Chinese Economics Thread


Anlsvrthng

Senior Member
Registered Member
You can control interest.

It is not possible to control independently the inflation, taxation rate (including the efficiency of collection) and the interest rate . Increasing the controlled variables decrease the freedom for the others, and if too many variable controlled then the last few is completely out of control.

This is the problem of the Chinese management, they can't capital flow , exchange rate and monetary policy ( interest rate) at the same time.

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now I read
Huawei to develop Harmony ecosystem to help industry break US domination
Source:Global Times Published: 2019/8/11 18:48:40
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Unyielding efforts expected to help industry break US domination

During its annual developer conference over the weekend, Huawei has shown its goal of making its Harmony operating system (OS) a new hit and building a global developer ecosystem for it, instead of just making it a plan B to cushion the impact of the US attack on the company.

In the face of increasing pressure from the US, the Chinese technology giant's unyielding efforts to build its own global software developer ecosystem are expected to promote China's electronic information industry to break US domination in OS development, analysts said.

Huawei is planning to launch China's first open-source foundation in a month or two, Wang Chenglu, president of the Huawei consumer business group's software division, told the Global Times on Saturday.

The Huawei Honor Smart Screen, the world's first terminal powered by the HarmonyOS, was launched on Saturday. The terminal is equipped with three self-developed chips, a built-in artificial intelligence camera and a 55-inch high-resolution screen.

The company also revealed a cutting-edge "digital reality" technology "cyberverse (cyber and universe)," which can realize a massive combination of virtual reality and reality, on Sunday at the Huawei Developer Conference (HDC2019) in Dongguan, South China's Guangdong Province.

The technology will provide services like high-precision maps at five sites in first-tier Chinese cities by the end of 2019, and expand to 1,000 sites by the fourth quarter of 2020.

"Huawei will continue to lead a broader effort to build China's software developer ecosystem and complete industry chain for the electronic information industry, rather than just launch its OS," Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times.

The HarmonyOS is an open-source system, but without the support of most application developers, it can't grow at a rapid pace and neither can the industry, Xiang said.

The HarmonyOS was initially seen as an alternative plan to deal with the risks of losing access to Google's Android software and overseas market share after the US attack.

Huawei is confident in keeping its overseas market share and displayed an ambition to make the HarmonyOS successful.

Richard Yu Chengdong, CEO of Huawei's consumer business, said that the HarmonyOS can make Huawei's devices functional again overnight, if the Android OS on the devices fails.

Huawei has obviously entered a whole new stage of fully developing its OS, developer ecosystem and more terminals equipped with the OS. It will eventually build its Internet of Things based on its leading communication systems, rather than just focusing on mobile phone products, a veteran industry analyst told the Global Times on condition of anonymity.

These efforts are expected to promote the whole industry, because unlike a government-dominated model, the company-driven model enjoys big market support, he said.

Huawei will also upgrade its "Shining Star" program for developers to $1 billion, providing developers with more money than other platforms to encourage their innovation, said the company.

Huawei will also reveal 65- and 75-inch smart screen products. The screens will be supplied by TCL's Huaxing Optoelectronics, and the overall unit will be produced by BOE Technology Group's Gaochuang (Suzhou) Electronics Co, Caixin reported on Sunday.

Honor's goal is to become the first or second name brand in China, and among the top four in the world, Yu said.
 

Anlsvrthng

Senior Member
Registered Member
That does not sound like something specifically for the Chinese economy or management; that sounds like a general economic dilemma for everyone.
Oh, yeah.


But these impossible trinities are connect together like the calculation of a truss support.


USA have flexible exchange rate and free capital flow, so has full and complete control above the monetary policy.

China has fixed exchange rate and capital control, so have no control above the monetary policy.
Actually , the extremely limited flexibility that China has in monetary policy balanced by the leaky capital control. : D


As side effect the Chinese monetary policy controlled by the FED, due to the capital control and fixed exchange rate.

Interesting, isn't it ?
 

AndrewS

Captain
Registered Member
Oh, yeah.


But these impossible trinities are connect together like the calculation of a truss support.


USA have flexible exchange rate and free capital flow, so has full and complete control above the monetary policy.

