jonathannat

China's 1.3B population is not equal. around 700M still lives on $140/month income, with no education to "accomplish anything they want". It will have 500M 65 year olds by 2050, too old to "accomplish anything they want".

China suffers brain drain to the West. Many of Chinese Ph.D students and scientists I know curse the day Xi Jing Ping declared himself to be the emperor, and is actively moving their families out of China as quickly as possible after 2018.

China has had very little luck in advanced semiconductor or airplane engine productions

most of it is already happening, check chinalawblog (including tales/warnings of kidnapping). the only thing that hasn't happened full scale is nationalization of tangible assets, such as molds, machines or factories. But if you owe some (made up) bills to the local government when you close your factories, the local government will prevent you from grabbing your stuff.

The era of CCP economic rise is over. Middle income trap and aging demographics dictate as much. CCP will now have to contend with

- internal turmoil

- political infighting

- encirclement by democracies (India, Japan, Australia, US, UK, Canada, France, South Korea, Taiwan). Once Merkel is out in sept 2021, Germany will be onboard

- negative sentiment from most of population in the world due to covid

- exploding debt/bankruptcies

- lack of efficient feedback loops to self correct, as dictatorship has little of that. Thus Jack Ma is no more.

If you have a foreign commercial presence in China, expect

- kidnapping of executives (for layoffs, unpaid bills)

- no delivery for paid merchandises

- seizure of molds/machines/factories (nationalization)

- seizure of tangible assets (nationalization)

- trademark/copyrights given to Chinese entities

with no recourses.

China is the one that keeps barking and talking about taking over Taiwan.

What could have been:

If Nixon hadn't started the process, if carter hadn't recognize the communist government of China.

- Offshoring/globalization may not have been the boom it is today, due to the lack of a major source of cheap/obedient labor force. In the 70s offshoring occured in Japan, Taiwan, South Korea and others SE Asia countries but they didn't have enough cheap labors to continue. American companies would have been timid to shift operations to Indonesia and India when they lacked severe infrastructure, with no totalitarian government to enforce cheap labor.

- As a corollary, GE/Intel would not not have shed all its capabilities to Asia, and be greatly diminished today.

- Wall street might not have been able to push companies to greatly shed cost and ship capabilities overseas due to national security issues. As a result, US unions would have been intact somewhat and the jobs would not have been shipped to China. Flyover states would have enjoyed greater strength as they did in the 60s and 70s.

- the great crash of 2008 would not have happened (Chinese entry into WTO greatly reduced manual jobs in US and Europe, crashing both economies)

- Trump would not have been elected. Trump was a reaction to much jobs lost and much sufferings in flyover states caused by China.

- Coronavirus spread around the world and all the deaths that occurred may not have happened (China would have been still a closed off country, not unlike what Xi Jing Ping is trying to do today). No mass flights out of Wuhan or Beijing.

This is a great reset of the US and Taiwan relationship that will allow new rules to get added by the State Department. Best case scenario is that the two democracies grow even closer together and Taiwan finally gets a US embassy or even a military base. Worst case scenario is Biden goes back to the old behavior of placating China.

In any case, this is great timing, as China suffers from internal turmoils in Hong Kong, Beijing (leadership conflicts), Xinjiang and Tibet. And currently is engaging in a conflict with India, Australia, US, UK, Canada. Quad alliance (Japan, India, US, Australia) https://www.aljazeera.com/news/2020/11/25/what-is-the-quad-c... has been pretty active, and Inter-Parliamentary Alliance on China (senior lawmakers in democracies) https://www.bloomberg.com/news/articles/2020-06-05/lawmakers... have recently formed this year.

Taiwan would be a great formal addition to these alliances, as it could act as a land carrier sitting off the coast of China. With its recent effort underway to build homegrown submarines by 2025, it could repel most of the sea threats from China for a long time https://www.forbes.com/sites/davidaxe/2020/12/02/taiwan-is-b....

