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....

China to Invest over $1 billion in Ghana Mining

2010-09-22T16:15:00.000-07:00

Bosai Minerals Group, a privately held mining conglomerate out of Chongqing will jointly invest $1.2 billion (US dollars) to build a power plant and upgrade bauxite mines at Awaso bought last year from Rio-Tinto-Alcan. The investment will come from Bosai, the China-Africa Fund, and the government of Ghana. Bosai will control 80% and aims to produce 2 million tons of bauxite per year by 2014...

China to Build Car Plants in Philippines

2010-09-20T17:01:00.000-07:00

Chinese vehicle makers JAC Motors, Chongqing Astronautic Bashan, and Great Wall Motors Company are planning separate investments in the Philippines to build assembly plants for Chinese trucks and passenger cars. JAC Motors based in Anhui has been exporting vehicles since 1990 and is China's number 1 exporter of light trucks. JAC has an extensive dealership network around the world but so far is kept out of first world markets. This year may be a record for car sales in the Philippines where local production is dominated by Japanese carmakers particularly Toyota. Chinese firms are hoping to carve out market share despite the Philippines's relatively high labor costs and notoriously fickle energy grid...

Swiss Watchmaker Sees No Limit to Luxury Sales in China

2010-09-17T12:06:00.001-07:00

Jean-Claude Biver, CEO of luxury Swiss watchmaker Hublot Geneve, says he sees "no limit" to the growth of luxury brands in China. Unlike in America and to a lesser extent Europe where the wealthy might wear "rubbish" on their wrists, Biver said in China expensive watches are sought after status symbols.

Hublot plans to open 15 new stores in Asia most of them in China where the company first opened a store in Shanghai last year. According to a report the average wealthy Chinese owns more than 4 luxury watches....

Shanghai Back Below 2,600

2010-09-17T11:45:00.000-07:00

The Shanghai Composite, China's bell-weather stock index, is back below 2,600 after a hefty sell-off at the end of the week. Commenters variously credit rising real estate values and tightening lending standards (for 2nd and 3rd homes only) or the tension with US Treasury Department over currency as the cause for the drop. However, as I have pointed out before the impact of China's week-long national holidays may be at play. At Chinese New Year there is what I call a "hong bao" or "lai see" effect - that is selling stocks for cash gifts. The week-long National Day holiday is coming up soon and the sell-off could be in preparation for the holiday. National Day holiday is also a big occasion to travel, visit family, shop, and party....

TRADE WAR: USA Takes Steel, Credit Card Disputes to WTO

2010-09-16T11:57:00.000-07:00

US Trade Rep Ron Kirk is taking two cases against China to the WTO. The first is a tit-for-tat move to impose anti-dumping and countervailing duties on imports of Chinese grain-oriented flat-rolled electrical steel or GOES. The case is on behalf of complaints by AK Steel and Allegheny Ludlum. AK Steel Holding is a private steel conglomerate that has seven plants in politically sensitive Ohio, Indiana, Kentucky, and Pennsylvania, and employs 4,900 members of Richard Trumka's AFL-CIO union. AK Steel complained in SEC filings that it was negatively impacted by Chinese duties on its GOES sales.

The second case demands access for US credit card giants to China's online processing or electronic financial services. The suit claims that China agreed to such access in 2006 although it is unclear as the China Trade Relations Act and the WTO accession agreement do not include the services...

CURRENCY MANIPULATORS

2010-09-15T14:23:00.000-07:00

Twenty-five years ago the USA forced Japan to appreciate its currency in order to correct its own bad books by fixing (temporarily) America's current account deficit. The Plaza Accord of 1985 led to rampant speculation in the Yen and a financial crisis and depression from which the Japanese have yet to recover. From the sidelines, having secured the return of Hong Kong and its capital, Beijing watched and learned.

Since the dotcom bubble popped and jobless recoveries, booms, and busts have America stalled, certain political factions believe that if Uncle Sam can force a similar appreciation of the Yuan on Beijing the American Dream can be saved. Chief among the politicians is Chuck Schumer (D-NY) and his chorus of taxpayer funded think tank reports and leading talking heads. One of the biggest proponents of the China tariff clique is Nobel Prize winning economist Paul Krugman. Krugman used his NY Times column again today to call for tariffs on Chinese goods deciding that one lesson from the Great Depression - the Smoot-Hawley Act - is not worth heeding.

I've written many posts and Sinomania! Show episodes on the futility of trying to force Beijing's hand on Yuan. Do a search here and on the Sinomania! website and you'll come up with the same conclusion. America cannot fix its problems by manipulating international forex markets. Beijing unlike Japan is not America's satellite and cannot be told what to do and is not afraid of Washington. And the biggest reason why people like Krugman and Schumer know that the issue is just hot air is not the "threat" of a "nuke option" - Beijing selling its holdings of US Treasury securities - but because the average American mired in a deep recession can't afford to pay two and three times for all the stuff they buy from WalMart, Target, IKEA, and everywhere else!

Further the accusation that Beijing manipulates the Chinese currency is complete hypocrisy when Washington and Tokyo both do the same. Just yesterday Tokyo intervened in forex markets for the first time in years to stop Yen appreciating. And Washington deliberately devalues the dollar (what W called the "strong dollar" policy) to support American exports and reduce the value of its debts.

Summer Davos 2010 Underway in Tianjin

2010-09-14T15:03:00.000-07:00

The World Economic Forum's so-called "Summer Davos" confab (officially the Annual Meeting of the New Champions) is underway in Tianjin as the world's political, business, and media elite chew the fat of hot topics and hot dishes. Click here to see the full line-up of participants and panels...

Lawson to Open Nearly 100 Stores in Chongqing

2010-09-14T14:40:00.000-07:00

Japan's second biggest convenience store operator Lawson plans to open another 130 stores in China by end 2011 - 97 of them in Chongqing alone (the remainder in Shanghai). Lawson is a poster child of multinationalism starting as an outlet for an Ohio dairy farmer, being known for decades as Dairy Mart, Circle K, and owned by American, Canadian, and Japanese conglomerates. Lawson is making a big push into Chongqing municipality -- China's fastest growing big urban market...

Chinese Communist Party Africa Tour

2010-09-13T16:44:00.000-07:00

A Chinese Communist Party (CPC) delegation will visit three African countries this week to attend party conferences first in Ethiopia then Malawi and South Africa. The delegation is led by Zhang Xuan, the deputy secretary of the Chongqing Municipal CPC Committee. Ms. Zhang is also an alternate member of the 17th Party Congress on the national level. Zhang is active with the Communist Youth League and could be a rising female star in the party. The tour is at the invitation of political parties in all three countries including the African National Congress. Whether the delegation includes any deal-making is unknown....

ReUnification Watch: ECFA Goes Into Effect

2010-09-13T16:37:00.000-07:00

The Beijing-Taipei Economic Cooperation Framework Agreement (ECFA) went into effect Sunday and will lower tariffs on 539 Taiwan originating products and 267 mainland Chinese products and open financial and other economic sectors to investors on both sides of the Straits of Taiwan. Already (official) cross straits trade exceeds $100 billion (US dollars). Expect that sum to expand greatly over the medium term....

