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君子報仇十年不晚 June 15, 2018

Posted by hslu in China, Cold War, Congress, 特朗普, 美國, 習近平, Economics, Globlization, Trade, Trump, U.S. Foreign Policy, 川普, 中國.
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Source: Bloomberg


I don’t know which side will come out ahead in this trade war between China and the U.S. but I believe the ongoing tech embargo against China will definitely put a dent on China’s “Made in China 2025” initiative. Don’t forget that ZTE’s fate, possibly Huawei’s too, is still in the hands of Trump and the U.S. Congress. It’s unfortunate that China doesn’t have anything equivalent to counter America’s punch.

However, this is not the whole story: The U.S. is not fighting a trade war with China alone. The U.S. is fighting with China, Japan, Russia, Iran, Koreas, Canada, Mexico, Venezuela and the EU, It’s not just China will retaliate, many other countries will retaliate too. All at the same time. Can Trump and America’s labor market take this assult from all sides at the same times?

I don’t think so.

A better question is: Can Trump states’ economies take the attacks before the November election?

The answer is: no.

The next logic question to ask is then: can Trump survive impeachment if Democrats take the House and the Senate in November after Trump’s trade war begins to inflict damages to the U.S. economy?

Definitely not.

As the excerpt below states, the current setback on China’s tech arms race against the U.S. isn’t all bad: there might be a silver lining for China after all.

Source: Bloomberg


Chinese often say that “君子報仇十年不晚.” It means that “a gentleman will have his revenge in ten years.” Xi Jinping, of course, is very familiar with this concept when he deals with Trump and whoever comes after him. Trump is in the game for instant gratification and political payback. China is in it for the long haul and Xi Jinping knows it.

Well, China just got whacked by a 2×4. But, the curse could be a blessing in disguise. Chinese call this “轉機. 2025 is 7 years from now and the U.S. will do all it can to stop China from reaching this goal. But, China is no longer a 省油的燈. Even though the threat is very real and the enemy is formidable, China, with its steadfast resolve, a stable political system, the accumulation of wealth and the support of the Chinese people, will push ahead and work out a way to reach its goal in time. If it can’t be done in 7 years, China will do it by 2028 and has its revenge in 10 years if necessary.


1.34 million October 26, 2017

Posted by hslu in China, Shanghai, Xi Jinping, 民主, 中國.
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That’s number of officials at every level of the Chinese government who have been arrested, tried, jailed and stripped of power by Xi Jinping since 2012.

The extensive nature of this anti-corruption purge was necessary because graft in the Chinese governments and military forces prior to 2012 were so severe that Chinese citizens have lost confidence in the Communist Party. 

Bribery, embezzlement, kickback, hush money, shaddy conducts, extortion and cash for stars (rank) in the military were so rampant that the entire nation was mired in severe materialistic satisfications and unchecked addictive buying. 

The materialistic mindset affected the psysche of the Chinese people who, with their new found fortune, have blindly pushed up prices of luxury goods all over the world. Aquisitions of LV bags, Hermes, Cartier, Gucci, Chanel, Armani, Tiffany, Rolex, wines from Château Latour, maotai (茅台酒), western and Chinese artworks, Ferrari, Porsche, Benz, BMW, and luxury apartments in cities all over the world were all the rage of the entire soceity.

Previous leaders have their hands tied and have lost control of the Communist Party. It was widely recognized inside and outside of China that something has to be done to right the ship before it rocked the foundation of the nation.

After five years working tirelessly at this thorny issue, Xi Jinping at the 19th National Congress of the Communist Party of China can point to these 1.34 million criminals and show the Chinese people this unprecedented accomplishment in recent Chinese history.

