Nation: Current events II

Retired chapters:

117     Can China say No to us?

In the last decades, Japan and some oil-rich countries could not say “No” to the USA, but China can to some extent and definitely can in 10 years.

Being the major players in the global economy, a full-fledged trade war with China would mean global recession and actually we would lose more than China. A military war would likely cause market crashes starting in the US and Asia.

Today’s China is not your Daddy’s China

China is not as strong as the US, but the gap has been reduced in the last 30 years, and at that time China could not build a reliable bicycle.

China lacks natural resources that she can obtain from many countries. China can get many high tech products from EU and Russia such as jet planes and agricultural products from many countries including SE Asia and Australia. At the meantime, Chinese are advancing their products. China no longer is export-oriented. Basically it is moving to a developed country with higher-value products. With its huge internal market, Chinese can manufacture products cheaply due to the economy of scale.

China’s rise is primarily due to the USA playing China card against Russia and now the US plays India (and possibly Taiwan) card(s) against China.

Let’s examine some critical factors in this book starting with a little history. In about 250 years ago, the alliance of 8 nations forced China to trade. When China refused, they enforced it with battle ships and cannons. When the Brits had nothing to trade, they pushed opium obtained from India and killed millions of Chinese. The alliance asked for ‘damages’ that bankrupted China and led to the national humiliation for China. The US was generous to use the money to fund Chinese foreign students to the US. They returned and modernized China.

What if China withdraws all the debts we owe?

It would lead to the global depression starting in the US. It is too obvious and I go no further. China is one link in the global economy. It will survive without our trades. A full-fledged trade war would hurt us more than China. Our trading competitors are EU countries, not China as we produce similar products such as airplanes. China would be more cautious in lending us money and/or buying US properties/companies. As of 1/2017, China was demoted to #2 in US debt holder. Unlike businesses, creditors have no weight in our political decisions.

Chinese is still buying our Treasuries for their interest. If they stop, the interest rate would rise and it would cause a housing recession. As of Jan., 2016, our debt to China is just over 1.05 trillion, or about 28% debts held by foreign countries.

How about the deficit with China

We had about $347B in trade deficit with China in 2016. A lot of products such as Apple’s iPhones are counted as import. We’re a victim of our own success: A higher living standard means higher wages, more protections to our workers, more regulations for our environment… Our strong USD reduces the competitive edge of our export. However, we need China to take out the obstacles to our products. To illustrate this, most of our consumer products cost a lot more in China than similar local products.

Modern warfare

Modern warfare is different from the 60s. We need better cyber security for both the government and the corporations. We need to fight against terrorists in our own soil.

We have enough nuclear weapons to destroy the entire world. N. Korea is not a nuclear threat unless the guy is really crazy and we drive him to the cliff. We do have to replace the 5" floppy disk though – it could be a security protection.

Aircraft carriers are a drain of the budget. It will not be useful as in the old days. They are sitting ducks for the carrier missiles... Why we need carriers with dual nuclear generators? In addition, China’s missiles can destroy GPS satellite which our guided missiles depend on.

Have we learned from our losses in Vietnam and Afghan? Does Vietnam today threaten us? Did we learn from the French and Russians? It is expensive to send soldiers thousands of miles away.

China has modernized its arm forces via development, acquisition and espionage. China produces cheaper military drones, which have been tested in the Middle East. China has mastered stealth technology in their jets and submarines; the technology could be stolen from us. China becomes the largest export on the military drones due to low prices and no questions asked.

To conclude, China’s military might is not that primitive and not that advanced as proposed by our offense vendors who want to sell their weapons. By quality and quantity, today China cannot compete with the US in military, but she is improving enough to defend her territory.

We cannot afford another war

The two wars in Middle East have been draining our resources. We’ve been broke. We will become a real paper tiger when the wars continue for another ten years.

Obama’s administration saved the market at the expense of our national debt which is at its recent height. Our competitive edge will be reduced by servicing the debt instead of investing on profitable projects such as infrastructure. The debts will be paid by our children and grandchildren who do not have a voice today. Are we following the footstep of Greece? We complains on Chinese military buildup without mentioning our military budget is more than the total of the next five countries not including China due to unconfirmed data.

China, the victim

China has not been an aggressor to foreign countries in her entire history. The last conflict is a brief war with Vietnam in 1979 to teach her former ally a ‘lesson’ and lessen the Russia influence in the region. China had no choice in the Korean War and she benefited by getting rid of the former Chiang’s soldiers. The war with India was a joke as China could win it by redirecting the water flow from Tibet. China’s involvement in wars is relatively less compared to our endless participation in wars.

In Roman time, China was as strong as Rome, but they very seldom colonized any country as opposed to the Roman. In around 1420, Zheng He’s fleet was far larger in size and number than Columbus’s and they just wanted the foreign countries to pay annual tributes and for that they received compensations in return. It contrasts significantly with Columbus.

For the last three centuries starting from the Opium Wars, China was the victim of aggressors. Actually the two dynasties of the last three were ruled by foreigners before Mao included these ‘barbarians’ as part of the Chinese minorities.

The late Deng X. P. said that China would recover most its lost territories in 100 years: many islets in South/East islets, Outer Mongolia (a buffer zone created by Russia), many farm lands from Russia… The boundary line between India and China was drawn by a British general favorable to India.

Why we identify China as an aggressor? Even they steal our intelligence properties due to our lack of protection - it is not the reason to start a war that would hurt us more.

Triggers

They could be China invading (or ‘reuniting’) Taiwan and the islet disputes in South/East China Sea. When China is richer and stronger in 50 more years or so, the national pride will drive China to reunite with China. Hopefully it will be achieved economically rather than militarily. Without the US’s full support of Taiwan, it would not be a tough job.

When the economy tanks, the US government would have to redirect our attention to other areas such as blaming China. Today we cannot as more jobs are replaced by lower-wage countries, not China. The job loss is also due to robots and less demands from the consumers since 2008.

China say “No” as the priority of political stability is more important than a trade war.

Will Chinese wake up and fight against the government?

It is the common thought of the China bashers. Most Chinese will not as most are busy in making money. After they taste the fruit of capitalism, no one is stupid enough to fight against the government and they learn the bitter lesson from Tiananmen Square incident.

Our investment in China

Currently, GM has about 25% profit from China and Ford has 16%. They will be replaced by cars produced in Europe and Asia. The first victim could be Boeing when China can buy jets from EU; it is worth more than $1 trillion in the coming 20 years. Walmart’s products will skyrocket in prices reducing the buying power of the low-income citizens.

Apple is a good example among many high-tech companies. Can Apple move their manufacturing back to the US to eliminate the 35% to 45% proposed tariff?

How can they find enough rare earth elements for their phones? They are available but most cannot be mined without damaging the environment. Many of these mines outside China were bankrupted. How can they motivate an army of educated workers for a new model with slavery wages and unions? It is easy to collect the generous welfare than working in these monotonous jobs. How can we get 40,000 technicians? How can Apple move all the component manufacturers from China? What is the impact on Apple in losing the China market (131 million iPhones vs. 110 million in US in 2015)?

One solution is to manufacture the individual parts in China and has the final assembly here in the USA with a label of “Made in USA” even the label is made in China.

Counting friends and enemies

The US used to have a lot of friends and formed powerful allies with them. When the allies embargo a country, they’re successful. However, our relationships with many of our allies are changing. Russia is not our enemy now and we have avoided some of the conflicts by not participating in actual wars. Russia is an important trade partner of China. Israel, our important ally, has been arguing with our political decisions more frequently than before. China is building two modern silk routes: one by sea and one by land to connect Asia, Africa and Europe better. The US has little use for these routes.

Strange relationships

The chess masters are the US, Russia and China. Japan, N. Korea, Taiwan, Philippines, India, SE Asia countries, Israel and EU are the chess pieces. The US and Japan are friends and both want to ‘contain’ China. Russia and China are trade partners with advanced weapons. Trump seems to be friendly with Russia to build a partnership. However, if we have any war, Russia will be sided with China, but we cannot count on EU now. Many EU countries are busy in fixing their economies and some do not want us to be our puppets. They just want our contributions to their defense. We should be reminded we have a hard time to end a war. When we do not learn history from Vietnam and the Middle East wars, we will repeat history. Why we should always find an enemy?

The US used to play the China card against Russia and attributed to China’s rise by taking out the embargo. Now, it tries to play Russia card against China. This is another example of “my enemy’s enemy is my friend”.

Being a US citizen and born in Hong Kong, it will be my saddest day if there is a war which is predictable as unavoidable by many. I hope it will not happen in my life time.

Investors have to watch the development of the possible conflict. The only winners are offense sector and precious metals. The recent news of capturing of a submarine drone drove the market lower. What will the market react when there is a military war between the two countries?

I have different feed backs from readers with different backgrounds. Being born in Hong Kong, I’m naturally biased.

Chris’ Comments

Chris, I’m not making changes, so I may use this one for the next release.

Afterthoughts

·         Taiwan bought a lot of weapons from us including the state-of-the-art fighter jets such as the $1.83 billion of military arms in Dec., 2015. We did not allow Russia to install missiles in Cuba and we clearly know the purpose of these fighter jets. I do not think China is over-sensitive. It provokes them to spend more in defense.

·         The US has been spending too much in defending other countries such as Japan, EU… We have too many problems to fix at home.

·         Trade wars between the countries have been started many times and both sides lose.

·         Most Taiwanese are those who retreated with Chiang after losing the civil war and their children / grandchildren.

·         Taiwan’s economy did not catch up with S. Korea primarily due to spending too much on defense, corruption as in most Democratic countries in Asia (have you heard of T.V. Sung?), mal governance…

·         China is Taiwan’s top trade partner (40% of its export).

·         Taiwanese are educated together with Cuba and Philippines. The difference is Taiwan has better living standard. I can attribute this as the other two do not have enough natural resources as explained in my Coconut Theory.

·         China has never expressed to be #1, but the US always does. That’s why we have the endless wars.

