Chinese Economics Thread

Player 0

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HONG KONG -- As part of its
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series, the BBC recently ran exclusive footage of a former senior Chinese Communist Party official meeting with the Dalai Lama in 2012, two years after the last formal talks between the two sides, and praying at a personal shrine he had constructed in his Beijing apartment, complete with the Dalai Lama's picture in pride of place.

In his
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, BBC reporter John Sudworth claims "the idea that an official would invite the BBC to witness him praying in front of a portrait of the Dalai Lama would seem a preposterous one. Laughable -- insane even." For publishing what is undeniably an interesting story, the BBC should be commended, but for suggesting that any display of religious feeling or sensitivity on the part of the Chinese government is itself akin to a religious miracle, the BBC does a disservice to all those who would seek to truly understand modern China.

The truth is that, despite its media portrayals as a spiritual and cultural wasteland, China is home to more than
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people who are either "Buddhists, Taoists or worshippers of legendary figures such as the Dragon King and God of Fortune." China also
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.
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and
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. The world's largest publisher of Bibles, Amity Printing Company, is located in the Chinese city of Nanjing.

Unfortunately, when it comes to China, religion is just one example of the mismatch between the mainstream media narrative and the underlying reality.

The transformative changes that have taken place in China have always been accompanied by changes in the way it has been perceived abroad. For many years the conventional wisdom was that China would fail because it was autocratic, corrupt and inefficient. When it did not fail, its critics changed tack to instead accusing it of an empty materialistic success. This "valueless China" narrative claims that spoiled princelings, grasping businessmen
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are all symptoms of a society has sold its soul and replaced its culture and traditions with pure greed. Take this much reported 2013 poll that "
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," or
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from August. Entitled 'What China wants," the photo is of a Chinese dragon hungrily eyeing a globe, inside, the caption proclaims that China "does not know how to achieve or deserve [respect]." But this most recent oversimplification is no closer to the truth than any of the old ones.

Earlier this year, Chinese President Xi Jinping stated that he was comfortable with allowing the country's rate of economic growth to slow. As of 2012, the Communist Party of China has also written into its constitution the need for the "establishment of ecological civilization."

Talk is cheap, but Xi backed up these words
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that will require China to make massive economic changes in order to move away from the coal that currently supplies 80 percent of its electricity. Even a relatively seamless transition will likely reduce China's GDP growth, a tradeoff Xi has publicly stated his government will make if necessary. These are not the actions of a government concerned only with material accumulation.

By numbers alone, China may very well be the most religious country on earth. Much the same is true when it comes to more secular cultural measurements. China graduated 3 million undergraduate students in 2012, almost 25 percent of whom studied either literature, philosophy, history or education.
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of any city in the world, with 159, more than New York with 113. The number of people employed in the performing arts in China is 250,000 according to National Bureau of Statistics, nearly twice the number in the United States. Then there is
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, which at 64 percent is far higher than Japan's 48 and India's 29 percent. And when it comes to law and order, which are surely part of a country's culture, China compares extremely well with other nations. China has a lower
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(1 per hundred thousand population per year) than the United States (4.7) and a far lower rate than fellow BRIC economy Brazil (25.2) despite a much lower GDP per capita.

The truth is the narrative of a valueless China is one that has been constructed by a group of commentators -- some of whom have only a superficial understanding of the country they are critiquing -- with an ideological axe to grind. The China they know is the China they deliberately seek out, one of unruly tourists and undeserving "princelings." This side of China does exist, but it does not even come close to being representative of the lives of the majority of Chinese, and it is not the side that has been and will continue to change the world.

It is true, for instance, that the Chinese do not make the most well-behaved of tourists. But while a widely reported 2012 poll found the
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in the world, the top spot went to Americans.

As for the princelings, their greed is surely not incomparable to that of the investment bankers and hedge fund managers who brought the world economy to the brink in 2007-2008. More importantly, they are an absolutely tiny fraction of China's billion person population.
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, and
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of
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. It is the height of absurdity to brand China a country of princelings while most people still struggle to make ends meet.

