Chinese Economics Thread


Hendrik_2000

Brigadier
All those spin about Japanese investment fleeing China is BS
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Japanese Firms Are Not Set to Move Back, JETRO Shanghai's Head Says

PAN YINRU
DATE: MAY 18 2020
/ SOURCE: YICAI

[IMG]


Japanese Firms Are Not Set to Move Back, JETRO Shanghai's Head Says

(Yicai Global) May 18 -- Shifting the industrial chain to Japan or a third country after Covid-19 is unlikely as the Chinese market is the most important for Japanese firms in the country, though the government in Tokyo does want some industries back, the head of the Japan External Trade Organization Shanghai recently told Yicai Global, citing these firms.

Most of the country’s companies in China are actually considering expanding investment, rather than moving the industrial chain back, said JETRO President Michiaki Oguri. For example, cosmetics giant Shiseido set up a research and development institute in Shanghai’s southern Fengxian district -- the eastern megacity’s dedicated ‘Beauty Valley’ -- during the pestilence.

Sweetened probiotic milk beverage producer Yakult similarly chose to expand its plant in the neighboring city of Wuxi.
An even more remarkable investment expansion dynamic will be visible among Japan’s car firms after the coronavirus, especially with Toyota Motor, which has invested quite a bit in the Chinese market and had much cooperation with it since last year.

Shinzo Abe’s government specially set aside USD2.2 billion to encourage Japanese firms to diversify manufacturing and production in the country's biggest- ever stimulus package worth almost USD1 trillion to cope with the pandemic’s impact on the supply chain.

The policy did not specify a country or state an intention to transfer the industrial chain, Oguri said, but the national government does hope some main sectors related to the nation's life, among them the face mask, medical equipment and car industries, can move back as supplies from China proved insufficient, the Japanese government found during the pandemic, he stressed.

Starting Over

JETRO's Shanghai office surveys Japanese firms in east-central China each month, canvassing the 710 of these based in Shanghai and the adjacent provinces of Jiangsu, Zhejiang and Anhui.

Almost all these firms have resumed work and production, last month’s most recent survey found. Japan's big three car firms resumed operations more quickly in the entire Chinese market than their US and European peers, he noted, adding they have basically pulled through the crisis.

Shanghai’s government ushered in policies on Feb. 7 to effectively ease the difficulties the epidemic has inflicted on companies. Chinese authorities very quickly brought in corresponding policies during the epidemic, many conducive to overseas-funded companies' resumption of work and business, he stated.

Oguri communicated with Shanghai’s commerce commission a great deal during the epidemic and he feels the Chinese government has treated domestic and foreign firms equally, which gave him the profound realization that the business environment in Shanghai and even China as a whole is very good indeed.
 

xiabonan

Junior Member
The thing Americans or whoever it is that's parroting American lines don't realise is that China is different from Japan in the 80s or other Asian economies where the sole focus is on manufacturing and exporting. So the logic was if you 'relocate' or 'decouple' by moving supply chains and thereby factories away from those countries their economic growth would be brought to a halt.

Such a strategy would have worked well in say Malaysia but certainly not so easily on China, because China is both the MARKET and the manufacturing hub. Many US, German, Japanese countries are in China not just because producing in China is cheaper, but also because they're producing close to the market, which this year will take over the US as the world's single largest consumer market.

Another point is the extensiveness and sheer size of China's supply chain. So much of the supply chain is in China that unless you can move ALL of it at once it's probably not worth it - because you've still got the other bits which you'll need.

Also, China has been working closely with Southeast Asian countries and trade in the region already surpassed US-China trade. If some manufacturing is moved to Southeast Asian countries then it also benefits China to a certain extent because of the amount of trade between them.
 

hullopilllw

Junior Member
Registered Member
The thing Americans or whoever it is that's parroting American lines don't realise is that China is different from Japan in the 80s or other Asian economies where the sole focus is on manufacturing and exporting. So the logic was if you 'relocate' or 'decouple' by moving supply chains and thereby factories away from those countries their economic growth would be brought to a halt.

Such a strategy would have worked well in say Malaysia but certainly not so easily on China, because China is both the MARKET and the manufacturing hub. Many US, German, Japanese countries are in China not just because producing in China is cheaper, but also because they're producing close to the market, which this year will take over the US as the world's single largest consumer market.

Another point is the extensiveness and sheer size of China's supply chain. So much of the supply chain is in China that unless you can move ALL of it at once it's probably not worth it - because you've still got the other bits which you'll need.

