Border Conflict: Can India Boycott China?

♠ Posted by Emmanuel in ,, at 6/20/2020 07:11:00 PM
They can burn as many Xi pictures as they like, but their compatriots won't stop buying PRC-made goods anytime soon.
I have always been fascinated by territorial conflicts over uninhabitable lands. Due to its altitude, the area where Chinese and Indian forces had a border skirmish cannot sustain an appreciably-sized population of any sort. Moreover, the details of the encounter remain sketchy: Who initiated the conflict? If both sides were unarmed, why do casualties on both sides number in the double digits? There is still a lot we don't know.

Importantly from an IPE perspective, will there be economic consequences for this particular encounter? In particular, the Indians have been avid buyers of PRC tech goods--and count on Chinese sources of investment also. So despite Indian officials allowing for some public letting off of steam directed at China, there will likely not be a break in their commercial ties. Simply put, India does not have the production capabilities or an alternative supplier (ideally nearby) to China at the current time:
India imports more goods from China than any other country. And over the past decade, India and China have enabled each other's rise as emerging technology powerhouses. Chinese tech giants have invested billions of dollars into India's biggest startups, while its smartphone makers dominate the country's market and Indians have flocked to apps like TikTok. 
Now, the dispute threatens those ties. Growing anti-China sentiment in India has already led to calls for a boycott of Chinese products and services, while new rules on foreign investment could constrain China's ability to cash in on India's internet boom.
What are the chances of a realistic Indian boycott of PRC tech? Slim to none:
China has created a significant place for itself in India's technology sector over the last five years, according to a report published by Indian foreign policy think tank Gateway House. Unable to convince India to sign on to its global infrastructure project known as the Belt and Road Initiative, China entered India's tech scene by flooding the market with cheap smartphones from brands such as Xiaomi and Oppo and plowing money into Indian startups.  
Gateway House estimates that Chinese investors have poured some $4 billion into Indian tech startups since 2015. Alibaba (BABA), for example, has invested in Indian e-commerce company Snapdeal, digital wallet Paytm and food delivery platform Zomato. Tencent (TCEHY), meanwhile, has backed Indian messaging company Hike and ride hailing app Ola. Gateway House found that more than half of India's 30 unicorns — private firms worth more than $1 billion -— have Chinese investors.
Despite some new rules to curb PRC investments disguised as additional scrutiny of those emanating from countries India shares borders with--Pakistan isn't investing in Indian tech anytime soon--India can only hope to channel some PRC investment in areas which may generate some jobs there. It's a structural dependence India has on China:
"I don't think there's a widespread understanding of how difficult it would be to completely reduce India's reliance on China," said Ananth Krishnan, former Brookings India fellow and author of the report. 
India relies on China for everything "from heavy machinery and all kinds of telecom and power equipment, to active pharmaceutical ingredients," said Krishnan, who is now a reporter with The Hindu newspaper. In his Brookings report, Krishnan estimated that the total current and planned investment from China into India is at least $26 billion. Trade between the two countries reached more than $87 billion in the 2018-2019 fiscal year, according to India's Department of Commerce. China was India's second largest trading partner that year, just behind the United States.
Also note that PRC smartphone makers have set up shop in India already, making them fairly entrenched in India's commercial scene:
Last year, four of the top five best-selling smartphone makers in India were Chinese: Xiaomi, Vivo, Oppo and Realme, according to market research firm IDC [...]
And all of them have manufacturing facilities in India. Doing so allowed the Chinese firms to both embrace Prime Minister Narendra Modi's "Make in India" program and avoid stiff import tariffs. Xiaomi manufactures 95% of the phones it sells in India locally. "So if you're talking about cutting down the sales or shipment for these guys, it also impacts the factories that they have in India," which will "absolutely" affect Indian jobs, said Kiranjeet Kaur, an analyst with IDC.
Both sides may allow or even foment some jingoistic posturing since they have nationalist-leaning leaders. But ultimately, India cannot wean itself of China at this point in time--much as it would like to. With China equally keen on securing export markets, this drama can only play out so far. 
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Trump Infests USAID With Right-Wing Ideologues

♠ Posted by Emmanuel in ,,,, at 6/16/2020 09:53:00 PM
Truth in advertising should be applied to USAID given the similarly bigoted beliefs of Trump's new appointees. 
Although foreign aid provision features much lofty rhetoric—giving the rest of humanity a helping hand—its reality is much more mundane. Like a lot of things in life, a mixture of altruistic and self-interested motives drive official development assistance or ODA provided by the likes of the American government through its US Agency for International Development (USAID). Being a practical sort, I do not believe this situation is necessarily wrong. For instance, the George W. Bush administration spearheaded the highly effective HIV/AIDS initiative PEPFAR in Africa, partly out of the conviction that stopping its spread there would benefit the rest of the world—including the US. Who led that effort? None other than one Anthony Fauci.