Now that China's economic growth has begun to slow markedly, the narrative seems on the cusp of changing yet again. Already one hears arguments detailing how China is destined to fail because it is not a democracy and how this top-down style of doing business has made it an economy of copycats and rote-learners devoid of innovation. "Designed in California, Made in China" is already an accepted formulation in the West. Just last March Harvard Business Review published a piece titled '
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.'

Yet since the new millennium, the
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a staggering 7 fold. (1 million in 1999 compared to almost 7 in 2013).

Foreign Policy reports the United States' National Science Board as concluding that "
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."

And when it comes to low-tech, China has an unparalleled civilization on which to draw from. As Professor Wen Tiejun of Renmin University's Institute of Advanced Studies for Sustainability notes, China's 240 million small household farmers represent rural communities "rich with indigenous knowledge." Their practices represent not just ancient tradition but a potential solution to "protecting the environment and providing for sustainable livelihoods."

China is a large nation with much that can be said truthfully about it. It is both crude and refined, rich and poor, crowded and desolate. It is both one of the most dynamic economies in the world and, as its own leaders well know, a country facing serious challenges to do with resource constraints, environmental degradation and a massive and rapidly aging population. But one thing that cannot be seriously asserted about a country of
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people is that it has no culture. That is not the case, nor has it ever been or will it ever be, and it does not help crucial international relationships to project these kinds of distorted images.
 

Franklin

Captain
Too bad the internet censorship thread is closed down so I post this article here. A facinating piece about internet censorship in China. As usual the media doesn't get or don't want to give the full and complex picture of what is happening in China.

The fascinating truth behind all those ‘great firewall of China’ headlines

Far from enforcing blanket censorship, the Chinese authorities are highly selective about what they do and don’t allow on social media

Here’s a proposition to make you choke on your granola: the only government in the world that really understands how to manage the internet is China’s. And I’m not talking about “the great firewall of China” and other cliches beloved of mainstream media. Nor, for the avoidance of doubt, am I saying that I approve of what the Chinese regime does: I do not. It’s just that I think it is better to deal with the world as it actually is, rather than as we fondly imagine it to be.

Western media coverage of China is a mixture of three parts fantasy to one part misinformation. The fantasy bit has deep ideological underpinnings: it asserts that the Chinese are embarked upon a doomed enterprise – to build a modern economy that is run by an authoritarian regime. The Chinese aspire to industrial greatness and see the internet (rightly) as an essential tool in this modernising project. But, being authoritarians, they fear the freedom of speech that the network enables. So they censor speech ruthlessly, devoting vast resources to the task, blocking access to western media and generally doing everything in their formidable power to keep their citizens from knowing anything that the regime does not wish them to know. Hence the “great firewall” etc.

But, according to the neoliberal narrative, the Chinese experiment is doomed to fail because everybody knows that democracy and capitalism go together, like love and marriage. Or, perhaps more accurately, like horse and cart.

The trouble with this comforting narrative is that it is mostly baloney. I’m sure that most foreign affairs specialists know that, and dedicated scholars such asRebecca MacKinnon and Min Jiang have been pointing out for ages that the Chinese have evolved a novel form of governance “networked authoritarianism – that appears to be working just fine. So isn’t it time that we tried to understand exactly how it works?

Enter Gary King, director of the Institute for Quantitative Social Science at Harvard, and one of the most interesting social scientists around. In August last year, he and two colleagues published in the journal Science the results of a fascinating experiment in which they had uncovered precisely how the Chinese internet is managed by the regime.

King and his colleagues had not set out to study censorship at all. They were seeking to test some computational linguistics software on what was perceived to be a particularly difficult language – Chinese. So they acquired a huge database of posts on Chinese social media. Having assembled this corpus of data, they then needed to check that the web-scraping tools employed to gather the texts were in fact collecting posted text, rather than, say, ads, from a particular page. So they clicked on the URLs associated with a sample of posts and found that some – but not all – had vanished: the pages had disappeared from cyberspace.