EU Helps Small Business Into Chinese Market

2010-09-10T16:25:00.000-07:00

The European Union's China Advisory Council recommends that the many business centers established by EU member nations in China be consolidated into "European Houses" to coordinate efforts to get small and medium sized EU enterprises (SMEs) into China. The EU Small Business Act is pushing an effort to help European SMEs into global markets particulary the biggest outside the EU, the USA and China. Overall the EU is expending a lot of effort and financing behind the effort. Why isn't the USA doing something similar? The US Commercial Service with its small network of offices in China and bloated Washington-centered bureaucracy seems lackluster by comparison...

China to Add 3 Million Barrels/Day Oil Refining Capacity

2010-09-10T16:15:00.000-07:00

China National Petroleum Corp., the parent of PetroChina (NYSE:PTR) aims to complete a 200,000 barrels per day capacity oil refinery in Kunming by 2013. The refinery will process crude delivered by the Burma (Myanmar) to Chongqing pipeline currently under construction. When complete it will give 400,000 barrels per day to feed the growing cities of Yunnan Province and in particular independent megalopolis Chongqing. A gas pipeline is also under construction through Burma to Yunnan with terminus in Guangxi Zhuang Autonomous Region that will deliver 12 billion cubic meters of gas. Completion dates for the pipelines are not known at this time but all told China plans to finish refining capacity for an additional 3 million barrels per day in the next 5 years....

What Happened to the China Collapse Call?

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

Stephen Green of Standard Chartered Bank (Shanghai), an expert in China's stock markets, writes in Bloomberg that China is returning to a "Sweet Spot" for foreign investment as the Chinese economy is neither too hot nor too cold. China may see an influx of $100 billion (US dollars) in FDI this year.

Morgan Stanley's Chief Economist for China Qing Wang (he replaced Andy Xie) calls it the "Goldilocks Scenario" and has advised for some time that Beijing's mandarins are skilled at using the right policy tools at the right time and have succeeded so far in avoiding hyperinflation and any crash including it appears a property bubble.

If China is Goldilocks what about the Bears that said China was too hot/cold and ready to crash? Mark Faber, Jim Chanos, and others may have some explaining to do if China doesn't disintegrate soon...

CHINA SIGNALS WTO GPA MOVE

2010-09-09T16:11:00.000-07:00

Vice President Xi Jinping responded to criticism of "buy China" bias in Chinese government procurement and China's near decade long foot-dragging on agreeing to the Word Trade Organization's Goverment Procurement Agreement (GPA) - a requirement of China's WTO accession protocol - telling reporters in Beijing that "with regard to government purchases and construction projects, the Chinese government will adopt an open, transparent plan to let foreign companies and technological products enjoy equal treatment."

In October it is believed Beijing will restart talks toward China signing the WTO GPA. Regular readers know this is a hugely important negotiation to watch. If the USA and EU can compel China to own up to its WTO commitments regarding government procurement it could potentially open the biggest market of all for exports to China. The possibility of competing for Chinese infrastructure and technology projects could help give President Obama's neglected "National Export Initiative" a chance for success...

ReUnification Watch: First Mainland Firm Lists on Taiwan Exchange

2010-09-09T16:05:00.000-07:00

Yangzijiang Shipbuilding (registered in Singapore but with all operations on China mainland) surged 7% today when it opened on the Taiwan Stock Exchange. The interest in shares shows that the long list of mainland firms eyeing a Taiwan listing may reap rich awards when listing becomes easier and directly possible as China and Taiwan merge their already closely related economies...

1st Shipment Leaves ChonqQing Cuntan Bonded Port

2010-09-09T15:45:00.000-07:00

The new Cuntan Bonded Port in Chongqing - China's only inland special port custom district - cleared its first shipment in a matter of days signalling the start of an increase in direct trade from the city. The Cuntan Bonded Port is an important development for Chongqing's economy. You can read my earlier posts on it here at the Sinomania! blog. Click here for some information about bonded ports in China....

Deutsche Bank Enters ChongQing

2010-09-09T15:35:00.000-07:00

German financial powerhaus Deutsche Bank was given permission to open a branch bank by the Chongqing municipality's banking regulators and authority. Over ten foreign banks have already set up shop in Chongqing - China's most dynamic city - including HSBC, Bank of East Asia, ABN-AMRO, and ANZ of Australia. Chongqing recently declared financial services to be a "pillar" industry of the giant independent municipality's economy and a focus of investment and innovation over the long term...

Chinese Auto Sales Over 1 Million in August

2010-09-09T15:20:00.000-07:00

Retail passenger car sales in China soared almost 60% over last year in August. Year-to-date the top auto sellers are the SAIC group (including Shanghai GM now run directly from Shanghai); GM; Dongfeng Motor; Toyota; and Honda.

Ford Motor ranks number 6 but is growing fast including a brand new partnership with Chongqing Changan Auto to build cars for export outside China.

In other auto news Chongqing Changan Auto's joint venture with Peugeot will invest billion$ to produce Citroen's top DS line of small cars and create a new brand for the company....

China Stock Market Cap Tops USA by 2030

2010-09-09T15:05:00.000-07:00

According to a new report by Goldman Sachs (via the Financial Times) emerging markets stock market capitalization will reach $80 trillion (US dollars) by 2030 from around $14 trillion today with China the world's largest stock market cap by a wide margin....

REUNIFICATION WATCH: TAIWAN LEGISLATURE APPROVES ECFA

2010-08-19T14:46:00.000-07:00

The Taiwan legislature on Wednesday approved the landmark Economic Cooperation Framework Agreement (ECFA) between Taiwan island and mainland China although neither side has yet had concluding high-level talks and exactly when the agreement goes into effect is undecided. Nonetheless, moving forward with ECFA is a huge development and begins the long process of economic absorption of Taiwan...

CHINA MAY ALREADY BE WORLD'S LARGEST ECONOMY

2010-08-16T20:42:00.000-07:00

As regular readers know I believe a nation's energy use and production a much better gauge of an economy's size than Gross Domestic Product which is easily manipulated by central governments (Washington is as guilty as Beijing in that regard) and made meaningless by currency exchange. On a purchase power parity basis China has been the second largest economy for a very long time.

Earlier this summer China surpassed the USA as the world's number one energy user according to the International Energy Agency (Beijing rejects the designation). To me this says that China is already the largest economy in the world. That is a change of historic significance. Around a century ago the USA took that top energy spot and kept the position until now...

Where Shall Sinomania! Go in China? VOTE in our Poll!

2010-07-13T15:30:00.000-07:00

Sinomania! plans to return to China this year for a research and business trip. Where shall I go?

SORRY SO SILENT

2010-06-18T16:26:00.000-07:00

My apologies for the two months of silence at this space on Sinomania! I am experiencing a spectacular loss. My partner of almost 13 years (actually we are legally married) died after a 5+ year fight with a rare cancer--ocular melanoma that metastasized. While his death did not come without warning it was nonetheless a shock and turned my world upside down. Not to be overly dramatic, I will be back, Sinomania! will be upgraded, and I plan to travel deep into China soon to report on what’s really happening with the world’s most beguiling and misunderstood giant. Meanwhile, please use the blog space to comment on the “news” of China presented by world media.

