that real Credit Default Swaps are coming. And Reuters reports today that short-term commercial paper will be traded in the interbank market creating a new vehicle for short term financing and away from dependence on bank lending.

Bank lending has expanded enormously in China in answer to the Panic of '08. Today over 45 trillion Yuan or $6.8 trillion US dollars in bank lending are outstanding a number not far off that in the USA....

Andy Xie Changes His Mind

2010-10-01T16:04:00.000-07:00

China hand Bill Bishop at Forbes' China Tracker blog calls out Andy Xie for now saying Chinese real estate is not a bubble but may have peaked and will decline slowly thanks to government actions. Again I ask what became of the China Crash Call? Will Marc Faber, Jim Chanos, Gordon Chang, the editorial boards of the Wall Street Journal, Financial Times, Nomura Securities, etc., change their tune too....?

MSM Discovers South-North Water Diversion Project

2010-10-01T15:43:00.001-07:00

A flurry of news stories on China's longstanding ambitious plan to divert water resources from the Yangtze River basin north are gaining currency in the mainstream media. The source appears to be this report in Wednesday's LA Times. Most of the reporting is critical with China gatekeeper Orville Schell asserting that China is attempting to "re-plumb" the nation a task "no country" has yet done successfully.

Schell's comment is particulary odd given his location in northern California. What of the 700+ miles of canals and pipelines in the California Aqueduct system that bring northern California's water south? Or the Colorado River aqueduct that taps the Colorado River 250 miles east of Los Angeles? Both diversion projects had their critics and opponents before they were built directly by the US federal government in the 1930s.

See my April 2009 post on China's diversion project here...

China Relaxes Rules on Gold Imports

2010-09-30T16:18:00.000-07:00

According to Reuters, the World Gold Council says China's central bank announced rules in August that will allow Chinese more banks to import and export directly on the global market. As China is slowly building its central bank holding of gold this means that China may soon play an important role in the global trade for bullion....

Chongqing New Energy Firm to List on NYSE

2010-09-30T15:59:00.000-07:00

A polysilicon manufacturer out of Chongqing, Daqo New Energy Corp., looks to rai$e $108 million (US dollars) with a listing on NYSE under stock symbol DQ. Daqo makes the key ingredient for solar photovoltaic panels and Daqo lists Yingli Green Energy of Beijing as a major customer. The company began direct manufacturing of solar panels in May when it opened a factory in Nanjing, Jiangsu Province. Daqo New Energy is one of 23 subsidiaries of the Daqo Group, a big electronics conglomerate founded in 1965 in Jiangsu....

TRADE WAR: US POLS WANT GREAT DEPRESSION II

2010-09-29T09:13:00.000-07:00

According to Reuters the US House of Representatives is poised to approve a bill to impose exorbitant tariffs on Chinese goods by declaring that the Chinese government "subsidizes" the exchange rate of the Yuan. Frustrated by the Executive Branch's longstanding refusal to declare Beijing a currency "manipulator" a corrupt bipartisan House is pandering to big unions, anti-China blowhards, and the widespread ignorance of the vast majority of Americans about America's deep interconnectedness with China.

But will the Senate approve and President Obama sign the legislation and risk a trade war, huge inflation - increases in tariffs would be passed directly to consumers, currency retaliations around the world, and another Great Depression?

China Buys a Slice of Hollywood

2010-09-28T16:41:00.000-07:00

Orange Sky Golden Harvest Entertainment Holdings, the year old merger of famed Hong Kong movie studio Golden Harvest and Orange Sky Holdings of Beijing, will buy a 3.3% stake of Legendary Pictures of Burbank, California. Legendary will get $25 million and the Chinese will get to appoint a Board member. Legendary Pictures has a "strategic partnership" with famous American movie studio Warner Brothers and co-produced this year's summer smash "Inception" and previous hits such as "The Dark Knight."

The two companies will work on Chinese language films, online games, and film distribution in China. American movies are hugely popular in China and last year's WTO ruling may help pry open the door to a big market for a uniquely American product....

Ford to Build New Auto Plant in Chongqing

2010-09-28T12:20:00.001-07:00

Ford Motor's Changan Ford Mazda Automobile Corporation joint venture (CFMA) will build a new engine plant in a new deal signed with Chongqing Municipality. The plant will be state of the art and will be financed at a value of half a billion (US) dollars directly from CFMA. When complete in 2013 it will double Ford's production capacity to 400,000 engines per year.

The head of Ford Asia-Pacific Joe Hinrichs told reporters "the growth potential in this part of the world in the next ten years is astounding"....

