Chinese Economics Thread

[broadsword]

China Shipping Container Lines step up to the plate. Maersk started the mega trend.

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HHI says the CSCL Globe features a single, 77,200 bhp electronically controlled main engine to enhance fuel efficiency by automatically controlling fuel consumption according to the ship’s speed and sea conditions, translating to a 20 percent reduction in fuel per TEU in comparison with similar 10,000 TEU containerships. The vessel also features two EcoBallast seawater treatment systems, capable of treating 3,000 m3 of seawater per hour by filtering and sterilizing bacteria and plankton bigger than 50 µm with ultraviolet rays

The largest engine ever:

It’s a MAN B&W 12S90ME-C Mark 9.2 type low-speed main engine
two-stroke engine
rated at 69,720 kW @ 84 rpm, although has been de-rated to 56,800 kW
stands a whopping 17.2 meters tall (that’s over 56 feet!)

 

[Player 0]

I...didn't wrote that, it came from the article.

Ah the integrity of Yahoo News, another reason you should never read it.

 

[delft]

I...didn't wrote that, it came from the article.

I know you didn't. I said "From the Yahoo article".

 

[Equation]

China Shipping Container Lines step up to the plate. Maersk started the mega trend.

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The largest engine ever:

It’s a MAN B&W 12S90ME-C Mark 9.2 type low-speed main engine
two-stroke engine
rated at 69,720 kW @ 84 rpm, although has been de-rated to 56,800 kW
stands a whopping 17.2 meters tall (that’s over 56 feet!)

Holy mother of God that's a big un! I wonder if I will get to see it one day docking either in Galveston Bay or the Houston Ship Channel.

 

[delft]

Holy mother of God that's a big un! I wonder if I will get to see it one day docking either in Galveston Bay or the Houston Ship Channel.

She will be used to go to Rotterdam of course. Galvaston Bay and the Houston Ship Channel are likely to be must too small. She will be able to pass the Nigaragua inter-ocean canal I expect but I wouldn't know a port on the West side of the Atlantic large enough to receive her.

 

[Hendrik_2000]

This is an excellent article about the implication and inevitable rise of Chinese economy. Instead of knee jerk reaction of fear and jealously professor Stieglitz suggest way forward of introspection and cooperation .




GEOPOLITICS
January 2015
The Chinese Century

Without fanfare—indeed, with some misgivings about its new status—China has just overtaken the United States as the world’s largest economy. This is, and should be, a wake-up call—but not the kind most Americans might imagine.
By Joseph E. Stiglitz

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Read all the Comments 43


When the history of 2014 is written, it will take note of a large fact that has received little attention: 2014 was the last year in which the United States could claim to be the world’s largest economic power. China enters 2015 in the top position, where it will likely remain for a very long time, if not forever. In doing so, it returns to the position it held through most of human history.

Comparing the gross domestic product of different economies is very difficult. Technical committees come up with estimates, based on the best judgments possible, of what are called “purchasing-power parities,” which enable the comparison of incomes in various countries. These shouldn’t be taken as precise numbers, but they do provide a good basis for assessing the relative size of different economies. Early in 2014, the body that conducts these international assessments—the World Bank’s International Comparison Program—came out with new numbers. (The complexity of the task is such that there have been only three reports in 20 years.) The latest assessment, released last spring, was more contentious and, in some ways, more momentous than those in previous years. It was more contentious precisely because it was more momentous: the new numbers showed that China would become the world’s largest economy far sooner than anyone had expected—it was on track to do so before the end of 2014.

The source of contention would surprise many Americans, and it says a lot about the differences between China and the U.S.—and about the dangers of projecting onto the Chinese some of our own attitudes. Americans want very much to be No. 1—we enjoy having that status. In contrast, China is not so eager. According to some reports, the Chinese participants even threatened to walk out of the technical discussions. For one thing, China did not want to stick its head above the parapet—being No. 1 comes with a cost. It means paying more to support international bodies such as the United Nations. It could bring pressure to take an enlightened leadership role on issues such as climate change. It might very well prompt ordinary Chinese to wonder if more of the country’s wealth should be spent on them. (The news about China’s change in status was in fact blacked out at home.) There was one more concern, and it was a big one: China understands full well America’s psychological preoccupation with being No. 1—and was deeply worried about what our reaction would be when we no longer were.