That’s why I am exasperated when ideologues are put in charge at USAID. Their agendas can be quirky, driven more by loopy thinking than practical ideas about how to improve the well-being of people in poor countries. To begin with, Trump regards aid as a waste of money, and has tried to cut it ever since. After all, there’s no redeeming what he calls “shithole countries,” right? So now Trump has decided that if he cannot singlehandedly stop aid provision—Congress decides that—he might as well put in those harboring—how do I put this—unusual ideas.

Instead of being attuned to evolving understandings about gender and championing democratic principles as USAID traditionally does, Trump has appointed some nutter blathering about "homo empires" and the genius of Hungarian strongman Viktor Orban. I did not make this stuff up:
A new White House staffer appointed by President Donald Trump once suggested America was a “homo-empire” ruled by a “tyrannical LGBT agenda” in a slew of writings that have since come back to haunt her.

Merritt Corrigan, White House deputy liaison at the US Agency for International Development (USAID), wrote that “our homo-empire couldn’t tolerate even one commercial enterprise not in full submission to the tyrannical LGBT agenda” in a tweet posted to her personal account, Politico reported, which has since been made private.

Ms Corrigan, who previously worked at the Hungarian embassy in Washington, has also claimed the country’s leader Viktor Orbán “is the shining champion of Western civilization” in a separate post.
But wait, it get worse. USAID's new appointee on religious freedom is an unapologetic Islamophobe. What a guy to get for reaching out to nearly a quarter of the world's population of Muslim faith:
USAID officials confirmed to me that [acting USAID administrator John] Barsa chose Mark Kevin Lloyd to be USAID’s new “religious freedom adviser.” His first day was Tuesday. In 2016, the Associated Press reported that Lloyd (then the Trump campaign’s Virginia field director) had made and shared several Islamophobic posts on his personal social media accounts. On June 30 of that year, he shared a post on Facebook that called Islam “a barbaric cult,” the AP reported.

Four days after the Orlando terrorist attack that same June, he shared a meme saying potential gun buyers should be forced to eat bacon. In another post, Lloyd wrote that “those who understand Islam for what it is are gearing up for the fight,” the AP reported. Those post are no longer public, but Lloyd’s Facebook account as of Tuesday still shows public posts where he accuses Barack Obama of ties to the Muslim Brotherhood and says people who believe Islam is a peaceful religion don’t understand history.
If these very fine people weren't enough, USAID's deputy deputy chief of staff is an anti-transgender activist. Apparently you can't get a job there nowadays without being controversially offensive.

The honest truth is that, inside the Beltway and in much of the rest of the world, serving as a Trump appointee is a stain on your CV akin to being the nightwatchman on the Titanic or the navigator of the Hindenburg. Given this talent pool [sic], Trump is forced to hire assorted right-wing nutters who are oftentimes the only ones desperate enough to serve a madman hellbent on loyalty oaths.

As with most things, USAID's rot starts at the top, with its current head viewing the post as a springboard to some future right-wing career [away from these developing country shitholes, too!] The more outrageously right-wing you are, the more attention you get from Uncle Donnie:
The White House named Barsa acting administrator last month without even consulting the State Department, reaching down to elevate him over more qualified senior officials. In the brief period since his appointment, Barsa has already gotten into hot water by writing a harshly worded letter to U.N. Secretary-General António Guterres demanding the removal of references to “sexual and reproductive health” from a recent U.N. pandemic response plan, and insisting that no funding be allowed to go to abortions.

That brought him rebukes both from Democrats in Congress, who took issue with Barsa’s characterization of the U.N. plan, as well as the Trump administration’s own U.N. ambassador, Kelly Knight Craft, who called Barsa to dress him down for not clearing the letter with top State Department and U.S. Mission to the United Nations officials in advance.

Barsa’s brazenness is fueling suspicion inside the administration that he is auditioning publicly for his next administration job, perhaps in the leadership of the Department of Homeland Security, where he worked during the first year of the Trump administration.
Let's see, USAID now prefers hiring those openly hating homosexuals, transgenders, Muslims, the idea of "reproductive health," and so on. Using Trump's language, I think the rest of the world would benefit if he kept these folks in America where they can do their best to f--k s--t up to impress the American president instead of inflicting their radically intolerant views abroad. If you just hate everybody unlike you, why even get into the business of claiming to help improve their well-being?
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Can the UK Poach Up to 3 Million Hongkongers?

