By Bilal Hafeez 13-09-2019
In: top-picks | China & Hong Kong

Top Picks: China

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21st April

China needs to look inwards and how blame game will be detrimental for the recovery from the crisis

Depression, and not Stagflation, Could Haunt China in 2020 (Brugel, 6 min read) Under plummeting external demand and deflationary pressures, China will need to rebalance the economy towards a consumption-based growth model quickly.

Blaming China Is a Dangerous Distraction (Project Syndicate, 7 min read) Avoid blame game. Focus on more pertinent issues at hand. Development of vaccine, collective deployment of diagnostic and therapeutic tools to fight the crisis and putting the economy back on track should be the priority. And China can play a crucial role in all of this.

14th April

Tesla gains momentum in China and Chinese space data shows weaker recovery

China Issues Coupons to Stimulate Consumption  (China Daily, 2 min read) Fifty cities have issued coupons with a cumulative value ranging from millions to hundreds of millions of yuan via WeChat and Alipay platforms. Over 80% of coupons are related to the catering industry, and 42.5% are related to the tourism industry.

Tesla’s China Shipments Surge as Shanghai Plant Ramps Up (CX TECH, 1 min read) Wholesale shipments by Tesla climbed to 10,160 units in China last month, more than doubling February figure. Suggesting, Tesla has been gaining momentum at the new Shanghai facility, its first vehicle-assembly plant outside the U.S.

The View From Space: China Hasn’t Started to Rebound (Barrons, 5 min read) Alternative data from space such as pollution, infrared data across supply and night light from the city – shows deep, ongoing contraction in business activity. Raising doubts about optimism and accuracy of recent PMI data.

7th April

Chinese consumers optimistic about recovery and how China can win global trust.

Cautiously optimistic: Chinese consumer behavior post-COVID-19 (McKinsey, 6 min read) McKinsey interviewed around 2,500 Chinese consumers. Around 50% of respondents to their March survey said they are optimistic that the economy will recover. Post-crisis – Chinese consumers are more likely to shop online, adopt a healthier lifestyle and consider environmentally friendly products.

Is This China’s Global Leadership Moment? (Project Syndicate, 2 min read) China should quietly win global trust by helping the United States and other countries, not out of strategic interest, but on moral grounds. Help includes; sending supplies and equipment, share its data and clinical experiences, guarantee continued operation of its medical supply chains and provide financial assistance to developing countries.

31st March

China’s regressive tax system and the dangerous bid for global leadership

China Needs More Progressive Taxes and More Spending on Public Health (CFR, 6 min read) China’s regressive tax system can be improved by; collecting more income tax versus the current 1.3% of GDP, creating a national system for social security and unemployment insurance, and increasing spending on public health and other social spending.    

The Problem With China’s Victory Lap (The Atlantic, 4 min read) China’s desire for global leadership may lead to the authorities to prioritise the economy over public safety. Promoting success in defeating the virus despite reports of ‘hidden infections’ in the country risks a second wave of infections.

24th March

The case for China’s insulation from global recession and lessons from its policy response

Is China a Safe Haven? (Matthews Asia, 8 min read) Space for significant further stimulus and a strong structural position (including high savings) going into the coronavirus crisis suggests the economy should be able to bounce back once the virus is fully eliminated. The country’s domestic-demand driven growth model should mean a global recession does not overly restrain China’s recovery.  

Blunting the Impact and Hard Choices: Early Lessons from China (IMF, 3 min read) Policy support to counteract the coronavirus needs specific measures for the most vulnerable through, say, waiving utility bills and social security payments. Other measures such as credit extension are also valuable but can heighten financial stability risks and reduce productivity further down the line if not well targeted. 

Chinese Factories Face New Threat: US Anti-virus Controls (AP News, 4 min read) Containment measures in the US could threaten the Chinese economic recovery as plummeting demand leads to reduced need for manufactured components from China.

17th March

New technology to get the country back to full capacity

China to Fast-track Work Resumption Across Industrial Chain (State Council Office, 1 min read) Industries including utilities, farming and exporters are being asked to support all parts of the supply chain to help return the country to full capacity. Use of 5G and AI are also being expanded to help the economy recover and to improve future resilience.