·         The recent Trans-Pacific Partnership tries to exclude China while China has its own partnership open to all. The hidden agenda is using the country’s currency as the reserve currency.

·         The Chinese maritime power is effective to defend its own shore, but not enough to secure the oil route; I estimate about 8% of current foreign oil from this route. With the aircraft carrier, China can invade (or reunite) Taiwan and the ‘lost’ territories in South / East China Sea easier.

·         I believe in “love over war” and also in free trade if both sides play it fairly.

·         Chinese accomplishments in 2016.

·         Here are nice articles on Trump and trade balance.

http://www.vox.com/latest-news/2017/1/19/14176896/china-facts-trump

https://www.thebalance.com/china-s-currency-the-yuan-or-renmimbi-3305906

·         Comparing US and Chinese military. Chinese PLA has shrunk from more than 3 to about 2.3 millions. Per capita China is less than the US.

http://www.businessinsider.com/chinese-us-military-comparison-2016-8

https://warontherocks.com/2016/05/how-good-are-they-the-latest-insights-into-chinas-military-tech/

http://www.cnbc.com/2017/02/04/new-york-times-digital-chinaas-intelligent-weaponry-gets-smarter.html

119     The China dream

China has dominated the world until the recent three centuries. China dream is to return to the powerful status as before. There are several milestones from my observations in 2017.

2020

2020 is an important milestone for China. China should be the #1 (or close) GDP in the world. With about 4 times the population of USA, the GDP per capita is about 4 times smaller than USA. To me, it will be the first time job creation is not be the top priority.  They should improve the real living standard such as pollution control (air and water to start), regulations, food quality control, environment…

2025

2025 is another milestone. China should transform itself to a different society. They will outsource labor-intensity jobs to countries whose wage is lower than China. They will produce most higher-value products that are available from the West today. The export of military weapons will be #2 or #3.

It would be the payback time of the many infrastructure projects with its neighbors as outlined by the “One Belt, One Road” Initiative. Most of them are primarily financed by AIIB and built by Chinese technologies and management. It will benefit for the countries involved and China in the long term. The richer these countries are, the more consumer products they will buy from China. China needs natural resources, energy, farm products… from them.

The wealth gap between the west and east China will be reduced.

Must Tier II cities will be closer to the Tier I cities today. The rural population will migrate to these cities where there are jobs. 

2049

It is one hundred years after the country was formed by the communists. China will be as strong as the US economically and the sole military power in the region. According to what the Chinese leader preached today, China will not become a “Ba” (roughly translated as #1 bully or #1 leader). As of 2017, US accounts for about 40% of global military spending.

Hopefully, with the “One Belt, One Road” Initiative, the neighboring countries will be wealthy with Chinese investment and trades. Under these conditions, China wants to be their trade partners rather than enemies.

#Filler:

 

120     The rise of China

Almost every rise of a nation has harms and benefits to the world and the rise of China is no exception. I bet China’s rise has more benefits to the world than harms. China’s rise is natural considering its huge population of 1.38 billion. Around 1800, it produced a third of the global GDP. The Great Wall had done a good job to keep the northern barbarians away so was the ocean from Japan until the last three dynasties. Today and even in the near future, China will not be a leader in politics, military, technology and culture compared to the US. She will be leader in trading due to China’s needs to import energy, other natural resources and agricultural products and export higher-tech products at prices far lower than the West/US.

Harms

From recent history, the rise of Germany led to World War II. Britain’s Industrial Revolution and the advances of weaponry led to the semi colonization of China about 180 years ago.

In another 50 years, I suspect China’s military might be strongest in its territory but not as strong as the US. At most, China will use her might to reunite with Taiwan. Hopefully, the islet disputes with its neighbors will be settled diplomatically. China’s leaders have repeated they will not be “Ba” (roughly translated as #1 bully or #1 policeman). No one can predict that far away. However, currently China has a policy of non-interference and does not expect other countries to interfere her internal affairs. She does not have much military alliance so far.

Economically, it will compete with the US and the west in all sectors. Many developed countries will lose their current financial strongholds if they do not adapt. Since its trade is already the largest, its currency could eventually be the reserve currency.

Despite the younger population, India will not fare well with China’s rise. Both have similar problems with a huge population to feed and shelter. India’s protectionism does not allow the country to concentrate on innovation and quality to be competitive. China’s friendship with Pakistan does not fare well with India.

Poor countries find it is hard to compete with Chinese products except with low wages. However, with better automation and robots, low wages may not be less important.

Benefits

There are many and they should outweigh the possible harms. Here are some examples and some have happened already.

About 250 years ago, China was semi colonialized by the US, the west and Japan and was bankrupted after paying all the unfair treaties. In the 1950s, China could not build a reliable bicycle. China started late but the progress especially in the last 30 years has been amazing. Chinese learn the lessons: They have to be strong in all areas: economics, science, weapons...

China graduates more college students than any other country especially in science and technology. In most cases, China has been run by engineers whiles our country has been run by lawyers. China invests in technologies such as space exploration. China invests in infrastructure projects than any other country such as owning more than 60% of high speed rail of the entire world. China invests more and consumes less that leads to a better future but also excess capacity. Here are some examples.

·        Medicines will benefit the world. If you need a drug to save your life, do you care whether it is from the US or from China? With its fewer restrictions in drug development and the government subsidies, I bet China will be the front runner in this field. It is a question of when and not why.

·        Public health. Hong Kong is the frontier in many medical procedures and inventions. It is one of the top cities if not the only one that has experience to conquer the bird flu. A city of 7 million citizens can contribute that much - imagine what a country of 1.35 billion can contribute.

·        Shenzhen is the Silicon Valley of the East or the Silicon Valley will be the Shenzhen of the West in 20 years. To illustrate this, the drone was arguably invented by a Hong Kong student and assembled in Shenzhen. It has most the components available within 30 miles area. Besides the innovation, these high-tech products can be assembled fast and cheap.

·        Cheap consumer products. They benefit even the poor in the US.

·        Many corporations such as Walmart take advantage of China’s low-cost products. Many high-tech companies such as Apple become wealthier to take China’s advantage.

·        Many poor countries copy China’s model successfully while some fail.

·        “One Belt, One Road” Initiative. It would make a lot of neighbor countries wealthy.

·        The world especially the poorer countries will benefit from China’s advancements. China benefits by learning the US and the West’s technical advancements. Now, China has some pioneer technologies including mobile, infrastructure… One example is the earthquake warning system.

·        The world including China has enjoyed our culture via movies and music. We will enjoy Chinese culture more than today.

·        China did not ask for foreign aids from the recent natural disasters. Imagine 20% (a little less today) of the world population begged for money.

·        China has aided many poorer countries such as Pakistan and many African countries to build their infrastructure.

Neutral

·         Weapons. From the centuries of humiliation, I do not blame China to invest in weapons. It helps China to defend herself from foreign invaders. China also exports to many developing countries who can only afford to the second-hand weapons. If they are used to defend themselves, it would be a benefit to the world but not for invasions.

Summary

China has to adapt to its rise, so are other countries particular the US. The balance of power will be changed and the eventual excess of capacity should be used for peace. We have to learn from the fall of China about 250 years ago and the rise of Germany during the WW2.

It is dangerous for us to isolate China. We should understand Chinese culture as they understand ours.  We should not use our standards to judge China or any other country as China should not use their standards to judge us. Our politicians should not use China to buy votes.

If China and the West do not adjust to each other, we will have economical conflicts that would lead to wars that the entire world cannot afford.

Links

Technology dominance (First of Part 3, Computer; great but a little pro-China to me). China still lags behind the US in many sectors. US has the benefit of immigration of many top scientists/engineers. Search for “China Technology” under YouTube such as this one, and you should find many. Military link. Space link, 2.  Economy 1  2 3 4. General 1 2 3. Diplomat magazine (many articles). High Speed Rail 1 2.

China should develop public transportation more than cars. Local brands in China can only compete in low prices that have thin profit margins. EVs can only be popular in China when they have enough fast charger stations and/or better batteries. Most Chinese live in apartments.

#Filler

121     How China rises

In the last 35 years, China has lifted millions from starving. It is no small task. Otherwise, India would be far wealthier than China and all the allied communist countries would not be in bad shape today.

China was as strong as the Roman Empire in the 200 BC period but she did not colonize any country. As late as 1800, she had 1/3 of the global GDP. She did not catch up with the West during the Industrial Revolution. The Opium Wars and the alliance of eight countries semi colonized China and bankrupted China by asking for unreasonable damages.

People’s Republic of China was created in 1949.  Mao was promoted from a great revolutionist to a poor governor, a poster boy of Peter Lynch’s Principle (promoting to a position one is not capable). Soviet’s withdrawal of the financial aids made it worse. Great Leap Forward and Cultural Revolution had done a lot of harms to the country.

The real recovery started when the US took out the embargo. Then Deng promoted his reform. The Special Economy Zone (SEZ) is his legacy. You cannot change a backward and poor country overnight. He started his experiment in a small fishing village (Shenzhen). The area was supplied with electricity, road and other infrastructure. With cheap labor, it is an instant success. Most genius ideas are so simple!

The next step was to convert the capital-intensive State Operating Enterprise (SOE) to one that is labor-extensive, export-oriented and market-driven. With lower taxes and incentives, Shenzhen, the first SEZ, became a choice for many foreign companies.

Hong Kong was already a first-class city with one of the best ports, trade expertise, finances, legal laws, financial systems and know-hows to support this next-door SEZ. The earlier Taiwan, S. Korea and Japan were the models to follow.

Before long, it attracted huge foreign direct investment (FDI). They can be viewed as renting China’s cheap but educated labor force and avoiding the restrictions (pollution, union…) at home. The same model is copied to other cities in China and the rest is history.

Shenzhen today is one of the wealthiest cities in China if not the wealthiest. It has its own stock exchange to finance new ventures. With all the component factories such as cable, transformer… available in the same area, it is the most efficient and cost effective city to assemble new products. Today it is also a research center for new products similar to our Silicon Valley.