♠ Posted by Emmanuel in ,, at 6/13/2020 06:17:00 PM
British students are not even on par with Yankee ones. No wonder the UK needs people from fourth-ranked Hong Kong.
Everybody is an opportunist: When the PRC passed security [sic] legislation by force in Hong Kong following the latter's supposed inability to do so, the British saw an opportunity. Now, the United Kingdom is still fully engaged in that exercise of unmitigated self-harm called Brexit. However, it seems that even the grossly inept government of Boris Johnson (my spell-checker suggests "Boorish Johnson"; who am I to disagree?) recognizes something. Without brainy Estonians, Irish, Polish, etc. coming from elsewhere in the European Union to work in the UK, they need to import "human capital," i.e., smarts, from elsewhere.

The chart above shows test results of the PISA 2018 standardized examination conducted annually by the Organization for Economic Cooperation and Development (OECD). The EU countries I mentioned above stomp the UK. Pretty soon, their citizens can't come to the UK to work anymore--at least nowhere near as easily as when they all belonged to a single labor market. So, with discontent mounting in Hong Kong over months and months of anti-PRC protests and now this anti-terrorist legislation, why not offer 3 million Hongkongers documentation to come to the UK? Like the other greyed-out Asian regions and countries (they participate in the test but are not actually OECD members), Hong Kong smashes the UK in academic performance.

That said, there is a catch since it's not simply a case of being able to buy a UK passport:
In his op-ed published by the Post on June 3, British Prime Minister Boris Johnson made a heroic pledge that Britain would not walk away from its obligations to Hong Kong (“Britain to offer alternative for Hongkongers fearing for their way of life”).

Improving on the offer made by Foreign Secretary Dominic Raab on May 28 to extend the visa-free stay of BN(O) passport holders to 12 months, Johnson said that, if China imposes its national security law on Hong Kong, Britain would change its immigration rules to allow BN(O) passport holders to go to Britain for work, which would provide a pathway to citizenship.
Johnson’s offer is far less generous than it sounds. Under Britain’s immigration rules, a BN(O) passport holder admitted for work will need to satisfy the continuous ordinary residence requirement for five years (without being absent for more than six months in any year) to acquire “settled” status. A person who has acquired “settled” status will have to wait another 12 months before qualifying for British citizenship. During that time, that person needs to have the means to support himself or herself in Britain, and pay British tax.
Is a diminished post-Brexit Britain more attractive than a Hong Kong ravaged by years of civil unrest and now the loss of political freedoms? It seems to me that folks both places would want to have might want to go elsewhere instead given the chance. New Zealand, for instance, isn't a dumpster fire of a nation.
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The Expendables 4: Granny Dies So Dow Jones Lives

♠ Posted by Emmanuel in , at 6/11/2020 11:23:00 PM
Teaser trailer for The Expendables 2 explodes online – The Reel Bits
Yo Adrienne, let's drink some Lysol!
Death Wish aside, there is this more recent American movie franchise The Expendables starring the aging action star Sylvester Stallone. Apparently, Trump's America has real-life elderly expendables too--they go by the name of "senior citizens." In the calculations of Trump and his administration's officials, the almighty economy cannot be sacrificed in the name of preventing COVID-19's spread in retirement communities or probably anywhere else. The administration's gospel according to Treasury Secretary Steven "The Munchkin Man" Mnuchin goes like this:
“We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage,” Mnuchin said in an interview with CNBC’s Jim Cramer on “Squawk on the Street.  And not just economic damage, but there are other areas and we’ve talked about this: medical problems and everything else that get put on hold,”  he added. “I think it was very prudent what the president did, but I think we’ve learned a lot.”
Now, his boss Trump has made no bones about wanting to quickly open up the United States despite COVID-19 ravaging the nation. Trump acts as if he could wish COVID-19 away. Witness his request for this year's Republican convention be held without social distancing, masks, or any substantive visual indicator that things are different nowadays. Trump's rush to open up America leaves those most vulnerable to COVID-19--especially seniors with their weaker immune systems--susceptible. Apparently, their gullibility is not infinite. They've taken notice in retirement communities like Florida:
The roots of senior discontent aren’t hard to find. Nora Patterson, a longtime Republican county commissioner and former mayor of Sarasota, told me that the “old people are all hidden away, fearing for their lives.” Florida has so far been spared the ravages of coronavirus compared to New York or New Jersey, two states that tend to feed Florida’s population, but concern remains high: According to the same Quinnipiac poll, 77% of seniors fear hospitalization for themselves or their family members. And seniors aren’t giving Trump high marks for his erratic handling of coronavirus. 
The simple fact is that the national government is profoundly indifferent to seniors with regard to COVID-19. Reporting requirements concerning the disease are lax despite nursing homes being frequent sites for the disease's spread:
Three months after the coronavirus began rampaging through U.S. nursing homes, the federal government has released the first nationwide data on the virus' impact on long-term care facilities, showing nearly 26,000 resident deaths and 449 staff deaths to date.