China has fixed exchange rate and capital control, so have no control above the monetary policy.
Actually , the extremely limited flexibility that China has in monetary policy balanced by the leaky capital control. : D


As side effect the Chinese monetary policy controlled by the FED, due to the capital control and fixed exchange rate.

Interesting, isn't it ?
But note that China still has fiscal policy and also other levers to influence demand/supply in the economy.

Eg. Launching an anti-corruption campaign to reduce demand in the domestic economy.
 
now I read this
Commentary: RMB exchange rate reform progress makes U.S. claim just a farce
Xinhua| 2019-08-11 16:59:50
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Since China launched a market-oriented RMB exchange rate reform four years ago, the reform progress has been recognized by the global community, except for the United States, sadly.

On August 11, 2015, the People's Bank of China (PBOC) announced a major improvement to the formation of the RMB's central parity rate against the U.S. dollar. It makes the central parity rate more consistent with the needs of market development.

It was a continuation of the previous rounds of such reforms, also an implementation of Chinese central authority's pledge to steadily advance the exchange rate marketization reform and accelerate the RMB convertibility under the capital account.

Four years on, the RMB's exchange rate has been able to rise and fall in two-way directions, while normal intervention by the central bank has withdrawn from the foreign exchange market. China's headway has been recognized by the International Monetary Fund (IMF), which concluded in its latest report that China's exchange rate is broadly in line with fundamentals.

But a few days before the IMF released the report, the U.S. government unilaterally and bluntly named China as a currency manipulator, ignoring the conspicuous progress China has made in exchange rate reform.

However, the IMF does not endorse the U.S. label of currency manipulator for China. Its report makes clear that there has been absolutely no currency manipulation and that China's external balance has been appropriate.

According to the data published by the Bank for International Settlements, from the beginning of 2005 to June 2019, the nominal effective exchange rate of the RMB appreciated by 38 percent and the real effective exchange rate by 47 percent, making it the strongest currency among the G20 economies and one of the currencies with the largest appreciation in the world.

According to international law, it is up to the IMF to monitor the exchange rate policies of member countries to avoid manipulating their exchange rates to gain unfair trade competitive advantages.

As a global multilateral agency seeking facts from investigations, the IMF, not the U.S. government, holds the legitimacy and credibility to make an assessment on China's exchange rate regime.

The IMF released the report after concluding the Article IV consultation to review the Chinese economy. During an Article IV consultation, an IMF team of economists visits a country to assess economic and financial developments and discuss with the government to gain a deep perception of the country's economic and financial policies. The process, in recent years, has been regarded as more transparent and essential to identifying stability and growth risks. Therefore the IMF's conclusion on the RMB is based on investigations and facts.

On the contrary, the U.S. assertion was arbitrary, capricious and a mixture of financial issues and political assessment. The U.S. claim on China is merely a self-conceited farce which deserves no respect.

China has the concrete foundation, confidence and ability to maintain the stable operation of the foreign exchange market and the basic stability of the RMB exchange rate at a reasonable and balanced level, keep debt under control, and safeguard its financial security.

The country will continue to deliver its promise to let the market play a bigger role in exchange rate regime to maintain stability and continuity of foreign exchange management policies, further promote the liberalization and facilitation of cross-border trade and investment and keep a prudent monetary policy. It will be normal for the RMB exchange rate to fluctuate flexibly in the short term in response to changes in market supply and demand. Expectations of long-term stability of RMB's exchange rate will remain unchanged through a series of two-way fluctuations, as China's economic fundamentals remain stable.

The RMB exchange rate system is not perfect. But that should not be an excuse to write off China's remarkable progress in exchange rate reform, let alone smearing the mechanism.
 

Hendrik_2000

Brigadier
A good op/ed by Yasheng Huang not exactly member China fan club He is the guy who wrote Tortoise and Hare extolling India success
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Oh that is another thing
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Trump Has Succeeded. Now Lots of Chinese People Are Buying Huawei Phones.
America goes after Huawei, and Chinese consumers rally to buy from the company.

By Yasheng Huang

Mr. Huang teaches international management at M.I.T.


Image

Smartphones at a Huawei retail store in Beijing.CreditCreditFred Dufour/Agence France-Presse — Getty Images
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BEIJING — Earlier this week the Chinese government aggressively
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— the
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that it is hunkering down for a protracted fight with the United States over trade.