China’s rise in her economy is not straight line or without problems. Here are some noteworthy events.

In 1988, her inflation rate was 20%. Corruption was widely spread. Officials pocketed the difference in official prices and market prices.

In 1989, the Tiananmen Square incident caused by protests due to social inequalities slowed down foreign investments, tightened strategic import and a little brain drain. Chinese students in US were allowed to stay in US and the US received the top of the cream of Chinese students attending colleges in the US.

In 1980s, Hong Kong factories were no longer be competitive and most moved to South China. It is similar to the electronic industry in Taiwan.

In 1992, Deng’s famous southern tour started a new reform. In 2001 China’s entry to WTO expanded her global market.

Quickly China became the number one producer of steel and for many years used half of the global cement due to its excessive infrastructure projects and buildings. It boosted its GDP and jobs but created excesses. Economy of scale from the huge internal market also allows China to reduce the cost tremendously.

As in most countries (US included) moving to a developed country, China took the shortest route by copying and using her cheap labor. The ‘copying’ is adaptive and sometimes innovative. If they are not, most other countries such as India should be more successful as most have started earlier.

Has China cheated? Most if not all countries cheated including the US. All countries manipulate their currency rate, subsidize their own industry… It is more political than economical. Chinese experts express doubts and problems about China’s economy. Most are routinely debunked.

China is in the front line of several industries such as high-speed rail, mobile technology, drones, electric cars, etc. “Made in China 2025” is an initiative to ensure quality of Chinese products in 2025. China still needs to use foreign companies to sell their products due to quality issues today. The China’s image of assembling products only will be history. When China is the third country sending men to the moon, it has to be innovative even it is 50 years late.

Today most products are still followers but more innovations are coming. China only has a few global companies from China such as Huawei but there are many companies taking advantage of China such as Walmart and Apple. Books on China’s economy written two years ago have to be updated. For proofs, one can find a lot of latest China’s achievements from YouTube.

Afterthought

Ignorance is our worst enemy. Many Chinese bashers still live in Mao’s era or in a cave for the last 20 years. If it is that easy to copy or steel IP, then India should be far better than China as they started far earlier.

China has promoted herself from a developing country to a developed country at least at the early stage. With the rising wages, China is outsourcing labor-extensive products to lower-wage country such as Ethiopia. To illustrate this, for one factory worker in China, you can hire 10 in Ethiopia. However, China has to learn how to deal with many problems. Ethiopian’s production is about 50% to 65% of a Chinese worker plus the low education level. China has built railroad and other infrastructure there. It will pay off but it will take a lot of patience and education.

How many countries can send human to space? In general, the US and the west have not supported China in space exploration. It takes the advances of many technical sectors from advanced machines, communication to rocket technology.

China has perfected many technical sectors such as the Ali Pay. It also build machines that are used to build bridges, tunnels, HSR, railroads and highways. There are many pioneer projects that need China to invest into pioneering technologies to solve the unique problems.

There are many articles showing China’s rise. Just Google “Chinese advances” followed with the current year such as “2017”. The following are some.

Weapons: 1, 2, 3, 4,  5, 6

Science: 1, 2, 3

General: 1, 2 

There are Chinese cheer leaders (or apostles to some) and Chinese bashers. Obviously Thomas Friedman is a famous cheer leader. Google his articles such as this one.  Every country has her problems and China is no exception.

How China filled the technical gap so fast

·         Cyber espionage. The blueprints of our top weapons and jets have been stolen. Hackers are criminals here but professionals there. They are also stolen from our allies such as Germany, France and Britain.

·         Old-fashion spying.

·         “Dual use” products.

·         Buy direct such as jets from Russia.

·         Reverse engineering.

·         Chinese are buying foreign companies with the technologies they need.

·         Transfer technology at the lure of huge China’s market.

·         Force technology transfer for most major contracts.

·         Government support and funding for research and education.

·         Government invests for long-term projects at the expense of improving living standard.

·         Less spending on wars. No costly wars since Vietnam era.

·         Stable government. No major protests after the Tiananmen incident.

·         More professionals and students returned home from US and the West.

·         Huge internal market.

·         Supported by commercial products that are developed and made in China that can be “dual use”.

Some of the above point are also relevant on the rise of China’s economy. Economy is usually tied with the support of weapon development.

Defending China

The following are more from China’s viewpoints. I bet we do not agree with the explanation. In any case, we have to protect our intelligent properties. If we cannot protect from hackers, we should not save them in the web to start.

Industrial espionage and reverse engineering are quite common and in many cases are legal. Most Microsoft’s products have similar products before, so are Apple’s products.

Copying is not ‘stealing’ as the US still has the property. However, ‘sharing intelligent properties without consent’ is the more appropriate phrase. We’re guilty to less extent of not providing security to our intelligent properties. It is similar to a beautiful girl jogging in a high-crime area in the middle of the night. She and the rapist are both guilty but one should go to jail.

If you were China, most likely you will do the same. It would take too long to develop the state-of-the-art fighter jets and you cannot buy them from US. Germany did the same to Britain and we did the same to Germany (particularly on missile technology after WW2) and Europe.

122     Shenzhen

Let’s start with a video from Professor X. Click here or type the following in your browser:

https://www.YouTube.com/watch?v=SGJ5cZnoodY&t=923s

Shenzhen has become the Silicon Valley of the East, or in the next decade we would say the US’s Silicon Valley is the Shenzhen of the West.

If you bought all the stocks in the Shenzhen Exchange, you could be very wealthy and there is no need to read my books on investing.

For example, it would take 9 months to assemble a new product but only 3 months in Shenzhen as most of the components are readily available next door or in the next street. Shenzhen’s advantages are no longer tax credit and cheap labors (but highly-trained Chinese technicians, engineers and researchers). Many tech companies from over the world come to Shenzhen to set up shops in order to be successful.

There are many high-tech products from Shenzhen and they’re sold all over the world. Unless you’ve been living in a cave for the last 10 years or you are blinded by your dumb nationalism, you should know China is catching up with technology.

Under Deng’s vision, Shenzhen has become one of the (if not the) wealthiest city in China.  Your home work is to study the many articles on Shenzhen starting with Wikipedia or enter the following in your browser.

https://en.wikipedia.org/wiki/Shenzhen

Extra credits. There are several other YouTube videos on this amazing city. Why copying the current technology to make it better or using it for a new product is creative and profitable? Any other countries copy Shenzhen's model and will they be successful? Do you agree from the video that open source encourages copying technology without compensation? What does our 9-year old most likely do with no homework? Is it too early for the Chinese 9-year old study electronics and programming?

Have a good day, class and no video game today.

123     China’s supercomputer

As of 2018, China has many sectors on the frontier such as high-speed rail (we’re still talking to build one), Ali Pay (years earlier than our Apple Pay) and 5G network (we do not build even 4G).

In 11-2017, China has the top two supercomputers and has more supercomputers in the top 500 list than any country. China did not have one in the list 15 years ago.

In 2015, US banned export of Intel’s Xeon chips to China. The then fastest supercomputer made by China used this Intel chip. Intel lost the $1 billion order. China designed her own with better energy efficiency and implemented into today’s fastest supercomputer.

It is not a stunt computer as there are many practical applications run on this computer. This is the reverse result of our embargo on China.

The next competition is “Exascale supercomputer” and China seems it will come out earlier.

124     Sorrows of China

China has many sorrows of natural disasters. The rise of China reduces many of them and hopefully in the coming decade, they will be memories. According to me, China’s priorities are food, shelter, job, living conditions (air, water, quality of food, health care…), protection from natural disasters, corruption, human rights…

China has ample housing, so it is not a major problem now. China is spending her effort in improving the living conditions. From the last decade, China can take care of herself from natural disasters such earthquakes and flooding disasters.

If it is not used for taking out political enemies, President Xi has accomplished a lot in suppressing corruption. Corruption is so widely spread and could be part of the culture, so it is not a small task. Compared to 30 years ago, human rights have been improved by leaps and bounds.

For the last 250 years, food has always been a problem. Today no Chinese starves to death, but it is a long way to compare to developed countries. The rich is literally eating all the better food produced by the world. I used to have a twin lobsters for $15 in many Chinese restaurants in Boston a couple of years ago and now it costs $35. Literally they fly or swim over to China. The poor countries suffer as more food is distributed to China compared to 25 years ago. About 25 years ago, I ate rice in China that had been in the stockpile for 5 years. It tasted bad.

China has 7% of the world’s arable land but 19% of the world population. That’s why China needed the ‘one-child policy’ while India’s huge population would eat all the limited food resources. The younger population will not help India as contrary to many experts’ expectations.

Coupled with the problem of few arable land per capita, China’s crop yields are poor compared to developed countries. Chinese farmers use too much fertilizers and chemicals that pollute the soil and land. The government banned GMO seeds with political reasons. As a result China is behind in GMO seed development which is important.

The industrial advances lead to migration of farmers to cities leaving the elderly farming the land. Many farm lands are also polluted by industrial wastes. China should encourage and subsidize farming for many reasons.

China today depends too heavily on farm products from S.E. Asia, US and Australia. It leads to the security to protect the import from her neighbors. Carries and a stronger blue water navy have been being developed for this purpose besides invading Taiwan.

A big drought or a big flood could starve her citizens and escalate to riots against the government. Most Chinese villages have electricity and basic machines/tractors. They also have good roads/railroads compared to most developing countries. They have adequate education on farming technology and management.

It is NOT enough! China government bit the bullet by letting ChemChina to acquire Syngenta, a Swiss company and a world leader in insecticides, herbicides and the No. 3 producer of seeds. It costs China $43 billion and far more expensive than her second largest acquisition of Nexen at $15 billion.

It makes a lot of sense in the cost (though huge by any standard) and benefit. China may not be able to buy a US company due to our congress on security reason. Technology transfer is too restricted, too little and too late.