Multinational factories are owned by multinationals. Yes, some factories are owned by Chinese firms, but even that's misleading. Alot of the "Chinese" firms have Hong Kong owners, who usually operates more ethically, and hates China, than "CCP state" firms that engages in modern day slavery.

The good news is all macro trends portend to factories leaving faster out of China. And less trade with China.

- Unfavorable Views of China Reach Historic Highs in Many Countries in 2020 https://www.pewresearch.org/global/2020/10/06/unfavorable-vi.... Consciously or subconsciously, consumers will favor goods made not in China

- US President-elect Joe Biden affirms his anti-China position. On Monday, he slammed China once again for “abuses” on trade, technology and human rights and said America can best pursue its goals relative to Beijing, when it is “flanked” by like-minded partners and allies. https://www.hindustantimes.com/world-news/biden-slams-chines.... This should help confirm multinational COO's decisions to leave China faster.

- China keeps attacking other countries, and further isolating itself. From stopping coal trade with Australia, and causing blackouts for its own cities https://www.nytimes.com/2020/12/16/world/australia/china-coa..., to engaging in border war with india, to antagonizing US, Canada and UK.

- Chinese suppliers engaging in more and more thievery and sabotage against its own global partners, as reported at chinalawblog. Western companies are reporting Chinese suppliers are brazenly not delivering on goods paid for.

The environment/macro has already changed, and the tariffs are here to stay, even Biden and post-Biden. If you haven't yet adjusted to this, your business is in big trouble as your competitors already have moved from China to other SE countries, and you will most likely fail soon.

As an aside. Most US based businesses have already moved on. It seems that alot of European-run businesses are laggards

> China has deficit with Australia NZ, Japan and Korea.

Japan had a trade DEFICIT with china in 2019, 15B. https://www.japantimes.co.jp/news/2020/01/23/business/japan-... "marking a second straight year of red ink amid slowing demand in China"

> Therefore, any attempts of decoupling or supply chain realignment will target South East Asia first in which China has a significant influence.

The governments of India, Vietnam, and Indonesia vehemently disagree with you. And it's not ATTEMPT. Supply chain moving away from China is fully underway for several years already. Foxconn already declared that China is no longer the world's factory. https://appleinsider.com/articles/20/08/12/foxconn-says-trad...

It will be useless, since ALL countries in RCEP want to run current account surplus and no one really want the role to absorb surpluses, i.e running current account deficit and ditch capital control and let their currency float.

For this to even work, someone has to run current account deficit and runs capital account surplus (play the role of the US). No one is willing to lol.

NY times actually summarizes it pretty well: It has little impact on legal work, accounting or other services that cross borders, and does not venture far into the often-divisive issue of ensuring greater intellectual property protections https://www.nytimes.com/2020/11/15/business/china-trade-rcep...

Right now Ant Group's valuation is way lower than their IPO price. It could even be bankrupt and be nationalized, depending on investigations into their books, and what the Chinese government feels like that day.

There won't be any Chinese luckin coffee shaninigans in US exchange by end of 2021, according to new accounting standards https://www.thenationalnews.com/business/markets/us-to-delis.... Also, expect a large wave of Chinese companies delisting in 2021.

Friendly warning: check your mutual and index funds exposure to Chinese companies on US exchanges.

your first sentence contradicts your second paragraph :)

> Ant is definitely not a pyramid scheme, if you've ever been to China you'd know.