10th March

Hubei infections stabilise plus the threat to the CP from a unhappy middle class

China Reports No New Locally Transmitted Coronavirus Cases Outside Epicentre (Reuters, 5 min read) Despite an absence of new COVID-19 cases outside Hubei for two days the authorities are advising people to remain “cautious”. The airport remains closed and activity is still a fraction of normal levels.   

Will the Coronavirus Topple China’s One-party Regime? (ASPI Strategist, 3 min read) The disruption to daily life threatens to erode support for the Communist Party, particularly within China’s middle class. Should economic growth falter the support for the party could fall further. 

China’s Continuing Credit Boom (Liberty Street Economics, 5 min read) China’s rapid debt build up over the past 15 years may be even higher than official data suggests with loans swapped for municipal bonds currently excluded. Reduced efficiency of credit and a greater reliance on non-deposit financing add to the risks. But the country’s huge savings and fx reserves leave significant buffers.  

Proposed Residency Changes Spark Racist Backlash in China (Sixth Tone, 6 min read) Chinese citizens have reacted with hostility to a proposed relaxation of requirements for foreigners to obtain permanent residence. Social media forums have warned against increase crime and perception of preferential treatment of foreigners.

3rd March

Why China can avoid a permanent hit from the coronavirus plus a first look at China’s status as a global creditor

Can China’s Economy Withstand the Coronavirus? (Project Syndicate, 4 min read) Economic cost of COVID-19 will be substantial yet transitory. Disruption may last into Q3 but any permanent hit from widespread business failures, weak investment and rising unemployment is unlikely. China’s reduce trade dependency and a large digital economy also provide important buffers.

How Much Money Does the World Owe China? (Harvard Business Review, 6 min read) China is now the world’s largest official creditor with more than 5% of global GDP outstanding. But with no official data on Chinese overseas lending this “hidden debt” complicates assessment of financial risks in debtor countries.

25th February

Coronavirus comes at a time of reduced policy space

It is Naive to Expect Chinese Economy to Collapse (Global Times, 3 min read) The huge scale of the Chinese economy combined with the fairly rapid resumption of activity in key sectors will ensure the country’s economy retains its competitive edge. The hit will undoubtedly be large but nothing the economy cannot withstand.    

China’s Coronavirus Health Crisis is Also a Threat to its Economy (Peterson Institute for International Economics, 2 min read) China’s reduced room for policy stimulus will exacerbate the economic slowdown. The large fiscal deficit prevents any significant fiscal stimulus (tax cuts) similar to that enacted after SARS, while the run-up in borrowing in the past decade also prevents any credit expansion.

Will China’s Growth Rebound This Year (Advisor Perspectives, 4 min read) Growth should rebound later this year but not to the extent witnessed in 2016 as the commitment to deleveraging will remain in place. PMIs, credit data and trade and the three data series to watch for the signs the economy is recovering.

18th February

US less affected than others in a China slowdown and the permanent hit to China’s political system

The Economic Consequences of the Coronavirus (Project Syndicate, 4 min read) Information sharing could be a more effective and less damaging way to contain the spread of the coronavirus rather than large-scale quarantines. Monetary and fiscal stimulus can also help to limit the hit to the economy.

Global Spillovers of a China Hard Landing (Federal Reserve, 42 page read) EM commodity exporters are most effected by a China slowdown with the estimated hit to growth three-quarters of that to China. This drops to a half for other EMs and one-third for advanced economies ex US. With low direct financial linkages, a less open economy and more space for accommodative monetary policy the impact on the US economy is more contained. 

Is Political Change Coming to China? (Project Syndicate, 5 min read) Regime collapse, leadership change or an internal power shift are three possible scenarios from the Communist party’s mishandling of the coronavirus. Retaining the status quo seems unlikely with the perception that censorship costs lives.

11th February

Not fully back to work, and more on the BRI

Back to Work (Trivuim China, 1 min read) China returned from its extended New Year holiday on Monday but activity remains subdued. Traffic on the Shanghai metro was 20% below normal while weekend rail travel was down 80% compared with the end of the 2019 New Year holiday. 

Assessment of the Effects of Infrastructure Investment Under the Belt and Road Initiative (China Economic Review) Some countries have suffered from China’s BRI initiative while trade and labour links have become more concentrated. Most countries have, however, seen benefits to economic growth and terms of trade.