Of course, in many ways—for instance, in terms of exports and household savings—China long ago surpassed the United States. With savings and investment making up close to 50 percent of G.D.P., the Chinese worry about having too much savings, just as Americans worry about having too little. In other areas, such as manufacturing, the Chinese overtook the U.S. only within the past several years. They still trail America when it comes to the number of patents awarded, but they are closing the gap.

The areas where the United States remains competitive with China are not always ones we’d most want to call attention to. The two countries have comparable levels of inequality. (Ours is the highest in the developed world.) China outpaces America in the number of people executed every year, but the U.S. is far ahead when it comes to the proportion of the population in prison (more than 700 per 100,000 people). China overtook the U.S. in 2007 as the world’s largest polluter, by total volume, though on a per capita basis we continue to hold the lead. The United States remains the largest military power, spending more on our armed forces than the next top 10 nations combined (not that we have always used our military power wisely). But the bedrock strength of the U.S. has always rested less on hard military power than on “soft power,” most notably its economic influence. That is an essential point to remember.

Tectonic shifts in global economic power have obviously occurred before, and as a result we know something about what happens when they do. Two hundred years ago, in the aftermath of the Napoleonic Wars, Great Britain emerged as the world’s dominant power. Its empire spanned a quarter of the globe. Its currency, the pound sterling, became the global reserve currency—as sound as gold itself. Britain, sometimes working in concert with its allies, imposed its own trade rules. It could discriminate against importation of Indian textiles and force India to buy British cloth. Britain and its allies could also insist that China keep its markets open to opium, and when China, knowing the drug’s devastating effect, tried to close its borders, the allies twice went to war to maintain the free flow of this product.

Britain’s dominance was to last a hundred years and continued even after the U.S. surpassed Britain economically, in the 1870s. There’s always a lag (as there will be with the U.S. and China). The transitional event was World War I, when Britain achieved victory over Germany only with the assistance of the United States. After the war, America was as reluctant to accept its potential new responsibilities as Britain was to voluntarily give up its role. Woodrow Wilson did what he could to construct a postwar world that would make another global conflict less likely, but isolationism at home meant that the U.S. never joined the League of Nations. In the economic sphere, America insisted on going its own way—passing the Smoot-Hawley tariffs and bringing to an end an era that had seen a worldwide boom in trade. Britain maintained its empire, but gradually the pound sterling gave way to the dollar: in the end, economic realities dominate. Many American firms became global enterprises, and American culture was clearly ascendant.

World War II was the next defining event. Devastated by the conflict, Britain would soon lose virtually all of its colonies. This time the U.S. did assume the mantle of leadership. It was central in creating the United Nations and in fashioning the Bretton Woods agreements, which would underlie the new political and economic order. Even so, the record was uneven. Rather than creating a global reserve currency, which would have contributed so much to worldwide economic stability—as John Maynard Keynes had rightly argued—the U.S. put its own short-term self-interest first, foolishly thinking it would gain by having the dollar become the world’s reserve currency. The dollar’s status is a mixed blessing: it enables the U.S. to borrow at a low interest rate, as others demand dollars to put into their reserves, but at the same time the value of the dollar rises (above what it otherwise would have been), creating or exacerbating a trade deficit and weakening the economy.

For 45 years after World War II, global politics was dominated by two superpowers, the U.S. and the U.S.S.R., representing two very different visions both of how to organ*ize and govern an economy and a society and of the relative importance of political and economic rights. Ultimately, the Soviet system was to fail, as much because of internal corruption, unchecked by democratic processes, as anything else. Its military power had been formidable; its soft power was increasingly a joke. The world was now dominated by a single superpower, one that continued to invest heavily in its military. That said, the U.S. was a superpower not just militarily but also economically.