> frankly the regulators were right. Ant essentially needs no deposit to lend

A couple of guesses here

a. Ant group is partially owned by a large group of elite foreign investors https://www.wsj.com/articles/ant-ipo-promises-8-billion-gain..., who will gain hugely from this IPO. The Chinese government doesn't want such a huge financial entity owned by foreign owners (even though they have claimed they are allowing more foreign entries in financial sectors). Also, China is suffering from dollar shortage/flight (foreign manufacturing moving out, foreign retailers moving in), and this IPO could exacerbate it

b. Jack Ma recently criticized the Chinese banks https://www.pymnts.com/news/ipo/2020/jack-ma-summoned-for-qu.... This is a big no no right now, especially since Xi's dictatorship is wobbly. Also this is what happens when you upset the world's largest mafia - Chinese government and Chinese state owned companies. Just look at what happened to Australia https://www.abc.net.au/news/2020-11-03/china-broadens-trade-..., South Korea https://www.vox.com/latest-news/2017/3/3/14795636/china-sout... US https://www.defensenews.com/global/asia-pacific/2020/10/26/c... and Japan https://www.nytimes.com/2010/09/23/business/global/23rare.ht...

c. There is probably a lot of financial misreporting within Ant Group, as it is pretty commonplace for Chinese public companies - check out recently delisted Chinese companies in US stock exchanges. If this IPO is allowed to expand, that's game over for shanghai stock exchange sooner than later.

(if you ask me, why would anyone invest in any mafia pyramid scheme with no guarantee you'll get your money out...)

So the US government obviously has alot more info than me, and probably submitted direct evidence of the Chinese government controlling wechat and applying threats/ban/disappearance to the ovesea wechat users and their families in China.

And the judge looks at the fact that Chinese government, of which Pompeo just gave a speech on the future conflict between freedom and dictatorship, controls a crucial communication tool used by Chinese-born and American citizens in US and said the threat was....'modest'.

I don't think you understand, this is geopolitics. This is the clash of ideologies. This is democracies vs dictatorships. This is market economy vs state controlled industries. This is EU, US, Japan, Australia, Canada, UK, Taiwan, India, South Korea vs China, Russia, Turkey, Iran, North Korea.

Those that say EU will side with China and go against US, don't know how geopolitics work. And haven't been paying attention to Europe standing up to China these past few weeks.

I think you're thinking of tiktok. This administration just wants to ban wechat outright.

That this is a politically motivated judgemenet

Overseas Chinese users can still use the chat function in Alipay to chat, no problem. As well as a host of other services like skype, facetime, etc.

Also, the Chinese communist party/government has recently decided to tighten the noose on its private companies: https://www.nytimes.com/2020/09/17/business/china-communist-... which makes wechat a national threat.

another take:

> Judge Beeler, sitting in San Francisco, noted that "while the general evidence about the threat to national security related to China (regarding technology and mobile technology) is considerable, the specific evidence about WeChat is modest".

A judge, in a city that is the stronghold of the party that is opposing the current administration, admits the national security threat, but thinks the threat is modest.

A judge who is apparently not familiar with Chinese government threatening overseas Uighurs, https://www.theatlantic.com/international/archive/2019/08/ch... and https://thehill.com/opinion/international/501008-beyond-xinj... and overseas Chinese critics https://www.reuters.com/article/us-usa-china-wray/china-coer.... And couldn't bother to notice the recent Chinese government's desire to control private companies https://www.nytimes.com/2020/09/17/business/china-communist-.... A judge who didn't bother to google before ruling on an extremely important National security issue.

A judge that IMO, has overstepped her bound.

> companies are definitely going to want to sell the the gigantic and growing Chinese market

Tons of companies have had that same dream in the last 40 years, before China gets old in 2050, before China became nationalist in 2018. Companies like KFC, Amazon, Facebook, Google, Samsung, Nintendo, Home Depot, Mattel, Ebay.

sinoinsider

> This administration messed up any opportunity to curtail China

Companies are stepping over each other to move factories out of China. Just check chinalawblog. Any sane COO is de-risking right now. And what about Pompeo's speech? tariffs? banning wechat? supporting Taiwan? There's an endless list of this administration actions trying to curtail China.

> dropping TPP.

TPP was still an IF still when 2017 rolled around.