Call it whatever you want, power grabing, purging of the opposition, one thing which can’t be denied is that the mindsets of common Chinese people have changed. Gone is the mindless pursuit of materialistic satisfication which I have observed first hand in Shanghai and cities I have traveled. In its place has been a return of sensible life style and a living within your means and saving for the raining days attitude. Binge buying still exists but it certainly isn’t widely spread like it used to. Government officials have pulled their horns for fear of being reported by regular people. Luxury hotels and 5-star restsurants all over China have gone out of business. Prices of fancy goods have dropped because of lack of demand. Even the officials of the central government have reduced un-necessary wasteful spending when treating foreign diginitaries. 

One has to wonder that can this kind of success be achieved in a democratic system in such a short period? With 關係and 關說 so prominent in Taiwan, can this kind of purge be done in Taiwan?

Highly unlikely.

Definitely May 14, 2017

Posted by hslu in China, Cold War, Economics, Global Affair.
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The more trouble America has, the better it is for the world and China.

The U.S. opposed One Belt One Road and the BRICS Bank (now the New Development Bank) when Xi Jinping first proposed this strategic alliance in 2013 and later threatened its allies not to joint this initiative. None of them except Japan took American advice.


Because the United States realized that it threatened America’s leadership in the world. 

So what America did to counter this threat? Pivot to the East.

Now the U.S. and Japan want in. 恬不知恥是也。

Just make them second or third tier observers with no right to vote.

BRI vs PE.

I for one like to see BRI took the lead not only on world trade but also on making friends in the world for decades and cennturies. What America leadership gave the world was one firthy rich and powerful bully, a few so-called allies, a poppy, a pawn and many enemies.

If you haven’t heard of this place, you soon will May 12, 2017

Posted by hslu in China, Cold War, 美國, Global Affair, Liberal Media, Middle East, Russia, U.S. Foreign Policy.
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Tashkurgan, China.

American press will not print anything relating to this place. American reporters will not tell you any story about this small town along the China-Pakistan border. It is the most westerly settlement in China and soon it will be the center of activity for the most ambitious infrastructural project in history: “One Belt and One Road Initiative.”


Tashkurgan map

Source: The Guardian

This weekend, several world leaders; Russian’s Vladimir Putin,  Pakistan’s Nawaz Sharif and Turkey’s Recep Tayyip Erdoğan will be in Beijing to hear hear what China’s Xi Jinping has to offer.

Have you noticed what Putin, Sharif and Erdoğan have in common? None of them is a friend of the United states.

Actually, the “One Belt and One Road Initiative” is designed to offset America’s “Pivot to the East” strategy. America, with its willing foot soldier, Japan, can block China all it want on the east, China will build an open pathway to Central Asia, Southeast and Southwest Asia, India, Indian Ocean, Middle East, Mediterranean Sea, Eastern Europe, Russia, Western Europe and Africa. Railroads, highways, pipelines, Internet cables and sea lanes will link these regions with China leaving the United States all alone in the Pacific Ocean.

Soon, with direct capital investment from China, areas around Tashkurgan in western China and eastern Pakistan will transform into one of the busiest regions in Central Asia since merchants first walked the silk road more than a thousand years ago.

Again, American press will not print this story. They want you to just forget this desolate place where few people in the world have ever walked.

Tashkurgan mountain scene

Credit: Tom Phillips for the Guardian.

In a decade or two, people who ride in this tractor trailer will be worth millions. If you are young, rich and dare, buy a few hundred acres of land along this two-lane highway, your future generation will thank you.

One China policy prevails February 10, 2017

Posted by hslu in China, Politics, Taiwan, Trump.
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There you have it.

Former Senator Dole made $140,000 from Taiwan. 

Trump played 蔡英文 like a chip.

蔡英文 can play her conversation with Trump over and over again and claim it a diplomatic breakthrough to her followers in her re-election bid 3 years from now. 


Trump’s anti-China tone has softened a lot from his tweets before taking the oath about 3 weeks ago.

Maybe he learned from his mistakes from that “worst phone call” he had with Australian PM earlier or maybe he realized that he can’t be the tweets-in-chief forever.