The United States then made two critical mistakes. First, it inferred that its triumph meant a triumph for everything it stood for. But in much of the Third World, concerns about poverty—and the economic rights that had long been advocated by the left—remained paramount. The second mistake was to use the short period of its unilateral dominance, between the fall of the Berlin Wall and the fall of Lehman Brothers, to pursue its own narrow economic interests—or, more accurately, the economic interests of its multi-nationals, including its big banks—rather than to create a new, stable world order. The trade regime the U.S. pushed through in 1994, creating the World Trade Organization, was so unbalanced that, five years later, when another trade agreement was in the offing, the prospect led to riots in Seattle. Talking about free and fair trade, while insisting (for instance) on subsidies for its rich farmers, has cast the U.S. as hypocritical and self-serving.
Continued (page 2 of 2)

And Washington never fully grasped the consequences of so many of its shortsighted actions—intended to extend and strengthen its dominance but in fact diminishing its long-term position. During the East Asia crisis, in the 1990s, the U.S. Treasury worked hard to undermine the so-called Miyazawa Initiative, Japan’s generous offer of $100 billion to help jump-start economies that were sinking into recession and depression. The policies the U.S. pushed on these countries—austerity and high interest rates, with no bailouts for banks in trouble—were just the opposite of those that these same Treasury officials advocated for the U.S. after the meltdown of 2008. Even today, a decade and a half after the East Asia crisis, the mere mention of the U.S. role can prompt angry accusations and charges of hypocrisy in Asian capitals.

Now China is the world’s No. 1 economic power. Why should we care? On one level, we actually shouldn’t. The world economy is not a zero-sum game, where China’s growth must necessarily come at the expense of ours. In fact, its growth is complementary to ours. If it grows faster, it will buy more of our goods, and we will prosper. There has always, to be sure, been a little hype in such claims—just ask workers who have lost their manufacturing jobs to China. But that reality has as much to do with our own economic policies at home as it does with the rise of some other country.

On another level, the emergence of China into the top spot matters a great deal, and we need to be aware of the implications.

First, as noted, America’s real strength lies in its soft power—the example it provides to others and the influence of its ideas, including ideas about economic and political life. The rise of China to No. 1 brings new prominence to that country’s political and economic model—and to its own forms of soft power. The rise of China also shines a harsh spotlight on the American model. That model has not been delivering for large portions of its own population. The typical American family is worse off than it was a quarter-century ago, adjusted for inflation; the proportion of people in poverty has increased. China, too, is marked by high levels of inequality, but its economy has been doing some good for most of its citizens. China moved some 500 million people out of poverty during the same period that saw America’s middle class enter a period of stagnation. An economic model that doesn’t serve a majority of its citizens is not going to provide a role model for others to emulate. America should see the rise of China as a wake-up call to put our own house in order.

Second, if we ponder the rise of China and then take actions based on the idea that the world economy is indeed a zero-sum game—and that we therefore need to boost our share and reduce China’s—we will erode our soft power even further. This would be exactly the wrong kind of wake-up call. If we see China’s gains as coming at our expense, we will strive for “containment,” taking steps designed to limit China’s influence. These actions will ultimately prove futile, but will nonetheless undermine confidence in the U.S. and its position of leadership. U.S. foreign policy has repeatedly fallen into this trap. Consider the so-called Trans-Pacific Partnership, a proposed free-trade agreement among the U.S., Japan, and several other Asian countries—which excludes China altogether. It is seen by many as a way to tighten the links between the U.S. and certain Asian countries, at the expense of links with China. There is a vast and dynamic Asia supply chain, with goods moving around the region during different stages of production; the Trans-Pacific Partnership looks like an attempt to cut China out of this supply chain.

Another example: the U.S. looks askance at China’s incipient efforts to assume global responsibility in some areas. China wants to take on a larger role in existing international institutions, but Congress says, in effect, that the old club doesn’t like active new members: they can continue taking a backseat, but they can’t have voting rights commensurate with their role in the global economy. When the other G-20 nations agree that it is time that the leadership of international economic organizations be determined on the basis of merit, not nationality, the U.S. insists that the old order is good enough—that the World Bank, for instance, should continue to be headed by an American.