OPEN THREAD

2010-04-15T14:59:00.000-07:00

Sinomania! is transitioning to a permanent blog at the Sinomania! website and integration with Wordpress. For the time being, talk amongst yourselves....

China Doomsayers Keep Talking

2010-04-15T14:46:00.000-07:00

Jim Chanos interview by Charlie Rose (whose show is partially funded by US taxpayer dollars) is getting lots of play time today with Chanos reaffirming his belief that China will collapse this year. Meanwhile in China "independent economist" Andy Xie, famous for years for his more sober views on China, now says Chinese real estate is a bubble ready to pop and with bad consequences. Chanos and Xie are just two in a growing group of talking heads staking their reputations on a China crash call. We'll see what happens over the next 8 months. And if they are wrong will their clients including media outlets still pay big buck$ for their thoughts in the future....?

Trade War: China Imposes Duties on US, Russian Steel

2010-04-12T15:36:00.000-07:00

According to a Xinhua via Reuters news report China will impose anti-dumping and countervailing duties up to 64.8% and 44.6% respectively on imports of grain-oriented silicon or electrical steel from USA and Russia. The American firms AK Steel and Allegheny Ludlum Corp., will get reduced extra duties ranging from 7.8% to 19.9% as they responded to Beijing's inquiry.

The Chinese Ministry of Commerce has not publicly announced the rulings yet. The investigation was brought by steel majors Baosteel and Wuhan Iron & Steel in June 2009 and focused in particular on incentives and subsidies given by the state of Pennsylvania.

Meanwhile China revealed today that March trade data revealed a trade deficit of over $7 billion (US dollars), China's first monthly trade deficit since May 2004....

China Wants Canada's Oil Sands

2010-04-12T10:03:00.001-07:00

Reuters reports that Chinese oil major Sinopec will buy ConocoPhillips's stake in Syncrude Canada, the world's largest oil sands project located in Manitoba. The deal is worth just under $5 billion (US dollars) and would give Sinopec nearly 10% of the project that currently produces 350,000 barrels per day. Sinopec already owns a 10% stake in French major Total's Canadian oil sands venture Northern Lights....

China Could Become Oil Exporter Again

2010-04-09T16:37:00.000-07:00

Long before the Panic of '08 Chinese oil majors planned major expansion of China's oil refining capacity. There are at least 10 major oil refineries or new capacity underway throughout China. According to 2009 data there are around 177 oil refineries of which 78 major refineries are owned by the Chinese oil majors and foreign joint ventures. By contrast the USA has around 150 oil refineries and no new construction for almost 30 years! The new refineries may add 3.7 million barrels per day of capacity by 2013.

In January China National Offshore Oil Corp. (NYSE:CEO) obtained license to export refined oil products. Just a year ago the company opened a new refinery at Huizhou, Guangdong, that is being upgraded to refine up to 22 million tons of oil per year.

If Beijing's big push for alternative energy is successful will all the new refined oil production be needed in China? Or could it end up exported onto Asian or international markets?

Reunification Watch: China-Taiwan Telecom Tie Up

2010-04-09T16:00:00.000-07:00

China Mobile and Taipei based Far EasTone signed a memorandum of understanding to develop a TD-LTE (time-division long-term evolution) network on Taiwan and cooperate in 4G applications and supply chain including Softbank, Vodafone, and Verizon. The move is part of the opening of Taiwan's telecom sector to mainland investment that began some months ago....

Beijing Ramps Up Heavy Industry Restructuring

2010-04-09T10:56:00.000-07:00

The head of the policy department of the Ministry of Industry & Information Technology - one of Beijing's five "super" ministries - says a plan is underway to consolidate the power, coal, iron and steel, cement, nonferrous metal, coke, paper, leather and printing material industries. Specifically targeted is the iron and steel industry with the call to shut down furnaces less than 30 tons capacity. The plan also calls to eliminate outdated plants in the textile industry by the end of next year. The ministry warns it will take joint efforts of all government departments to achieve the aims.

The consolidation of China's massive but scattered and often inefficient heavy industrial plant is a long standing goal. It will be accomplished through corporatization of government-owned businesses and mergers and acquisitions leading to a handful of powerful industrial leaders. This is part of Beijing's overarching desire to see American style "big 3" players in all industrial sectors.

Economic restructuring is one of 5 key areas Beijing is channeling central government resources into in a bid to jump start a "third wave" in the Chinese economy. The other areas are agriculture, alternative energy, social services particularly education and health care, and "independent innovation"....

Vladivostok Increases Ties with Heilongjiang

2010-04-08T16:07:00.001-07:00

The mayors of Vladivostok and Suifenhe, Heilongjiang Province, signed a protocol for increasing ties and cooperation. The plan is set up a Russian-Chinese Industrial Park at the Vladivostok State University. Despite its name the park will focus on scientific research and partnership.

Sinomania! readers will recall that at the provincial level Heilongjiang and Primorsky Krai (Russia's Far East) are spearheading cooperative efforts. Xi Jinping's recent Russia-EU tour began in Vladivostok with a welcome from Russia's top leaders.

Manchuria and Siberia remain underdeveloped and rich in resources. Along with the Tumen River area the region could be a major center of migration, industrialization, and urbanization in the medium to long term....

China Wants Canada's Nickel

2010-04-08T14:33:00.000-07:00

Chinese mining and metallurgical conglomerate Jinchuan Group Ltd. wants to acquire Crowflight Minerals Mining Company of western Canada. Jinchuan is offering just under $150 million (US dollars) for Crowflight, a hefty premium on its Toronto listed shares. Crowflight operates nickel mines in Manitoba. Nickel is at two year highs over $24,000 per ton mostly on Chinese demand. Two thirds of nickel demand is driven by the stainless steel industries. Jinchuan Group began in 1958 with the development of nickel mining at a huge deposit in the Hexi corridor of Gansu Province in western China. Some observors believe Jinchuan's acquistion may signal a new push by China to acquire more of Canada's mineral resources....

Kyrgyzstan: Who's In Charge?

2010-04-07T11:42:00.000-07:00

Last month the Pentagon funneled over 50,000 troops and millions of gallons of fuel through the Manas "Transit Center" in Kyrgyzstan, the euphemism for the US air base that Kyrgystan's parliament voted closed in 2009.

The "Tulip Revolution" of 2005 failed as Kyrgyz President Kurmanbek Bakiyev preferred his neighbors Russia and China to Uncle Sam. On March 11 the US State Department issued a human rights report against the Kyrgyz Republic creating the background and justification for future intervention. Now the "United Tajik Opposition" or UTO (which was active in Kyrgyzstan's civil war after the Soviet Union collapsed) is disrupting the urban centers of the country.

Coincidentally, just in the last two weeks major investments by Chinese ventures were ramping up in Kyrgyzstan including energy giant China Guodian Corp. Guodian opened an office last week in Bishkek, the Kyrgyz capital, and said it was pursuing electricity generation projects including hydropower. Guodian is still scheduled to issue 1 billion Yuan in corporate bonds on April 13.

It will be interesting to see how the situation in Kyrgyzstan unfolds. Watch closely and you might catch the interaction of clandestine operations, "legitimate" warfare, psyops, American, EU, Russian, Chinese, and multinational interests of all stripes collide!