But the figures released Monday are significantly lower than other estimates, as they capture only a part of total coronavirus deaths associated with nursing homes. The federal government is not requiring facilities to report data on cases or deaths that happened before May, and the administration said nearly 3,000 nursing homes have yet to submit data to the government.

According to the latest NBC News tally, nearly 40,000 coronavirus deaths are associated with nursing homes, assisted living and other long-term care facilities since the beginning of the pandemic — representing almost 40 percent of all coronavirus deaths in the U.S. The NBC News tally is also likely to be an undercount, as a handful of states have still not released their nursing home death tolls.
They are not counting all nursing homes with coronavirus infections--much less their number of deaths. It makes Trump look better like not letting infected people off cruise ships, right? To add insult to injury, Trump is looking into defunding Social Security payments that seniors rely on by reducing payroll tax contributions from working-age persons:
Large majorities across party lines continue to support Social Security while opposing benefit cuts. They also recognize the financial lifeline that their earned benefits supply at a time of gross income inequality and diminished retirement savings -- and now, during a global pandemic, 40% of seniors rely on Social Security for all of their retirement income. That's how vital this program is.
Social Security may be vital to seniors--as is keeping unnecessary movement to a minimum like masses staying away from Republican conventions. But Trump and his administration will have none of it since he obviously prioritizes his re-election over the well-being of seniors. If pumping up a moribund economy requires their sacrifice, well, so be it. Nevermind that people--seniors included--would probably be more persuaded to engage in economic activity if they knew COVID-19 was on the wane in their country due to national government action--which it isn't, really. Not by a long shot.

The post's title says it all. Congratulations on your overwhelming 2016 voting choice, American seniors. Maybe you'll make a more sensible choice next time around--if you'll get one. 
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Brainless Markets, US vs. Asia COVID-19 Edition

♠ Posted by Emmanuel in ,,,, at 6/09/2020 11:34:00 PM
Are US stock markets missing something, or is Trumpland going to be socked more by COVID-19 than Asian economies?
The legendary economist John Maynard Keynes is attributed for saying "the market can stay irrational longer than you can stay solvent." Well, if we are to evaluate countries by how hard hit they are by the coronavirus pandemic, the performance of American stock markets should be all the evidence you need that Keynes was right as it leads the rest of the world in rebounding from their March lows. The tech-heavy NASDAQ is somehow at record highs three months or so after stock markets worldwide imploded. Is it because the United States is doing so much better in coping with COVID-19 than anyone else? Heck no!

1. The Organization for Economic Cooperation and Development (OECD) predicts the US economy will shrink far more than Pacific Rim countries like Japan, India, Indonesia, China and Korea, and the disparity will be starker if there is no "second wave" of infections. (See the chart above.) For, the American economy is expected to suffer much the same GDP declines in either case than the aforementioned Asian economies. Yet, those Asian economies' stock markets are not doing anywhere near as well.

2. As China's stock market remains comparatively moribund, we are reminded that PRC fatalities are by now less than one-twentieth of the United States' despite being the country from which the virus originated. In fact, the US death rate is by now over 100 times greater than China's:
COVID-19 remains an ongoing threat and the U.S. has just reached a tragic milestone in the pandemic that may not get much attention. The COVID-19 death rate in the U.S. has now passed 340 per million residents, just over 100 times the rate in China. Let that sink in: The death rate from COVID-19 in the U.S. is 100 times greater than it is in China, where the virus first emerged in humans and where the Trump Administration claims the blame should lie for letting the pandemic get out of hand.
3. With 112,000 deaths and still rising, the United States has in no way slowed COVID-19 down unlike most European and East Asian countries. So, the Yanks' lead in this dubious statistic--coronavirus deaths--should become even more insurmountable in the coming weeks as they continue to climb without appreciable arrest. Its states have removed most restrictions on movement despite not having any noticeable improvements on a nationwide basis, so it's almost a given that things will get even worse Stateside. 
---

In my humble opinion, those betting on US outperformance--whether in dealing with COVID-19 or its economic fallout--are as delusional as that country's leader.  It's the financial equivalent of wishful thinking that the country that is so far ahead of any other country in COVID-19 cases and deaths will also be the one to do the best economically. It's the financial equivalent of ingesting  hydroxychloroquine, Clorox, or whatever chemical Trump is fancying at the moment so that the virus will magically go away.