Overnight, China becomes one of the top three companies in this sector. It bought the global market share too beside the benefit for feeding the world population including China. It will provide better food quality required by her wealthier citizens. With the commitment and huge pool of Chinese scientists, China will catch up fast. It looks great for China and the world. Today China does help many poor countries especially in Africa on farming.

Water shortage

Another sorrow or challenge for China is water shortage. It needs a lot of crops to produce meat that her citizens demand. The farm land depends on water that China lacks of. To illustrate how bad it is, for every cup of drinkable water the world offers to her citizen, a Chinese citizen has only one fourth of a cup. China’s fast growth makes the problem worse. China have improved the quality of water by reducing environment damages and processing industrial waste and urban waste. Many polluting factories such as paper industry have been closed. Water supply has been increased by redirecting the water from the south to the north, preservation and reducing industrial and mining uses. Redirecting water from Tibet to the north would anger countries such as India and S.E. Asia which depend on the water from Tibet.

Links

Wikipedia:   https://en.wikipedia.org/wiki/Agriculture_in_China

Challenges: http://factsanddetails.com/china/cat9/sub63/item348.html

Water: http://www.cnn.com/2017/03/21/asia/china-water-crisis/index.html

125     Conflicts

The U.S. created another conflict with China by helping the Chinese blind dissident. There are so many incidents in the past and I bet there will be more to come. I believe in helping the oppressed, but we do have a price to pay for and it is the relationship between the two nations.

China’s territory disputes with Japan, Philippine and many countries in SE Asia will be another bigger conflict most likely backed up by the U.S. Selling arms to Taiwan and its Seventh Fleet near China is not a friendly gesture to China.

Many small conflicts could lead to a big one and wars eventually. I will be very, very sad when my adopted country and my native country go to war like your parents throwing stuffs at each other. I hope it will not happen in my life time.

When China withdraws its U.S. debts, the stock market could lose more than 25% which would drive our economy into a longer and deeper recession. In turn, it would deteriorate our job market further. The poor would suffer with less money from the government and from private donations. In a sentence, wars are no good for everyone on earth except for offense industries and those politicians who want to re-direct our attention from their inability in fixing our problems.

Afterthoughts

·         Korean War.

The front Chinese soldiers sent to Korean War were the surrounded soldiers from Chiang Kai-shek. China let them to be in front to test their royalty. You can tell from their equipment and attires that were not fitted to fight in the harsh cold weather.

·         Tiananmen Square incident.

I believe no Chinese wanted it to happen and not in the future. The cause could be the desperation of the government and the naïve students. Let history be the judge and I like to skip the unpleasant controversy whenever I can.

However, there are several effects from this incident:

#1. The U.S. is more careful in dual purpose equipment import to China. It takes longer time for some military projects in China but it also forces the Chinese to develop these technologies themselves or buy them from other countries such as Russia. It is good for China in the long run to be independent and bad for the USA if the same equipment can be obtained from other countries.

#2. The Chinese students here were allowed to stay in the U.S. in that year, a small brain drain for China and a win-win for the U.S. to get the top cream of the cream of Chinese scholars. During the 2007 recession, some returned home for better opportunities with valuable work experiences. They are called ‘sea turtles’ returning to their mother land.

126     One belt, one road

Chinese is building two modern silk roads, one by land and one by sea. It has been participated by more than 60 countries. It is a $3 trillion infrastructure campaign funded mostly by China. The idea is from President Xi and was initiated in 2013. There are multiple purposes:

·         Improve transportation of products and mineral resources between China and Europe. From China to Germany by train, would shorten the fright time from 2 weeks to 14 days but the cost would double.

·         It provides better market for Chinese products.

·         Enrich the wealth and living standards of the countries between the routes especially the developing countries, which should benefit when U.S. and the West reduce their foreign aids.

·         Eventually China’s higher-value products will catch up with the West and the US. When the developing countries are richer, they are the target markets.

·         It could reduce some conflicts. Philippines received billions on the loan and has downplayed the islet conflict with China. Hence the chance of Chinese military interference would be reduced.

·         China’s Yuan could be used as the reserve currency instead of USD.

·         Improve China’s political and cultural influences in these countries.

·         China needs their energy supply, natural resources, trade and road to Europe.

·         Most infrastructure products are financed by China and built with Chinese management and technologies, hence using China’s excess capacity such as building roads and bridges.

·         In case of military disputes, the land route would be an important alternate route.

Many developing countries and provinces in west China will benefit. Many projects will be financed via Asian Infrastructure Investment Bank (AIIB), which is mainly funded by China. China may supply most of their services such as building factories or improving ports. However, China will not see their profits from the investments in the short term. Some loans will be partly donated to friendly allies.

US is not participating in this campaign. We will not benefit from these agreements and we will lose our influences to the developing countries. However, some big projects require advanced technologies and they will be supplied by US corporations such as turbines from GE. Honeywell and Caterpillar will likely benefit. India may not participate due to the road thru a territory claimed by Pakistan.

As in most projects, China will face problems and challenges. Thailand and Indonesia are modifying their original railroad projects. The project is easily accepted in developing countries but not in developed countries such as EU. China is having its own economic problems. Some projects may not pay back and China would end up losing money. China needs to analyze the projects carefully. China has to settle the islet disputes in South and SE China Sea. The natural resource prices are lower than 3 years ago.

It is better to invest in profitable infrastructure projects than selling destructive weapons. Many finished projects such as the major railway in Africa do not benefit China and even the host so far. They need to select those projects that are beneficial otherwise it would be a waste of resources. A train started from a Chinese city to arrive in London and another one to Madrid. In general, it is faster than sea route and less expensive than air fright. Or, it is more expensive than sea route and more time consuming than air fright. Many products such as red wine are suitable to ship by train. It also depends how far the products are from the closest seaport or railway station. In general west China and their neighbors will benefit more.

China has or will face challenges and problems. The finance would drain China’s reserve funds. Many top officers in the countries receive maximum benefits while their citizens are not. Need to resolve them by making more jobs available to common citizens. Some current highways would be abandoned. India will object due to her animosity with Pakistan. Russia may have the own ideas and/or not investing enough in the part of their infrastructure. 

Links

Ethiopia Rail, Pakistan, review, Central Asia

Trade: China’s export  

One Belt, One Road: Episode 2, 3, 4, 5, 6, 1 (poor screen quality)

There are many articles on this One Belt, One Road Initiative (OBOR). Google it for recent articles. Here are some: Wikipedia, US & Heritage.

Challenges, 2.0

127     Misunderstanding China

As of 2018, many folks are still misunderstanding China as evidenced by the comments I read in Seeking Alpha, a financial web site. Many must be living in caves for the last 5 years. Most still think China is backward, stealing our jobs by selling low-cost products and stealing intelligent properties. It may be true 10 years ago, but most are not any more.

First, there are many countries having lower wages than China and most are not successful in competing against China. You need infrastructure and many skills beside wages. Secondly, China is moving to higher-value products.

China paves the road for the future generations by investing heavily in infrastructure and researches. The living standard has been raised but not comparatively to the profits they gain from the global trades.

Most developed countries except the resource-rich countries have to go through copying (and sometimes stealing) and low-cost, low-quality products such as Japan and S. Korea. China’s exception is the scale and the speed (over 9% for over 10 years).

We’re doing just the opposite. Partly it is due to our political system. The voters have to buy votes. If they cannot see the short-term results, they will not invest. Secondly we have to protect our workers and we would not be competitive globally even we are still leading in many sectors.

Here are three Chinese achievements from the bottom to the top from many (Ali Pay, stealth fighters, sub way system, space exploration, AI,.. Google “China achievements 2018”.

High-speed rail. It has more than 50% of the total high-speed rail in the world even they started late. Public transportation is usually not profitable based on income alone but some routes are. It makes sense in China primarily due to the dense population.

Super computer. As of 11/2017, China has the top two super computers and the total in the number of the top 500 super computers is higher than us. US bans the importing of high-performance processors to China. The top super computer comprises of processors developed in China with efficient energy. Intel lost $1 billion order. AI is the race war between China and US.

4G network. China is among the three countries that build 4G network and is now working on 5G. US is not one of them.

128     Defending China on its pollution

US is #1 to me and China #2 as I'm a US citizen born in Hong Kong. Let's argue with facts, not dumb nationalism.

Fact #1. As per capita, we pollute more than double that of China even including the pollution due to producing products for global consumption. A surprise to you? To start with, our average house is many times larger than the average Chinese apartment. We have more cars than Chinese per capita.

Fact #2. China is #1 or #2 in most if not all green energies. China also exports the green technologies and products.

Fact #3. China is blessed with polluting coal, not the non-polluting oil.
We ask China to export rare earth elements with no restriction. If I were China, I would export as little as possible as it hurts the environment badly.

129     Why a war with China

I read several articles why we want a war with China. Most arguments are not valid. I summarize here with my own arguments. When the war is materialized, Russia will side with China and the combined force is more than our carriers can handle not mentioning our draining resources from the Middle East wars.

China is a communist country

China is ruled by a party with handful of decision-makers. It is more capitalist than us: When you do not work in China, you die. Every political system has its strengths and weaknesses. When they do not harm us, we should leave them alone. Is the current Vietnam a threat to the world peace today?

Our major strength is our Constitution, which leads us to transfer the power without bloodshed. Our major weakness is a bi-political system but it is also our strength. I despise communism as it makes her citizens lazy – why should you work harder when everyone is paid the same? Our two-party system are wasting time in arguing who is on top.

No freedom in China

However, comparing to 30 years ago, freedom grows by leaps and bounds in China. At that time no one wanted to speak anything bad against the government. As long as China is heading to the right direction, it is fine with me.

There are many countries having even worse record on human rights than China, should we send soldiers to ‘liberate’ them? Freedom takes a back seat to food, shelter and clothes. “Live free without food” is a fool’s game. In the last 30 years, It is no small accomplishment for China lifting millions from starving to death in the last 3 decades.

