February 28, 2010
I do not think we should play compromise any longer.
"We should refuse to recognize Rumania and Bulgaria until they comply with or requirements; we should let our position on Iran be known in no uncertain terms and we should continue to insist on the internationalization of the Kiel Canal, the Rhine-Danube waterway and the Black Sea Straits and we should maintain complete control of Japan and the Pacific. We should rehabilitate China and create a strong central government there. We should do the same for Korea.
Then we should insist on the return of our ships from Russia and force a settlement of the Lend-Lease Debt of Russia.
I'm tired of babying the Soviets."
Source: An unsent letter by President S Truman to Secretary of State James F. Byrnes dated January 5, 1946 -- Harry S Truman Library, Harry S Truman Papers, President's Secretary's Files , Box 333, 1946.
Labels: Sinomania
Daily Posting
At the late dawn of the Internet age in 1998 Sinomania! heard a piece of advice that was not heeded. The success of any website ("blog" did not exist then) is based on regular posting every day at a minimum.
In keeping with this spirit on days when Sinomania! is unable to post meaningfully a random quotation relevant to China is offered.
February 25, 2010
Anti-China Senators Call For "Crackdown" On China
Longstanding China critic Senator Chuck Schumer of New York is leading a pack of anti-China Senators in election year pandering to big union and other contributer interests by urging the Obama administration to -once again- declare that Beijing is "manipulating" its currency and solely responsible for the loss of American manufacturing jobs.
The anti-China coalition consists of:
- Charles E. Schumer (D-NY)
- Lindsey Graham (R-SC)
- Robert Byrd (D-WV)
- Carl Levin (D-MI)
- Barbara Mikulski (D-MD)
- Russ Feingold (D-WI)
- Susan Collins (R-ME)
- Olympia Snowe (R-ME)
- Sam Brownback (R-KS)
- Jim Bunning (R-KY)
- Debbie Stabenow (D-MI)
- Ben Cardin (D-MD)
- Sherrod Brown (D-OH)
- Bob Casey (D-PA)
- Arlen Specter (D-PA)
Anyone familiar with these politicians knows that they are the chorus in all condemnations against China. Sherrod Brown is a bomb thrower of particular reknown being a co-founder of the Taiwan Congressional Caucus.
The hypocrisy in the Senators' action is rich. All are beholden to special interests that require them to play a China card on wedge issues such as trade and human rights. Yet many come from states that benefit greatly from expanding Chinese trade, the USA's third biggest and fastest growing export market. It is afer all US multinational corporations that lead the charge in outsourcing to China. And there is no matching call against the Japanese Yen which is actively supported by Tokyo to be just as advantageous in trade.
Election year politics aside regular readers know that Washington is powerless to force currency appreciation on China beyond what is already happening in the markets....
Labels: china policy, chinese trade, congress, currencies, free trade, hypocrisy, schumer
February 18, 2010
China Doomsayers
None other than famous "Dr. Doom" Marc Faber has joined the chorus calling for a China crash this year. Marc Faber is well known for warning clients about the 1987 Wall Street selloff but he has been right about as often as a flashing clock since then although Faber's views on long trends are very prescient. If you had followed Faber's advice in January 2007 (see The Sinomania! Show episode 3) you would have missed out on the spectacular run up in Chinese stocks that saw the Shanghai Composite Index balloon to over 6,124. And Faber was wrong in 2003 when he said that SARS would ruin the Chinese economy. Most analysts believe and data appears to support continued strong growth in China with the risk to overheating versus a profound slowdown. Time will tell....
Labels: chinese stocks, economy, global economy, markets, stock market
The Deceiver of Dharamsala
It seems a waste of bandwidth to weigh in (once again) on the latest publicity stunt of the Dalai Lama but "His Holiness" is a media darling and I feel compelled to put his visit to the White House in perspective: It means nothing except that the fundraising party circuit in Washington DC is even more unctuous than usual.