The question then was: what was it about the “disappeared” posts that had led to them being censored? And at that point the experiment became very interesting indeed. First of all, it confirmed what other researchers had found, namely that, contrary to neoliberal fantasy, speech on the Chinese internet is remarkably free, vibrant and raucous. But this unruly discourse is watched by a veritable army (maybe as many as 250,000-strong) of censors. And what they are looking for is only certain kinds of free speech, specifically, speech that has the potential for engendering collective action – mobilising folks to do something together in the offline world.

“Criticisms of the government in social media (even vitriolic ones) are not censored,” King et al reported, “whereas any attempt to physically move people in ways not sanctioned by the government is censored.” And the strange thing is that “even posts that praise the government are censored if they pertain to real-world collective action events”.

The fact that an authoritarian regime allows vitriolic criticism of it in social media may seem paradoxical, but in fact it provides the most vivid confirmation of the subtlety of the Chinese approach to managing the net. “After all,” observes King, “the knowledge that a local leader or government bureaucrat is engendering severe criticism – perhaps because of corruption or incompetence – is valuable information. That leader can then be replaced with someone more effective at maintaining stability and the system can then be seen as responsive.” The internet, in other words, is the information system that enables the system to keep a lid on things.

Sobering thought, eh? The paper is online and Gary King has a terrific lectureabout it on YouTube. So next time.
you read about the “great firewall”, remember that the really interesting story is what goes on behind it.

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broadsword

Brigadier
Early this month, it was reported that China plans to unveil new cybersecurity rules that require tech companies to hand over source code and build back doors in hardware and software for government regulators. Now foreign companies have even less reason to cry trade protectionism and accusing China of paranoia or Orwellian becomes more hollow.

Excerpt:
HUGE SPY PROGRAM EXPOSED: NSA has hidden software in hard drives around the world
Reuters

Feb. 16, 2015

SAN FRANCISCO (Reuters) - The U.S. National Security Agency has figured out how to hide spying software deep within hard drives made by Western Digital, Seagate,Toshiba and other top manufacturers, giving the agency the means to eavesdrop on the majority of the world's computers, according to cyber researchers and former operatives.

That long-sought and closely guarded ability was part of a cluster of spying programs discovered by Kaspersky Lab, the Moscow-based security software maker that has exposed a series of Western cyberespionage operations.

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In a case of sometimes what they don't mention is as significant as what they do, while this Stratfor article has interesting insights into the countries it does talk about it is peculiar that there is no mention of China at all especially with the one child policy being a unique and relevant phenomenon to the topic. I assume they want people to buy a book and it is probably mentioned in there.

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P.S. article is too long so I will post in two parts

Population Decline and the Great Economic Reversal
Geopolitical Weekly FEBRUARY 17, 2015 | 09:52 GMT Print Text Size

Stratfor
By George Friedman

In recent weeks, we have been focusing on Greece, Germany, Ukraine and Russia. All are still burning issues. But in every case, readers have called my attention to what they see as an underlying and even defining dimension of all these issues — if not right now, then soon. That dimension is declining population and the impact it will have on all of these countries. The argument was made that declining populations will generate crises in these and other countries, undermining their economies and national power. Sometimes we need to pause and move away from immediate crises to broader issues. Let me start with some thoughts from my book The Next 100 Years.

Reasons for the Population Decline

There is no question but that the populations of most European countries will decline in the next generation, and in the cases of Germany and Russia, the decline will be dramatic. In fact, the entire global population explosion is ending. In virtually all societies, from the poorest to the wealthiest, the birthrate among women has been declining. In order to maintain population stability, the birthrate must remain at 2.1 births per woman. Above that, and the population rises; below that, it falls. In the advanced industrial world, the birthrate is already substantially below 2.1. In middle-tier countries such as Mexico or Turkey, the birthrate is falling but will not reach 2.1 until between 2040 and 2050. In the poorest countries, such as Bangladesh or Bolivia, the birthrate is also falling, but it will take most of this century to reach 2.1.