What is the intention of China’s rising military spending

Should we ask the same question ourselves to our own government? We do not know their actual spending, but our military budget is more than the next five countries combined. Our missiles can wipe out the entire world with a press of the button. Our weapons are the most advanced with jet fighters and jet carriers with dual nuclear generators.

We need to liberate the suffering of Tibetans & other minorities

Should we ‘liberate’ the blacks and the Red Indians first? Check out Detroit or any Indian reservation. Except the suppression of Tibetan monks a long while ago, China gives more to Tibetans than Tibet contributes. For example, they never have the ‘one-child policy’. In the days before the ‘liberation’, only monks can get an education. Every city I went in Western China, Chinese preserve their cultures. Actually China treat the minorities so good and makes other Chinese jealous.

According to a survey, Chinese netizens are more pro America than China. They’re not completely correct as most do not understand American politics. Most countries have their own problems. Let them fix their own problems.

China is rising

Why we have to suppress others from passing us? Actually they have a long way to pass us. Should we risk wars with Europe when they’re rising? Does a dying patient care about whether a life-saving drug is from China? Do you prefer a rising China or a nation of 3.5 billion begging for money?

Our leaders want to be #1 and China has never claimed to be so. Our military generals and the CEOs of offense corporations want us to go to war with any country in order to protect their interests or to hide their inability to fix our problems. China does not want a war with the US:

1.       China knows she is not ready even in 2050.

2.       Even if she is ready (most likely with the alliance with Russia), she knows there is no winner but destruction on both sides.

3.       She has a policy of non-interference. Hence she will not send soldiers to foreign soil to fight for others.

4.       She has announced she will not be a hegemony (Ba in Chinese) like the US.

China is an aggressor

Throughout history China has been more a victim than an aggressor especially in the last 175 years.

Taiwan’s Chiang at one time wanted to conquer China to recover the lost kingdom. In a way, he acknowledged Taiwan was part of China. If there is a war between China and Taiwan, it would be a civil war.

The islet disputes in China Sea should be settled diplomatically. Recently the president of Philippines toned it down after receiving billions of loans from China. This could trigger a serious war if US participates.

China is corrupt

India is many times more corrupt than China. Most democratic countries excluding Japan are corrupt, past and present. America’s corruption is relatively small. President Xi has been suppressing corruption. It is a good start.

China manipulates currency

Most if not all countries manipulate currency. They all want to depreciate their own currencies to make their export more competitive. Our loans from China will be paid back with a stronger USD – a disadvantage to us.

China steals our secrets

Most countries and corporations steal secrets from each other. We need to safeguard our secrets. Do you think CIA is merely a data gathering organization?

Links

China’s weapons.

130     Economic war

As of 2017, the chance of military conflict leading to a war between the US and China is slim. However, the economic war has started for years. China disapproves the massive debt in the US. Recently Japan has passed China to become the number one of Treasuries holder of our national debt. The national debt is at the recent record high due to jacking up the money printing machine to save our stock market. It will be escalating for the following reasons:

·        China needs to switch the maturing loans from the US to its “One Belt, One Road” Initiative. It is better to kill the goose that lays the golden eggs at least with some thin meat. China could see it would be a better investment in the Initiative.

·        When we reduce the trade deficit with China, it is no longer needed for China to recycle the trade deficit to buy our Treasuries.

·        China’s rising economy does not need to rent her factories for the US and the West to assembly their products. China’s labor cost is higher than many countries today, the environment has to be fixed…

China is changing its economy based on export to one based on internal consumption. China is close to a developed country and actually China is in the frontier of many industries.

·        China’s consumer products are catching up with the West.

·        China’s rising currency will be beneficial for China to buy foreign products including ores, energy, jets, high-tech products and agricultural products.

·        Our leaders are out-of-touch and continuously blame China on our problems. We blamed China for manipulating her currency. Suddenly we declared they are not. Many trade wars with China do not make sense.

131     US tariffs on steel and aluminum

As of 3/1/2018, President Trump's planned 25% and 10% respectively tariffs on steel and aluminum, raised fears of a potential trade war. Most global markets were down. Brazil and Canada would be affected more than China which has been criticized for product dumping (due to overcapacity) and huge trade deficit with us.

This article examines why we have a huge deficit with China and the consequences of a trade war.

Why huge trade deficit with China

The U.S. trade deficit with China was $375 billion in 2017.

·         The above figure is a little exaggerated. Using iPhone as an example, it is designed by Apple and assembled in China with components from many countries. The design and many components are not included in calculating the deficit. I estimate roughly that the labor costs about $10 for a $750 iPhone.

·         A foreign country dumps the products to drive our companies out-of-business and then raises prices. So far, China has not raised prices in most products. Some said some Chinese steel products have lower costs than the combined costs of the raw materials. Most likely the costs of the raw materials are based in US, not in China.

·         We need to negotiate with China (or any country) to take out tariffs and trade barriers on our products.

·         We ban the dual-purpose products to export to China. Most of them China can get them from Russia, EU and even Israel. EU is no longer our puppet.

·         Are we losing competitive edge in some sectors? It could be we are the victims of our own success. The workers have to be protected with regulations and higher wages, so is our environment.

Our high debt could be due to our political system. The politicians do not plan anything longer than four years. They buy votes by satisfying the majority of voters. Their primary tool is borrowing more money.

All these reduce our competitive edge as our taxes are used for consumption (such as wars) instead of investing (such as building bridges or funding researches). Hence, we cannot blame everything on China when our politicians cannot fix our problems.

The consequences of a trade war

1.       China (Canada too) will retaliate or keep it low-key (as China still has a high trade deficit). They will target on the sectors that would make the loudest noise against the government. I would stay away from BA... for a while.

2.       China could ban exporting rare earth elements esp. to US. This time they may win in WTO court.

3.       China and other countries will withdraw our debts to them due to the retaliation and the expected depreciation of the USD. The status of the USD as a reserve currency will be reduced. Learn from the economic damage when the British pound lost the status.

4.       Consumers will suffer. It is the invisible tax. Most likely the tariffs will be passed to consumers. Hence, inflation will rise.

5.       The stock markets around the world will suffer.

6.       Some industries are less competitive globally. For example, EU companies can buy cheaper steel and aluminum without tariffs to produce products cheaper than us. The last trade war, we lost about 200,000 jobs and a prolonged economic recession.

7.       Companies on aluminum and steel will make good money initially.

At the second sip of coffee, I can think of the above, so there should be more. It will not be good for global economies with excessive tariffs. The better action is not excessive tariffs and ask China and other countries to take out trade barriers for our products.

Most likely, the tariffs will be reduced and the affected countries will retaliate. The suffered sectors due to the retaliation in US would voice their opposition and the tariffs would be reduced or eliminated within two years. Both sides would declare victory. Seen this many times. I hope Trump is bluffing (as of 3/2018). It is a good negotiator to ask for a forest and then settle for a tree.

132     A tale of two cities

I was born in Hong Kong and live in a suburb of Boston. The comparison of these two cities tells a lot of the two countries, cultures and future trends.

Education

You will be a no body if you do not study hard; no one will bail you out in Hong Kong. Parents start the preparation from the time their babies were born. There is a fierce examination from kindergarten to college. Some even commit suicide for failing to pass the united cert exam after high school. The students in Hong Kong study at least 3 more hours than the American counterpart. If you believe they achieve the same in life, you believe in magic.

They are trained to take exams and work hard. From a city of 7 million (about 4 million 50 years ago), Hong Kong has produced more scientists and professionals per capita than most other countries. Teachers are well respected while we have teachers bullied by their children.

Wealth

Hong Kong’s wealth is due to its proximity to China besides the hard working citizens. The Stanford professor falsely attributed the success to colonial government and he suggested to apply it to many African countries.

As in many countries, the wealth gap is huge, which is partly due to the rising real estate. The half a million dollar can buy you a flat with 500 square feet in Hong Kong. In my area, you can get a 1,500 square feet house for the same money. Hence it is not good for young folks starting out. Without considering housing cost, living standard comparison based on income alone has no meaning.

About 30 years ago, when the US took out the embargo, Hong Kong’s factory towns became ghost towns. Hong Kong folks moved all of them to South China and become wealthier. It is how Hong Kong adapted to turn a crisis into opportunity. The richest few of my friends benefit from China’s growth. They had the unique situation of knowing the west and China. It is similar to Walton family importing Chinese products and became the richest family in the world. Opportunity knocks once or twice in our life time.

Hong Kong has one of the few (if any) private subway companies make great profit. It is due to the land allocated to them and partly due to the dense population. Hong Kong subway is sparking clean, advanced and well managed. Boston, take notes. Hong Kong has the Octopus pass (for paying subway fares and vending machines) more than 10 years earlier than our Apple Pay. They look antique compared to what mainland China is using.

Living healthy

Hong Kong has the highest life expectancy at least at one time. It attributes to lack of ‘expensive’ food at one time, improving health care delivery and ‘forced’ exercise in the hot and humid climate. With the rising wealth and ability to buy ‘fancy’ food, I expect life expectancy will decrease. Walking around a lake (minutes from my house) is my favorite activity. It is not easy in Hong Kong. 

Hong Kong independent?

It will never happen. Some want to be kings and queens for their own selfish agenda. China has restricted themselves not to send in the soldiers to suppress protests (or trouble makers to some). The naïve students are the losers. Yes, we all have been young and want to fight for injustice according to what we see. Educate yourself and contribute to the society when you can make a difference.

Every country welcomes tourists. Hong Kong folks blame their housing problem on tourists from the mainland. There is some truth on that. However, there are more benefits than harms. Border trade is beneficial throughout China’s long border. At one time, a lot of Canadians drove to the US and bought a lot due to tax saving and favorable currency rate. It is the same as Chinese tourists buying all the luxurious goods in Europe.

We vote literally with our feet

It is easy to live in US than in Hong Kong and China. We have fresh air, clean water, easy for the kids to study, go to college and get a job.  I migrated to the US when it was very hard to go to a decent college in Hong Kong.