Also, China has been working closely with Southeast Asian countries and trade in the region already surpassed US-China trade. If some manufacturing is moved to Southeast Asian countries then it also benefits China to a certain extent because of the amount of trade between them.
I am sure the one forming those trade policies are not the average Americans or Trump himself, that team should probably be the State Dept, which under someone like Mike Pompeo, be quite the specialist at undermining and waging economic wars to contain nations.

And also...companies. In the 80s, American firms are the ones that own the factories, but now Chinese are the ones running the factories and have their own national champions that are in the market fight against American ones. US politicians seem to think that Apple run factories, but no Apple don't operate factories, those supply chains don't belongs to American, in fact iPhones is not manufactured in USA to begin with.

If the Fortune 500 are dominated by US alone, and US is the main market then YES decoupling will main hurt only China. But in this case, if US firms choose to operate out side of China, which is on track to be the single biggest consumer market in 2020, then it will only lead to losing the Chinese market share and exorbitant profit to THOSE THAT REMAINS IN CHINA, if the motive is to simply cater to escape American import tariff. Yet reality is, except for the high-end sectors like healthcare, aerospace and semiconductors, US firms are no loner competitive in pretty much all other sectors against Chinese players. If we see the F500 list, China will probably surpass US this year too. To make it worst, the gap will keep getting larger and hundreds of millions of middle class is set to rise in the upcoming decade.

What we have here is a nation that have assembled the most complete industrial chain in human history. The Chinese understand that industrialisation is the crucial key to the top, seeing that only about 15 nations on Earth have completed industrialisation. And the core part of industrialisation is mastering modern manufacturing. Add in the ability to scale, and the inherent entrepreneurship spirit of the chinese....we have seen the rise of a beast on an entire different class from the rest.
 
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Hendrik_2000

Brigadier
Good video. Anyway look like Chinese economy has rebounded strongly
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China’s Manufacturing Had V-Shaped Rebound After Covid-19, Geospatial Data Shows

WILLIAM CLEGG
DATE: MAY 18 2020
/ SOURCE: YICAI

China’s Manufacturing Had V-Shaped Rebound After Covid-19, Geospatial Data Shows

(Yicai Global) May 18 -- China's manufacturing sector mounted a V-shaped recovery after the restrictions imposed to combat the Covid-19 outbreak in January and February were eased, according to a new report based on geospatial data. But the recovery is regional rather than national.

The V-shaped “bounce” indicates that manufacturing production in the world’s second-largest economy has rebounded to levels seen before the novel coronavirus, consultancy Oliver Wyman and risk advisory Silk Road Associates said in the joint report published on May 15.

"The Chinese economic recovery is well underway, following the Covid crisis," Peter Reynolds, a partner at Oliver Wyman in Hong Kong, said on a weekend webinar to mark the report’s release.

Though Reynolds emphasized that the onset of a global recession could have broad implications for China's prospects in the long-term, he expressed optimism at not only the relative speed of recovery in manufacturing but also the outbreak's impact on the sector as a whole.

"It's striking that the Q1 numbers that came out showed only an 8.4 percent decline in manufacturing output relative to the same quarter in 2019," he said. "If you look at the amount of time that was shut down -- the Chinese New Year break plus the additional couple of weeks that things were stopped -- you actually have 17% less operational time.”

Reynolds said demand for the fulfillment of backlogged orders and the steady supply of crucial raw materials are key factors in the recovery.

Regional Recovery

Ben Simpfendorfer, chief executive at Hong Kong-based Silk Road Associates, Oliver Wyman's data partner on the project, introduced some of the geospatial data used to provide a more regional than national picture of the recovery across China's diverse industrial heartlands.

chinese economy rebounded.jpg

Official data for the country as a whole indicates an overall recovery is already underway. The Caixin purchasing managers' index for the sector leaped 9.8 points to 50.1 in March after an all-time low in February. But Simpfendorfer highlighted the importance of regional data in gaining a better understanding of the current situation.

"The data released by the National Bureau of Statistics and other independent agencies tends to be at the national level and that's helpful. It's important for financial markets," he said. But China is “a big country, and we really need to be able to understand at a granular level what's happening on a regional basis, especially as certain regions have competitive strengths, whether it's agriculture or manufacturing services.”
 

hullopilllw

Junior Member
Registered Member
Good video. Anyway look like Chinese economy has rebounded strongly
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China’s Manufacturing Had V-Shaped Rebound After Covid-19, Geospatial Data Shows

WILLIAM CLEGG
DATE: MAY 18 2020
/ SOURCE: YICAI

China’s Manufacturing Had V-Shaped Rebound After Covid-19, Geospatial Data Shows

(Yicai Global) May 18 -- China's manufacturing sector mounted a V-shaped recovery after the restrictions imposed to combat the Covid-19 outbreak in January and February were eased, according to a new report based on geospatial data. But the recovery is regional rather than national.

