Chinese Economics Thread

crobato

Colonel
VIP Professional
This one is by Tony Blair himself.

We Can Help China Embrace the Future

By TONY BLAIR in The Wall Street Journal, August 26, 2008

[Mr. Blair, former prime minister of Great Britain, is teaching a course on faith and globalization at the Yale Schools of Management and Divinity].

The Beijing Olympic Games were a powerful spectacle, stunning in sight and sound. But the moment that made the biggest impression on me came during an informal visit just before the Games to one of the new Chinese Internet companies, and in conversation with some of the younger Chinese entrepreneurs.

These people, men and women, were smart, sharp, forthright, unafraid to express their views about China and its future. Above all, there was a confidence, an optimism, a lack of the cynical, and a presence of the spirit of get up and go, that reminded me greatly of the U.S. at its best and any country on its way forward.

These people weren't living in fear, but looking forward in hope. And for all the millions still in poverty in China, for all the sweep of issues -- political, social and economic -- still to be addressed, that was the spirit of China during this festival of sport, and that is the spirit that will define its future.

During my 10 years as British leader, I could see the accelerating pace of China's continued emergence as a major power. I gave speeches about China, I understood it analytically. But I did not feel it emotionally and therefore did not fully understand it politically.

Since leaving office I have visited four times and will shortly return again. People ask what is the legacy of these Olympics for China? It is that they mark a new epoch -- an opening up of China that can never be reversed. It also means that ignorance and fear of China will steadily decline as the reality of modern China becomes more apparent.

Power and influence is shifting to the East. In time will come India, too. Some see all this as a threat. I see it as an enormous opportunity. But we have to exercise a lot of imagination and eliminate any vestiges of historic arrogance.

The volunteer force that staged the Games was interested, friendly and helpful. The whole feel of the city was a world away from the China I remember on my first visit 20 years ago. And the people are proud, really and honestly proud, of their country and its progress.

No sensible Chinese person -- including the country's leadership -- doubts there remain issues of human rights and political and religious freedom to be resolved. But neither do the sensible people -- including the most Western-orientated Chinese -- doubt the huge change, for the better, there has been. China is on a journey. It is moving forward quickly. But it knows perfectly well the journey is not complete. Observers should illuminate the distance to go, by all means, but recognize the distance traveled.

The Chinese leadership is understandably preoccupied with internal development. Beijing and Shanghai no more paint for you the complete picture of China - than New York and Washington do of the U.S. Understanding the internal challenge is fundamental to understanding China, its politics and its psyche. We in Europe have roughly 5% of our population employed in agriculture. China has almost 60%. Over the coming years it will seek to move hundreds of millions of its people from a rural to an urban economy. Of course India will seek to do the same, and the scale of this transformation will create huge challenges and opportunities in the economy, the environment and politically.

For China, this economic and social transformation has to come with political stability. It is in all our interests that it does. The policy of One China is not a piece of indulgent nationalism. It is an existential issue if China is to hold together in a peaceful and stable manner as it modernizes. This is why Tibet is not simply a religious issue for China but a profoundly political one -- Tibet being roughly a quarter of China's land mass albeit with a small population.

So we should continue to engage in a dialogue over the issues that rightly concern people, but we should conduct it with at least some sensitivity to the way China sees them.

This means that the West needs a strong partnership with China, one that goes deep, not just economically but politically and culturally. The truth is that nothing in the 21st century will work well without China's full engagement. The challenges we face today are global. China is now a major global player. So whether the issue is climate change, Africa, world trade or the myriad of security questions, we need China to be constructive; we need it to be using its power in partnership with us. None of this means we shouldn't continue to raise the issues of human rights, religious freedoms and democratic reforms as European and American leaders have done in recent weeks.

It is possible to hyperbolize about the rise of China. For example, Europe's economies are still major and combined outreach those of China and India combined. But, as the Olympics and its medal tables show, it is not going to stay that way. This is a historic moment of change. Fast forward 10 years and everyone will know it.

For centuries, the power has resided in the West, with various European powers including the British Empire and then, in the 20th century, the U.S. Now we will have to come to terms with a world in which the power is shared with the Far East. I wonder if we quite understand what that means, we whose culture (not just our politics and economies) has dominated for so long. It will be a rather strange, possibly unnerving experience. Personally, I think it will be incredibly enriching. New experiences; new ways of thinking liberate creative energy. But in any event, it will be a fact we have to come to terms with. For the next U.S. president, this will be or should be at the very top of the agenda, and as a result of the strength of the Sino-U.S. relationship under President Bush, there is a sound platform to build upon.