The process is essentially irreversible. It is primarily a matter of urbanization. In agricultural and low-level industrial societies, children are a productive asset. Children can be put to work at the age of 6 doing agricultural work or simple workshop labor. Children become a source of income, and the more you have the better. Just as important, since there is no retirement plan other than family in such societies, a large family can more easily support parents in old age.

In a mature urban society, the economic value of children declines. In fact, children turn from instruments of production into objects of massive consumption. In urban industrial society, not only are the opportunities for employment at an early age diminished, but the educational requirements also expand dramatically. Children need to be supported much longer, sometimes into their mid-20s. Children cost a tremendous amount of money with limited return, if any, for parents. Thus, people have fewer children. Birth control merely provided the means for what was an economic necessity. For most people, a family of eight children would be a financial catastrophe. Therefore, women have two children or fewer, on average. As a result, the population contracts. Of course, there are other reasons for this decline, but urban industrialism is at the heart of it.

There are those who foresee economic disaster in this process. As someone who was raised in a world that saw the population explosion as leading to economic disaster, I would think that the end of the population boom would be greeted with celebration. But the argument is that the contraction of the population, particularly during the transitional period before the older generations die off, will leave a relatively small number of workers supporting a very large group of retirees, particularly as life expectancy in advanced industrial countries increases. In addition, the debts incurred by the older generation would be left to the smaller, younger generation to pay off. Given this, the expectation is major economic dislocation. In addition, there is the view that a country's political power will contract with the population, based on the assumption that the military force that could be deployed — and paid for — with a smaller population would contract.



The most obvious solution to this problem is immigration. The problem is that Japan and most European countries have severe cultural problems integrating immigrants. The Japanese don't try, for the most part, and the Europeans who have tried — particularly with migrants from the Islamic world — have found it difficult. The United States also has a birthrate for white women at about 1.9, meaning that the Caucasian population is contracting, but the African-American and Hispanic populations compensate for that. In addition, the United States is an efficient manager of immigration, despite current controversies.

Two points must be made on immigration. First, the American solution of relying on immigration will mean a substantial change in what has been the historical sore point in American culture: race. The United States can maintain its population only if the white population becomes a minority in the long run. The second point is that some of the historical sources of immigration to the United States, particularly Mexico, are exporting fewer immigrants. As Mexico moves up the economic scale, emigration to the United States will decline. Therefore, the third tier of countries where there is still surplus population will have to be the source for immigrants. Europe and Japan have no viable model for integrating migrants.

...continued on next post
 
...continued from previous post

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The Effects of Population on GDP

But the real question is whether a declining population matters. Assume that there is a smooth downward curve of population, with it decreasing by 20 percent. If the downward curve in gross domestic product matched the downward curve in population, per capita GDP would be unchanged. By this simplest measure, the only way there would be a problem is if GDP fell more than population, or fell completely out of sync with the population, creating negative and positive bubbles. That would be destabilizing.

But there is no reason to think that GDP would fall along with population. The capital base of society, its productive plant as broadly understood, will not dissolve as population declines. Moreover, assume that population fell but GDP fell less — or even grew. Per capita GDP would rise and, by that measure, the population would be more prosperous than before.

One of the key variables mitigating the problem of decreasing population would be continuing advances in technology to increase productivity. We can call this automation or robotics, but growths in individual working productivity have been occurring in all productive environments from the beginning of industrialization, and the rate of growth has been intensifying. Given the smooth and predictable decline in population, there is no reason to believe, at the very least, that GDP would not fall less than population. In other words, with a declining population in advanced industrial societies, even leaving immigration out as a factor, per capita GDP would be expected to grow.

