Chinese Economics Thread

[tphuang]

More on Yuan settlement and such.

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the 3rd yuan clearing center in Africa is now operational is Mauritius. would be good to continue to see these open up so they can do more trades with African countries in RMB.

The Russian piece of this is interesting and trend is accelerating

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looks like even small and medium firms are now settling with RMB at a much higher rate. Looks like there is still some room for growth. And maybe RMB can be used in more of Russia's trade with other countries.

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Sberbank planning to open branch office in China in 2023. That would be good. They should welcome more Russian banks. Also, interesting to see that Russia expect share of RMB in their trade to rise to 20%.

 

[tphuang]

On a side note, it looks like China Is importing Alumina from Indonesia and then selling them to Russia here.

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Looks like a lot of the import from Indonesia is from Chinese companies operating there. I wouldn't be surprised if those are then traded on Chinese exchanges and then settled in RMB.

If Australia doesn't want to deal with that, then they will just get fewer orders from China.

 

[gelgoog]

Russia produces more than enough aluminium for its own needs internally. They have a whole cycle including their own ore. But since Russia is a major aluminium exporter they import a lot of ore from Guiana. And private conglomerate Rusal has facilities to refine ore in lots of other countries like Ireland, Italy, Ukraine. The ore comes from Guiana, and the ore is processed to extract the alumina in the refineries which are close to shore, this reduces the volume of material to process, which then is sent inside Russia to electrolyze into aluminum and processed for export. I assume they are importing alumina from China to make aluminum because of logistical problems with transit from the European side. And the loss of the Ukrainian refinery. Rusal AFAIK has not been sanctioned.

Ok, found an older article which probably explains the situation better.

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"Rusal is also facing a shortage in supplies of alumina, a raw material for aluminium production, after Australia banned exports to Russia on March 20.
Rusal, whose Mykolaiv Alumina Refinery in Ukraine halted production in March, was getting 20% of its alumina needs from Australia."

Rusal also had a share in an alumina refinery in Australia. Between that and the shutdown of the refinery in Ukraine, they probably lack alumina. But turning alumina (i.e. oxidized aluminium) into actual aluminium metal is done in Russia where energy costs are lower.

 

[Eventine]

I thought this article was ridiculous. I really do.

One problem is that they are clueless of what is going on, with the trade volume between the two countries at a record level, and that China's trade with the rest of the world is expanding rapidly. The word contain means to restrict. They obviously do not know what the word contain means, when the Chinese economy keeps on expanding, which in turn fuels more trade growth, which in turn keeps the Chinese economy expanding.

The other problem, regarding technology, was that the two sides, China and the United States, were never coupled to begin with. 10 to 20 years ago, the tech gap between the two was way too wide. A coupling was a pipe dream. The only coupling that could exist, is the Chinese would pay the Americans to license their IP. Since the Chinese develop their own, (see Huawei), there is no coupling of tech there. The coupling, where they assume US tech is vital to Chinese growth, is simply a crock. Does not exist.

The technological relationship between the United States and China, is solely a commercial relationship today. If one side cannot buy something from the other side, then they will go buy it somewhere else. But the Western media makes that sound impossible. That is a total crock.

The proof is in the Chinese GDP figures. The only thing that held China economy back was covid. Not some tariff or ban.

If there is a real cold war between China and the United States, then like so what?

The Chinese economy will keep on growing, pushing it past the American economy, making China a high income nation. China will continue to develop a full spectrum technological eco-system in everything.

If this is the idea behind this cold war, China should applaud!

US policy is never going to be that coherent because there are different factions with different ideas of how to proceed. Cold War veterans like Lighthizer believe in a full de-coupling, partly because they remember how the Cold War was, and believe the US can still get it back to that. That's why they make statements like "tell Europe [and other countries in the world] they're either with us, or against us" - ie give the world an ultimatum and force them to choose sides, which a guy like Lighthizer believes, will inevitably lead to a decision by most to side with the US, since the US is still the dominant power and along with its allies, control >50% of the world economy

Is that strategy fundamentally flawed? Perhaps. But you can see where it's coming from if you believe that the world functions in a certain way and you're willing to destroy the current world order to achieve your aims. Lighthizer and other Cold War hawks are extreme enough to do that, because they lived through an era when the US split the world in two, and came out as the sole super power. They have the confidence that they can do it again, even if the facts don't make it seem possible - hopium is a powerful thing and no one really knows what would happen in an ultimatum situation.