4th February

More on the UK’s Huawei decision and the economic impact of China’s ageing population

After Trump’s China Trade Deal, The Case For A Chexit (Vanity Fair, 8 min read) The Phase 1 deal will increase US trade links with China yet IP theft and unfair competition are hurting American industry. An “amicable disentangling” is the prudent way forward.

5G Choices: a Pivotal Moment in World Affairs (The Strategist, 8 min read) The UK’s decision to keep Huawei out of core 5G functions does not guarantee cybersecurity. Capability, opportunity and intent are what matters. And with access to foreign networks the first two factors are available to exploit.

Population Aging, Credit Market Frictions, and Chinese Economic Growth (Philadelphia Fed, 49 page read) China’s increasing life expectancy is one factor explaining per capita income gains and rising savings rates over the past forty years. Credit policies also played a role.

28th January

UK set to allow Huawel some access to its 5G network

The Man at the Center of Brussels Spy Probe (POLITICO, 7 min read) German authorities suspect former EU ambassador Gerhard Sabathil of providing classified information to China. A 30-year EU veteran and dual German and Hungarian national, Sabathil held several senior positions in Brussels. 

British Officials Propose Limited 5G Role for China’s Huawei: Sources (Reuters, 3 min read) Despite pressure from Washington the UK government will opt against banning Huawei from its 5G network. A limited role will, however, keep the Chinese equipment outside the core, data-heavy functions.

21st January

Twenty-two policy proposals for the US’ China strategy. Huawei security concerns linger on.

Implementing Grand Strategy Toward China (CFR, 82 page read) Twenty-two policy prescriptions for the US to navigate the current phase of US-China relations. Domestic initiatives include limiting China’s IP theft and developing AI. On foreign policy includes shifting military resources to Asia and pushing China to accepting reciprocity (including on trade practices and market access).

The Case Against Huawei (Balding’s World, 5 min read) Huawei is owned by the Chinese Communist Party through a complex structure of Trade Union Committees, most of its senior employees have ties to the military or security services and there is clear evidence of data collection on individuals, firms, intellectual property – the list goes on. [Bearish Huawei]

China’s Ten-Year Struggle against U.S. Financial Power (The National Bureau of Asian Research, 10 mins read) Recaps China’s efforts to boost its financial power. Bilateral swap lines, renminbi promotion through the BRI and regional trade, interbank payments systems and use of its own super apps including payment systems. [Bearish dollar]

14th January

Family offices are booming, the catchup on innovation continues

One in 3 Super Rich in China Builds Wealth on Real Estate (The Straits Times, 1 min read) China’s wealthy are twice as likely to have made their fortune in real estate compared with elsewhere according to a survey discussed in this article, with almost 30% attributing wealth to the property sector. Family offices are benefitting as succession planning and wealth preservation move into focus. [Bullish Chinese wealth management]

China: From Imitator to Innovator? (Science Direct, 10 min read) Comparing innovation of Chinese firms with U.S. peers the authors find that policy change had a positive effect on Chinese firms’ research intensity. Chinese companies have not overtaken their U.S. peers yet in innovation, but they have reduced the gap.

9th January

Opportunities for growth in a year of ongoing trade tensions, a structural economic shift and financial sector measures. Plus a look at overseas lending under the Belt and Road initiative.

What Can We Expect in China in 2020? (McKinsey&Company, 20 min read) McKinsey expects more bankruptcies, regulation, unpredictable risks to reputation and more selective consumer spending patterns. But opportunities exist. Economic growth will continue to be led by domestic consumption creating opportunities for companies to increase activity. Government spending on priority sectors should also boost business in 2020.  [Bullish China consumer]

Does China’s Overseas Lending Favour One Belt One Road countries? (Munich Personal RePEc Archive, 24 page read). Beijing’s launch of the Belt and Road initiative in 2013 boosted China’s lending towards the roughly 70 countries involved, in particular, those along the continental route. Lending promotion continued over a period of 3 years according to the paper’s findings with the effects strengthening over time.