At issue is transport and supply of the so-called Af-Pak theater and the larger contest for the resources and markets of the one of the world's least developed regions. As with Vietnam the USA is opting to destabilize a border region of China where Beijing wants to gain the upper hand. We know how that ended. Beijing is just as content to watch patiently as America bleeds on a different Chinese border....

Boao Forum 2010 Signals Alternative Energy Push

2010-04-06T21:02:00.000-07:00

The Boao Forum for Asia begins this week and lasts through the weekend at a luxury hotel on the coast of tropical Hainan Island. The annual gathering of business and political elites is often called the "Chinese Davos" which is odd since there is already a Chinese meeting of the World Economic Forum called the Annual Meeting of the New Champions held the past 3 years in Dalian or Tianjin.

This year's Boao focuses on "Green Recovery" with confabs on sustainability, low carbon objectives, all clues to where investment focus is going. Former US Treasury Secretary Hank Paulson will be on a capital markets panel. There will be discussions on protectionism, consumption in Asia, hot real estate prices with SOHO Chairman Pan Shiyi, China-India Cooperation, the China-Taiwan Economic Cooperation Framework Agreement, and "unleashing the power of the private sector."

Chinese Vice President Xi Jinping will deliver a keynote address and be joined by current politicos Robert Hormats, US Under Secretary of State, Singapore Senior Minister Goh Chok Tong, the Prime Minister of Denmark, Taiwan government officials, and many others.

Business leaders include executives from many American firms including PepsiCo, Harbinger Capital, Goldman Sachs, Bristol-Myers Squibb, Bank of America and Merrill Lynch, Morgan Stanley (of course), the Chicago Board Options Exchange, Nielsen, Prudential, and so on. The activities of the Boao Forum challenges the line of mainstream media that China is "closing for business...."

Chinese Offshore Wind Farm Shows Benefits of Cooperation & Trade

2010-04-05T12:06:00.000-07:00

A 102 Megawatt offshore wind farm will begin operating by the end of April in the delta lands off Shanghai. Chinese wind turbine developer Sinovel installed 34 wind turbines in the muddy waters, the first installation in a plan to get over 500 Megawatts of wind power generation off the Chinese east coast. Each Sinovel SL3000 turbine contains core electrical components created and supplied by American Superconductor (NASDAQ:AMSC).

AMSC initially struck a deal to supply electrical components to China via its Chinese subsidiary WindTec. But in January 2010 Beijing's National Development and Reform Commission lifted the 70% domestic components requirement for wind energy development. This move will allow foreign companies much greater access to the fast growing clean energy sector in China.

This June Shanghai will host Offshore Wind China 2010 organized by Chinese Renewable Energy Industries Association, the Global Wind Energy Council and others....

Sinomania! on assignment - Open Thread

2010-04-01T00:14:00.001-07:00

Sinomania! will be on assignment until next week. Use this post as an open thread. Treasury must report to Congress on Chinese currency in mid month. Will the Obama administration appease scared politicians up for re-election with a Chinese bogeyman and unleash a trade war?

[UPDATE: Camp Obama Punts - the Treasury Dept. said its semiannual statement on currencies will be delayed until after the G20 summit in June. When the USA put pressure on China at the Copenhagen Summit it nearly derailed the entire event. At last year's G20 in London China showed it is impervious to pressure even from her so-called peers. Good luck Geithner.]

CHINA TO SELL US TREASURIES FOR GOLD

2010-04-01T00:14:00.000-07:00

In a surprise move Beijing's State Council will soon announce that China will redeem nearly all its holdings of US Treasury securities and demand compensation for their current market value in gold. Official notification is expected in advance of the US Treasury Department's anticipated ruling that Beijing is manipulating Renminbi and will be delivered in private direct to Treasury Secretary Geithner before the close of business April 1. Through an obscure legal ruling from the days of FDR China will demand payment for its holdings of US treasuries in gold and at just under $900 billion Beijing will take possession of a large part of Fort Knox. An unnamed source at the White House said all efforts would be made to discreetly move the gold from Fort Knox in order to avoid anti federal government sympathies....

[Ed. note: this is a special April Fool's Day report.]

We then proceeded to Beijing Film Studios

2010-03-31T16:00:00.001-07:00

"...to be greeted by another delegation, the ritual similar to this morning except that after the tea, we had small, dubious sandwiches and rice wine, followed by a tour of the studio, which is like all other studios I've ever seen -- slightly out of date (considerably so, here) dusty and cluttered, repeated warnings not to trip on the cables I've been avoiding before the people who warn me were born.

Some of the sets from The Last Emperor are still standing...absolutely world class. On the back lot, some really fine exterior sets are now useless because the sky behind them is now studded with high-rise buildings. That happened a long time ago in Hollywood. It's curious how similar film studios are around the world."

Actor Charlton Heston in Beijing in 1988 while he directed an all-Chinese version of Herman Wouk's play "The Caine Mutiny Court-martial". Heston, Charlton. Beijing Diary. New York: Simon & Schuster, 1990.

[ed. note: on days when Sinomania! is unable to post meaningfully a random quotation relevant to China is offered.]

Shanghai To Launch Yuan Funds, REITs

2010-03-30T10:04:00.000-07:00

Before the Panic of '08 China's State Council created the little-known National Office of Financial 30 to direct a series of financial liberalizations in Chinese capital markets. The financial crisis and Beijing's mammoth stimulus spending delayed many of the reforms. But word is Shanghai is on the cusp of getting approval for two major initiatives -- launching foreign Yuan private equity funds and Real Estate Investment Trusts (REITs).

A "trial plan for participation of foreign investment in Renminbi investment funds" is close to approval. This will allow certain foreign investors, most likely big institutions such as the Carlyle Group, to invest in Chinese private equity funds via a mechanism that would grant a quota of Yuan directly to the foreign investor.

Property developers in Pudong (Shanghai) and Tianjin appear to the driving force behind establishing REITs in mainland China. Details for Chinese REITs are still being sorted out but word from Yan Qingmin, head of the Shanghai office of the China Banking Regulatory Commission, is that REITs should get the green light in the 1st half of this year. Rumour is Citic Securities, the brokerage of Citic Group - China's premier transnational corporation - may be the first to establish a REIT.

The intent of the Financial 30 is to expand private sector access in bank lending and to channel investment to Chinese small and medium enterprises as well as other breakthrough type reforms. The ShenZhen GEM board, for example, grew out of the program....

China Business News for Monday 29 March 2010

2010-03-29T12:09:00.000-07:00

Geely Buys Volvo - Chinese carmaker Geely becomes the 1st Chinese auto maker to buy a legendary brand with its $1.8 billion (US dollar) acquisition from Ford Motor. Analysts say for the venture to work Geely will need to take a different approach something Geely just may be able to pull off given its reputation as China's biggest privately owned auto company....
Rio Tinto Ex-employees Sentenced in China to prison on bribery and theft charges with terms ranging from 7 to 14 years. Australian Foreign Minister Stephen Smith criticized the verdicts and said it may impact relations with China. China is Australia's top trading partner....
AFP says a World Gold Council report sees Chinese gold consumption doubling over the next decade. Although currently the world's leading gold producer China could exhaust its known gold reserves in just 6 years if gold consumption reaches the same degrees as India....
Sinopec Buying Upstream Assets from its parent China National Petroleum Corp. including Angola assets valued at $2.6 billion (US dollars) all in a bid to ensure petroleum reserves....
China's National Social Security Fund To Invest Overseas and its Chairman Dai Xianglong specifically mentioned USA, EU, and India as investment targets. Currently the fund has around $114 billion (US dollars) available and aims to more than double in size in 5 years to 2 trillion Yuan....