Their opponents want more targeted strategies than that. Biden's administration, in particular, doesn't seem like they're willing to go that hard or that fast with de-coupling. They want gradual, targeted sanctions, and a "wait and see" attitude to see whether they're effective or not, before pushing further. This gives China more time, but it also gives the US more time while they're fighting Russia. You don't want to give China an excuse to pour in support for Russia and make Ukraine that much harder to win.

The bottom line, though, is that the US really *does* believe that it can and must stop China's rise. The strategies and tactics differ, but there is consensus on the aim. The people - both Chinese and otherwise - who thought that the US would just allow China to over take it, or that the US would just quietly accept the loss of its hegemonic status, have been shown to be fools. This is where Xi Jinping comes in, as he's been warning about this happening for a decade. So this actually strengthens his hand as long as the US is in a containment mode.

Whatever happens, the only certainty is that the new Cold War won't end any time soon. People who hope or think this will just "blow over" and that relations will be reset in the next few years, are fooling themselves and not seeing the forest for the trees.

 

[luosifen]

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2022-12-27 16:05:27Xinhua Editor : Li Yan

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Chinese lawmakers are mulling a draft revision to the country's Company Law to improve the corporate system, with rules for greater responsibility for shareholders and better corporate governance.
The draft revision was submitted Tuesday to the ongoing session of the Standing Committee of the National People's Congress (NPC), the top legislature, for a second reading.
Compared with a draft revision submitted for deliberation in December 2021, the new draft strengthened the responsibility of shareholders in capital contribution when the company is unable to repay debts due and in other cases.
It further improves rules on the organizational structure of companies, including listed companies, to enhance corporate governance.
"Improving the modern corporate system with distinctive Chinese features and encouraging entrepreneurship" is added to stipulations on the legislative purpose, according to the new draft.
Adopted in 1993, China's Company Law has been amended several times. The current version was enacted after an amendment concerning the capital system of companies in 2018.

 

[horse]

Whatever happens, the only certainty is that the new Cold War won't end any time soon. People who hope or think this will just "blow over" and that relations will be reset in the next few years, are fooling themselves and not seeing the forest for the trees.

I have no disagreement with what you wrote, which was rather good.

However, I got different ideas.

Since I am like an old man almost, I cling to the stereotypes I heard in my youth.

When we talk about American right wing nuts like Lighthizer, that means obviously they are dumb and will be easily outmaneuvered.

Nothing I have seen in my lifetime can change me from that view.

Although I have no objections to everything you wrote, I like and approve of it, what I am really saying is those American right wing nuts extremist will be outmaneuvered yet again.

You can count me in as one of those who do not believe there will be another new cold war. For example, is there a trade war? The trade volume is at record levels between America and China. That is one strange trade war. The whole world should do trade war if that is the case.

The tech war is more interesting. To me, the tech war is mostly about making money. Currently, the actions of the US government has harmed US corporations with their China bans. While there is a boom in the IC industry in China. Someone is making more money, and someone else is making less money. And this was all self-inflicted!

This chip war, really is a zero sum game, as there probably is over capacity now, and in the future. Those who are making money in the future, is taking that money away from those who did not make it. In fact, given the layoffs in America in Silicone Valley, that probably already happening.

The rhetoric, just does not match the reality on the ground.

We have seen this before. The Vietnam War was like that.

Biden said Afghanistan was stable, two weeks later the Taliban returned to power without firing a shot.

Seems to me the Americans keep hyping another cold war as a way to remind their allies to continue playing cowboys and Indians.

Not going to work.

The most high profile fight was US government against Huawei 5G.

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Check out the chart. Seems like nothing had really changed in Europe the past few years.

 

[Topazchen]

It's not the article itself that is ridiculous but the views of the US administration it seems you are saying. I thought the article was interesting for the insight it gave into those views.

You are right. The views and aims of the US administration and hawks are retarded and delusional to be honest.