Chongqing's 20 Billion Yuan Airport

2010-09-28T12:11:00.000-07:00

The third terminal of Chongqing's Jiangbei International Airport will employ "third generation" technology and concepts including "passenger enivronment" according to French financial consultancy Sodefinance Capital Markets. The new airport will cost 20 billion Yuan (nearly $3 billion US dollars) and be able to handle 70 million passengers a year making it larger than London's Heathrow airport....

Will China Takeover Gwadar Port?

2010-09-24T16:34:00.000-07:00

According to Reuters Pakistan admiral Noman Bashir, head of Pakistan's Navy, told reporters at a televised news briefing that Pakistan should review the multi-decade contract for Gwadar Port's operations awarded to state-owned PSA International of Singapore. The report says Pakistan is frustrated that the port is largely unused but makes no mention of Gwadar's security problem. Between nativist demands that the port be handed over to Baluchistan tribal leaders, attacks from insurgents perhaps backed by India or even the USA, and the withdrawal of Chinese investment cash it is not a surprise that Gwadar has failed to take off as a new Karachi. If China is put in direct control of the port expect plenty of opposition from Indian and American interests....

Guangzhou-Chongqing High Speed Rail Route Set

2010-09-24T15:58:00.000-07:00

The new Guangzhou to Chongqing high speed railway will run through Nanning, capital of Guanxi Zhuang Autonomous Region, and Guiyang, capital of Guizhou Province according to Radio China International. Already under construction is the Guangzhou-Nanning-Guiyang section. The Guiyang-Chongqing section will be a challenge as it must tunnel through the Guizhou Plateau but that stretch is scheduled to be completed by 2015! When complete passengers will travel from Guangzhou to Chongqing in only 6 hours versus over 20 hours currently. The high speed rail link will serve as a huge catalyst for spurring the development of the southwest and dispersing overcapacity in Guangdong Province...

Russia Says ESPO Price Stays

2010-09-24T15:46:00.000-07:00

Russia's Deputy PM Igor Sechin denies rumours that the China National Petroleum Corp. was asking for a lower price for deliveries of crude oil from the Eastern-Siberia Pacific Ocean or ESPO pipeline. The reasoning was that since the spur into China was only 67 kilometers from the terminus why pay the ESPO price set at Kozmino far away on Russia's Pacific coast? Sechin said the official Russian-Chinese deal begins 2011 but until that time Russia would deliver 15 million tons annually at the regualar ESPO price.

With the ESPO and new Turkmenistan via Uzbekistan pipelines already open and the Myanmar(Burma) to Kunming and eventually Chongqing underway as well as crude lines potentially running through Pakistan, China is securing oil and gas deliveries free of the Straits of Malacca and more importantly the prying eyes of the US Navy off China's long and vulnerable coastline....

Obama's National Export Initiative & China

2010-09-23T14:48:00.000-07:00

With no fanfare from the White House and zero interest from mainstream media President Obama received a week ago the report (as required by Obama's March 11 Executive Order) from the Executive branch's Trade Promotion Coordinating Committee on the National Export Initiative (NEI).

Although mostly focused on policy and the creation of what promises to be another cumbersome interdepartmental and interagency bureaucracy the report does single out China as a major focus for US exports. China is the fastest growing market for American exports for many years now.

The NEI report emphasizes six fairly broad areas of focus for China trade: Green Tech including all aspects of 'green' energy and retrofitting, healthcare (medical equipment is already a major export), transport (think railways including urban transit), tourism (very underdeveloped), agriculture (China is already the USA's second biggest export market valued around $13 billion (US dollars) in '09), and lastly education.

The report mentions the importance of Chinese accession to the WTO Government Procurement Agreement but fails to make it a policy objective. Access to China's government procurement was a requirement for WTO acceptance and so far Beijing has kicked the ball for almost a decade. Most of the investment in China's enormous infrastructure and building boom is state-led via direct Central and Provincial government spending. The USA should focus on opening this market by demanding China adhere to the WTO Government Procurement Agreement versus wasting time on political posturing over the exchange rate of the Yuan.

China Has No Property Tax

2010-09-22T16:41:00.000-07:00

The rumour mill is running full speed in China with the latest report by a Chinese newspaper called China Business News that Beijing will implement a property tax at the beginning of 2011 according to a highly-placed anonymous mandarin. Currently China has no property tax a fact that might startle many Americans who continue to view China as as a heavy handed "communist" country. Where the property boom is hottest in cities such as Shanghai and Chongqing property tax proposals have been put forth and some trials are in place. To date however there is no official word on any property tax. Beijing continues to dampen property prices with restrictions on second and third homes and onerous down payment requirements....