Maryland Biofuels Gets Chinese Investment

2010-03-26T16:53:00.000-07:00

Milestone Biofuels will be the name of a new venture between New Generation Biofuels (NASDAQ:NGBF) of Columbia, Maryland, and Chinese partner Regent Trend Investment (formerly Great Full Group Holdings) who will supply $20 million (US dollars) for the joint venture to produce 250 million gallons of biofuels a year in the USA....

Dell Computer Plans Billion$ in China Investment

2010-03-26T16:38:00.000-07:00

Dell Computer says it expects to reach $5 billion (US dollars) in Chinese sales this year and plans to invest $25 billion in China. Dell's sales in China are growing at high double digits and China is the company's largest market after the USA. Dell has a partnership with the Postal Saving Bank of China that allows Chinese customers to wire payments to Dell for free via 45,000 postal offices around China thereby serving markets in lower tier cities and even rural areas....

Shanghai Starts Index Futures, Short-Selling Next

2010-03-26T11:52:00.000-07:00

Trading in stock index futures will begin April 16 in Shanghai according to Reuters. The Shanghai Financial Futures Exchange will offer futures contracts on the CSI 300 index (made up of 300 leading shares from Shanghai and ShenZhen exchanges). Initial capital requirements will be hefty (500,000 Yuan or over $73,000 US dollars) and margin requirements around 15%. Coming soon short-selling in stocks will be allowed on 40 shares of the Shanghai Composite Index (which 40 shares is unavailable at this time - if you have insight, please let me know) and margin trading is promised as part of a plan to slowly liberalize Shanghai's capital markets...

TRADE WAR: US Credit Cards Demand China Access

2010-03-25T16:56:00.000-07:00

Bloomberg via Businessweek reports that US Trade Representative Ron Kirk may be considering a WTO complaint against China on behalf of Visa, American Express, MasterCard, and Discover Financial. The credit card giants want access to China's fast growing electronic payment processing market. Although Chinese still prefer to use cash for most transactions credit and debit cards are rapidly gaining popularity. The number of new cards issued is measured in hundreds of millions. Most growth has occurred in just the past few years and domestic ATM king UnionPay has the largest market share in China at around 65%.

America's card companies claim China committed to opening up the sector to foreign competition when it joined the WTO. Fact is, however, there is absolutely no mention whatsoever regarding credit or debit cards and electronic payment processing in either the USA China Trade Relations Act or the WTO Accession Protocol. Both documents are readily available at the Sinomania! website....

China Backs Away from IPI Pipeline

2010-03-25T14:58:00.001-07:00

According to a report originating at Upstream (an oil & gas industry publication out of Norway) an unnamed senior mandarin in Beijing told Iran that China would not invest in the IPI (India-Pakistan-India) pipeline project to bring gas from Iran's south Pars fields. The source said an extension to China through Pakistan and via roughly the Karakoram Highway was too difficult at present and wouldn't be considered for at least 5 years. China's preference is to buy gas direct from Iran most likely in LNG form....

Beijing Rockers Revive Chinese Grunge

2010-03-25T14:11:00.000-07:00

Last weekend the SXSW (South by Southwest) music festival in Austin, Texas, featured a China Night with rock bands from Beijing mostly -- Carsick Cars in particular was a hit. While nearly all China is saturated with bubble bands and American Idol knock-offs, Beijing tries to retain its gritty grunge from the '80s. Even today Cui Jian and other ethnic Korean-Chinese rockers still define rock music in China's capital. When I first visited China ten years ago the music scene was definitely more eclectic and active. While there are certainly more and bigger music clubs now live music is not the norm. But according to some observers Beijing may rock in 2010. You can check out the Beijing based rockers during the Chinese Invasion Tour 2010 put together by music producer Maybe Mars, founded by American expat Michael Pettis of Beijing. Here in San Diego, California, you can catch them at Brick by Brick....

Much Ado About Google

2010-03-24T15:40:00.000-07:00

Ten flower bouquets were pretentiously laid outside Google's headquarters in Beijing one per each million or so residents of the Chinese capital. The flowers are an apt metaphor for Google's market share in China. At the insistence of co-founder Sergey Brin Google is quitting China and wants a messy exit to hide its inability to build successful brand and business in the world's number 1 Internet and cell phone market. This move will mark the end of Google's seemingly unstoppable trajectory. Like Yahoo!, Ebay, and other web businesses before it Google will discover that while the USA may have created the Internet and still runs much of it (backbone, ICANN, etc.) it does not control it nor have a monopoly on its commercial applications.

Google cannot remain viable just delivering ads to eyeballs based on an outdated Internet business model. The future is in smartphones and new devices linking people directly to video, music, texts, independent of search engines. Even websites (god forbid!) are endangered.

Sergey Brin is a hypocrite. Google censors all over the world at the pleasure of governments from Germany to the USA targeting sex offenders, neo-Nazis, wannabe terrorists or "dissidents" that want to overthrow their own governments.

Mainstream media genuflects for Google with story after story about Google's brave stand not once revealing the fact that Google has three current executive employees in White House positions or that Google was the Obama campaign's number 3 contributer. The editiorial line shared by Anglo-American newspaper and media giants (New York Times, Washington Post, Wall Street Journal, Financial Times, London tabloids, etc.) says China is becoming "isolationist" and that the business world is abandoning China. This is deliberate misinformation and complete nonsense.

Just this week the Chairmans, Presidents, or senior executives of the following companies were all in Beijing: Caterpillar, Morgan Stanley, Bosch, Nomura, Nokia, Unilever, Bombardier, JP Morgan/Chase, Novartis, Sybase, Ford, ADB, McKinsey & Co., Michelin, Toshiba, Royal Dutch/Shell, Danone, Dupont, Amway, Total, Rio Tinto, BP, Dow Chemical. And that was at just one meeting....

See my earlier post "Google Hijacks US China Policy."

[Disclaimer: the author owns shares of Google via a mutual fund.]

Chinese Mega Resort May Transform Bahamas

2010-03-23T11:38:00.000-07:00

Boosters in the Bahamas say a multi-billion (US) dollar deal between Armenian tycoon Sarkis Izmirlian and the Export-Import Bank of China to build the Baha Mar resort complex is moving forward and will revive Bahamian tourism. Hopes are Baha Mar will lure Chinese tourists and bring new focus to Nassau. An agreement was signed earlier this month in Beijing with China State Construction Engineering Corp. to begin building on Cable Beach. Baha Mar will feature a Jack Nicklaus golf course, casinos, and hotels, condos, and spas under brands W, St. Regis, Westin, among others....