The Olympics is now the biggest sporting event in the world, and because of the popularity of sport it is therefore one of the events that makes a genuine impact on real people. These Games have given people a glimpse of modern China in a way that no amount of political speeches could do.

London 2012 gives Britain a tremendous chance to explore some of these changes and explain to the East what the modern West is about. One thing is for certain: Hosting the Olympics is now a fantastic opportunity for any nation. My thoughts after the Beijing Games are that we shouldn't try to emulate the wonder of the opening ceremony. It was the spectacular to end all spectaculars and probably can never be bettered. We should instead do something different, drawing maybe on the ideals and spirit of the Olympic movement. We should do it our way, like they did it theirs. And we should learn from and respect each other. That is the way of the 21st century.

Please, Log in or Register to view URLs content!
 

antimatter

Banned Idiot
right now, china is making horrendous decision on oversea investing, they have no clue of what they doing. They fund investment first half lost more than 150billion USD. I have no ideas why they invest in so many oversea financial instituions, like blackstone, terrible lost, lost 1/3 of their values, getting shares of barclay, another lost...what's their obsession on that.

It much better served if invest and buying natural resource and technology companies, Granted they lost the bid on 3com, but they should continue that on purchaing small/medium size foreign technology companies. That's the true value lies.

What they doing on investing on foreign financial institutions is a travesty. It's a fool's gold, has no much value in it.
 

crobato

Colonel
VIP Professional
The reason why they look to other investment is because they cannot keep on investing on the US dollar ala Treasury Bonds. The dollar just continues to shrink in value due to the deficits, and unless there is some way to convince investors of the value of the US dollar, this will lead to a Catch 22 situation where investors leaving the dollar will cascade and avalanche.

Another thing is that those funds and institutions you mention are the ones actually buying companies here and there. Blackstone for example, acquired the Hilton hotel group. If you try to buy technology and resource companies directly it will lead to all sorts of complaint and criticism, as well as local government objection, such as the proposed Unocal and Maytag deals. So these funds and investment institutions are the ones buying these companies. When the stock of these institutions lose value, its because somehow the perceived value of the companies they bought may not be as good as thought. But these acquisitions are for the long term. Those in the stock business knows its about the long run.

Blackstone Group actually made money on the 2nd Quarter, offseting their net loss in 1st Quarter in right about the same amount. So they're pretty even so far this year. Note look and what Blackstone is investing on. Some of these investments can be deemed worthwhile in the long run towards bettering China's---and the World's---energy and resource future.

Please, Log in or Register to view URLs content!
 

antimatter

Banned Idiot
The reason why they look to other investment is because they cannot keep on investing on the US dollar ala Treasury Bonds. The dollar just continues to shrink in value due to the deficits, and unless there is some way to convince investors of the value of the US dollar, this will lead to a Catch 22 situation where investors leaving the dollar will cascade and avalanche.

well, investment is for rich people. The chinese money are blood money hard earned from their labors.

If the dollars are not worth it, then invest more in china's infrastrucre and education, and enhance its own competitiveness.

They target the big US companies like 3com, unocal, maytag try to get their brand name and enter their market. That's too aggressive of course raised alot of objection.

try to go for many smaller comapnies, granted they have less market share but it's more doable. less objection would raised. If they acquire 20 small companies, the effect would big accumlatively.

Seems like China is going for extreme, going after big companies but when failed go to those overrated financial instiitutions.

also China has better luck in acquiring assets in non US countries, like the succesful bid in acquiring australia iron core assets. maybe the norway drilling company. They should have better luck in Eu than US.
Stay away from US, too much hawkish folks in the government against China there. They only allow China to invest in those useless (IMO) financial institutions.

ANd lastly they have no idea of dollar cost averaging works. They try acquire blackstone 9 to 10% percent all at once. The stock price dropped alot since.
What they do is invest 3%, for every 3 monthes. spread out the downside risk.

They need to hire some professional international fund managers.
 