Changes in the Relationship Between Labor and Capital

A declining population would have another and more radical impact. World population was steady until the middle of the 16th century. The rate of growth increased in about 1750 and moved up steadily until the beginning of the 20th century, when it surged. Put another way, beginning with European imperialism and culminating in the 20th century, the population has always been growing. For the past 500 years or so, the population has grown at an increasing rate. That means that throughout the history of modern industrialism and capitalism, there has always been a surplus of labor. There has also been a shortage of capital in the sense that capital was more expensive than labor by equivalent quanta, and given the constant production of more humans, supply tended to depress the price of labor.

For the first time in 500 years, this situation is reversing itself. First, fewer humans are being born, which means the labor force will contract and the price of all sorts of labor will increase. This has never happened before in the history of industrial man. In the past, the scarce essential element has been capital. But now capital, understood in its precise meaning as the means of production, will be in surplus, while labor will be at a premium. The economic plant in place now and created over the next generation will not evaporate. At most, it is underutilized, and that means a decline in the return on capital. Put in terms of the analog, money, it means that we will be entering a period where money will be cheap and labor increasingly expensive.

The only circumstance in which this would not be the case would be a growth in productivity so vast that it would leave labor in surplus. Of course if that happened, then we would be entering a revolutionary situation in which the relationship between labor and income would have to shift. Assuming a more incremental, if intensifying, improvement in productivity, it would still leave surplus on the capital side and a shortage in labor, sufficient to force the price of money down and the price of labor up.

That would mean that in addition to rising per capita GDP, the actual distribution of wealth would shift. We are currently in a period where the accumulation of wealth has shifted dramatically into fewer hands, and the gap between the upper-middle class and the middle class has also widened. If the cost of money declined and the price of labor increased, the wide disparities would shift, and the historical logic of industrial capitalism would be, if not turned on its head, certainly reformulated.

We should also remember that the three inputs into production are land, labor and capital. The value of land, understood in the broader sense of real estate, has been moving in some relationship to population. With a decline in population, the demand for land would contract, lowering the cost of housing and further increasing the value of per capita GDP.

The path to rough equilibrium will be rocky and fraught with financial crisis. For example, the decline in the value of housing will put the net worth of the middle and upper classes at risk, while adjusting to a world where interest rates are perpetually lower than they were in the first era of capitalism would run counter to expectations and therefore lead financial markets down dark alleys. The mitigating element to this is that the decline in population is transparent and highly predictable. There is time for homeowners, investors and everyone else to adjust their expectations.

This will not be the case in all countries. The middle- and third-tier countries will be experiencing their declines after the advanced countries will have adjusted — a further cause of disequilibrium in the system. And countries such as Russia, where population is declining outside the context of a robust capital infrastructure, will see per capita GDP decline depending on the price of commodities like oil. Populations are falling even where advanced industrialism is not in place, and in areas where only urbanization and a decline of preindustrial agriculture are in place the consequences are severe. There are places with no safety net, and Russia is one of those places.

The argument I am making here is that population decline will significantly transform the functioning of economies, but in the advanced industrial world it will not represent a catastrophe — quite the contrary. Perhaps the most important change will be that where for the past 500 years bankers and financiers have held the upper hand, in a labor-scarce society having pools of labor to broker will be the key. I have no idea what that business model will look like, but I have no doubt that others will figure that out.
 

ahojunk

Senior Member
These OC idiots are being used by external powers to stir up trouble. They are doing untold damages to Hong Kong's economy and reputation. They are so stupid to realize that their stupidity will eventually come to hurt them directly.

It is okay to protest within the law with but please no violence against ordinary mainlanders. Last year, there were 47 million of them visiting Hong Kong which accounted for 77% of all visitors. They are very important to Hong Kong's economy and tourism.

The Hong Kong government is already taking action against "parallel traders" - these are the people the OC idiots should be protesting against, but not the normal mainland visitors.