I've put my money where my mouth is at: I am long Asian stocks and short American ones. If equity valuations are still reality-based--on fundamentals--the relatively lesser economic consequences of the virus on Asian economies should ultimately result in their stocks outperforming American ones going forward.

6/11 UPDATE: US stock markets have been hammered right after this posting, with the Dow Jones Industrial Average  down 1,800+ points. To paraphrase Forrest Gump, brainless is as brainless does. 
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Meet Iran, World's Hottest Stock Market

♠ Posted by Emmanuel in , at 5/17/2020 09:26:00 PM
Infidel, witness the power of the Tehran Stock Exchange.
Your first reaction may be, "They have a stock market in Iran"? Fret not, dear readers, they do have one. What's more, it's been on fire despite the ongoing US embargo that's brought its economy to a near-standstill in terms of international trade. Speaking of which, one of the things Iran still trades--albeit in reduced amounts--is oil. With oil prices near multi-decade lows at the moment due to the sheer lack of demand for it as the world has come to a halt, you would be right to expect that this newly-discovered Iranian stock market is faring very poorly at the moment.

And that's where you are precisely wrong. As it turns out, the stock market is one of the few domestic money-making opportunities left in Iran. They cannot trade internationally, and that which they can trade--oil--is worth #$%^. Sounds like a boom scenario for the local bourse, no?
The Tehran Stock Exchange has seen gains of 225% in the last year, with sharp increases even as the country struggled with one of the first serious coronavirus outbreaks outside of China. Encouraged by a government eager to privatize state-owned firms, average people now have access to the market and can trade shares, earning returns they’d never see in a savings account or a certificate of deposit.

But these rapid gains increasingly have analysts and experts worried about a growing stock market bubble, one that could be particularly dire and wipe away the earnings of the average people flooding into the market.

“We have witnessed a very strange incident,” said Hossein Tousi, a member of Iran’s Chamber of Commerce , speaking to 90eghtesadi.com, an Iranian economic review website. “As all markets have fallen, crude prices have fallen sharply, but in our market, the situation is upside-down. It is clear that it is a bubble.”
To be sure, you would still be worse off in US dollar terms since the rial has depreciated mightily since Trump's reintroduction of sanctions. It's worth less than a fourth of what it was pre-Trump. Decades of isolation have made Iranian leadership characterize foreigners' skepticism of outsized stock market gains as (surprise!) a Western plot to destabilize Iran. This is not a bubble, they say:
The exchange lists a half-million active traders out of some 12 million people who registered to buy and sell stocks. “An everyday 5% percent is very sexy,” said Abdollah Rahmani, a retired bank employee who trades stocks. ”What other market makes such a profit?”

Even President Hassan Rouhani, beleaguered since U.S. President Donald Trump unilaterally withdrew America from his 2015 nuclear deal with world powers, has pointed to the market as a rare bright spot for the country. Iran’s rial currency has fallen to 160,000 to 1 against the U.S. dollar, as opposed to the 35,000 to $1 in 2015.

“As Iran’s bourse has developed, (our enemies) become nervous and asked why the market is developing while markets in the world are in chaos,” Rouhani said at a Cabinet meeting last month. This rise “is because of efforts by all companies, business people and fortunately offering shares of big companies to the stock market.”
This stock mania traces its roots to nationalization post-1979 revolution and then privatization once more a few years thereafter as public management of the commanding heights was not found to be conducive to economic development:
The stock market rise in part takes root in how Iran’s economy has changed in the decades since its 1979 Islamic Revolution. Immediately after taking power, Iran’s Shiite theocracy seized large private industries, putting them in large trusts, or bonyads. The bloody 1980s war with Iraq saw Iran further nationalize its economy.