Historic Chinese Drought Marks World Water Day

2010-03-22T14:47:00.000-07:00

Today is World Water Day a project from the 1992 UN conference on the environment in Rio. Chinese PM Wen Jiabao just concluded a visit to drought stricken Yunnan Province. For 3 days Wen saw empty reservoirs and dried up villages suffering from a century drought in southwestern China. The provinces of Yunnan and Guizhou are particularly hard hit but also affected are Guangxi Zhuang Autonomous Region, Sichuan, and giant Chongqing municipality.

China has suffered devastating droughts from time immemorial. Beijing says the drought in the southwestern region is the worst in 100 years. Officially 51 million Chinese are impacted. The rains stopped coming last October and some areas have not seen rain for 9 months. Downstream along the Mekong River China's dams are blamed by critics in Thailand, Laos, and Vietnam. Wen Jiabao said no one in China would go without drinking water and indicated Beijing will ramp up relief efforts....

Xi and Li at Home and Abroad

2010-03-22T10:35:00.000-07:00

China's senior leaders are taking a back seat this week to allow the next generation a chance at the helm. Vice President Xi Jinping began a four-nation European state visit in Vladivostock with President Medvedev and PM Putin and other senior Russians there to greet him. Xi is traveling with a large entourage of important mandarins including Zhang Guobao, director of the National Energy Administration of China. They will travel the length of Russia to the Baltic and visit Finland and Sweden.

In Beijing, Vice Premier of the State Council Li Keqiang delivered the keynote speech at the China Development Forum 2010. The forum opened on Saturday and features a full range of heady topics and addresses by a who's who of global mulitnational corporations and NGOs from the IMF to OECD and from Morgan Stanley to Ford and Bombardier. The participation makes mockery recent mainstream media reports focusing solely on Google and false claims that foreign companies are "wary" of doing business in China or pulling out altogether.

Meanwhile a tourism forum on Hainan brought former US Secretary of State Condoleezza Rice to Beijing to meet with an old friend.

Xi Jinping and Li Keqiang are expected to be the next President and Prime Minister of China but I still believe either man could be President in 2013....

Trade Win: China Agrees to Buy US Pork

2010-03-19T16:39:00.000-07:00

US Trade Rep Ron Kirk and Secretary for Agriculture Tom Vilsack announced today that China will resume pork imports from the US as soon as export documentation is agreed. During the H1N1 scare Beijing had barred imports of pork from the US in a knee-jerk reaction followed by many countries. At the time China was the number 7 market for American pork exports valued at $275 million annually. Since then China increased imports from the EU. In the words of Secretary Vilsack this is "excellent news for American hog producers." The talks on removing the trade barrier began with the latest US-China Joint Commission on Commerce and Trade in Hangzhou last October....

China Fastest Growing Market for California Wine

2010-03-19T14:30:00.000-07:00

While 2009 saw a decrease overall in the near $1 billion (US dollar) exports of California wine the outlook for 2010 is looking good according to data from the Wine Institute of California. China (including Hong Kong which re-exports wine to the mainland) accounted for $83 million in exports and is by far the fastest growing market at over 70% overall. China currently ranks number 8 globally in terms of wine consumption but the number of Chinese drinking and enjoying wine is set to grow immensely according to Vinexpo the international wine and spirits association.

Figures for 2008 show that imports accounted for 11.8% of Chinese wine consumption with France the largest supplier. By contrast imported wines account for almost 1/3 of wine consumption in the USA. Always adept at developing new business Chinese are ramping up wine production around China. But as California well knows it takes a lot of work and time to grow vineyards and create good wines. In the interim Chinese imports could grow to a level similar to that in America and be a real opening for California wines in the immediate future. The Wine Institute says it is making progress introducing its wines to Tier 2 cities. My recommendation is to focus instead on select lower tier cities.

Download the 2008 China Wine Market report from the USDA Agricultural Trade Office. The report indicates that USA wines are losing to Europe, Australia, and Chile. The report says the key is to create brand awareness of the US as a premier wine producer. This is wrongheaded thinking. Better to focus on creating brand around California wines - clearly the leader in US wine exports. Notice the ugly USA banners showcased at a trade fair in the report. That sort of marketing will not be effective in the more nationalistic Tier 2 cities and less developed parts of China....

Winner Medical Gets NASDAQ Listing

2010-03-19T10:39:00.000-07:00

ShenZhen based Winner Medical Group is the leading Chinese exporter of medical dressings. The company has 10 plants in the Pearl River Delta and thousands of employees making specialized non-woven 100% cotton products. Winner has USA FDA license to direct ship sterilized medical products to America. The company has been approved for a NASDAQ listing and will start trading in early April under symbol WWIN. This is another opportunity to directly invest in the roaring Chinese economy and the cost conscious US healthcare industry....

PayPal China Deal Expands Online Shopping for Hundreds of Millions

2010-03-18T14:44:00.000-07:00

Online payment business PayPal (wholly owned by Ebay) announced that it will form a partnership with China UnionPay the number 1 electronic payment processer and ATM network of China. PayPal said the arrangment means China is open for business as an import market. There are over an estimated 100 million online shoppers in China and the number may swell to 300 million by 2013 according to PayPal's China manager Alien Tien. This is a big win for an American business over Chinese ecommerce rival Taobao and its proprietary payment system. Using PayPal will allow Chinese to buy direct from millions of online merchants from Amazon to Walmart....

When China reestablished its sovereignty over Hong Kong in 1997

2010-03-16T21:44:00.000-07:00

...I did not hold much hope for the survival of Hong Kong capitalism. The notion that China would honor its pledge that Hong Kong would remain a bastion of capitalism for fifty years seemed to me rather naive. Capitalism and Communism side by side under the same sovereign authority was just not credible."

Former USA Federal Reserve Chairman Alan Greenspan. The Age of Turbulence: Adventures in a new world. New York: The Penguin Press, 2007.

[ed. note: on days when Sinomania! is unable to post meaningfully a random quotation relevant to China is offered.]

Chinese Firm Funds Botswana Energy Complex

2010-03-15T16:36:00.000-07:00

The Mmamabula Energy Complex at the Mmamabula Coal Field in southeastern Botswana is an important independent power project for southern Africa. Development is led by CIC Energy Corp., a Toronto exchange listed company with headquarters in the Bahamas and operations in South Africa. Today it was announced that Golden Concord Holdings Ltd., a Chinese conglomerate, will take a 70% stake in the Mmamabula project and build and run a 300 MW power plant. Golden Concord Chairman Zhu Gong Shan said the investment was an excellent way to establish his company's opportunities in southern Africa. Zhu mentioned that the Botswana government was aware of the deal. A contract for the power plant was originally signed by CIC Energy last year with Shanghai Electric Group....

China to Develop Deep Water Chittagong Port

2010-03-15T14:26:00.000-07:00

Newspapers in India are reporting that Bangladesh Prime Minister Sheikh Hasina will seek Beijing's support for a massive $8.7 billion (US dollars) development of Chittagong Port. Hasina will begin a 5 day visit to China on Wednesday at the invitation of Chinese PM Wen Jiabao. Word is Hasina will visit the new highway in Yunnan Province that may someday connect via Myanmar all the way to Chittagong in Bangladesh. There is also a railroad planned.

China is already working on port projects in Chittagong. The China Harbour Engineering Group or CHEC builds container terminals there. CHEC is the world's largest maker of quayside cranes and other port heavy machinery. CHEC remains state-owned but is slowly corporatizing. In 2004 its dredging businesses were spun off as public companies.