The V-shaped “bounce” indicates that manufacturing production in the world’s second-largest economy has rebounded to levels seen before the novel coronavirus, consultancy Oliver Wyman and risk advisory Silk Road Associates said in the joint report published on May 15.

"The Chinese economic recovery is well underway, following the Covid crisis," Peter Reynolds, a partner at Oliver Wyman in Hong Kong, said on a weekend webinar to mark the report’s release.

Though Reynolds emphasized that the onset of a global recession could have broad implications for China's prospects in the long-term, he expressed optimism at not only the relative speed of recovery in manufacturing but also the outbreak's impact on the sector as a whole.

"It's striking that the Q1 numbers that came out showed only an 8.4 percent decline in manufacturing output relative to the same quarter in 2019," he said. "If you look at the amount of time that was shut down -- the Chinese New Year break plus the additional couple of weeks that things were stopped -- you actually have 17% less operational time.”

Reynolds said demand for the fulfillment of backlogged orders and the steady supply of crucial raw materials are key factors in the recovery.

Regional Recovery

Ben Simpfendorfer, chief executive at Hong Kong-based Silk Road Associates, Oliver Wyman's data partner on the project, introduced some of the geospatial data used to provide a more regional than national picture of the recovery across China's diverse industrial heartlands.

View attachment 60108

Official data for the country as a whole indicates an overall recovery is already underway. The Caixin purchasing managers' index for the sector leaped 9.8 points to 50.1 in March after an all-time low in February. But Simpfendorfer highlighted the importance of regional data in gaining a better understanding of the current situation.

"The data released by the National Bureau of Statistics and other independent agencies tends to be at the national level and that's helpful. It's important for financial markets," he said. But China is “a big country, and we really need to be able to understand at a granular level what's happening on a regional basis, especially as certain regions have competitive strengths, whether it's agriculture or manufacturing services.”
V shape is good, means China will have money for reparation to US.
-Trump/Mike/Peter
 

supersnoop

Junior Member
Registered Member
This is funny
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When I saw another article about this, it didn’t mention the parent company of Autel Robotics, so I thought, “US company really hitting at Chinese company’s success...”.
Then I find out, it’s actually two Chinese companies, one using Byzantine American intellectual property laws to try to cripple the other!
 

Gatekeeper

Captain
Registered Member
The thing Americans or whoever it is that's parroting American lines don't realise is that China is different from Japan in the 80s or other Asian economies where the sole focus is on manufacturing and exporting. So the logic was if you 'relocate' or 'decouple' by moving supply chains and thereby factories away from those countries their economic growth would be brought to a halt.

Such a strategy would have worked well in say Malaysia but certainly not so easily on China, because China is both the MARKET and the manufacturing hub. Many US, German, Japanese countries are in China not just because producing in China is cheaper, but also because they're producing close to the market, which this year will take over the US as the world's single largest consumer market.

Another point is the extensiveness and sheer size of China's supply chain. So much of the supply chain is in China that unless you can move ALL of it at once it's probably not worth it - because you've still got the other bits which you'll need.

Also, China has been working closely with Southeast Asian countries and trade in the region already surpassed US-China trade. If some manufacturing is moved to Southeast Asian countries then it also benefits China to a certain extent because of the amount of trade between them.
Hit the nail on the head! Yes the main difference is the market, (M) and the highly skilled (HS) and educated workforce (EW)

Japan in the 80s had HS and EW, but not M (population 1/3 of America's and even with this size, the market for American goods was small)!

Just as other countries now that America and the West is looking to as replacement for China lacks one of these three ingredients.

Viet Nam: WE; yes. HS; maybe. Market size; same problem as Japan.

India: WE; no. HS; no. Market size; maybe. (In time).

You could do the same for other countries in ASEAN. The result is the same, somehow all these countries lack one of the ingredients that makes it like China! Which Is why all the talks about firm's fleeing China is just that. Talks!
 

Hendrik_2000

Brigadier
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I like the conclusion of this article
It should be clear by now that the trade war is an economic disaster for American farmers. But the economic costs associated with retaliatory tariffs should also be a reminder that the people who launched the trade war had no idea what they were doing.

In March 2018, after Trump announced his intention to hike tariffs on steel and aluminum, Peter Navarro, the director of the White House's National Trade Council,
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about the potential consequences of retaliation aimed at American farm exports.

"I don't believe any country in the world is going to retaliate," he said. "They know they're cheating us, and we're just trying to stand up for ourselves."

Navarro and Trump were wrong. American farmers have lost $14 billion because of their mistake.
 

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