Currency devaluation is the mother of all retaliations. The move, designed to help offset the Trump administration’s tariffs against China,
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, and that
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more than any trade war. It also carries significant risks for China, including capital flight and inflation.

Yet the Chinese government seems confident that it can weather these side effects. Why? Because its entrenched position has won over the Chinese public. It has managed the public relations feat of casting the trade war with America as a war not on China,
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. President Trump’s maximum-pressure tactics has stiffened the resolve of the Chinese government and made it harder to win concessions from it.

When his administration first imposed tariffs on Chinese goods in March 2018,
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. Some Chinese liberals even
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, who might force China to open up and reform its economy.

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, Huawei’s chief financial officer and a daughter of the company’s founder. The origins of
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predate the Trump administration: Career officials at the Justice Department were exploring cases against Huawei
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, under President Barack Obama. But it was Mr. Trump who escalated the Huawei affair, turning a discrete legal case into the showpiece of his broader trade war.

And yet, much as there was a bipartisan consensus in the United States about getting tough on China, there now seems to be a consensus among both liberals and ultranationalists in China that America is trying to undermine the welfare of the Chinese nation itself. To this perception,
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by buying Huawei’s phones in huge quantities — even though Ren Zhengfei, the company’s founder, himself has discouraged consumers from
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.


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in the first six months of this year compared with the same period in 2018, despite an economic slowdown in China and sanctions from the United States. According to the research firm Canalys, the number of mobile phones that
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increased by 31 percent in the second quarter of this year compared with the second quarter of last year.
 

Hendrik_2000

Brigadier
(cont)
But this rally is a show of support for Huawei specifically. Other Chinese companies have fared badly in China. The shipments of Oppo, a domestic rival of Huawei’s, declined by 18 percent over the same period; those of Vivo, another Huawei competitor, by 19 percent; and those of Xiaomi, also a competitor, by 20 percent. (In comparison, Apple’s shipments declined by only 14 percent.) Chinese consumers, in other words, appear to have rallied around the one Chinese company that America has pointedly targeted rather than around Chinese companies in general.

Americans may think of Huawei as a pawn or willing partner of the Chinese government, but in the eyes of many Chinese people the company symbolizes high-tech and entrepreneurship — and success in the face of political adversity.

Huawei was never a darling of the Chinese government’s industrial policy, and plenty of state-owned companies that were, like
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and Shenzhen Electronic Group, haven’t made it onto Mr. Trump’s blacklist. It is Huawei, not those other companies, that pioneered 5-G technology, the next generation of wireless networks that the United States sees as a national security risk.

Huawei succeeded despite, not because of, the Chinese government’s industrial policies. It is a genuinely private company, owned by its employees. In the 1990s, when the authorities strictly regulated and restricted population mobility, Huawei had trouble obtaining residency permits for staff members in Shenzhen.


Huawei went to Europe to get away from China’s skewed business environment, and it has become China’s top technology firm because it learned to thrive in brutally competitive international markets. No Chinese company can operate without government support, of course, and in 2004 Huawei received
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to expand into developing countries. But it earned recognition from the Chinese government only
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.

Going hard on Huawei was the wrong way for the United States to confront China over its grievances — even if many of them are entirely valid.

Huawei did commit intellectual property theft, but it is also investing heavily in research and development. According to the European Union’s Industrial R&D Investment Scoreboard, in 2019 Huawei ranks fifth in the world in R&D spending, ahead of Apple (which is seventh). Some 45 percent of its employees
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. By Chinese standards, the company is collaborative: While it has developed its own operating system, it has also kept using Google’s, Android. Its supply contracts with American companies amount to some $11 billion a year. It counts many
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on its staff, including
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. And so — supreme irony — the Chinese who celebrate Huawei seem to do so precisely because it stands for values that should resonate with Americans, too: a can-do attitude, independent outlook and openness to the world.

One early misstep of the Trump administration concerns ZTE, another Chinese telecom company. In the spring of 2018, the United States Commerce Department
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. But the Trump administration later
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— bringing ZTE back from the brink of bankruptcy.

Unlike Huawei, ZTE is a state-owned company subsidized by the Chinese government and, apparently, garners little love from
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. It also is
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than
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and, therefore, more vulnerable to being derailed. Targeting ZTE first would have also allowed the United States to keep bolder measures in reserve and escalate matters by confronting Huawei later if that proved necessary.