24th December

Winning The Race: China’s Auto Market Shifts Gears (McKinsey, 4 mins) A concise strategy framework applicable for auto markets in general but focusing on China. To maintain their relevance, market players need to adapt to four redefining trends of the industry: autonomous driving, connected vehicles, electric vehicles, and shared mobility. China’s highly fragmented model based on dealership networks needs to transition to an online sales system, like Tesla, NIO, and Mercedes. [Bearish China auto sector short term, Bullish long term]

17th December

China continues to assert itself around the world, but providing many forms of support to poorer nations. Meanwhile, it is playing Macau off against HK.

Yes, Virginia, China Is Exporting Its Model (CFR, 5 min read) Xi Jinping has reiterated his belief that “[China] offers a new option for other countries and nations who want to speed up their development while preserving their independence.” From Cambodia to Tanzania, China aims to institutional frameworks to enhance state control or providing technology to support development. This shows China’s global reach [Bullish China]

Exclusive: Protest-free Macau to Win Financial Policy Rewards From China (Reuters, 4 min read) Chinese officials are helping Macau to establish its yuan-based stock exchange. It will start by handling the local bond trading business, as well as investments in start-ups from Portuguese-speaking countries, marking the next step of Macau’s integration in China’s Greater Bay Area.Looks like China is starting play Macau off against HK. (Bearish Hong Kong)

10th December

China’s growth inevitably meant that HK would suffer, perhaps current protests reflect that. Meanwhile, China is making headway outside of the US in tech sales, while internally China is clamping down on outflows.

How China’s Rise Has Forced Hong Kong’s Decline (NY Books, 5 min Read) In light of the protests in Hong Kong, an argument is put forward that China’s explosive growth over the past few decades has shifted attention and resources from Hong Kong to mainland China, explaining part of the city’s woes. [Bearish HK, Bullish China]

Huawei Chips Away at US ‘Security’ Ban (Asia Times, 3 min Read) Chinese smartphone giant Huawei shows no sign of slowing down in the months following the Trump ban. They recently signed 65 new commercial deals, nearly half of which are with European customers, in a bid to increase participation in 5G infrastructure projects. [Bullish Huawei]

US Dollar Transfers Cut Back by Chinese Bank as Beijing Steps Up Scrutiny of Capital Outflows (South China Morning Post, 3 min read) Beijing has tightened rules on overseas transfers by individuals in recent years to ensure control of capital outflows. China Merchants Bank announced the entire “Overseas Remittance Programme” will be shut down by the end of the month before reversing its position amidst customer protests. The bank’s public reason was to upgrade the system, but many suspect this to be regulatory pressure influenced by the trade war.  [Bullish CNY]

3rd December

China is facing classic developing market issues; transitioning to a service-based economy and problems to protect IP.

China Issues Guideline for High-Quality Trade Development ( The Chinese government looks to shift its trade towards services and implement more environmentally friendly policies for industrial production. [Bullish China]

China Bids to Lead World Agency Protecting Intellectual Property (Foreign Policy) China is attempting to lead the World International Property Organization (WIPO) – the UN agency responsible for maintaining standards and protecting IP. Part of the reason for this is that China has more of its own IP, which it wants to protect globally. But the US is naturally pushing back on China’s bid to lead WIPO. [Bearish Equities]

26th November

China cannot escape its structural drags. Policymakers are trying to mitigate the impact of an aging population. China will soon become a trade deficit country, which has implications for global bonds. And we can’t forget the festering issue of HK unrest which could end up restricting Chinese access to foreign capital.

Why Has China’s Trade Surplus (Just About) Gone Away? (Conversable economist) Timothy Taylor reviews IMF forecasts that China will run small trade deficits rather than surpluses in coming years. The three compelling factors for this are a services deficit (partly due to tourism), greater domestic consumption and an incomes deficit on net foreign assets. [Bearish US bonds]

China’s Desire to Control Hong Kong Will Not End Well – for China, Hong Kong or the Rest of the World (George Magnus) Hong Kong is China’s bridgehead to the international capital market and vice versa. A further deterioration in the Hong Kong situation may lead to financial sanctions against China, which could backfire. [Bearish HK, bearish China]

China Unveils Plan for Tackling Population Aging (Xinhua net) Chinese government has unveiled a medium- and long-term framework for tackling China’s aging population by 2022. Measures include reforming income distribution, steadily raising pension reserves, and increasing medical and nursing care for the elderly. [Bullish Chinese Health Care]

19th November

You can’t get away from the credit problems of China. Small banks are suffering, and policymakers are struggling with financial stability.