The Dalai Lama is a very influential political figure and a fixture of an international celebrity party circuit that sees him as a self-help guru. Lamaism is not Buddhism and neither is the Dalai Lama buddhist. He drinks alcohol, eats meat, and maintains many positions such as anti-gay that his otherwise politically correct crowd should find abhorrent. To Chinese he is a tool of the American government in its now more muted quest to change China. The Dalai Lama and his entourage of Tibet exile elites and their descendents live lavishly off the donations of morally righteous Westerners in stark contrast to the slums and squalor of his adopted home Dharamsala in India.
If you want a full sense of the Dalai Lama's ghoulish character read my earlier posts on him and Tibet here.
Labels: dalai lama, free tibet, hypocrisy
China Buys ESPO Crude
Unipec -- China's largest oil trader and a wholly-owned subsidiary of Chinese oil major Sinopec -- bought a 730,000 barrel cargo of ESPO (East Siberian Pacific Ocean) crude oil held in storage at a terminus of the new ESPO pipeline (see previous reports here). The move is viewed by analysts as a sign that China is pleased with the oil's quality. First shipments were made to refiners in (South) Korea and Japan. It is anticipated that ESPO could become an Asia-centered pricing benchmark similar to West Texas Intermediate or Brent Blend.....
Labels: foreign trade, oil, peak oil, pipeline, russia
February 16, 2010
China Gives WoW New Life
The latest expansion of World of Warcraft, Earth's biggest MMOG or massively multiplayer online game sensation, will be allowed to launch in China. Almost a third of WoW near 12 million subscribers are Chinese so the move is a big plus for media conglomerate Vivendi which owns Activision Blizzard of Santa Monica, California, the creator of the Warcraft games....
Labels: games, tech stocks
February 13, 2010
Xin Nian Kuai Le! Happy New Year! Gung Hay Fat Choy!
Happy New Year wishes from Sinomania! 2010 is the Year of the Tiger and year 4,707 of the Chinese calendar, one of the oldest and longest running in world history.
Chinese New Year (still officially called "Spring Festival" by the Chinese government) is the most important family holiday of the year. As in the USA during Thanksgiving, Chinese travel across the country to reunite with family. Next week is a week long national holiday in China known as a "golden" week. Retail sales usually skyrocket during this period and huge amounts of money exchange hands as family give lai see or hong bao (red envelopes filled with crisp paper money)...,
Labels: new year
February 12, 2010
World Markets Slide: Blame China
The consenus view of mainstream media today is that worldwide stocks and futures markets sank in reaction to the Chinese central bank raising its reserve requirement a half a percentage point. But contrary to what most reports claim the increased requirement for banks in China was not a surprise. Further an increase in the People's Bank of China benchmark interest rate, a much more important change, is expected sometime this year possibly in the second half as long as the Chinese economy continues strong growth. Money managers already factored in these increases in their predictions and analyst advice sometime ago.
More likely world markets reacted to news from the EU that its anemic recovery is faltering. Official statistics from the EU show that 4th Quarter 2009 GDP barely increased 0.1% and industrial production fell almost -2%. Add the ongoing sovereign debt problems in Greece and other EU members and surely world markets are more rattled by events in the EU than anything happening in China.....
More likely world markets reacted to news from the EU that its anemic recovery is faltering. Official statistics from the EU show that 4th Quarter 2009 GDP barely increased 0.1% and industrial production fell almost -2%. Add the ongoing sovereign debt problems in Greece and other EU members and surely world markets are more rattled by events in the EU than anything happening in China.....
Labels: banking, financial crisis, global economy, stock market
February 11, 2010
Changan Auto Expands Into EV Production
Chongqing Changan Automobile plans to issue new shares valued over half a billion US dollars according to the ShenZhen Stock Exchange. The capital raised will be for new capacity, factory upgrades, and research and development. Changan is China's leader in minivan production, a major component of the fast growing rural car market for public and private fleets. But Changan plans to debut an electric vehicle version of its Zhixiang sedan possibly this year. Today comes news that Korea's LG Chem will supply li-ion lithium batteries to Changan in a new deal....