In any case, it is wise for Trump to walk back from his anti-China tweets. If he doesn’t, the consequence will be overwhelming and the China-U.S. relationship will be beyond repair. If U.S. economy suffers because of his anti-China policy, he’ll lose the mid-term election and he’ll be an one-term president for sure.
I believe that after considerable discussion among Trump’s advisors, clear heads prevailed and they agreed to take this issue off the table. However, we don’t know what else they have agreed upon over the phone.

Although China-U.S. relationship under Trump got off without incident, the spark is by no means over. Let’s just hope that Trump and his team have the sense to negotiate the issues with China behind the closed doors instead of acting like a 5-year old brat bad mouthing people he doesn’t agree with.

One China policy prevails February 10, 2017

Posted by hslu in China, Politics, Taiwan, Trump.
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There you have it. Former Senator Dole made $140,000 and Trump played Taiwan’s 蔡英文 like a chip with nothing to show of. 


It is wise for Trump to walk back from his anti-China tweets. If he doesn’t, the consequence will be overwhelming and the China-U.S. relationship will be repair.

Trump’s anti-China tone has softened a lot from his tweets before taking the oath about 3 weeks ago.

Maybe he learned from his mistake from that “worst phone call” with Australian PM earlier or maybe he realized that he can’t be the tweets-in-chief forever.

I believe that after considerable discussion among Trump’s advisors, clear heads prevailed and they agreed to take this Issue off the table. However, we don’t know what else they have agreed upon over the phone.

Although China-U.S. relationship under Trump got off without incident, the spark is by no means over. Let’s just hope that Trump has the sense to negotiate the Issues behind the closed doors instead of acting like a 5-year old brat bad mouth people who don’t agree with him.

762 captured. 17,238 to go. August 12, 2014

Posted by hslu in China.
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762, that’s how many corrupt formal Chinese officials and sleazy businessmen who have been captured by China in a foreign country and returned to China to face prosecution.

There are still as many as 17,238 economic criminals who are still hiding in foreign countries according to Chinese newspaper.


Source: CNBC mobile site.

Let’s get every single one of them and bring them back to China to face justice. While you are at it, Xi Jinping, get their money back to China from their foreign bank accounts too. That money belongs to China and Chinese people.

I hope the serious efforts by Xi Jinping will keep the corrupt Chinese officials up in the night because it will soon be their turn to get caught no matter which country they hide. Of course, they all know that once they get caught, they will stay in prison for a long time.

For thousands of years in China, a majority if not all of government officials have been corrupt and have been collecting money illegally from citizens and businesses alike. Once a while, a sensible and powerful emperor or official would clean the house and put these corrup officials in jail.

Xi Jinping is such a serious and apparently very powerful leader. Hundreds if not thousands of corrupt officials and businessmen have been caught in China. Many of them have high level positions in the central government. This is great news for people on the main street and a necessary action to keep the party in power in this day and age where corrupt officials are running out of places to hide.

Chinese people call this: 大快人心、罪有應得也。

I like it too.

Americans will say: ‘Great job! Well done! Keep at it, Jinping.’

You know, Americans aren’t like Chinese. They go by first names as if they have known you a life time even though they just met you in the elevator on the way down to the first floor.

美國自顧不暇; 中俄趁虛而入 July 23, 2014

Posted by hslu in China, Cold War, Economics, Energy, Global Affair, Military, Muslim, Obama, Obamacare, Oil, Politics.
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With American’s Monroe Doctrine formally denounced by none other than American’s own John Kerry, America basically invite others to coming in to his back yard and do whatever it wishes.


Well, with an open invitation like this, China’s Xi and Russia’s Putin gladly took up the opportunity and celebrated the occasion with the formal launch of the New Development Bank and a great tour of the Central and South Americas.