Upbeat Outlook from Chinese Banks’ Profits Masks Growing Problems for Small Banks ( Higher balance of local government bonds and lower funding costs help smaller Chinese banks with their performances, but small banks still lack competitive advantage in attracting savings. [Bearish China small banks]

The Afterlife of Marx’s Footnote on Chinese Currency (Andrew Batson) The only Chinese monetary thinker cited in Das Kapital, Wang Maoyin,was an advocate of market independence. Beijing’s approach today over this subject matter seems to deviate from this path.

As The 2020s Dawn, China’s Search for Financial Stability Isn’t Getting Easier (George Magnus) Underperformances of smaller banks and lenders, an acceleration in the amount of foreign debt and an increasingly large amount of under-reported, non-performing loans are giving China a headache over its financial stability problems. [Bearish china credit]

12th November

Facing slowing economic growth, Chinese President Xi Jinping is willing to offer some concessions in the short-term to limit the trade war damage – it seems as though both sides have notes how harmful it all is. China is now also seeking partners elsewhere and hopes to grow warmer to Russia before Europe does.

How The iPhone Widens The US Trade Deficit With China (VOX) The iPhone case unambiguously demonstrates that conventional trade statistics significantly inflate China’s trade imbalance with the US. Importing one iPhone X from China generates a $330 trade deficit for the US. [Bullish CNY]

Masayoshi Amamiya: Japan’s Experience and Its Implications For China – Monetary Policy And Financial System(BIS) Japan has already “been there, done that” when it comes to issues facing China – aging population, slowdown, struggle with policy. As the economic and financial ties between the two countries grow stronger, there are increasing opportunities for the two central banks to cooperate e.g. last year they signed a currency swap agreement.

China’s Growing Presence on The Russian Market and What It Means For The European Union ( Europe and China are competing against each other to become Russia’s biggest trading partner. However, Europe has competitive advantages in certain sectors that China aims at. [Bullish Russia]

All the International Brands That Have Apologized To China (Sup China) Sup China drafts a list of high-profile brands that have given in under the Chinese governmental pressure after stepping over the “red lines” of certain sensitive issues.

2nd November

Last week we looked at China’s growing laundry list of troubles. This week has been big for the CCP, and its Fourth Plenum is sending out mixed signals regarding the changes in the power structure within the Party. These changes are going to affect China’s next steps in addressing its urgent diplomatic and economic concerns.

Has Xi Jinping’s War Countdown Begun? (Project 2049/Taipei Times) Taiwan’s military defences and diplomatic outlets are heavily outsized by mainland China’s. Regional expert Ian Easton describes how recent changes in China’s military structure could foreshadow a conflict with Taiwan. [Bearish Taiwan markets]

Xi’s in Charge: What the Fourth Plenum Tells Us about Xi Jinping’s Hold on Power (CSIS) The CCP has recently initiated its Fourth Plenum of the Nineteenth Party Congress. The convention focuses primarily on strengthening CCP capacity and governance. Notably, it has a specific session on ‘Xi Jinping Thought’, showing the president’s firm grip on power. [Bullish Chinese SOEs]

26th October

China’s laundry list of issues continues as the Government is searching for new ways to revive the slowing economy and protect investors and companies against a US large-scale backlash. We look at their plan to double spending on infrastructure. At the same time, the rich Chinese are becoming richer and hoping to surpass their American peers.

China’s Growth Much Worse Than Reported, What About the US? (Money Maven)Argues that the Chinese economy is doing worse than might be currently portrayed. Desperate to avoid a slowdown, the Chinese government is launching 770bn yuan infra projects to boost the economy, double that of last year. Bullish near-term Chinese growth and hence stocks

Locking China Out of the Dollar System (Project Syndicate) Given the dominance of the dollar, a US restriction on capital flows have more far-reaching effects than any trade tariff. Trump is reportedly considering restrictions on US portfolio flows into China, including a ban on US pension funds from investing in China and delisting Chinese firms from US stock exchanges. Capital controls are coming to the US – could hurt dollar.  