Connecting Yunnan and southwest China to a major deep water port at Chittagong will give China access to the Bay of Bengal and Indian Ocean avoiding the Straits of Malacca....

Krugman's Last Stand

2010-03-15T11:52:00.000-07:00

Columnist Paul Krugman of the New York Times says the US government needs to "take a stand" against China by declaring that Beijing "manipulates" its currency (Renminbi) and slap big extra tariffs on Chinese imports. Krugman began the year with the same message and seems willing to stake his reputation on his quixotic quest. Frankly the US has already taken a stand on the issue of the Yuan/Dollar exchange rate and been stood down. Further Krugman's simplistic explanation of alleged Chinese "mercantilism" is surprising from a Nobel Prize winning economist. To blame global economic imbalance on imports of Chinese goods is absurd.

To declare China a currency manipulator while ignoring Tokyo's support of the Yen and other currencies pegged to the US dollar including oil exporting nations and whole regions (the Caribbean, etc.) is a selective and hostile act. And if the Yuan is so undervalued why are the EU, Brazil, Australia, and other countries with important China trade not joining the USA in a stand against China?

Millions of Americans are already cutting back on what they buy and trying to make do with less. Do we need the cost of everything to go up because of additional tariffs on Chinese goods? Does Krugman think stagflation will help the American economy recover?

Reunification Watch: Taiwan Approves Financial Integration

2010-03-12T11:56:00.000-08:00

Taiwan's Financial Supervisory Commission - the Taipei government's financial regulator - approved direct investment by mainland Chinese banks, brokerages, and insurance companies in Taiwan. Several Chinese financial businesses are interested in setting up branches on Taiwan and investing in Taiwan companies. Bank of China and Bank of Communications are known to seek expansion to Taiwan. Taiwan news sources say the Commission still needs to inform the Executive Yuan and Taiwan's parliament but the new rules could be in place as soon as next week....

Obama's China Currency Comment

2010-03-11T13:35:00.000-08:00

Headline writers this afternoon say President Obama "urged" China to stop controlling its currency. What did Obama say exactly? Long into a banal booster speech at the annual meeting of the Export-Import Bank of the United States (a federal government agency), Obama said

"China moving to a more market-oriented exchange rate will make an essential contribution to that global rebalancing effort."

It surprises me Obama continues to spend political capital in a pointless pursuit to coerce Beijing to appreciate its currency. Washington can urge China all it wants but Beijing has made its position on Renminbi very clear. Just this week at the National People's Congress session China said the Yuan's unofficial peg to the US dollar will end and appreciation up to 10% over the short to medium term is expected.

A move by Beijing to drastically create a more "market-oriented" exchange rate would mean reducing China's dollar holdings in favor of other currencies or gold. Is this ultimately what Washington really wants? It is also hard to argue that the exchange rate of the Yuan is that out of whack for US exporters when China is year after year the fastest growing market for US exports.

A far better use of rhetoric and effort would be for Obama to push Beijing to fulfill its promise to enter into the WTO Government Procurement Agreement (GPA) and open up potentially billion$ in opportunities to American businesses. So far no moves on the GPA have been made by US Trade Rep Ron Kirk or anyone else in the Obama administration. Why not?....

China Offshores Wind Turbine Jobs to Nevada

2010-03-11T11:16:00.000-08:00

Anti-China blowhard Senator (D-NY) Chuck Schumer's gambit may have paid off for Nevada. Schumer was close to derailing a giant wind farm in Texas planned by US Renewable Energy Group (US REG) and A-Power Energy Generation of China by thwarting currently available federal subsidies (tax credits) because the wind turbines would be manufactured at A-Power's plant in Shenyang, Liaoning Province. Today US Reg announced the joint venture will build a manufacturing plant in Nevada potentially employing 1,000 Americans to build and assemble the wind turbines. The location and details of the plant are not revealed at this time. A-Power shares (NASDAQ:APWR) are up over 8% today. US-REG is a private equity venture.

Schumer's opposition to the original deal was purely political grandstanding in an election year. Fact is American multinational GE will supply the massive gearboxes to A-Power and eventually build a manufacturing center to supply not only A-Power but China and all of Asia. A-Power's wind turbines are built under license from Fhurlander AG of Germany, a leader in wind energy technology. The Texas wind farm demonstrates the benefits and complexity of globalization. You can read my post on the original deal here....

Will Geely Offshore Volvo?

2010-03-11T10:15:00.000-08:00

According to Paul Tan's Automotive News Geely has secured over $2 billion (US dollars) financing to complete its acquisition of Volvo from Ford Motor Company. Billionaire Chairman Li Shufu of Geely, China's biggest privately owned automaker, says the company has regulatory approvals to move forward with the deal. It was lack of Beijing approval that killed the Hummer deal for Sichuan Tengzhong.

At issue now is whether Geely will move Volvo production to China from Sweden. Plans are to double production to 300,000 vehicles per year. It seems highly unlikely Geely would mass produce Volvos in a country with one of the highest labor costs in the world, higher even than the US auto industry....

China Moves the World

2010-03-10T15:12:00.000-08:00

It is an interesting irony that the same mainstream media that criticizes Chinese government data as untrustworthy claims that same data is capable of moving commodities, currency, and stock prices the world over. Consider today's headlines. Chinese numbers on exports and inflation are responsible we read for stock markets going up in the USA, Canada, and Brazil; affected the Mexican Peso, the (US) Dollar, and the Yen; and impacted gold and oil markets!....

USA-China Venture Builds Largest Biologics Lab in Beijing

2010-03-09T14:31:00.000-08:00

AutekBio, a Silicon Valley based biotech business with operations in China, will build Asia's largest biologic contract manufacturing organization (CMO) outside Beijing. The $100 million (US dollar) facility is financed by US and China venture capital firms. The labs will meet current US (FDA) and EU regulatory requirements and be able to handle multiple production lines for biopharmaceutical research and development....

China Gets North Korean Port on Sea of Japan

2010-03-08T16:08:00.000-08:00

The provincial government of Jilin Province in Manchuria told the National People's Congress today that the North Korean government agreed to lease the port of Rajin on the northeastern coast of the Sea of Japan to China for 10 years. Use of the port will give sea access to the landlocked hinterlands of Manchuria for the first time since the collapse of the Qing Dynasty. Rajin is included in economic and trade zones originally created as part of the UN sponsored Tumen River Area Development Programme between Russia, China, and North Korea. Russia is upgrading a railway from the border to Rajin in what may be competing investment. Chinese development of Rajin port could jump start the Tumen River region. This development has important implications for the economy and navy balance in the region....

Beijing's Ambitious Plans to Settle the West by Rail

2010-03-08T14:55:00.000-08:00

Wang Mengshu, a Chinese expert in railway engineering and tunneling, has made a splash telling newpapers from the South China Morning Post to the Telegraph of Beijing's plans to extend high-speed railways into Central Asia and connect China to southeast Asia and eventually Europe.