In the 1990s, Iran began a privatization effort. The stock market became one way to accomplish this, with former hard-line populist President Mahmoud Ahmadinejad giving out so-called “Justice Shares” in firms to the poor. Some 50 million Iranians now hold those shares.
When day trading is the only economic activity left in a country, and that country's stock market is the only one up significantly in the whole wide world, you are right to be skeptical. Economic theory holds that shares rise in the expectation that corporate earnings will increase rather than decrease, and Iran remains in the direst of straits. Maybe the next question we should have is, "Do they have short-selling in Iran"?
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Japan’s Ongoing Repatriation of PRC Production

♠ Posted by Emmanuel in ,, at 5/10/2020 09:32:00 PM
"Sorry mate, but Japan Inc. is coming home."
One of the current themes of the global COVID-19 pandemic concerns "deglobalization." In economic terms, previously elaborate supply chains stretching across continents have proven brittle to disruptions caused by closed borders and transportation shutdowns. Of course, no country has benefited more from the broadening of these global production networks in recent decades than the People's Republic of China. At least that was the situation way back when relocating operations in China made sense given its low-cost labor and vast numbers of newly-minted consumers.

Nowadays, though, those attractions have waned. Labor isn't as cheap in China anymore, and the number of Chinese entering the global consumer class isn't rising at the same rate as before. So, it was perhaps inevitable that--China fearmongering notwithstanding--multinational corporations would seek to repatriate their production facilities so they can make their wares nearer home. Perhaps no other country has a more active program for doing so than Japan, which has allocated significant amounts of public funds for this very purpose:
Japan has earmarked ¥243.5 billion [about USD 2.3 billion] of its record economic support package to help manufacturers shift production out of China as the coronavirus pandemic disrupts supply chains between the major trading partners. The extra budget, compiled to offset the devastating effects of the pandemic, includes ¥220 billion for companies shifting production back to Japan and ¥23.5 billion for those seeking to move production to other countries, according to details posted online.

The move coincides with what should have been a celebration of friendlier ties between the two countries. Chinese President Xi Jinping was supposed to make a state visit to Japan this month, but the summit, which would have been the first of its kind in a decade, was postponed a month ago as the virus began to spread through Japan. No new date has been set.
Again demonstrating this move as being more about business than politics, Japan-China relations are actually improving nowadays, but that's not been a barrier to Japan, Inc. seeking to repatriate MNC production:
Amid the coronavirus pandemic, Japanese Prime Minister Shinzo Abe has proposed building an economy that is less dependent on one country, China, so that the nation can better avoid supply chain disruptions. The call touched off a heated debate in the Chinese political world.

In Zhongnanhai, the area in central Beijing where leaders of the Chinese Communist Party and the state government have their offices, "there are now serious concerns over foreign companies withdrawing from China," a Chinese economic source said. "What has particularly been talked about is the clause in Japan's emergency economic package that encourages (and funds) the re-establishment of supply chains."

Had the pandemic not struck, Chinese President Xi Jinping's maiden state visit to Japan would have been wrapped up by now with Xi proudly declaring a "new era" of Sino-Japanese relations. He would have cheered on Abe as Japan prepared for the next big event, the 2020 Olympics.
Japan's largest producers' organizations are leading this reshoring drive:
At the table were influential business leaders such as Hiroaki Nakanishi, chairman of the Japan Business Federation, the country's biggest business lobby better known as Keidanren. "Due to the coronavirus, fewer products are coming from China to Japan," Abe said. "People are worried about our supply chains."

Of the products that rely heavily on a single country for manufacturing, "we should try to relocate high added value items to Japan," the leader said. "And for everything else, we should diversify to countries like those in ASEAN."
After the aforementioned production repatriation fund was announced on April 7, Chinese leadership called an emergency meeting to discuss its implications for PRC production going forward:
The next day, April 8, China's Politburo Standing Committee, the party's top decision-making body, held a meeting in Beijing. Speaking at the meeting, President Xi said that "as the pandemic continues its global spread, the world economy faces a mounting downside risk." He added, "Unstable and uncertain factors are notably increasing."

Xi, who doubles as the party's general secretary, stressed the need to stick to "bottom-line thinking" -- which means assuming the worst -- and called for "preparedness in mind and work to cope with prolonged external environment changes." The seven-member Politburo Standing Committee usually meets once a week, and it is rare for the holding and content of these meetings to be reported.
It's just another way the virus is changing the world of global commerce. Slowly but surely, de-Chinafication is unfolding outside of today's news headlines.
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Trump Blocks US Public Pension's PRC Investments

♠ Posted by Emmanuel in ,, at 5/09/2020 04:42:00 AM
US public pensions being invested in China post-Covid-19? Getouttahere!
 A core idea in investing is that of "portfolio diversification": It's better not to put all your eggs in one basket so that they all do not break if that basket falls. For instance, we are witnessing an historic AmeriCollapse with a 14.7% unemployment rate and 20.5 million jobs lost in the wake of Trump's bumbling response to the COVID-19 outbreak Stateside.  So, wouldn't you want to put at least some of your money elsewhere the economy isn't so dire like, say, China whose exports are on the mend?