There Are More Wealthy Chinese than Americans for the First Time (CNN) The average American is still much richer than their Chinese counterparts and China still has only a quarter of the millionaire count of the US, but it’s rising up the charts quickly. Now there are more rich Chinese than Americans in the top 10%.

19th October

They say bad things come in bundles – in the case of China it rings true. Their economic growth sank to a 26-year low in the latest quarter amid pressure from a trade war with Washington and weaker consumer demand. We feature two pieces looking at the recent NBA controversy which is now grabbing attention.

China Has Begun to Shape and Manage the US, Not the Other Way Around (The Atlantic) US thought it could change China, but recent NBA controversy suggests China could be changing the US. I’ve been thinking that Western countries are more and more trying to copy the China political model.

Corporate Subservience to China Exposes the Hypocrisy of Woke Capitalism (Quillette) Lists other cases, apart from the NBA, where companies espouse liberal values but caved with China.

12th October

Controversies around Hong Kong remain, and we look at how the recent undertaking of the NBA is a wider warning sign to the rest of the World. China is often scrutinised as benefitting of a developing country status so we explore the potential of change.

China Bends Another American Institution to Its Will (The Atlantic) By taking on the wildly popular NBA, and especially the even more popular Rockets, China’s leader, Xi Jinping, is blowing a whistle on companies and countries around the world that he can easily be destructive using no weapons.

Myth Busted: China’s Status as a Developing Country Gives it Few Benefits in the World Trade Organization (The Conversation) Donald Trump and Australian PM Scott Morrison argue that China is effectively a developed economy that receives unfair benefits by joining the WTO as a developing economy.

The China Cultural Clash (Stratechery) China’s boycott of the NBA is about more than the pro-Hong Kong tweet from the Houston Rocket manager Daryl Morey. The way that the Chinese government influences public opinions from social media apps and the Great Fire Wall is creating an even wider division between the country and the West.

With the US and China, Two Types of Capitalism Are Competing with Each Other (Stigler Center, University of Chicago Booth School of Business) Branko Milanovic’s new book argues against China’s view as a socialist state. The state-led authoritarian capitalism model has hugely contributed to China’s rapid economic growth in the past few decades, and China’s economic success undermines the West’s claim that capitalism and liberal democracy must be linked with one another.

4th October

HK troubles are poised to stay and only get worse and China is now blaming Washington for their involvement. As CCP are celebrating their 70th birthday, we look at how they are slowly losing their dominating grip.

Will the Trade Conflict Confound China’s Ambitions? (George Magnus/Carnegie-Tsinghua Center for Global Policy) The Chinese government and the CCP wished for a celebration for the republic’s 70th anniversary, but a number of pressing matters have cast clouds over their heads. The trade conflict with the US had much greater externalities than expected on a lagging Chinese economy, which had become increasingly integrated with the rest of the world. Finding a solution to the unrest in Hong Kong is proving another huge, hot potato.

China’s Impact on Global Financial Markets (NBER) Examines shifts in the structure of China’s capital outflows over the past decade, and how Chinese institutional investors had become the major channel of China’s foreign investment outflows. In contrast to the presumptions of many, these investors, in fact, overweigh sectors and regions where China has a comparative disadvantage.

People’s Republic of China Reaches Age 70 (Econospeak) Examined the PRC’s rapid socioeconomic and political transformation 70 years since its founding days. The CCP could be seen as a dynasty of modern age. But aside Hong Kong and now Taiwan, the expansion of power and influence across much of the world, especially through the Belt and Road initiative, may be running into limits.

How China Sees the Hong Kong Crisis (Foreign Affairs) Beijing has been acting fairly restraint towards the protests in Hong Kong. A firm belief is that the majority of Hong Kong elites and part of the Hong Kong public would be Beijing’s allies in solving the problem. Beijing also heavily criticise the US involvement in the matter, as it believed that Washington sought to inflame radical sentiments in Hong Kong.

China’s Hong Kong Problem (Project Syndicate) Chris Patten, the last British governor of Hong Kong heavily criticises the way China is handling the protests. Instead of undermining international trust with their behavior, they should affirm their intention to uphold China’s commitments under the Joint Declaration treaty and guarantee HK’s freedoms and high degree of local autonomy until 2047.