Labels: batteries, chinese autos, electric cars, foreign trade
Major Gas Find in South China Sea
Husky Energy of Canada confirmed discovery of 4-6 trillion cubic feet of natural gas in an offshore block near Hong Kong. The block is jointly developed by China National Offshore Oil Corp. (CNOOC) (NYSE:CEO) in a production sharing agreement but Husky may spin off the operations into an independent Chinese company listed on the Hong Kong exchange. Production could reach 90 million cubic feet per day and begin as soon as 2013.
CNOOC is also still in talks with French oil major Total to develop oil fields in Lake Albert, Uganda....
Labels: energy security, gas, hong kong, oil, peak oil
February 10, 2010
Fox News Part Owned by Red China
There are 2.62 billion shares outstanding of Rupert Murdoch's New York City based News Corp., the parent of "The Most Powerful Name in News" Fox News Channel. Of those shares 300,000 valued at over $4 million (US dollars) are owned by the China Investment Corporation - the sovereign wealth fund (SWF) of the People's Republic of China. The holdings of News Corp. represent the only media investment by Communist China.
In perspective China owns only a small piece of News Corp. But the shares are Class A which have special rights. And often the purchase of Class A shares implies that more shares are anticipated as the initial upfront investment declines with additional investment.
The bigger question though is do conflicts of interest exist between Rupert Murdoch's desire to build business in China, Beijing's investment in his company, and the reporting of Fox News?....
Labels: business news, foreign investment, foreign relations, media
Reunification Watch: Taiwan to Allow Mainland Investment in Financial Sector
Mainland China based brokerages and insurance companies may be allowed to directly invest in Taiwan financial institutions according to the Taiwan Financial Supervisory Commission. A final decision has not been approved. Moving forward, Chinese banks famously awash with capital to spend, may be allowed to invest in Taiwan's financial businesses as part of the big Economic Framework Agreement still under consideration....
Labels: financial news, reunification, taiwan
West China Opens High Speed Rail
Over the weekend the new Zhengzhou (capital of Henan Province) to Xi'An (capital of Shaanxi Province) high-speed rail opened cutting the the travel time between the cities to just 2 hours. Both cities are considered "Tier 2" cities, that is big developed urban cores with above average GDP and population growth rates but not yet at the "developed world" levels of China's "Tier 1" megalopolises such as Shanghai, Beijing, and the Pearl River delta. This year Beijing will invest around $100 billion (US dollars) on high speed railways delighting domestic suppliers and foreign partners Siemens, Alstom, and Bombardier. Already China has the world's second largest railroad system after the USA. By 2020, the Chinese high-speed rail network will link every province and region with 18,000 kilometers (over 11,000 miles) of railways.....
Labels: economic impact, high-tech, investment
February 09, 2010
China's Portfolio: AAPL BLK KO NWSA RIMM TCK V
The China Investment Corporation, the sovereign wealth fund of the Chinese central government, revealed its holdings in a Form 13F filing with the US Securities & Exchange Commission last Friday. The biggest single investment is 101 million+ class B shares of Teck Resources Ltd., a Vancouver based mining conglomerate listed on NYSE as TCK.
CIC's Major holdings of Morgan Stanley (MS) and Blackrock (BLK) are well known but less known are sizeable share blocks in healthcare and pharmaceuticals including Health Net, Abbott Labs, Pfizer, Merck, Eli Lilly, and financials & banks such as Metlife, Bank of America, Citigroup, Comerica, and Wells Fargo.