Yet another example: when China, together with France and other countries—supported by an International Commission of Experts appointed by the president of the U.N., which I chaired—suggested that we finish the work that Keynes had started at Bretton Woods, by creating an international reserve currency, the U.S. blocked the effort.

And a final example: the U.S. has sought to deter China’s efforts to channel more assistance to developing countries through newly created multilateral institutions in which China would have a large, perhaps dominant role. The need for trillions of dollars of investment in infrastructure has been widely recognized—and providing that investment is well beyond the capacity of the World Bank and existing multilateral institutions. What is needed is not only a more inclusive governance regime at the World Bank but also more capital. On both scores, the U.S. Congress has said no. Meanwhile, China is trying to create an Asian Infrastructure Fund, working with a large number of other countries in the region. The U.S. is twisting arms so that those countries won’t join.

The United States is confronted with real foreign-policy challenges that will prove hard to resolve: militant Islam; the Palestine conflict, which is now in its seventh decade; an aggressive Russia, insisting on asserting its power, at least in its own neighborhood; continuing threats of nuclear proliferation. We will need the cooperation of China to address many, if not all, of these problems.

We should take this moment, as China becomes the world’s largest economy, to “pivot” our foreign policy away from containment. The economic interests of China and the U.S. are intricately intertwined. We both have an interest in seeing a stable and well-functioning global political and economic order. Given historical memories and its own sense of dignity, China won’t be able to accept the global system simply as it is, with rules that have been set by the West, to benefit the West and its corporate interests, and that reflect the West’s perspectives. We will have to cooperate, like it or not—and we should want to. In the meantime, the most important thing America can do to maintain the value of its soft power is to address its own systemic deficiencies—economic and political practices that are corrupt, to put the matter baldly, and skewed toward the rich and powerful.

A new global political and economic order is emerging, the result of new economic realities. We cannot change these economic realities. But if we respond to them in the wrong way, we risk a backlash that will result in either a dysfunctional global system or a global order that is distinctly not what we would have wanted.
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[AssassinsMace]

There was an internet article which argued that Great Britain should deny Prince William's trip to China next year because of Hong Kong. Plenty of comments that insulted the royals on their over-inflated self-worth. Then there was one that was irate at the attacks on the royals and said plenty of countries love the queen. Someone replied saying something about only the countries the British colonized and brainwashed ones. Which is true and that's where some want to blur the lines on what is natural with what has been instilled through coercion. Same with US soft power. Oh, yes it is tremendous and the US does have the advantage over China but it's not because it's natural. China hasn't colonized the world like the West. A lot of the US and the West's soft power comes from colonization and forcing what the West values onto others.

There was another article I read where it was laughing at China because so many countries "hate" China. Someone commented about why are Americans upset about the US helping the world and then getting disrespect from the world? Americans feel unappreciated. Then the commentator argued that if the West weren't rich and lost control of the world economy, a lot of countries would start settling scores. That's why the West is in fear of China.

Personally I don't think China is looking out to "settle scores" because you don't see Beijing hammering the West over colonialism like others do to which is why many Westerners "forget" what they did to China as if they did nothing. So of course they're going to work against China establishing a free trade agreement in Asia. Of course they're going to impede China from starting an Asian development bank. Those things help chip away from the West's control of the world economy. Whether it's the HQ-9 deal with Turkey, the US and EU banning Huawei, the IT deal with South Korea, and maybe even HSR in Mexico, all have to do with China entering international markets of significance and preventing China from making inroads in areas the West has been long dominant.