The unsurprising answer from the Trump administration is, "@#$% no!" A few months ago, it was decided that more US public pensions would be invested abroad for "portfolio diversification" reasons. More specifically, this investment would track the MSCI All Country World Index. Curiously, the world's second largest economy, China, was only very recently included in this "World Index." The PRC's share of the MSCI gauge has steadily increased since its May 31, 2018 inclusion.

Now, let's put two and two together: US public fund managers were scheduled to begin buying foreign stocks--including an ever-increasing amount of PRC equities whose weighting was increasing in the MSCI index--just as Trump's blame game on China for everything that has gone wrong with the world since COVID-19's emergence intensified. When Trump caught wind of the imminent public pensions investment in Chinese stocks, he's [surprise!] tried to scotch the proceedings:
The Thrift Savings Plan (TSP) – the federal government’s retirement savings fund – is scheduled to transfer roughly US$50 billion of its international fund to mirror an MSCI All Country World Index, which captures emerging markets, including China. The Federal Retirement Thrift Investment Board (FRTIB) overseeing the fund made a decision in 2017 that the money should be moved by mid-2020. Opponents of the transfer in recent weeks have engaged in a last-minute effort to stop it [...]
Senator Marco Rubio, a Florida Republican, applauded reports of the move in a statement Thursday. “It’s outrageous that five unelected bureaucrats appointed by the previous administration have ignored bipartisan calls from Congress to reverse this short-sighted decision, and I applaud President Trump for directing his administration to take swift action preventing this from going forward,” he said.
Now, the Washington Post reports that assorted China bashers began alerting Trump administration figures to this process:
Roger Robinson, who served on the National Security Council under President Ronald Reagan, said he began meeting with top White House officials last summer to alert them that the Thrift Savings Plan’s new investment strategy could be seen as undercutting national security by subsidizing Chinese companies involved in weapons manufacturing and other interests detrimental to the United States. “The Thrift Savings Plan issue is a microcosm of the broader problems of U.S.-sanctioned Chinese companies and other corporate bad actors in our capital markets and Beijing’s noncompliance with federal securities laws,” said Robinson [...]
In response, Trump intends to appoint China-phobes to the said board and scotch the MSCI investments--especially since its index contains [heaven forbid!] PRC-listed stocks:
President Trump’s intensifying showdown with China over its handling of the coronavirus pandemic is expanding to a new battlefield: the retirement portfolios of 5.9 million federal employees and U.S. service members.


In recent days, White House officials have moved to seize control of a little-known board that administers the $557 billion federal retirement program for most active and retired federal employees and military members, with some aides eager to halt the flow of billions of dollars into an index fund that includes Chinese companies, according to two White House officials and an outside Trump adviser involved in the discussions.

Trump on Monday nominated three members to replace the majority on the Federal Retirement Thrift Investment Board, made up of five investment experts who oversee the retirement plan. All of their four-year terms have expired, and Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Nancy Pelosi (D-Calif.) have not replaced those serving in the two seats they control.

With its new nominees, the White House is taking steps to block the plan’s $40 billion international fund from investing in a fund that contains about 11 percent of China-based stocks, according to people familiar with the strategy. “Obviously, the president doesn’t want this investment to take place and is looking for other alternatives,” said a senior administration official who was not authorized to speak about the nominations. “These individuals will be key to making that happen.”
The Trump administration is hiring those peddling protectionism...who would've thunk it?
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Coincidence? UK Tops W European Obesity; COVID-19 Deaths

♠ Posted by Emmanuel in , at 5/05/2020 09:17:00 PM
Flat on his bum Boris Johnson is the perfect metaphor for the UK's COVID-19 response.
Is it a coincidence that a certain European island country tops the region's obesity and COVID-19 death league tables? I think not. Probably the worst insult you can hurl at the British is that they are the Americans of Europe. Now that's a lot of baggage--which they mostly carry around the waist, as it turns out. Especially nowadays, that transcontinental dietary "special relationship" isn't working out so well. Just as the US has the fattest people among all OECD nations, the United Kingdom has the portliest Western Europeans. First, let's face the fats:
The UK is the most obese country in western Europe, according to the Organisation for Economic Co-operation and Development. Its annual Health at a Glance report, published on Friday, shows that 26.9% of the UK population had a body mass index of 30 and above, the official definition of obesity, in 2015. Only five of the OECD’s 35 member states had higher levels of obesity, with four outside Europe and one in eastern Europe.