Last edited:

crobato

Colonel
VIP Professional
Do know this is money coming from the 1.8 trillion dollar forex reserve. The problem is that this money is in US dollars, not China Yuan. You cannot invest this money into China directly because it means conversion of dollar to Yuan, which has to come up with printing more Yuan or buying back the Yuan converted and moved overseas. The former will cause further inflation on the Chinese economy, while the latter will push the value of the Yuan up and the dollar down. Either way, you're screwed. The stock buyers should probably have averaged the cost of the stock buy, but nonetheless, the purchasing of companies and institutions are inevitable. For instance, in the last two years or so, Chinese companies acquired a number of major machine tool manufacturers around the world including two American and one German.
 

antimatter

Banned Idiot
Do know this is money coming from the 1.8 trillion dollar forex reserve. The problem is that this money is in US dollars, not China Yuan. You cannot invest this money into China directly because it means conversion of dollar to Yuan, which has to come up with printing more Yuan or buying back the Yuan converted and moved overseas. The former will cause further inflation on the Chinese economy, while the latter will push the value of the Yuan up and the dollar down..

They could spend the USD to buy some foreign equipments, can they?


Also, since domestically, China still has alot works to do. Why not invest more money inside the country. For example, There's backlog of several hundred of GE's commercial aircraft engines ordered by China. What they can is invest and form JV /w and demand GE to manufacture those engines inside China. Using the USD to acquire the necessay equipment for that manufacturing.

They need to invest alot to form JV for every kind of important commercial technology.

Also it's contradictory to invest in US and also build up militarily for potential US confrontation. In a cnflict, US could easily freeze all China's oversea assets. Either that or got accused of supporting future terrorists and assets got frozen also.

To play it safe, better to invest for build up domestically.

Their bloodbath on investment on financial institutions are the result of kneejerk reaction of the rejection by the US on acquiring some the companies.
They might have some OK ideas on investment , but the detail planning and execution are very poor.
 
Last edited:

antimatter

Banned Idiot
Chinese government need to support more for some the key areas.
For example, they made the Godson, and longson, to promote that, Chinese government needs require government and acadmeic leve instituions all use linux machine running on longson or godson processors. This way, it will create a market to sustain its processor development.

South Korea and Japan have those do it all type of high tech power comapnies like samsung, hynix, sony, mitsubishi, nec, nikon.
China has none. Those companies did alot on R&D understand the deep submicron device physics behind it, also the advanced materials. Now those are hardcore technologies.

China's biggest success like huawei and lenovo are like system level. They are rather niched, not a comprehensive techology powerhouse.
SMIC is more like Taiwan's end user of fabs, high tech manufacturing. Not really capable of creating new fundamental tech.

CHinese govvernemnt needs invest more and champion world class companies who are comprehensive tech power houses.


I am dissappointed at their make money now, oversea market share now, instant gratification type of mentality. they more interest in getting the final finished type of products. and they normally are system level of goods that involved codes, software involved. Some security issues might get involved.

How come they never bother to make a play on component tech type of companies. IC components are just generic parts, has no codes involed. no security issue involved.

I bet if they make an offer for comapnies like lattice semicondctuor, making FPGA, triquint semicondcutor RF Ic components. they will have better chances.

btw, their 3G wireless chipsets TD_SCDMA comes from WJ, part of triquint semicondcutor.

I guess China has no interest in components, more interest in the final system products, ready to use. I think that's rather shortsighted.
 
Last edited:

Roger604

Senior Member
right now, china is making horrendous decision on oversea investing, they have no clue of what they doing. They fund investment first half lost more than 150billion USD. I have no ideas why they invest in so many oversea financial instituions, like blackstone, terrible lost, lost 1/3 of their values, getting shares of barclay, another lost...what's their obsession on that.

LOL. The entire value of the fund is $200 billion. I think you mean they lost $150 million.
 

antimatter

Banned Idiot
LOL. The entire value of the fund is $200 billion. I think you mean they lost $150 million.

just for blackstone, they lost about 3 billions.
as for the rest, check this out,

Please, Log in or Register to view URLs content!


they don't know what they doing and the government is not prioritized the need to build up it own internal competitiveness.
short sighted, focusing too much on oversea market share. instant gratification.
If you have enough core technology, the money and market share will automatically come as a secondary effect.
 
Last edited:

Roger604

Senior Member
^ Your figure is plainly wrong. Do some basic internet research before posting, please. The entire investment was $3 billion.
 
Top