Even Western allies can't escape US soft power. Look at the situation with Ukraine. European nations right before the Ukraine situation blew up were unhappy with the US over the NSA scandal. Then Ukraine happened and Obama managed to rally Europeans allies against Russia despite their need for Russia for energy and as a customer for their goods. They talk about Russia's economic outlook is gloomy... the EU doesn't look that great either and it's in part because of trade relations with Russia. I read an article that the EU is headed for a Japanese-style deer-in-the-headlights economic downturn. And look at how the US economic outlook is so rosy in contrast. Same goes with Japan and others in regard to China. That kind of power over allies all unravels if the US doesn't maintain its economic preeminence. Hence why you see Obama so overt against China. The accusation of cyber espionage is linked to that. They don't want China making inroads into high-end technology sales so there has to be the prejudice it's filled with spyware so no one buys it. They wouldn't have to place sanctions which the WTO can interfere or give China an excuse to retaliate in kind. Just seed the prejudice so that customers don't buy and China can't really do anything about it.

 

[A.Man]

China beats South Korea on smartphone market share

Summary:Chinese smartphone manufacturers have surpassed their South Korean counterparts in combined global market share in smartphones.

By Jaehwan Cho | December 10, 2014 -- 00:45 GMT (16:45 PST)

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According to a report released on Tuesday by the Federation of Korean Industries (FKI) comparing industry standings of Chinese and South Korean smartphone manufacturers, nine Chinese handset makers have toppled Samsung and LG's combined market share in the second quarter of the year.

The FKI said the nine global Chinese smartphone makers, Huawei, Lenovo, Xiaomi, Coolpad, ZTE, TCL, Vivo, Oppo, and Gionee, recorded 31.3 percent of global market share in the second quarter. Samsung and LG together had 30.1 percent global market share.

Samsung, South Korea's largest smartphone maker, contributed the lion's share of this, at 25.2 percent, shipping more than 74 million handsets.

In the second quarter of 2012, China controlled only 14.6 percent of the market, with just five vendors selling globally. South Korea had 34.8 percent market share then, more than double that of its Chinese neighbours, and Samsung dropped over 6 percent in the same period. Emerging powerhouse Xiaomi had no meaningful market share to be included.

Now, though, Huawei, Lenovo, and Xiaomi -- first, second, and third among Chinese vendors in market share, respectively -- combined for 17.3 percent, 5.4 percent more than the world's second-largest vendor, Apple.

The FKI said that strong interest in Apple's iPhone 6 and price-competitive handsets made by Chinese companies have directly cost South Korea strong shares for the last two years. The federation urged South Korean companies to find new industries to offset losses.

The report also noted the growth of China's automobile industry. China's global share was a meagre 4.7 percent in 2003, but it controlled 12.5 percent as of 2013. South Korea had 5.4 percent in 2003 and 9.8 percent in 2013.

"The Free Trade Agreement between South Korea and China is the best way for South Korea to boost up its core industries, which are now in crisis. Securing new technology and finding new businesses are essential for South Korea to beat China," said Yoo Hwan-ik, assistant secretary general of FKI's Industrial Research division. South Korea and China completed their free trade agreement negotiations last month.

Source: ZDNet.co.

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[A.Man]

UPDATE: China Wants to Conduct the World’s High-Speed Rail Market

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December 12, 2014
By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors
The construction of the American transcontinental railroad in the 1860s, which cost upwards of $136 million and covered 1,800 miles over arduous terrain, could not have been as easily accomplished without the major influx of Chinese immigrants into California. Tens of thousands of Chinese laborers worked grueling 12-hour days, six days a week, often at paltry wages and with little or no accommodations. They gained a reputation as indefatigable and resilient workers because they hardly ever became ill or died as a result of their boiling all of their drinking water and pasteurizing their food.

Now, close to a century and a half later, the Chinese want to return to the railroad business. This time, however, they strive to become the world’s leading go-to provider of high-speed rail and exporter of mass transit technology.
They certainly have the credentials and experience to back up their ambitions. By the end of last year alone, more than 6,800 miles of high-speed rail spanned the fourth-largest country, with another 7,500 miles currently under construction. UBS’s research reports that “China has the largest high-speed rail network in the world, with a total of more than 20,000+ kilometers [12,400+ miles] high-speed passenger-dedicated lines scheduled to be operational by end-2015.”