By the way, there were some news regarding China creating a "second Hong Kong". So I hope those OC idiots will quickly wake up and stop these stupid activities.

Thirty years ago, Hong Kong is very important to China, but today China is very important to Hong Kong.
.
 

A.Man

Major
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The world's new tastemaker: China

Steven Butler, OZY 8:03 a.m. EST February 21, 2015
For years, pastries in China have been stuffed with red bean paste. But every weekend, when Hong Tang Ran stops by BreadTalk, a big pastry chain in Beijing, the 34-year-old ends up buying chocolate sweets instead. As for bean paste? He doesn't think his 6-year-old has ever tried it. "I don't think she would like it," he says.
The times they are a-changin' — and so are the tastes of Chinese consumers. The days of U.S. baby boomers as the post-World War II royalty of global consumption are fading, and a new group of shoppers is rising. Even the slice of China's so-called "generation two" consumers who are in their teens or early 20s and have comfortable amounts of money to spend — a demographic of 200 million — are expected to outnumber American baby boomers three times over by 2022, according to the consulting firm McKinsey.

Already, Chinese consumers have become the biggest group of car buyers in the world, including the No. 1 market, by volume, for all-American brand General Motors. And they've purchased more computers than consumers from any other country — for nearly the past four years. Now, it seems, they're dominating practically every industry.
China has quickly become one of the main consumers of cocoa, for which sales have grown 6 percent annually in recent years. As for those pastries? The country goes through about 4 million tons each year — roughly two and a half times the amount eaten in the U.S., and more than any other nation. Its consumers are also big fans of flavored milk drinks. You guessed it: China has become the world's top market in this area as well.
Given China's enormous population — around 1.35 billion people versus a measly 324 million in the U.S. — it was, perhaps, only a matter of time before these shifts happened. And yet the trend is only just starting to take hold, creating ever bigger potential opportunities for global companies as Chinese consumers, who are mainly located in cities, spend more and more money. But inevitably, experts say, there's going to be a boomerang effect, in which trends in China lead companies there to leverage their growing prowess and spread far beyond their homeland's borders.
Many of these changes are being driven by China's accelerated economic output, which stood at a mere $864 per capita at the turn of the millennium. By 2013, it was nearly eight times as large, at $6,800. Meanwhile, Chinese household spending has been growing by about 8 percent annually. David Dollar, a senior fellow at the Brookings Institution, a think tank, says growth could continue at that pace — roughly doubling in nine years — even as other drivers of the economy, exports and investment, slow down.
While the Chinese market is huge, it's not always easy for foreign companies to get in. High income inequality, which limits the average person's purchasing power and squeezes company profit margins, is just one inhibiting factor. Regional diversity, which makes China seem like it encompasses many markets rather than one, and tough local competition from both legit businesses and street vendors selling counterfeit goods are also issues, says An Hodgson, a retail analyst at market research firm Euromonitor International.
But some companies have found success there. Luxury German car sales are higher in China than anywhere else in the world, for instance. "Brands are very important to Chinese people," says Shi Dan, a sales rep at a Mercedes dealership in Beijing's Chaoyang District. Meanwhile, electric-vehicle sales are forecast to overtake the U.S. within the next two years, according to Neil King, Euromonitor International's automotive analyst, and that's expected to create an opportunity for Chinese carmakers to develop new models for the cheaper end of the market — and eventually export those.
Similarly, Chinese TV makers, like TCL and Hisense, have begun to leverage huge domestic sales to push into foreign markets, although they are struggling for brand recognition in a crowded field. At home, China is the world's biggest market for shipments of ultrahigh-definition 4K television sets. While South Korea's Samsung still has the biggest sales volume even in China, it wasn't that long ago when the company overtook Japanese giants Sony and Panasonic in this industry. Today, Hisense is closing in on Sony as the world's No. 3 TV maker. And while it has a ways to go before it catches either Samsung or LG, given the size of the company's home-turf market and its likely growth ahead, time may be on its side.
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