These are some of the headlines of their trips:

  • China, Russia leaders’ tours of South America underscore expanding influence in US back yard
  • China’s Xi goes to South America to break US dominance
    China’s President Xi Jinping signs Venezuela oil deal
  • Chinese leader woos Latin America with deals
  • Xi Jinping’s Latin American trip places trade ahead of ideology
  • Xi Jinping offers to build railway across South America
  • Putin denies reports that Russia plans to reopen spy base in Cuba
  • Russian president Vladimir Putin meets with Fidel Castro in Cuba
  • Putin pledges to help Cuba explore for offshore oil
    Putin signs Argentina nuclear deals on Latin America tour
  • Ortega Celebrates Putin’s Nicaragua Visit as a ‘Ray of Light’
  • Putin’s Latin America trip aims to show Russia is more than just regional power
  • Russia writes off $32 b Cuban debt in show of brotherly love

While all these were going on, Obama the supreme leader of America the super power of the world was busy with:

  • Iran
  • Iraq
  • ISIS
  • Syria
  • Israel
  • Hamas
  • Ukraine
  • Pivot Asia
  • Palestinian
  • Afghanistan
  • Broken Obamacare
  • $17 trillion national debt
  • $700 billion annual deficit
  • Flood of Illegal immigrant children

美國焦頭爛耳, 自顧不暇. 此乃強弩之末之徵兆也.

Well, I did see a piece of news talking about America Navy launched an amphibious assault ship which cost only ~$3 billion to build and will have capacity for 34 aircraft and about 3,000 soldiers. It is called USS America – LHA 6.

Yeah, more battle ship or aircraft carriers the better. Interest rate is low, isn’t it? Why not? The all mighty America needs aircraft carriers to show its strength to Russia’s Putin and China’s Xi.




习近平把“南京大屠杀”搬到世界的台面上了 March 30, 2014

Posted by hslu in China, Global Affair, Military.
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China’s Xi says Japan’s wartime atrocities ‘fresh in our memory’


At a think-tank forum Friday in Berlin, Xi criticized Japan’s wartime atrocities, saying the Japanese military killed more than 300,000 people in Nanjing in 1937 when it occupied the Chinese city.

Xi also said that more than 35 million Chinese people were killed or injured as Japan waged a war of aggression stemming from its militarism


习近平指的是日本的滔天大罪 “南京大屠杀。”  习近平用他访问德国的机会公开的告诉全世界日本在二次大战的丑恶的罪行让日本没有地方躲。他间接地指责日本的安倍不应该参拜二次大战的A级罪犯:日本侵犯世界的罪魁祸首。德国的领袖已经公开地为德国在二次大战杀害犹太人的罪行道歉而日本的首相却继续去朝拜杀人凶手。

The selection of the venue by Xi Jinping to expose Japan’s war crime in front of foreign press members in a foreign country was an excellent move. It exposes Japan’s lack of attrition for its aggression against other countries during WWII, including China, Korea and the United States, among others. It also bought the issue to the world’s attention so that Japan can no longer deny that it didn’t happen. The public condemnation may slow down Japan’s push to revise its constitution and re-arm its military.

Take a look of the parallels:


German    Holocaust

Japan        Nanjing Massacre


Germany’s public apology for crime against Jews

Japan’s continuing denial of Nanjing Massacre in the hands of Japanese soldiers


Merkel visited Nazi concentration camp Dachau to lay a wreath

Abe visited Yasukuni to pay respect to convicted Japanese war criminals

Saying he wanted to pray for the souls of the war dead, Japanese Prime Minister Shinzo Abe made a controversial visit to the Yasukuni war shrine in Tokyo on December 26, 2013.

I salute Xi Jinping’s boldness.