One of their objectives is to stop "indigenous Chinese innovation" pray tell how they plan to achieve that?
Ban Chinese from starting businesses? Ban research in China? Sanction all STEM professors and students?

 

[Strangelove]

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High-end manufacturing on fast track​

By LIU YUKUN | China Daily | Updated: 2022-12-27 09:52

Robot arms make automobiles in a factory in Qingdao, East China's Shandong province on Dec 20, 2022. [Photo/Xinhua]

A-share listed, tech-focused firms see overseas footprints bear fruit

China's high-end manufacturing sector is on a fast development track with an increasing number of companies going public, gaining higher profits and expanding their footprints overseas, according to a report by the China Association for Public Companies on Monday.

High-end manufacturing, compared with traditional manufacturing that is labor-intensive, is more technology-focused and produces high value-added products, including semiconductors and electronics, the report said.

According to the report, the number of A-share-listed manufacturing companies reached 3,313 as of Dec 10, accounting for 65.5 percent of all A-share companies. Among them, the number of listed companies in the high-end manufacturing sector reached 2,121, accounting for 65 percent of listed manufacturing companies, up 69.7 percent from 1,250 at the end of 2017.

The market value of A-share-listed high-end manufacturing companies has increased significantly, according to the report. The number of A-share listed manufacturing companies with a market value above 10 billion yuan ($1.4 billion) increased from 338 at the end of 2017 to 664 on Dec 10.

"China's high-end manufacturing industry is developing rapidly, resulting from the country's relatively mature industrial chain and good domestic business environment to support innovation," said Zhou Mi, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

"In addition, the COVID-19 pandemic has caused a breakdown of the global supply chain, while uncertainties in international trade and geopolitical conflicts also posed challenges to the manufacturing supply chain. Facing shrinking global market demand, an increasing number of companies are investing more in research and development to increase the added value of their products, to obtain higher profits and increase global competitiveness, which promotes the development of high-end manufacturing," Zhou said.

According to the CAPC report, companies in the high-end manufacturing sector have continuously improved their ability to make a profit. The profit level of A-share listed high-end manufacturing companies declined in 2018 due to trade frictions and other factors. However, with more efforts on the promotion of import substitution and overseas market expansion, the profit level began to increase rapidly since 2020, with a growth rate of 46 percent year-on-year in the year.

"There are more business opportunities to explore in the global high-end manufacturing sector. Companies should improve product quality to raise competitiveness and explore more cooperation globally," Zhou said.

 

[mossen]

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The trade battle that took off in 2018, along with subsequent pandemic disruptions, inaugurated a reordering of global supply chains. Manufacturers based in China have sought to shift some elements of their production lines to the country’s Asian neighbors, either to sidestep tariffs or insulate themselves from the risk of future upheavals as relations between the U.S. and China deteriorate.

That reshuffling, however, often served to enhance rather than reduce trade between China and other parts of Asia, data shows, reflecting the complex nature of manufacturing processes that commonly require dizzying numbers of components and several stages of assembly. Snapping together a smartphone in Vietnam or India, for instance, requires the manufacturer to move Chinese-made parts and basic materials within Asia before it is shipped off to its final customer.

“Within Asia the U.S. is facing a real uphill struggle,” said Rory Green, chief China economist and head of Asia research at consulting firm TS Lombard in London. “They are fighting economic gravity.”

 

[horse]

This graphic from the article in the above post, said it all.

In two or three years, ASEAN and China trade could be larger than China-US trade and China-EU trade combined. It is no secret which areas of the world faces recession or low growth, due to circumstances surrounding that, cough cough, special military operations.

As a side note, the rest of the world, outside of China, ASEAN, the United States, and EU, will look at that chart, then consider what the Americans told them about relying too much on China, and think this is a total joke.

What exactly is everyone else doing? Trade keeps going up.

It keeps going up, even in the places that Blinken Sullivan et al does not want to see happen.

Eat another Big Mac attack!

Clog those arteries with American cholesterol. Be thankful! That is made in America!



Notice on the graphic, in the part above the chart, that they have the color codes for the lines on the chart.

They put the US first, then EU, and ASEAN last.

So if you were colour blind or blinded by ideology, or not paying attention, then US is number #1.

People feel better and are rest assured when they go on with the rest of their day and watch football.