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A lot has changed with Chinese rail since I previously wrote about it

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Back then, the country was struggling to get new projects started, one of the catalysts of which was a bullet train crash in 2011. At the time, out of five countries, including Australia, the U.S., Russia and China, the Asian giant came in last place for the total length of railway per capita.
Then, in August 2013,

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highlighted the massive increase in the country’s urban subway systems, as the “length of light rail and metro will be extended by 40 percent in the next two years, and tripled by 2020.”

We’re currently seeing the arrival of this Chinese railway Renaissance.
As I told Wall St for Main St a couple of days ago: “The [Chinese] government is promoting light rail train everywhere in the world, and it’s only accelerating.”
China Seeking Consumers
In recent months, Chinese Premier Li Keqiang has emerged as the nation’s top salesman for what he calls the “New Silk Road”—miles upon miles of high-speed transportation connecting all corners of the world. His plan might very well become one of China’s most lucrative exports and culturally significant contributions to the world: fast, efficient and reliable railways.
Which many areas of the world sorely need.
In numerous countries, including here in the U.S., rail systems are outmoded and deteriorating. Five years ago, the

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concluded that “more than one-third of [rail] agencies’ assets are either in marginal or poor condition, indicating that these assets are near or have already exceeded their expected useful life.” A whopping 92 percent of railroad ties in the U.S. are still made of wood and, in many cases, fall within a range of 15 to even 100 years old. A few lines, such as the one that connects Los Angeles and Las Vegas, no longer receive regular service.
In India, where thousands of citizens rely on mass transportation, railroads have been combating a

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relating to aging equipment and poor electrical maintenance. Last month, the state-owned India Railways chalked out plans with China to improve its lines and begin construction on a $33 billion, 1,090-mile high-speed rail connecting Delhi and the southern coastal city of Chennai.

Also in November, China Railway Construction Corp. (CRCC), which we own in our

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signed a contract with Nigeria to construct a $12 billion, 870-mile rail system from Lagos, the nation’s second-most populous city, to the seaport town of Calabar. In an effort to shed China’s reputation for using only Chinese workers in foreign projects, CRCC Chairman Meng Fengchao “pledged to hire at least several thousand workers from Nigeria,” according to

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But China’s most ambitious plan to date comes in the form of a proposed $230 billion high-speed rail system linking Beijing and Moscow—what will be the longest in the world of its kind—which will largely replace the storied 100-year-old Trans-Siberian Railway. Whereas the Trans-Siberian takes about six days one-way, the new high-speed line will cut travel time down to only two days. The estimated distance is 4,350 miles, “more than three times the world’s current longest high-speed line, from the Chinese capital to the southern city of Guangzhou,” according to

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Following the announcement, the market handsomely rewarded CRCC. Since the end of October, its stock has surged 16 percent, beating for the first time this year the Hang Seng Composite Index, the benchmark for USCOX.

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Just as significant as the proposed line itself is what it symbolizes: a strengthening relationship between Beijing and Moscow. Already Russia has signed a multibillion-dollar gas and oil export deal with its southern neighbor, a clear snub at the European market.
In any case, China’s goal is to do for other countries what it has done for its own. In only ten years’ time, China has amassed an impressive network of rails that helps citizens from all corners of the nation—from the rural to urban—stay connected.

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Unfathomable Amounts of Resources Will Be Needed
As impressive as the Beijing-Moscow project is, it only begins to reveal the large host of jobs China has lined up.
In the map below, each shaded country denotes the location of current or pending Chinese projects, with many more possibly to come. UBS reports that 64 new projects have been signed in 2014 alone, with the months of October and November seeing a huge spike in approvals.

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A few highlights are worth mentioning. Last March, CNR Dalian Locomotive and Rolling Stock Company signed a $17.6 million contract with Ethiopia to provide 41 modern tramcars. Around the same time, South Africa ordered 232 diesel locomotives from CNR, a job worth $930 million. In July, China, Peru and Brazil agreed to cooperate on the construction of a railway that would connect the Peruvian Pacific coast to the Brazilian Atlantic coast. And in October, the Massachusetts Department of Transportation awarded a $567 million contract to CNR to build 284 train cars for Boston’s subway system.