China’s Transformation just got Started February 14, 2014

Posted by hslu in China, Cold War, Economics, Energy, Global Affair, Taiwan.
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China – Transformation to a New Economy

Third Plenum, November 2013

To get a grip of China’s economic condition, one has to start with the reforms detailed in a report, “A Decision on Major Issues Concerning Comprehensive and Far-Reaching Reforms,” which was officially announced by Xi Jinping after China’s Third Plenum in November 2013; 35 years after Deng Xiao Ping’s historical economic reform for China. It sets the stage for China’s economic transformations which will influence China and the rest of the world for many decades to come. It appeared that Chinese government under Xi and Lee has shown determination and resolve to change its economy from a 1) “nation-building phase” with massive infrastructural investments and 2) an “export-led economy” with manufacturing of low margin goods for export to a modestly growing economy led by consumer spending. The Xi and Lee government seemed to realize that the earlier growth model has stalled and a new growth model is necessary for China to escape from the much talked about pending “Middle Income Trap.” There are plenty of evidences in our everyday lives: more and more low end products at Wal-Mart and IKEA have been manufactured by such countries as Vietnam and Malaysia while China struggled to find enough workers to keep their energy intensive plants going due to distortion in its demography. This has to change and I am glad that Chinese leadership recognized it and has chosen to do something about it. Of course, the devil is in the details and the most difficult part is its implementation which is by no mean easy.

That being said, the nation building phase of the past decade or more in China; railroads, high speed railroad networks, subway system, airports, super highway networks and three-gorge dam, just to name a few, is not dissimilar to the “nation-building” phase for the US in the 1920’s when railroads and canals revolutionized America’s infrastructural and manufacturing base. These and the development of super highway network in the mid-1950’s after WWII significantly lowered American’s transportation cost which made American companies that much more competitive in the world. The abundant supply of cheap crude oil from West Texas, Louisiana and Oklahoma over the past century also provided strong tailwind to US economy as many nations rebuilt their economies after WWII. The gold rush in California also created great wealth to American people and the country. The fact that America has never seen a war on its soil made US the strongest nation in the world that much easier and faster. It took America more than half a century to make what it is today. China is trying to do it in a decade or two.

China is paving the road for the decades of economic expansion to come and I expect the leadership will continue to invest in this important area because China will eventually over take America as the largest economy entity in the world. It needs a strong infrastructure to support its growth. And the time to invest is now. Corruption is a side effect and it can be dealt with. Take a look of World Journal and you will see that happening by the tens if not hundreds on a regular basis. The process started from the lower level and escalated with the arrest of 薄熙来。We will see what takes place on 周永康 which will show what Xi and Li are really made of. It is an exciting time in China indeed.

They have to do this if they have the best interests of Chinese people in their collective hearts. In these day and age of Internet and instant news, they have no choice because 1.3 billion Chinese are watching them. People talked about waste and corruptions. In my mind, this is more or less a given for China which experienced nothing but corruption in the past millenniums: 争权夺利,官商勾结,官官相护 were a norm for most of China’s history. It will not be easily changed but there are signs that the Xi and Li government is addressing this situation with the help of millions of people on the Internet. It is a good sign.

Now, let’s go back to investment in infrastructural. It seemed to me that this phase is necessary because without these investments, China’s economic development will be held back just like what India is facing right now.

The Third Plenum also mentioned the following important reforms: financial market reform, SOE reform, fiscal reform, anti-corruption and social media and internet management. Massive urbanization projects (land reform) are on government’s reform agenda. It is important to recognize that the reform plan serves as a blueprint and it will be a continual, multi-decade long process. Short-term, the implementation of the reforms, assuming that they are successful, will be disruptive to China’s economy and its growth rate. China’s stock market will suffers as well.