133     Future trends as of 2017

As of 8/2017, we’re in the cross road in many areas. Let me outline some of my thoughts. Check it one year later and see how many have materialized.

Economy

1.       Today the market is fundamentally unsound but technically sound. When technical goes down, it could be the time to exit the market.

2.       FAANG as a group of stocks is very risky to me. Netflix is the riskiest fundamentally.

3.       Oil price will take a break before its upward trend. I sold some when oil price was $50 and I bought them at $30. I expect there is a fierce correction and at that time most sectors including oil would go down. Why I expect an uptrend on oil after that? It is a simple supply and demand at work. Today drilling, exploration… are not economically feasible. Hence we should have less oil in the future and oil is still competitive and environmentally friendly.

4.       “One Belt, One Road” Initiative will have impact to the world economy. It will benefit the participating countries and provinces in west China. Even many American companies including GE and Caterpillar will benefit by providing heavy equipment that China do not build today.

5.       The world should benefit from the rise of China if China does not raise wars.

6.       From my estimate, only one job will be gained from 10 returned jobs from Mexico and China due to automation.

7.       The wealth gap will be widened due to robots and advance of artificial intelligence. It could be the biggest impact since internet.

8.       Europe will finally recover despite the rising of terrorism.

US

1.       US is declining but we’re still leading in many sectors. We spend too much effort in being a world policeman while China is concentrating their efforts in improving the economy.

2.       Trump will not be re-elected. Will it be the trigger to bring down the market? Only time can tell.

3.       We used to be a nation of problem fixers, but now problem avoiders. Trump did that by dissolving his committee of business leaders. He does not want to fix the health care system but recommend one to replace it. So is Yahoo!Finance. I miss many nice features from this site that are no longer available.

4.       We need the H-1B program to attract the world’s best programmers and scientists to make us more competitive. We need to monitor and enforce the program to ensure more benefits than harms.

 

134     TED and YouTube

This article is less than one page but it will take days to read it. No kidding.

The first one is TED Talk.

https://www.ted.com/talks

The second one is YouTube.

https://www.YouTube.com/

The third one is Google.

Enter “China” in Search and you should find a lot of topics on China. The last two have too many hits and you should narrow your search such as “The rise of China”.

Check out the dates and the sources. China changes too fast and too much so many are obsolete. There are less propaganda compared to the 50s and 60s. I prefer HD versions and you may select the language (usually choice of Chinese and English in YouTube) you’re proficient in.

Chinese military from Google.

http://webcache.googleusercontent.com/search?q=cache:1iKYl9EZJQQJ:english.chinamil.com.cn/view/2017-04/07/content_7554618.htm+&cd=1&hl=en&ct=clnk&gl=us

Relax with some Chinese music.

https://www.YouTube.com/watch?v=vSUpiyT42hc

135     Las Vegas shooting

MGM lost a lot in the shooting that took 59 lives. It is the stock risk (after market risk and sector risk) and this time we cannot control. However, you can tell someone knows before the terrorist attacks by the increased shorts. It is cruel to think of losing money during the disaster.

We’ve been praying for thousands of years for world peace and the world has not been peaceful. We need to take actions for disasters caused by humans. We need to reduce our efforts and expenses in wars and use them for natural disasters such as the damages done by the recent hurricanes.

Traders should find some companies such as housing construction companies and supplies and China should benefit from the damages caused by the hurricanes. Traders should wear two hats, one for investing and one for humanity by donating part of their profits to humanity.

Which countries besides us let their citizens bear arms? Israel (58 killed by guns in 2016) and Switzerland (34 killed) come to mind. They do not have constant shootings like ours (10,728 killed). Learn from them.

NRA is so powerful and wealthy. It controls our politicians. These puppets are supposed to serve us and they did not treat it seriously in the last election. I’m politically neutral.

Be realistic! We need to control guns gradually and realistically. They are more guns than citizens and they're voters - however, they and their families could be victims too. First, take out some guns and the enhancements that can turn into automatic guns (. Second, limit the number of fire arms one can buy in a year. You can buy a drone for less than $800 from Amazon and enable it to drop bombs. Is it horrible?

Hope someday we and our children can go to concerts, school, movies, Marathons... without worrying being shot at. Give peace a chance!

When will we WAKE up even after so many shootings?

Responses to my post

One gun owner told me “Go back to China, Tony”, but many agreed with me. I hope NRA, our political leaders and their followers would give us some resolutions. Here are my replies:

I will move to China after all move back to the countries they came from. We only have native Indians and Eskimos here. But, wait a minute - they're Chinese too. They must have lost their way after too many rice wine or escaped from prosecutions and wars. They came here via the Bering Strait when it was frozen.

Indians, Eskimos and Chinese have the same genes like lacking a certain enzyme to prevent us from being drunk easily. When I was young, I used to tell my dates that I was not responsible after the second drink. So I will stay while most of you move out.

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One will burn my book he bought because I'm pro-gun control. I do not know how as his was a digital book. It is his loss and he cannot learn from someone he does not respect. So far all my book profits have been donated to charities. One will buy my new book. Even a blind man (very smart to buy my book) asked me for the book.

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That's why we need amendments to modify the Constitution or amendments, which were created long time ago. It could be perfect for the time as we needed guns to protect ourselves, but it is not true anymore.

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My last name and yellow skin betray me. I do not discriminate against the black and the white although Chinese call foreigners white devils or black devils. I'm the yellow devil and God bakes us right, not too early and not too late. We could be the chosen people. Without other citizenship, I got stuck here and enjoy the arguments with white devils who have guns while I have pen and strong arguments. Treat my responses as jokes that we need to be humorous and wishful dreams even in the bitter incidents.

136     Immigration

Most immigrants come here for economic reasons like the famine in Ireland, wars and food shortage in China especially during Mao's era. The majority of Hong Kong population was formed by illegal refugees from mainland China.

With comparatively booming economy, huge natural resources per capita and small population per square mile, US is the heaven. We need cheap labor and more top professionals/scientists.

The other reasons are political oppression, freedom, better opportunities, etc. My reason is lack of good colleges in my homeland Hong Kong at the time.

Today many rich Chinese want to migrate to the US for better opportunities for their children. US had missed the opportunities to attract them when Hong Kong was taken over in 1997. The current investment requirement is a good vehicle to attract wealthy Chinese. It is better than the economic refugees who burden our welfare system. 

Some Chinese are escaping from potential prosecution of the crimes in corruption - there are better countries for this purpose.

In the last century or two, Chinese came here to build the railroad and/or mine gold. Some were cheated to come to work in the slavery conditions. The tougher parts of the railway connecting the two coasts of US and Canada were done by them and their efforts were not recognized. I have not seen a single picture with a yellow face in any milestone of the railway.  In the old days, Chinese migrated to South East Asia. Their hard working pays off for themselves and the adopted countries.

It is easy choice for Indians as no one in the right mind wants to wait for India to fix their basic infrastructure. So are the Mexicans.

In simple words, they migrate for better living conditions and opportunities. Most do not want to leave in the places they grow up and the friends and families if they have a choice.

The adopted countries should benefit from immigration if handled correctly by filling jobs their citizens do not want or are not qualified.

Rich immigrants also bring money to invest in the local economy. However, some immigrants become permanent welfare recipients, criminals and/or even terrorists. Japan does not welcome immigrants and they do not have terrorist attacks from immigrants.

Wealthy Chinese drive up the price of the housing market in Vancouver and other cities that welcome them. It is good for the current house owners. It is bad to those who start out as they cannot possibly afford the appreciated houses.

It is another example in my Coconut Theory: Folks without coconuts move to places with coconuts.

137     Sea turtles returning home

Many have returned to China termed as "sea turtles" especially in the last financial crisis. It has been accelerating in recent years. As of 2018, it is almost one returned for one new foreign student from China. 

When the opportunities in China are better than the US, it is an easy choice. Some have vast opportunities and are given a lot of incentives at least at one time. Today many researchers return home due to lack of research funds here. Some return home due to not extending the work visa successfully. It is nothing to politics but personal opportunities.

US does not allow dual citizenship and Medicare is only available to US citizens. Many Chinese have citizenship and green card in either country. Their Chinese children have more opportunities here (i.e. less competition here). Some parents work in China and come back to see their children during vacations.

After Tiananmen Square incident, Chinese students were allowed to stay. It is one of the few times US gets the best foreign brains over welfare recipients and potential terrorists. US did miss the rich Hong Kong migrants to Canada and Australia on the year of Chinese takeover.

No Indians in the right mind want to return to India, but not Chinese. The simple reason: Compare the infrastructure of the two countries.

138      From “Made in China” to “Designed in China”

After Deng’s reform, China has been the global factory but not been innovative compared to the US. There are only several recognized Chinese brands outside China. However, we have been seeing changes in front of our eyes.

Why Chinese have not been innovative

·         As of 2018, China is moving up from a developing country to a developed country. It is not there yet, but it is getting closer. In many sectors China has been in the leading edge.

·         Protection of intelligence properties is still in the infancy in China.

·         During Mao’s communism era, Chinese did not think outside the box.

·         Traditionally Chinese education system encourages students to be good in exams by remembering formula, data, facts and how to take exams.

·         The global US brands are partly due to the spreading of US culture via movies and music. China only have a handful of global brands. Today Chinese products compete with low prices and in developing countries. It has changed in several sectors. 

Why is changing

·         As product value is climbing, it requires innovation for better profit margins. Most large corporations in China have strong research departments. With a large local and foreign markets, the research would be paid off and some already did.

·         With a lot of innovative products, China naturally has to protect her own intelligence properties.

·         Many do think outside the box. Chinese have seen the successes and the generated wealth from innovative products.

·         We have not yet seen the geniuses like Gates and Zuckerberg in China. However, China does have schools for geniuses in most Tier I cities. Even the traditional schools encourage innovation thinking.

Many of my classmates become innovators after the Peking-duck education in high schools. The owner of DJI, the largest company in consumer drones, graduated from college and got a small grant from his college to start the company. It is a successful model to follow among many.