The OECD’s report, which says obesity in the UK has increased by 92% since the 1990s, illustrates the scale of the public health challenge, with fears it could bankrupt the NHS. Tam Fry, chair of the National Obesity Forum, said: “One could weep over the figures, the result of successive governments who have, for the last 30 years, done next to nothing to tackle obesity.
The British have also done next to nothing to deal with this obesity problem. Their lardy PM Boorish Johnson [sic] has even suggested a rollback of the UK's too little, too late sugary drinks tax. (Is being outrageously fat an indicator of Britishness from Johnson's point of view, too?) This sort of happy-go-lucky, what-me-worry-about-my-waistline attitude is actually not very funny at all given the health consequences and the associated strains placed on public finances. The right-wing Daily Telegraph has even featured an op-ed that suggests the UK finally do something about its obesity epidemic in light of the rising COVID-19 death toll there:
The same ailments keep emerging: diabetes, heart disease and high blood pressure. Data from the first 2204 Covid ICU admissions show 73 per cent were overweight, a condition linked to those diseases. Not only does carrying more visceral weight put greater pressure on the lungs, excess body fat causes the immune system to dysfunction, instigating the cytokine storm that floods lungs causing pneumonia-like complications.

For decades successive governments have been negligent in tackling obesity head on. Whether it’s subservience to the food and drink industry that contributes almost £30bn to the economy, or an aversion to becoming a Nanny State, obesity has ballooned without concerted intervention. More than half of the British diet is ultra-processed food with 60 per cent of the population overweight.
I don't want to say this, but I fully expected to see what's since become true: Just now, the UK has exceeded Italy and now tops European COVID-19 fatalities after you tot up fatalities in Northern Ireland:
Britain has the worst coronavirus death toll in Europe, official figures showed on Tuesday, prompting calls for an inquiry into the handling of the pandemic. The government’s tally of fatalities across the UK reached 29,427 for those who tested positive for coronavirus, exceeding the 29,029 recorded in Italy – until now Europe’s worst-hit country.

Italy’s total does not include suspected cases, however. Newly released data from the Office for National Statistics showed that 29,648 deaths were registered in England and Wales with Covid-19 mentioned on the death certificate by 2 May. With the addition of the official death figures for Scotland and Northern Ireland, this was calculated to take the UK’s toll to 32,313.

The true figure is likely to be significantly higher due to missed cases and a lag in reporting.
It's not politically popular to tell your people that they're too goddamn fat. It's even more difficult to tell your people to slim down when you select "leaders" like the obese Trump or Johnson. The truth remains though is that the US and UK were in literally poor shape to deal with COVID-19.  
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The Rise of European CoronaProtectionism

♠ Posted by Emmanuel in ,, at 5/02/2020 08:11:00 PM
 I almost forgot to post this one: The "hollowing out of the industrial base" is a favorite belief of arch-protectionists like Trump's pseudo-economist, Peter "Death by China" Navarro.  However, this belief knows no geographic boundaries or ideological predispositions. American or European, right or left, you'll find the same idea repeated ad nauseam. What's more, it's a sign of the times that the drumbeat for this kind of protectionism grows louder.

In the wake of 2020's Great Coronavirus Global Shutdown, European countries long since affected by the loss of the commanding heights of industry--coal, oil, steel, and so forth--see a further looming Chinese threat. With Western markets slumping, any number of European companies may be purchased at bargain bin--if not fire sale--prices. Hence European authorities want to prevent the Chinese swooping in to buy these virus-cheapened firms:
The EU plans to help block foreign takeovers of European companies struggling with the virus downturn. It wants to allow governments to invest in weak companies, which could include some form of ownership. While it called them "measures of last resort", the European Commission says it is consulting member states. A focus for the regulator is to counter unfair competition from state-owned firms, which are the backbone of economies such as China's.

It is now looking at further protection for businesses based in the EU, in light of the significant financial impact coronavirus lockdowns are having on them. "This in principle falls outside the scope of EU state aid control and can in particular be important for interventions by member states to prevent hostile takeovers of strategic companies by foreign purchasers," a spokesman for the European Commission said.
The justification you could have seen from a mile away: national security [duh]:
"As in any crisis, the industrial and corporate assets are under stress. The resilience of our industries, their capacity to continue to respond to the needs of EU citizens and the preservation of strategic assets and technology, is key," the spokesman added. The EU is worried that foreign investors may try to acquire European companies "in order to take control of key technologies, infrastructure or expertise". It says this "raises concerns as regards security".
How utterly predictable. In fact, you probably guessed this post's contents just by seeing its title--which is as hoped. CoronaProtectionism it is.
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