For now, let’s take a somewhat cursory look of the key points of the reforms and their impacts to Chinese economy:

  • China’s “one child” policy will be loosened somewhat. It will in a decade or two soften the distortion in China’s demographic trend. Short-term, this will stimulate consumer spending as more babies are born in China. Housing demand will continue. Consumptions of diapers, toys, baby food, milk products and other baby related items will rise. Percentage of GDP from personal consumption will rise as a result which will offset the decline stemming from lower infrastructural investments. Overall GDP will grow as population increases.
  • With economy’s growth slowing down, commodity demand will drop and natural resource rich countries such as Brazil, Russia, S. Africa, Canada and Australia will be negatively affected. The drop on commodity prices has already reflected this change. On the other hand, demands on meat, vegetables, corn, soy beans and other food items will rise as China’s population increases. Overall, this will improve situation of China’s massive trade surplus because China relies on other countries for many of the raw material it needs. Inflation pressure will ease as growth slows down which, along with less demand on new plots of land, will likely reduce social unrest.
  • China will encourage more private investments in state-owned enterprises (SOE) which, in time, will make them more efficient and competitive. This however, will take time to play out and there is no guarantee that we will see any material change soon.
  • China will push more rural land reforms and will try to change the country into a more urbanized society. The government has announced that it will move as many as 250 million people into cities, some of them newly created, which will increase personal consumption but will add pressure to government debt, pollution, water usage, food supply and jobless rates. Urbanization rate in China is around 51% according to Xihua News while more than 75% of the US population live in cities. For Japan, that rate is around 80%. Reform on Hukou system, along with the creation of social safety net, will likely be addressed too as reforms and urbanization are phased in in the next decade or two.
  • The government will tackle financial reform in the form of interest rate and capital account liberalization. It will in essence let the market determine the interest rate (mortgage and CD rate for instance) and allow the market to determine what the best capital allocation is. After reform of the financial markets, Renminbi and currency exchange rate will be on the table later.

In short, Chinese government has realized that government isn’t the best option to direct the next phase of China’s economic growth. I see this as a positive first step to make China a more competitive nation in the world with more transparency and openness. This will be necessary if China wants Renminbi to be accepted freely by the world financial markets.


Renminbi’s gradual rise into prominence is a trend worth noting. It also has huge implication to the value of US dollar and other currencies in the world. China’s Renminbi has risen against the US dollar under the watchful eyes of the People’s Bank of China. It is by design and is a prelude to free trade of Renminbi on the currency markets in the world. It appears that Chinese government allowed Renminbi to appreciate by about 3% annually so that China’s export industries have time to make necessary adjustments. This trend will likely continue in the future. China has done this (chart) to avoid hot money crossing the board to take advantage of a rising currency.

As of the end of 2103, Renminbi has taken over Euro as the second most used currency for international trades. Of course, it is still pale in comparison to the overwhelming percentage of international trades settled in US dollar, now standing at 81.08%. There is no doubt that this trend will continue because the rate of adaptation increased by 8.66% in October 2013, up from just 1.89% in January 2012. As of now, nearly 20% of Chinese trades are settled in Renminbi, up from 12% in 2012.

Furthermore, China has taken over US as the largest global goods traders according to a recent article on FT. It was reported that the total value of imports and exports for China has reached a staggering $4.16 trillion vs. US’s $3.5 trillion for the first 11 months of 2013.

China has gradually set up bi-lateral currency swaps with most of its major trade partners which allowed their trades to be settled in Renminbi instead of the customary US dollar. This practice will continue and the dollar amount and scope will be expanded further.

Even though it is still way too early to sing the demise of the US dollar, the strengthening of the Renminbi is worth watching because of its potential implication to financial markets in the world. As more bi-lateral trades are settled in Renminbi, China and its trading partners will benefit from direct currency exchange set up and they will no longer need as much US dollar for international trades as before. As such, these countries, along with China, will recycle fewer US dollars back to the US Treasuries. The net results will be a rise of interest rates of US Treasuries. In the meantime, demand on Renminbi will rise as more countries realize the benefits of direct settlement without converting their currencies into US dollar first. The implication of a holding strong currency, i.e., Renminbi, has not lost its lure to those countries either. In essence, it will be a choice among the Euro, the SU dollar and Renminbi. Japanese yen will become the currency to avoid because of the radical monetary policies of the BoJ.