China owns 30,000 shares of Apple; 158,100 shares of Coca-Cola; 300,000 shares of Rupert Murdoch's News Corp.; 401,100 shares of Sprint; and $350 million worth of Visa, Inc. China also has investments in iShares indexes and SPDR ETFs ranging from $50 million+ to over $200 million per account. The Form 13F and full list of China's portfolio can be viewed at the Sinomania! website here. Chart via CFR.org, Brad Setser....
CIC's Major holdings of Morgan Stanley (MS) and Blackrock (BLK) are well known but less known are sizeable share blocks in healthcare and pharmaceuticals including Health Net, Abbott Labs, Pfizer, Merck, Eli Lilly, and financials & banks such as Metlife, Bank of America, Citigroup, Comerica, and Wells Fargo.
China owns 30,000 shares of Apple; 158,100 shares of Coca-Cola; 300,000 shares of Rupert Murdoch's News Corp.; 401,100 shares of Sprint; and $350 million worth of Visa, Inc. China also has investments in iShares indexes and SPDR ETFs ranging from $50 million+ to over $200 million per account. The Form 13F and full list of China's portfolio can be viewed at the Sinomania! website here. Chart via CFR.org, Brad Setser....
Labels: foreign investment, foreign relations, forex, stocks
February 08, 2010
Iran Says China Top Trade Partner
The Iran-China Chamber of Commerce says that China is Iran's top trading partner over the EU when factoring in transhipments from China via the UAE. Using that calculation Iran-China trade is valued at over $36 billion (US dollars). Officials in Tehran and Islamabad are openly seeking Chinese involvement in the delayed "IPI" gas pipeline project that would deliver Iranian gas from the South Pars fields to Islamabad, Pakistan, and on to New Delhi, India. India has backed off the deal and for nearly 2 years Pakistan's president Pervez Musharraf has said why not make it the "IPC" pipeline where the C stands for China. Islamabad is only 400 kilometers or so (less than 250 miles) from Pakistan-China border and it might be possible to link the pipeline with the Karakoram Highway transit corridor currently under expansion by Chinese investment....
Labels: energy security, foreign investment, foreign relations, gas, india, iran, pakistan
Vietnam-Guangxi To Expand Trade Zone
The ASEAN-China free trade agreement became effective January 1. Already China has displaced the USA as ASEAN's number 3 partner (after Japan and EU). Vietnam is not expected to acceed to the new ASEAN-China free trade agreement until 2015, buying time for the country to prepare for more open competition. Paving the way may be an expanded trade zone straddling the border towns of Mong Cai in Vietnam and Dongxing in Guangxi Zhuang Autonomous Region that has a sizeable Vietnamese population.
Vietnam has approved the arrangement and the government of Guangxi is seeking Beijing's go ahead. The new trade area will include infrastructure building including a new bridge over the Beilun River that separates the cities. There were around 5 million border crossings and over $4 billion (US dollars) in cross border trade in 2008.....
Labels: foreign exchange, foreign relations, free trade
China Overseas Oil Production to Reach 1.2 Million Barrels Per Day
The overseas crude oil production of China's oil majors is expected to almost double by 2020 to 2 million barrels/day according to data from the energy consulting group Facts Global Energy. A new report on Chinese oil & gas investment shows Chinese investments around the world accounting for 25% of China's crude oil imports although their percentage of China's total oil consumption - 12.5% - is still relatively low. China National Petroleum Corp. and listed subsidiary PetroChina (NYSE:PTR) have several major new investments planned this year particularly in Iran and Iraq. Other Chinese oil majors such as CNOOC and Sinopec will pursue international oil deals as well as smaller firms such as Yanchang Petroleum owned by the government of Shaanxi Province.....
Labels: energy security, foreign trade, imports, oil, peak oil
February 05, 2010
Trade War: China Anti-Dumping Duties on US Chicken
The latest tit-for-tat move in China trade is the announcement by the Chinese Ministry of Commerce that the USA is dumping chicken parts on China. Anti-dumping duties up to 105% will be levied in a preliminary assessment. You will recall last year the USA banned poultry imports from China in the first big spending bill signed by President Obama. In 2008 the USA exported around $800 million (US dollars) of chicken parts to China and accounted for almost three quarters of the Chinese market. Since that time US exports have risen. The impact of the new Chinese tariffs will hit the profits of American poultry businesses such as Tyson Foods.