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, seeking the extradition of Ms. Meng. On Wednesday, it issued a rule
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and Huawei, as well as other Chinese companies (this time, including ZTE).


Yet such maximum-pressure tactics have delivered no meaningful results — other than undermining the good will of the Chinese public and its liberals toward America. The United States should de-escalate tensions and help China come back to the negotiating table by decoupling the Huawei issue from its broader trade concerns.

A trade war — which now risks spiraling into a currency war — is no easy thing to win. And it requires a more grounded understanding of Chinese reality than Mr. Trump has displayed so far.


Yasheng Huang is a professor of international management at the Sloan School of Management at the Massachusetts Institute of Technology.

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DigoSSA

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sorry i posted protected content

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China trade war data belie Donald Trump’s bragging
James Kynge 12 hours ago

If President Donald Trump’s tweets are taken at face value, the US-China trade war is a “beautiful thing” combating Beijing’s sharp practises while helping to attract “massive amounts of money” into the US. However, key data tell the opposite story.

Mr Trump threatened to impose a 10 per cent tariff on an additional $300bn of Chinese exports to the US from September 1. Washington also formally designated Beijing a “currency manipulator”.

But Beijing shows little sign of buckling. Hua Chunying, Beijing’s foreign ministry spokesperson, called Washington “irresponsible” over its approach to negotiations, noting: “The Chinese economy grew by 6.2 per cent in the second quarter of this year, while for the US the number is 2.1 per cent.”

One reason for Beijing’s defiance is that China’s economy is not hurting as badly as many in Beijing feared, analysts said.

“One year into the trade war, the casualty numbers are in,” said Shan Weijian, chairman and chief executive of PAG, an investment firm. “And by these numbers, the United States is not winning.”

Between July 2018, when the US first imposed its tariffs, to the end of June this year, US exports to China slumped by $33bn, or 21 per cent of the total. In contrast, Chinese exports to the US grew by $4bn, or 1 per cent, according to Mr Shan.

All of this has created the exact outcome Mr Trump was determined to avoid. Far from contracting, the China trade surplus with the US lambasted by Mr Trump as “out of control” has swollen to even greater proportions.

In this year’s first seven months, the surplus stood at $168bn in China’s favour.

The first reason for this is that the US consumers are loath to switch away from Chinese-made goods, particularly those manufactured by US companies such as Apple that have outsourced production to China, Mr Shan says. The surplus also suggests that US manufacturers in China have been slow to return home.

Meanwhile, China is preferring US competitors. While the average tariff Beijing imposes on US goods has risen by 12.4 percentage points since May last year, the average tariff it applies to Europe, Japan and elsewhere has decreased, according to research by Chad Brown, Euijin Jung and Eva Zhang at the Peterson Institute.

“While Trump shows other countries nothing but his tariff stick, China has been offering carrots,” the US think-tank said. “Beijing has repeatedly cut its duties on imports from America’s commercial rivals, including Canada, Japan and Germany.”

Nevertheless, the trade war is not just about trade. A broader type of economic decoupling that embraces security and competition concerns is also under way.

Among the actions taken was a ban issued this week on US government agencies from the Pentagon to Nasa against buying equipment from Huawei, the world’s largest telecoms equipment company. The ban also covers ZTE, a telecoms company; Hikvision and Dahua, manufacturers of surveillance cameras; and Hytera, which produces two-way radios.

These measures are affecting the companies concerned in the US market. Less obvious, though, is the ability of US sanctions to have the type of global influence that will force Chinese companies to toe Washington’s line.

The business of Huawei, for instance, has been virtually shut down in the US, but it is leading the race to install base stations for 5G telecoms, the next generation of superfast connectivity, around the world.

Huawei has also managed — in spite of being included on the prohibitive US “entity list” in May — to gain global market share for its smartphones in the second quarter of this year. It posted a near one percentage point increase in share, compared with a decline for Apple in the same period.

Most of the increase came from rapid sales in China, where Huawei rode a patriotic backlash against American sanctions on the company.

None of these signals are conclusive. Competition between the US and China appears set to run for years to come. But so far, it is not the “beautiful thing” Mr Trump has described.
 

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