These projects will require astronomical amounts of resources and raw materials, including heavy-duty steel, carbon fiber, aircraft-grade aluminum, copper and concrete—all of which should bode well for our

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Missing in action here is California, but perhaps not for long. Next year, the California High Speed Railroad Authority will begin accepting bids on what will eventually be the U.S.’s first high-speed rail system. Right now a bidding war for the estimated $566 million contract is brewing between China’s CSR Corporation Limited and China CNR Corporation.
Also missing is Mexico. Early last month, CSR won the bid to manufacture train cars while CRCC arranged to build the Latin American country’s first-ever high-speed railroad. Costing $4.3 billion, the line would have spanned 130 miles, from Mexico City to Queretaro. But just days after the contract was signed,

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“amid new reports that one of the bid partners built a home for [Mexican] first lady Angelica Rivera,” according to Bloomberg. CRCC has threatened legal action.
Still, there are numerous investment opportunities in Premier Li’s “New Silk Road” initiative, as you can see below.

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And the opportunities don’t stop there. Along with a greater number of domestic Chinese rail lines comes an explosion in service industries catering to weary travelers, including restaurants, hotels, car rentals, discretionary goods, property and more.
Many of these companies, in fact, hail from the U.S. Fast food restaurants such as McDonald’s, KFC, Pizza Hut and Starbucks—which we own in both our

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and

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—have lately taken aggressive positions in and close to China’s growing number of depots.
American hotels have also seized on the opportunity to service Chinese travelers making overnight stays along the way, with massive growth in the works.

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Playing the Train Game
In a

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emerging markets analyst Shuli Ren highlighted the attractiveness of investing in China rail stocks, especially in light of the People’s Bank of China’s (PBoC’s) recent interest rate cut, which will help railroad companies deleverage:

While China Railway Construction Corp. [which we own in USCOX] and China Railway Group both are major winners, given their 40 to 45 percent market share each in railway construction in China, CRCC currently has only a small exposure overseas, which means more upside. About 25 percent of CRCC’s new contracts come from overseas markets, the highest among its peers. CRCC is also less indebted, with “only” 94 percent net gearing.
​

Chinese banks’ recent decision to lower financing costs and increase lending has helped railroad companies, both state-owned and listed, gain a market advantage throughout the world.

BCA Research has additionally cited the PBoC’s rate cuts and the Chinese leadership’s efforts to lower the cost of borrowing as further enticing reasons to consider Chinese rail: “interest rate sensitive sectors such as… ‘asset-heavy’ industries such as materials, industrials and energy” all benefit. As these industries are directly and indirectly related to the construction and maintenance of railroads, they are also clear beneficiaries.
Expressing positivity in “Chinese growth, especially on stocks, going into the New Year,” BCA encourages readers “to be invested in Chinese shares and overweight Chinese equities in managed global and EM [emerging market] portfolios.”
One such EM portfolio that investors can take advantage of to catch opportunity is our very own

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On Our A-Game
One final note I want to leave you with is the strong performance of Chinese A-shares lately. Even though they tend to be volatile, they’ve been climbing pretty steeply since the summer.

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The financial sector has been the clear winner, which USCOX maintains significant exposure to. And as I’ve previously said, materials, utilities and industrials all have residual benefits to the railway industry.

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[AssassinsMace]

And that's why there will be those working against it. I don't know if it's someone in Beijing making these proclamations or is it outsiders making their own interpretations of what China is up to. Look at the Mexico HSR deal that China won and was cancelled just days after. What I read beforehand all the other international HSR players didn't even bother to put in a final bid. So why was it cancelled because supposedly one of the wives of the Mexican partners in the Chinese bid got a new house? Wouldn't it have to be one of the wives of someone in the government who's in a position to decide the winning bid? Yeah everyone knows there's no corruption in Mexico and that's why they were able to single this out so easily. I'm sure China will face it again in other countries that can be influenced. China hopes to bid for HSR plans in India too and China should expect the run around and not win in the end too.