The heads of China Eastern (NYSE:CEA) and China Southern (NYSE:ZNH) airlines warn that the Chinese high-speed rail network threatens their market for short and medium hauls. Some analysts believe that once complete Chinese railways will make flights under 800 kilometers (under 500 miles) uncompetitive potentially eliminating a great deal of flights. Investors in Chinese airlines should take this possibility seriously.

"We foresee that in the coming decades, hundreds of millions of people will migrate to the western regions" Wang said when discussing a plan to build high-speed rail from Urumqi, capital of Xinjiang autonomous region, to the Caspian Sea and beyond. It is interesting to speculate on just how transformative a potential migration of that many people -- most likely poor rural Chinese -- will be on western China, Central Asia, even Eastern Europe.

China Reaches Peak Oil with Call for Bigger Strategic Reserves

2010-03-08T11:34:00.001-08:00

Chinese oil production has essentially peaked and the country's strategic reserve is insufficient according to National People's Congress delegate Chen Geng. Geng is a former executive of state-owned China National Petroleum Corp. China is one of the top oil producers in the world at just under 4 million barrels per day. Data of the International Energy Agency shows production increasing around 3% a year over the medium term but long term forecasts show the share of imported oil increasing much faster. Chinese press reporting from the Congress session say there are calls to greatly increase the strategic oil reserves currently targeted at 170 million barrels. By contrast the USA has almost 700 million barrels stored in salt caverns around the country....

TRADE WAR: US Anti-Dumping Duties of 349% on Chinese Bricks

2010-03-05T16:15:00.001-08:00

The US Commerce Department is pursuing at least 20 countervailing and anti-dumping duties cases against China. Yesterday a ruling put preliminary duties ranging from 132.74% to 349% on magnesia carbon bricks imported from China. In 2008 the USA imported $50.8 million of Chinese bricks. The original complaint came from one US maker, Resco Products Inc., a privately held conglomerate out of Pittsburgh.

Earlier this week Commerce slapped duties of 109% on certain types of coated paper and 13% extra on Chinese salts....

Visit Florida China

2010-03-05T15:41:00.000-08:00

The Sunshine State's new tourism marketing program Visit Florida is aggressively pursuing Chinese tourists - the fastest growing group of foreign visitors to the USA. This year Chinese tourist numers are expected to grow 15% overall and Florida wants a share. The state has an office in Shanghai and numerous programs to bring in more Chinese. It is anticipated that within 10 years China will be the world's number #4 source of foreign travelers.

Florida's efforts are in contrast to the damaging and divisive actions by their own Congressional Representaton such as Ileana Ros-Lehtinen (R-FL) Republican Congresswoman from the 18th District that includes Miami. Visit Florida should consider whether their cause is helped each time Ros-Lehtinen sponsors legislation or makes an official statement against "Communist China".....

Gamet Bearings Gets Guanxi

2010-03-05T14:38:00.000-08:00

Gamet Bearings, a manufacturer of precision ball bearings and related equipment in Colchester, UK, understands the importance of Guanxi in building business in China. Gamet spent nearly two years developing close relations with Chinese businesses and prospective partners in several Chinese cities. The company now anticipates a good future supplying components to China's aerospace and other industries - good news for the borough of Colchester and for UK exports. Gamet is part of the 600 Group PLC a machine tool conglomerate. Last year the 600 Group announced it would no longer outsource production to China over quality concerns....

China's Parliament Convenes

2010-03-05T12:03:00.000-08:00

The annual session of the Chinese unicameral legislature opened in the Great Hall of the People today in Beijing. It is the third session of the 11th National People's Congress (NPC) and will run to around March 15. Many observers, particularly American mainstream media, dismiss the NPC session as a carefully controlled rubber stamp farce. But reporters expecting surprises don't understand the institution or the process. The NPC is one of the world's largest representative bodies. And yes it is representative. Approximately 3,000 delegates are selected by the Chinese Communist Party by an elaborate method and in some instances by direct election down to the village level. Some of the elections are internationally recognized as fair and competitive. The NPC affirms the direction China is going and gives law to Beijing’s policies.

Prime Minister Wen Jiabao opened with a report on the economy and presentation of the central government budget. As in many nations today the Chinese government is predicting a deficit (around $154 billion). And while overall government spending is increasing the rate from last year is decreasing. Unreported in world media is a drop in Chinese defense spending the number 1 item in the government budget just as in the USA.

Wen said Beijing will loosen the grip of state power on "monopoly industries" and encourage further corporatization of state-owned enterprises. This is a signal that more government owned shares may be sold into market and that further privatization will occur....

US-China Fence Mending Falls Flat

2010-03-04T15:30:00.000-08:00

The Obama Administration's emissary to Beijing left empty-handed and is now in Tokyo in a reversal of the old Tokyo first then Beijing protocol. Deputy Secretary of State James Steinberg and chief Asia analyst at the National Security Council Jeffrey Bader met with Foreign Minister Yang Jiechi and State Councilor Dai Bingguo. Both Washington and Beijing billed the visit as an attempt to ease tensions over recent disputes on trade, the Dalai Lama, and arms sales to Taiwan. But judging from what the State Department disclosed today the meeting was just more lip service on established positions. Beijing may feel assuaged that the emissary came directly to China. We can only hope that more substantive talks did occur behind the silk screens otherwise the stalemate continues....

Chinese Scientists Decode Human Digestive System

2010-03-04T14:42:00.000-08:00

Chinese scientist Wang Jun and a team of international researchers say the average human gut contains up to a thousand species of bacteria. Their findings are presented in the latest issue of the presitigious journal Nature. Wang's team sequenced the genes inside the human digestive system and according to Wang 99% of them are not of human origin. The discoveries may reveal causation between types of bacteria and certain diseases including cancer. Once identified drugs and other products could be created to interact with the various species. Research such as this are further evidence of China's growing lead in genomics....

China to Build Big SEZ in Pakistan

2010-03-04T14:03:00.000-08:00

Pakistan papers say that a delegation from a Chinese entity called Asia International Development signed an agreement with the Punjab Industrial Estates Development & Management Company to build a giant industrial city of 100,000 acres or more outside Lahore, capital of Punjab in Pakistan.

Exactly where the special economic zone (SEZ) will be located is unknown but word is it will be near important transport corridors such as the Lahore Ring Road begun five years ago. From there it is not far to connect with the Karakoram Highway and railway projects currently planned or under construction by Chinese business and government interests or connect to the port at Karachi or perhaps in the future Gwadar. China builds industrial zones with an eye to finished processing and as a form of export substitution. A developed deep water port at Gwadar may some day ship containers filled with China origin goods finished in Pakistan....

They have the deepest fidelities to family ties

2010-03-02T22:35:00.000-08:00

"...and the fullest affection for their children. They work harder and more hours than any race in the world. True, they are superstitious beyond belief, but they have a vivid sense of humor. They are courageous, as witness the armies they have created. They are highly acquisitive, and one need have little fear that this great mass will ever be communists for long."

Former USA President Herbert Hoover (1929-1933) on the Chinese people. Hoover moved to China in 1899 with his new bride to be foreign adviser to the Chinese Ministry of Mines and agent for the Chinese state-owned Chinese Engineering and Mining Company. They lived in Tianjin during the Boxer Rebellion. Lyons, Eugene. Herbert Hoover A Biography. New York: Reader's Digest Association, 1947.