Another interesting development is that China has signed agreements with Russia and a few other countries, like Iran, to settle their crude oil trades in Renminbi instead of US dollar. I don’t expect countries such as Saudi Arabia or Kuwait will use Renminbi to settle their crude oil trades any time soon but this bears watching too.

As swap programs gaining momentum in the future, interest rate in the US will rise, albeit slowly, as demand of US Treasuries decreases. As more countries accumulate Renminbi for trade settlements, more Renminbi will be made available to international Renminbi hubs such as London, Hong Kong and Singapore, reducing the need of US dollar further.

Of course, helping Renminbi’s ascension came from America’s own doing in the form of QEs by the Fed, near-zero Federal Funds rate, trillion dollar annual deficit and $17+ trillion (and rising) national debt incurred by the US government. Slowly but, I think, surely, Renminbi, Euro, other major currencies or some form of a pseudo currency, such as IMF’s SDR, will someday challenge the world reserve currency status enjoyed by the US dollar for the past several decades. Even though its timing is at least five, ten or fifteen years into the future, it is a time bomb waiting to explode if you hold too much assets in US dollar in your portfolio.

Shadow Banking

According to some reports, China’s banks may have as much as $4 trillion dollars off balance sheet loans which are hidden from bank regulators. Recent comprehensive government audits put that figure at $3.6 trillion but some private estimates were as high as $6 trillion. This is referred to as shadow banking in China.

Loans made through shadow banking network could be very toxic and may have the potential of becoming the sub-prime mortgage loan crisis of the United States according to many analysts and western government officials. Chinese government also realized its potential negative impact on its economy and is doing something about it. The comprehensive review of all banks in China (6000+) was the first small step forward so that the central government knew how big a problem it really is. Cracking down on illegal loans has begun and to me shadow banking in China has not reached crisis level yet simply because un-performing loan is still at manageable level according to many analysts. Besides, many loans were made by private companies and individuals; default on these loans will not affect major banks controlled by the government.

It appears that Chinese leadership has accepted the fact that China should grow at a more manageable pace; like annual GDP growth rate around 7.5% instead of double-digit paces a few year back. With China’s GDP growth rate target taken out of the local government’s performance metrics, loan growth on the local level will be less important in the future. Furthermore, PBoC’s manipulation of overnight lending rates may be one of the ways for China’s central bank to control the activities of shadow banking in China. Nonetheless, we needs to pay attention to.

Environmental Crisis, Social Issues and Ethic Unrests

There is no doubt that air and water pollutions have reached dangerous levels in many cities in China. Coal consumption has to come down and other forms of energy such as natural gas, solar and nuclear will have to ramp up to take its place. China is doing something about it but these projects take time to implement with some taking as long as a decade or so. More natural gas is coming into China and as many as 32 new nuclear power plants within the next five years are under construction. The combined capacity is a staggering 32,580 MW. Currently China has 16 nuclear power plants in operation, China is aimed to increase its electricity produced by nuclear power from the current 2% to 6% by 2020 (20% in the US and 74% in France). Please note that 1 MW is 1 million watts which will supply enough electricity to 1,000 typical homes in the US. However, even this kind of intensive capital investment, any significant relief to air quality will be at least five years out. One thing seems certain though and that is China will continue to invest in nuclear energy and the air quality problems in China will likely get worse before it get any better. Water pollution problems seem to be less urgent at this moment.

Social issues can be very volatile if they are not handled carefully by the government. Hopefully, with the announced reforms, China will see fewer civil unrest incidences in the future. Of course, the way the reform is carried out needs to be sensitive to the needs of the affected citizens. A heavy-handed approach will certainly have negative implications.

Ethnic unrests, especially in the provinces of Xinjiang and Tibet, could get very ugly as anti-government sentiments got stirred up by small but vocal and influential groups either inside China or in foreign countries. Many of such groups are calling the US home and may get funding from interest groups. These types of issues require Chinese government’s patient and persistence to get them resolved, if possible, peacefully.

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