Meanwhile Beijing has filed a dispute settlement with the WTO over the EU anti-dumping tariffs on Chinese made footwear saying the EU never removed quota restrictions on Chinese imports after China acceeded to the WTO....
Meanwhile Beijing has filed a dispute settlement with the WTO over the EU anti-dumping tariffs on Chinese made footwear saying the EU never removed quota restrictions on Chinese imports after China acceeded to the WTO....
Labels: chinese trade, foreign relations, foreign trade, free trade
February 04, 2010
Foreign Firms To IPO on Shanghai Exchange
Pricewaterhouse Coopers (PwC) Hong Kong office says five foreign companies are lined up to float shares on the Shanghai Securities Exchange. It has long been predicted that Beijing will allow foreign firms to raise capital in Shanghai although there is no official confirmation that this writer can find nor any information on which 5 firms may go to Shanghai. Overall, PwC expects 60 IPOs in Hong Kong including some mega offerings, 15 large listings in the Shanghai A share market including possibly Agricultural Bank of China, and 130 IPOs on the new small & medium enterprise and the CHINAEXT boards on the ShenZhen Stock Exchange.....
Labels: chinese stocks, foreign investment, stock market, stocks, tech stocks
February 03, 2010
Chinese Explorations Past and Present
A Chinese map that predates the first English settlement in what is now the United States shows the Gulf of Mexico and North America in amazing detail. Commissioned in 1602 by famous Ming court Jesuit Matteo Ricci the giant map (measuring 12x5 feet) was held for decades by private owners but is now on display in the USA Library of Congress. It was bought at auction in London for million$ by the James Ford Bell Trust (named for the founder of food giant General Mills) and will become part of the trust's collection in Minneapolis. The map combined Chinese and Western knowledge of the world's coastlines to create a comprehensive view of the world and China's position in it.
Flash forward to today where Chinese explorations of Earth's north and south poles are revealed in a new Atlas of the Artic and Antarctica. Beijing's Chinese Artic and Antarctic Administration guides numerous surveying expeditions. Just now the 26th Chinese Antarctic Expedition (CHINARE) concluded a trip to the south pole....
Flash forward to today where Chinese explorations of Earth's north and south poles are revealed in a new Atlas of the Artic and Antarctica. Beijing's Chinese Artic and Antarctic Administration guides numerous surveying expeditions. Just now the 26th Chinese Antarctic Expedition (CHINARE) concluded a trip to the south pole....
Labels: foreign relations
February 02, 2010
Time to Settle US Arms Sales to Taiwan
Now that the Obama administration will fulfill W's promise of high-tech weaponry to Taiwan it is important to review just where the USA and China stand on the issue.
The Taiwan Relations Act does imply if not compel the USA to supply arms to Taiwan for its defense. As Taipei and Beijing rapidly detangle 60+ years of separation with historic cooperation it can be argued just what is Taiwan defending itself against? But the 1982 Sino-American communique says the USA will end arms sales to Taiwan. Specifically,
The Taiwan Relations Act does imply if not compel the USA to supply arms to Taiwan for its defense. As Taipei and Beijing rapidly detangle 60+ years of separation with historic cooperation it can be argued just what is Taiwan defending itself against? But the 1982 Sino-American communique says the USA will end arms sales to Taiwan. Specifically,
6. Having in mind the foregoing statements of both sides, the United StatesThe foregoing was agreed to by both sides NEARLY 30 YEARS AGO. The only people benefitting from the latest arms deal are three corporations, perennial Pentagon suppliers Boeing, Lockheed-Martin, and United Technologies. It is time for the USA to stop fanning flames and work toward peace by ending arms sales to Taiwan.