·         Chinese students work harder than American counterpart. If you believe the students working 3 hours less (my estimate) every day will achieve the same in life, you believe in fairy tales.

·         The government encourages education while our leaders cut research and school budgets. I know three Ph.D. in space engineering in US: one retired and two are still looking for jobs. All those talks on improving science education are just garbage or our leaders are out-of-touch.

·         You can hire 4 engineers in China for the price of 1 engineer in US. They are dedicated with no distortion of sports, coffee breaks, long vacations…

·         Most large projects have a technology transfer clause. If you do not comply, China gives the projects to your competitor. Some are due to the short-term profits. It would mean bonuses to the officials and stock appreciation. Some are due to the promise of the huge China’s market for their products.

·         China is also buying many US and EU companies for the technology and/or the market share. Many bankrupting companies were bought by Chinese. Many purchases may be backed by Chinese government.

·         Many espionages and cyber hackings are proven or suspected that Chinese are stealing our trade and military secrets.

“Made in China 2025” is an important milestone for China to improve the core components to 70%. With the threat of banning China from buying from US core components such as chips for Chinese mobile phone, I believe the strategy will be changed and accelerated. It is easily said than done as US leads the chip and the manufacturing equipment. Hence together with farm products, China cannot say no to us right now, but in more than 5 years, she can.

Links: 1  2 3  4 5 6 7 8     

How far behind is China

US tech had about 50 years advantage over China. Some still argue US is 50 years ahead for the following arguments:

1.               US sent men to the moon in 1968 and China sent man to space in 2003.

2.               China had built the first carrier in recently while US had the first one in 1920.

China was broke in 1949, the year People's Republic of China was formed. In the last 68 years, China has reduced the gap from 10 to about 8 years (higher or lower according to whom you talk to). In some sectors such as supercomputer and cyber, China is among the leaders.

Comparing the research fund in China, we're not that much behind but somehow our researchers are feeling the pinch.

Asians countries commercialize our technologies and China build them cheaper than most.

In 20 years and if we do not correct our decline, our tech would go to toilet but definitely not now. 138 

139     Potential impact of our trade war with China

As of 7/15/2018, Trump may ask for a forest and settle for a tree. Hopefully it would end the trade war. This article describes what China would react to the full-fledged trade war. Even if there is no trade war, China would prepare herself better for the future. 

·         China will not meet the demands of the US and cannot counter react effectively.

The gap of trade deficit is huge. Part of the trade deficit is due to including the component costs (such as the iPhone), not counting the service deficit (Chinese tourism and Chinese attending colleges here) and profits of our companies in China. China’s estimate of trade deficit is 60% less than ours.

·         China would fall into a recession. I guess it would be brief and mild. Her GDP growth would fall to 5% which is still good for most developed countries.

China’s economy depends on her export to the US. It will turn to other partners such as the participants in the “One Belt, One Road” projects, outsource the manufacturing to other countries that have little tariff impact and concentrate more on her huge internal market.

·         It would be a blow to China’s scheme in cutting internal debt, which has been high and risky.

·         China will speed up research and investment on core technologies such as manufacturing of chips. The middle class will suffer except those who involve in core technologies.

·         From the ZTE experience, China should weigh more on US supply on core technologies such as chips than tariffs.

Once China masters these technologies in 10 or so years, China can really stand up and say no to us. Today we have about 65% of our science Ph.D. graduates are foreigners with a good percent from China.

China recently ban Micron’s memory chip. The world’s second fastest computer (after three times number one) is made of CPU chips by China after US banning US CPU chips to China. The world may under estimate China’s potential in core technologies. In addition, it is not impossible to buy many components from other suppliers.

·         China will continue to attract Chinese who have technical skills to return to the motherland. China will also attract top scientists from all over the world. It is easier than before when research funds in US have been reduced.

·         China would have closer partnership with many countries such as Canada while we would be more isolated.

·         China will withdraw or at least will not buy more of our Treasuries. It would raise our interest rate and it would have adverse effect on our stock market. The Fed would be forced to buy more.

·         China will devalue the yuan. When it has been down by 10% recently, the tariffs would be not as effective as before. It would make her products cheaper and tourists will flood to China. The payback of the loans in USD will be beneficial to China.

·         Profits from many corporations will suffer such as Boeing, GM, Ford and companies that supply chips and/or components to China. The stock owners of these stocks will suffer.

·         India and many countries will benefit from the trade war. To illustrate this, India will be more competitive in farm commodities replacing US export to China due to tariffs.

·         US will gain some jobs, but not as much as expected. Many even predicted we will have net job loss. Some jobs will be replaced by robots and some will be lost due to the trade war. Most manufacturing jobs cannot compete with low-wage countries such as Mexico.

·         Some of our products depending on imported commodities will cost more to make and hence less competitive. More corporations will move their manufacturing to other countries to minimize the effect of tariffs. Tesla announced opening a plant in China. A motor bike company is moving their production line to S.E. country to benefit for tariff-free among these countries and less tariffs for steel and aluminum. Many other companies will follow.

·         Some Chinese imports will be replaced by other low-wage countries. In this case, we gain nothing but our consumers will pay more. It happened before when we banned Chinese tires that were replaced by lower-quality tires at higher costs from other countries.

·         Even with the tariffs, some Chinese imports are still competitive to US and/or other low-wage countries. Hence the tariff is a kind of tax added to our consumers.

·         China has not used her most powerful chip: rare earth elements. If we ban core technologies such as memory chip to import to China, China will take this ultimate weapon.

·         The farmers especially the soybean farmers will voice their discontent against Trump. Trump would not last for another term with the opposition from farmers, Hispanic voters and ObamaCare recipients.

·         China is waiting for the next political leader replacing Trump and s/he may have different view that is more favorable to China.

Trade war is a loss-loss scenario. In the long run, it would be good for China but bad for the US. In the short run, the reverse would be true.

Even without a trade war, the damages have been done. China will focus on long-term solutions such as core technologies. China will reduce the holding (about $1 trillion) US treasury bonds. The yuan has started to depreciate. We become more isolated from our best partners Mexico, Canada and EU.

I hope the trade war will not materialize and we settle down with cutting at least half of the deficit. But, from whose estimate?

140     Random thoughts & jokes in 2018

Some are for your entertainment, so do not take the jokes in this article seriously. It reflects my recent thoughts and my responses to the daily business news. They should be grouped by category such as Economy. Again, I’m neutral in politics and religion.

Employment

Mathematically incorrect, 5% is full employment with many not seeking employment. It is hard to find qualified candidates when it dips below 4%.

Employment is up with the increase in average wage but the economy may not be. Today could be one of the few times that correlation between the employment and the economy is not happening. We still have high debts and unfinanced entitlements.

The rosy employment report today is due to tax cuts, both at the corporate level and individual level. The extra tax incomes from the growing economy would not compensate for the loss of tax revenues and hence a larger Federal budget gap. It is another example of buying votes (more employment) at the expense of long-term benefits (the economy).

USD

Last year USD was at the peak. It came down and now headed up inches.

Yuan has been up against the USD for the last 5 years at about 20% from my rough estimate as a tourist.

A strong dollar may not be good for investing:

·         Our products are more expensive overseas.

·         The profits from overseas would be reduced when converting to USD.

·         It is good for us as tourists, but bad for attracting tourists to US.

Tariffs

The tariffs would lead to price hikes on commodities if they are imported to the US. It is a good revenue to the government. Our finished products if depending on the imported commodities would cost more and would be less competitive in the global market.

With tariffs, banning some trades from China and the rising interest rate, we will expect inflation.

China’s impact

Commodities will rise due to demand such as from "One Belt, One Road" projects and the wealthier Chinese. For example, we used to enjoy $15 for twin lobsters in Chinese restaurants and now it is $40 as many lobsters literally fly to China.

Trump and Newton

Trump should learn from Newton on his "No more Mr. Nice guy policy": For every action (tariff), there is an equal and opposite reaction. Silly? Somehow, someone has to take no action to an action. Otherwise we are watching a Kung Fu movie with the endless revenges (tariffs and counter tariffs).

Patriot shoppers

A patriot shopper only buy stuffs made in USA. It is hard to find products purely made in US. Some may be assembled with foreign components. Check out the components under the hood of your car.

Sam Walton was a patriot. When he passed away, his children started selling Chinese stuffs as they found out Sam calculated wrongly for the margins. They become the richest family of the world - yes richer than Buffett and Gates as a family.

EU

Europe is still burning. Euro is a good idea especially for tourists. Greece took advantage of it. Italy and Spain had been warned a few years ago. Importing refugees to do jobs their citizens do not want has its consequences. Deng’s “Fresh air and flies come in when opening the window” applies here too.

Political systems

Each has its merits and weaknesses. They differ from each other on how to share the wealth. Socialism is good for rich countries such as Norway. 

China today is not communism which does not allow their citizens to open their own shops for example. The major weakness of communism is there is no incentive to work harder as everyone is paid the same - similar to our unions?

India is democratic and the wealth gap is huge. Democratic system needs educated citizens and good governance. Most countries in Asia beside Japan and some extent in Singapore are corrupt.

Why drunk violators got the out-of-jail card

Most likely the judge and most of the jury members are drunks in one time or another.

Another shooting

It is a norm until we love our children more than our guns. Do not pray but take action NOW without worrying their contributions to your campaigns. The children cannot vote, so the politicians do not care about what they demand.

Legalized drugs

Yes, everything comes back sooner or later. As a nation, the Brits pushed opium to China when they had nothing better to trade. It led to bankrupting China. Now the addictive drugs are hurting the US and the West.

As an investor, do not invest in companies in this 'legal' drug. Do not count money with your hands dripping in blood. The parents have more work to do: Children are curious and they will follow what their friends do.

They expect the state and many will profit with no regard to the social problems and consequences. What kind of society we're coming to?

China, the human rights lover

Yes, no kidding if you compare her human rights 30 years ago to today. Having food to eat is the first right and China has saved millions from starving. The other rights are shelter, clothing, education, freedom…

Why “education” before “freedom”? We need to be educated first before you open our big mouths crying for freedom. Right?