Hong Kong’s Protesters are Outfoxing Beijing Worldwide (The Atlantic) The key figures who lead the Hong Kong protests are now having the public opinion high ground on several international occasions – especially in the western world. They are better at utilising technology and social media to voice their opinions, have their cases heard by a much wider audience, and seek moral support.

28th September

China in the 2020s: A More Difficult Decade? (George Magnus) In-depth view on China and argues for a much weaker CNY that could end seeing the Chinese economy stay the same size relative to the US in dollar terms over the next 5-10 years.

The New Battle in Hong Kong Isn’t on the Streets; It’s in the Apps (MIT) Activists are using Airdrop, livestreams and maps to circumvent authorities.

Ownership Structure and the Cost of Debt: Evidence from the Chinese Corporate Bond Market (Bank of Finland) Finds state, institutional and foreign ownership reduce spreads.

Third Rehearsal for National Day Celebrations Concludes (Xinhua) About 300,000 people were involved in the rehearsal and related supporting services! 70th anniversary of the founding of the People’s Republic will be on Oct 1

Experts Dismantle the Ugly Political Plot that the United States will Manipulate the Hong Kong-related Bill (Xinhua, Chinese) Lengthy piece in Chinese featuring experts arguing against US Congress’ ‘Hong Kong Human Rights and Democracy’ Bill. The law would change US relations with HK in response to the protests. The article’s narrative is that the Bill is encouraging protests.

20th September

Some past allies of China are changing their tone, HK troubles could continue unless the democratic deficit is corrected. Plus, China is upping its propaganda AI game.

How Hong Kong Got to this Point (Brookings) Analyzes the “hybrid” nature of Hong Kong’s governmental and political structure. It also explains how the current procedure of electing Hong Kong Chief Executives caused civil discontent amongst Hong Kong residents.

Blackstone’s Schwarzman: China’s Economic ‘Miracle’ Came at the Expense of the US and the West (CNBC) Blackstone had string ties with China, so interesting change in tone.

Xi Stresses Integrated Media Development (Xinhua) Government wants “to boost integrated media development and amplify mainstream tone in public communication so as to consolidate the common theoretical foundation for all Party members and all the people to unite and work hard.” Hmm propaganda-AI?

13th September

Evaluating International Impacts of China-Specific Shocks in an Input-Output Framework (Bank of Finland) Thorough working paper that estimates impact of China slowdown or trade war on the growth of key countries. On growth, Korea, Australia and Germany are most sensitive.

We Can’t Secure 5G Networks by Banning Huawei Gear (Defense One) 5G network are based widely-distributed software-define digital routing and small-cell antennas. This means any part of the network, including Internet of Things (smart fridges) could be infiltrate the system. US government needs to partner with business on this – otherwise US networks will be vulnerable.

Is China Fudging Its GDP Figures? Evidence from Trading Partner Data (San Fran Fed) They find that using other countries import data (Fed’s so-called C-CAT index) can track Chinese growth. Over time, official Chinese GDP has become more accurate, but it still understates the volatility of growth.

A Requiem for “Blame It on Beijing” Interpreting Rotating Global Current Account Surpluses (Chinn and Ito) Argues that relative fiscal policies rather than the savings glut explain global imbalances

6th September

Can Presidents Block Investment in China? (Council on Foreign Relations, 4 min read). Apparently Trump could use International Emergency Economic Powers Act of 1977 (IEEPA) to prevent US companies from making future investments in China. He could also use it to make it harder to continue to do business in China.

China to Take Targeted Measures for Steady Economic Growth (State Council, 2 min read) Official announcement that RRR cuts are their way. Credit has been surprisingly lacking this year, so this could provide a boost. Bullish for risk markets.

The Background to HK Turmoil (Xinhua, 4 min read). The op-ed was written in Chinese and argues that unrest in HK was caused by the increase living expenses for HK residents, the inability to afford housing, lack of upward mobility and the inability of the local government to respond to requests from the public.

Hong Kong Leader Carrie Lam to Withdraw Extradition Bill That Sparked Protests (WSJ, 5 min read) Withdrawing the bill no longer the top priority among the “five demands” from the Hong Kong protesters – the top one is holding to account the police officers attacking protesters. Doubt this will ever happen!

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