Government states that it does not seek to carry out a long-term policy of arms
sales to Taiwan, that its arms sales to Taiwan will not exceed, either in
qualitative or in quantitative terms, the level of those supplied in recent
years since the establishment of diplomatic relations between the United States
and China, and that it intends to reduce gradually its sales of arms to Taiwan,
leading over a period of time to a final resolution. In so stating, the United
States acknowledges China's consistent position regarding the thorough
settlement of this issue.
7. In order to bring about, over a period of
time, a final settlement of the question of United States arms sales to Taiwan,
which is an issue rooted in history, the two governments will make every effort
to adopt measures and create conditions conducive to the thorough settlement of
this issue.
Labels: foreign relations, military-industrial complex, reunification, taiwan
Boeing 737 - Airbus A320 - Comac C919
Commercial Aircraft Corporation of China or COMAC debuted the C919 today at the Singapore Air Show. The C919 is China's aerospace industry's challenge to the world's best selling passenger jets, the Boeing 737 and Airbus A320. Already COMAC claims it has 100 orders for the planes and hopes to sell 2,000 over the next 20 years. With China's recent airplane leasing activity it is possible many airlines may fly the C919 before long. Critics claim the C919 is a way for Chinese airlines to get away from reliance on Boeing, for years the USA's number 1 exporter. Although entirely designed and built in China there are great benefits for US companies to supply C919 production. GE has a multibillion dollar deal to supply engines and Honeywell will supply electronic controls for the cockpits....
Labels: aerospace, aircraft, boeing, foreign trade, jet planes
Chinese Researchers Use Acupuncture for Cancer Detection
Chinese scientists at the Shanghai Synchrotron Radiation Facility, one of the most advanced super X-ray centers in the world, discovered evidence of the existence of acupuncture points - micro-vessels and mineral concentrations in several well known points used in acupuncture. Researchers used these points and micro-vessels in conjunction with super X-rays to detect cancer tumour cells overlooked by traditional scans. The Shanghai synchrotron opened last May and by 2030 will be one of the largest in the world allowing 1,000 scientists simultaneous access....
Labels: high-tech, technology
February 01, 2010
Chinese Investment Returns to Gwadar - Future Overseas Base?
Pakistan's National Economic Council approved nearly $4 billion (US dollars) worth of mega projects last week including New Gwadar International Airport. The projects are financed by the Pakistani federal government, the export-import banks of China and the USA, Oman, and others. The Gwadar airport anticipates 300,000 passengers per day with capacity for cargo and 50 flights and hour. Once again there is big talk of pipelines and power plants. Meanwhile Indian interests are speculating that Beijing wants a military base in Pakistan. An op-ed by prominent Fudan University (Shanghai) professor Shen Dingli (an expert in international security matters) raised a lot of eyebrows late last week with its call for Chinese overseas bases. Many interpret the editiorial as proof that Beijing is building a 'string of pearls' of Navy bases around India to gain independent control over trade lanes across the Indian Ocean and into the South and East China Seas.
Of course the idea that a Chinese Navy base or two in support of Chinese shipping could alter America's military supremacy is absurd. As the map pictures, China is ringed by US military installations. And all Chinese traffic in the seas around China are at the mercy of US Navy ships, carriers, and submarines. More probably Dr. Shen's editorial is more a salvo in the war of words over Obama's arms sales to Taiwan.....
Of course the idea that a Chinese Navy base or two in support of Chinese shipping could alter America's military supremacy is absurd. As the map pictures, China is ringed by US military installations. And all Chinese traffic in the seas around China are at the mercy of US Navy ships, carriers, and submarines. More probably Dr. Shen's editorial is more a salvo in the war of words over Obama's arms sales to Taiwan.....
Labels: chinese trade, foreign relations, global security, military-industrial complex, navy, pakistan
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