Obviously, “Without freedom, let me die” or similar slogans are from the mouths of idiots who have never starved.

Defeating Facebook

We can defeat Facebook, a survey company, by giving them false info. If they're not useful, they will not use them. Here is mine.

I am a female born in April 1, 1800, living in 1 Main Street, graduated with a B.S. (real BS) from University of Lies in Washington DC and am working as the assistant to Trump being his sister-in-law. The only true info is I spend too much time in blogging and have written a best seller in investing; it is more effective by mixing false info with true info. What's yours?

Facebook provides a valuable service to me at no cost. Why should I complain? For my potential employers, all my info are false and all my pictures were taken after my two drinks and smoking some legal drugs, so I am not responsible. 

Sex & top 1%

If one can make $130,000 in one hour service, one should be in the top 1% and pay a lot of taxes together with the altar boys, victims from the many sex offenders who surfaced every month now. Just jealous!

007’s license

If the president can pardon himself (or herself), s/he has the license to kill, rape, steal… What kind of society we’re coming to?

Oh!Roseanne

RIP to where you belong.

”Roseanne says she was under the influence of Ambien."

All these sex offenders say they were under the influence of Viagra. LOL.

I like the show and agree some of the contents. Hope they have a similar show without Roseanne and it would save over 200 jobs. The hard work and talents are appreciated.

She does represent a good slice of the population: Stupid, biased and big-mouthed.  Her good side is her honesty. True or false?

Nobel Prize material

If we can pass the sterile feature from seedless watermelons and seedless oranges to hum beings, we would have solved the over-population problem.

Bayer and Monsanto combined is too big and monopolize that sector. The regulators' eyes must be covered with the hands receiving cash. No proof and just my guess. Too scary that someone can control so much!

Discrimination (jokes)

The black here discriminate folks from Africa because they have darker skin.

The black can say racial jokes against their own race, but not the white dudes. Reverse discrimination?  Similar to restrictive college admission for Asiana.

The Chinese are baked right, not too white and not too dark. Thank God. If so, why there is no yellow Jesus and Chinese not chosen?

Wonder why Adam and Eve had belly button and how the creation of earth (or universe) was recorded before language and paper were invented.

We have full time of prayers on world peace for centuries. Is God not listening or God wants us to solve our own problems?

I would be attacked by the black and religious folks. Relax, just joking. If I were a public figure, I would have lost my job by now.

Jets & the preachers

Is it stupid for the preachers to ask for jets on the argument that Jesus would not ride a donkey? It is more stupid for folks to donate money for the jet. Are the jets more important than the poor? Please think before you answer this question. It is not an IQ test.

Filed under the folder “Believe it or not on Japan”

Japanese emperor was tricked to believe that we had the third atomic bomb and it might fall on Kyoto (rightfully so?) instead on 'innocent' citizens.

From the experiments using live humans in China, Japan had many breakthroughs. Japan gave US the secrets of cosmetics as part of the surrender deal. That could be the reason why Japan and U.S. were the leaders in cosmetics after WW2. Ladies, when you put make-up on your beautiful face, thank the victims but not the Japanese.

Japan's recent disaster is caused by the tears from the victims of Nanking if you believe in karma. To me, this generation should not be punished by the crimes of their ancestors.

141     How to deal with China

I have suggested how we should deal with the rising China and here is my brief summary. Patriots’ head coach and the book of War of Arts offer some good hints even in today’s world.

·         Better engage than offend China. Need to understand China more.

·         China will reunite with Taiwan. It is a matter of time. I hope they will do it peacefully. We have a dilemma with Taiwan but I believe US will not go to a military war.

·         Hope China will settle peacefully with the disputed islands.

·         We need to invest in our economy (starting with infrastructure) and fund college researches. Without a robust economy, we would become a paper tiger.

·         Many are still living in denial. Fortunately our leaders and the defense industry (for their benefits) recognize China is rising fast both in military and economy.

·         We need to continue to attract top scientists and engineers outside USA. Otherwise we would lose our leads in many sectors.

·         We need to provide adequate security to our secrets. Our secrets of many advanced weapons have been stolen.

144     The root problem of a trade war

The trade war is supposedly used to fix the huge trade deficit with China.

The root problem is capitalism. The only objective of our corporations is making money. They take advantage of the cheap Chinese labor when China opened up. They do not care about job loss in the U.S.

The result of cheap Chinese labor means less jobs to the U.S. workers. The average family does not survive with one job. The mother has to work and it floods the job market with more job seekers to make it even worse. With the supply and demand, the corporations reduce the wages and increase their profits.

As of the beginning of 2020, the unemployment rate is very low. But, is it a trick for the election year? In addition, the average salary is still lower than 2007 after inflation.

With reduced tax revenues and higher welfare expenses (due to buying votes by our politicians), our Federal deficit has increased to a record level. We print money excessively and ask foreign countries to buy our debts; China and Japan are the top two loaners. When we cannot pay out the interests, the status of our USD as the reserve currency will be shaken. We know what happened to United Kingdom when the USD replaced the pound as the reserve currency.

The following are related topics:

Money talks

In order to capture the huge Chinese market, corporations gave out our secrets to Chinese. The CEOs care about their bonuses / options, which depend on the corporate profits.

Walmart becomes one of the largest companies by selling cheap Chinese products to meet the high demands of the poorer U.S. citizens.

Are we better off?

With low unemployment, you think we’re better off. The additional tariffs will pass to us the consumers. It hurts the poor especially more.

Many states have the average income of $30,000. You would live like a king in many countries but you cannot survive in U.S. without all kinds of subsidies.

The rich gap is widening. The rich own stocks in the corporations and they become richer. The poor is getting poorer.

California is the 5^th economy after Germany and before United Kingdom if it were a country. It has Hollywood and the Silicon Valley. It has about 1/5 of the total homeless folks in the U.S. Many homeless folks are not unemployed. Most have low-wage (relatively) jobs that they cannot afford to rent an apartment. It is an example of the worst of capitalism.

Can the politicians fix these problems with all the money? The priority is to satisfying the rich and in this case the corporations. All the projects such as infrastructure will not pay off for them in the next election (a four-year cycle).

Seattle with corporations Microsoft, Boeing and Starbucks is another example.

### Filler

I got a call from Buffett asking me to lead their stock research.

I asked him why for a nobody; you may be asking the same question. No kidding.

He told me that he should have read my book Scoring Stocks to buy Apple instead of IBM in May, 2013. It would save his company millions of dollars minus $10 for my book. Not to mention the market timing technique that had worked in the last two major market plunges.

I told him, "OK, I'll beat your mediocre returns of the last 5 years."

He said, "You can do better than that and at least beat SPY. If you do so, no one will be that stupid to leave my fund and pay the hefty capital gain taxes."

I told him, "I cannot beat the market as you are the market especially after your expensive fees. In addition, I do not know how to avoid day traders from riding my wagon in trading. Also most of my big profits were made in small stocks that your fund cannot trade besides owning the company."

I woke up trembling. I'm glad it is only a nightmare.

26       China, the human rights lover?

Agree that you find it contradictory by the title of this article. Hopefully at the end of this article you agree with me more. With an open mind, please read on.

Human rights have priorities: Food, Shelter, Clothing, Job, Freedom… China in the last 30 years have lifted millions from starving to death. From 1950 to 1961, millions starved to death during the big famine. Today, very, very few starve to death in China. For this alone Deng deserved a Nobel Peace Prize, but instead Obama got one for doing nothing.

Compared to U.S. and many European countries, China is not up to their standard, which was set up by them. However, comparing China 40 years ago, freedom in China has grown by leaps and bounds.

China does not afford to have the same freedom as the West as it is still not a fully-developed country. To illustrate this, China does not have the resources to have a similar trial on O.J. Simpson. Even he was found guilty, a two-cent bullet is far cheaper than the $31,000 USD per year per inmate in the USA.

China has strict laws and punishment, where the West would find China violating the prisoners’ human rights. You are only right if you ignore the rights of the victims.

When there are CCTVs everywhere, the West would find China violating the citizens’ privacy rights. The potential crime committers would think twice if they realize they could be caught easily and they would have to hide for the rest of the lives. When there is automatic death sentence to rape an under-aged kid, do they still commit this crime such by Epstein in the U.S.?

Social Credit System is another way to cut down riots and protests. For a wealthy country, riots and protests are needed to remind the government on injustice. China will reach this eventually.

Most Chinese do not care about being watched by the government. It could be due to different culture. Most Chinese do not want to fight against the government as their living standard has been improved substantially in the last 30 years. Most Chinese are busy making money. In addition, they cannot possibly fight and win as evidenced by the last time they rioted against the government. China has been enjoying a very stable society for decades.

Most Chinese feel safe in public places such as cinemas and schools. Gun control is a violation of individual rights here. Is constant shooting not a human rights violation?

We want other countries to follow our standard and our culture. It does not always work especially in the poorer countries. If your country does not follow our standard, we and our allies will isolate / embargo your country. China has a non-interference clause and does not force any country to follow their ideals. For example, China does not force any country to join their “One Belt, One Road” projects.

China does not practice communism as communism does not allow individuals to set up stores. The major fault of communism is discouraging her citizens to work hard. All political systems have faults and advantages. Our fault is the constant arguing from the two political parties. During the recent impeachments, the politicians had wasted a lot of time and effort that should be directed to improve our country.

Even rich countries such as U.S., we have a lot of homeless folks and many live from paycheck to paycheck. Both countries are facing the problem of wide wealth gap (a human rights to me). But, China has been working hard via the governance’s actions for years. I do not agree moving the poor to the cities to solve this problem.

Racial discrimination exists in both countries. When I was in China, I could tell the cultures of minorities were maintained. There is no ‘one-child policy’ for minorities in China.

China should put higher priorities in public heath, clean air, clean water and safety regulations. Unfortunately, freedom of speech has been tightened a little recently.