> Chinese know what a joke this administration is which is why they basically captured Hong Kong, are trying to destroy Vietnam, extracting as much from Australia and India

China is making stupid mistakes after mistakes. It managed to piss off almost every surrounding neighbors: South Korea, Japan, Taiwan, India, Australia, New Zealand, Vietnam, etc. It is basically at war with India right now. And US, Canada, UK, France, and some EU countries are in conflict with China as well. Just recently, even Germany, one of its last ally in Europe has condemned China publically for the czech republic situation

China is so knee deep in trouble, with internal top leadership conflict, coronavirus, job losses, suffering trade, flooding, food shortage, that it has no choice but to establish internal "order" with inner Mongolia, Xinjiang, Hong Kong, Tibet. But it is messing up there too.

> Also, comparing to Germany, a country with a population less than 20% of the US

That's just dishonest hand waving. Everyone knows Germany leads the EU.

> Why don’t you compare to India

China literally killed Indian soldiers - an act of war. There's no comparison here. And again, this is election year. This US administration cannot piss off every US companies by an absolute economic sanction on China.

At least this US administration is standing up and doing something about it. Do you see the Germany chancellor sanctioning for Xinjiang concentration labor camps? UK prime minister? French president? Japanese prime minister?

Another reason this current administration's hands are tied because it's an election year. And wall street has already raised more money for democrats this past few months than republicans, because of the anti-China stance.

When folks bring up China of today, other folks like to deflect by bringing up US of 10 years ago, 20 years ago, 50 years ago, or 200 years ago. And use the same social and moral context from those era to judge.

I think you meant to say clearly that the current US administration has a chaotic approach to China. Which is true.

But keep in mind, a revolution is chaotic. And it is a revolution because this administration was the first in US and world to stand up visibily against China. Via tariffs. Via bans. Via sanctions. Via communique. Until the rest of the world recognized the danger and followed.

So I would cut this administration some slack. Just like you would for a startup that's trying to change the status quo.

That doesn't mean that there aren't LGBT bans in certain countries, which is what the article was talking about.

And also, what prevents authoritarian CCP from ordering TikTok to ban LGBT contents overnight? They've done it with Uighur concentration camp/slave labor mentions, hong kong protests, massive flooding, etc.

> downvote means someone is trying to take away your freedom of speech

Nope, that's not what I said

> Hindsight shows us they were all left out worse than they were.

Taiwan, South Korea, and a few eastern european countries would vehemontly disagree with you

> US government which is highly incompatible with the European values and ideals of rights and freedom

I don't know where you're getting this. US shares the same democratic ideals as most of the countries in Europe. Which is why there's now a ton of pushbacks against China in Europe. https://www.bloomberg.com/opinion/articles/2020-05-07/from-f... https://www.nytimes.com/2020/06/17/business/european-union-c...

Germany (sans Merkel): https://www.politico.eu/article/why-post-merkel-germany-will...

France: https://asia.nikkei.com/Spotlight/Huawei-crackdown/France-pl...

UK: https://www.nytimes.com/2020/07/21/world/europe/mike-pompeo-...

Czech: https://www.reuters.com/article/us-china-czech/czech-prime-m...

Sweden: https://asia.nikkei.com/Politics/International-relations/Swe...

I think the moral of the story is that America is flawed, however, it eventually does the right thing, as well as other great things. And that's why it engenders so much love/hate.

I think it's very relevant to today's events, where people wants to "cancel" a person, just because of one or two things they did wrong (which may have just been the norm in their days). This is a slightly disturbing trends, as we can supposedly only use perfectionists and saints as role models (are there any?), instead of humans who are naturally flawed.

I am proud of America, the country that produced a great democracy, defeated Nazi Germany - which raised hell on earth and held concentration camps, sent people to the moon, heralded in 70 years of relative peace, spread democracies around the world, launched reusable rockets that landed back safely, and is in the process of confronting China - another country that raised hell on earth and held concentration camps - after realizing its fault.

It has been most of the US history