Asia's century.

[jk]

Re: Asia's century.

I think a lot of his thesis makes sense except for the internal/external debt iwhich was confusing. It's similar to what Gromen says and has been saying for a couple of years. It ties in with Triffin and EJ. Where I disagree is the idea that the Chinese are in total control of this process or somehow to blame when it all goes tits up.
After all, nobody forced the US to exploit its exorbitant privilege to the extent it did. Michael Hudson on these pages years ago predicted a tri-polar trading world. So long as they don't go to war with each other it could work out quite well for people everywhere.
Going back to his theory that the Chinese can crash it all-well the US can start printing and front run the Chinese in my mind. The Chinese would be nuts to sell their paper claims on hard assets just to cause a crash as the Fed could just do a BoJ. In fact the US playbook has been to control this process ie force selling and foreclosures through dollar shortages/tightening.
What no one seems to have considered is that it plays out similarly to the last crash. ie A continued run up in oil inflation-->inflation brought about by continued dollar printing followed by tightening. However the US is trying to offset its normal playbook with its oil pumping and continued loose money policy making predictions difficult.
But anyway, I still think it's the US that decides when the crash occurs not the Chinese.

i agree that the chinese would be taking a risk to sell assets and go to cash, while the fed is ready to print as much as necessary. the end of qt means the fed is now running a $4T balance sheet ad infinitum- so much for the idea that we don't monetize debt. of course that $4T was sterilized by going to the banks and being held in riskless but interest bearing excess reserves. it didn't enter the real economy. next time around it will be trillions being spent on entitilements, interest and defense contracts, and thereby entering the real economy. china's cash proceeds, were it to have sold, might not be worth as much as they'd hope. there's a lot of delicate timing involved here, though. i keep thinking ka-poom is really the right model, but timing your buying to the "ka" won't be easy.

[vt]

Re: Asia's century.

60 Minutes had a segment on the Chinese electric car industry:

https://www.cbsnews.com/news/electri...ry-60-minutes/

[Thailandnotes]

Re: Asia's century.

i agree that the chinese would be taking a risk to sell assets and go to cash, while the fed is ready to print as much as necessary. the end of qt means the fed is now running a $4T balance sheet ad infinitum- so much for the idea that we don't monetize debt. of course that $4T was sterilized by going to the banks and being held in riskless but interest bearing excess reserves. it didn't enter the real economy. next time around it will be trillions being spent on entitilements, interest and defense contracts, and thereby entering the real economy. china's cash proceeds, were it to have sold, might not be worth as much as they'd hope. there's a lot of delicate timing involved here, though. i keep thinking ka-poom is really the right model, but timing your buying to the "ka" won't be easy.

This is from http://www.itulip.com/kapoomtheory.htm

"The first foreign central banks to move will be those with the least exposure to losses in national income from sales of exports to the U.S. or depreciation in the value of the dollars they are holding as reserve assets (e.g., France)."

I guess the best financial strategy if you are a doomer approaching retirement, is to pay off your house, spend liberally on the last car you'll ever own, and install a bunch of solar panels. Or move to ?

[touchring]

Re: Asia's century.

This is from http://www.itulip.com/kapoomtheory.htm

"The first foreign central banks to move will be those with the least exposure to losses in national income from sales of exports to the U.S. or depreciation in the value of the dollars they are holding as reserve assets (e.g., France)."

I guess the best financial strategy if you are a doomer approaching retirement, is to pay off your house, spend liberally on the last car you'll ever own, and install a bunch of solar panels. Or move to ?

If there were inflation, wouldn't having a loan be a good deal? Not sure if paying for the biggest car is actually a good deal.

[thriftyandboringinohio]

Re: Asia's century.

T

...the best financial strategy if you are a doomer approaching retirement, is to... move to ?

Dominican Republic looks pretty good. We shopped for real estate there and made some friends among US expats.
Still haven't bought in DR but it has great appeal to us.

[jk]

Re: Asia's century.

If there were inflation, wouldn't having a loan be a good deal? Not sure if paying for the biggest car is actually a good deal.

fixed rate long term debt is a great inflation hedge for the borrower.

[Morgasbord]

Re: Asia's century.

I can only assume China would push the 'sell button' if they assumed they could win the war that followed? Wasn't this the whole point of US China Economic Mutually Assured Destruction?

But yeah if this were immanent, I'd want to take out a mortgage rather than wait for the current housing downturn to run it's course. I suppose it would depend on which is happening faster: housing asset deflation, or Fed money printing & dollar depreciation response.

[jk]

Re: Asia's century.

I can only assume China would push the 'sell button' if they assumed they could win the war that followed? Wasn't this the whole point of US China Economic Mutually Assured Destruction?

But yeah if this were immanent, I'd want to take out a mortgage rather than wait for the current housing downturn to run it's course. I suppose it would depend on which is happening faster: housing asset deflation, or Fed money printing & dollar depreciation response.

during the '70s the REAL value of houses dropped a bit. the REAL value of mortgages was decimated.

[Woodsman]

Re: Asia's century.

I can only assume China would push the 'sell button' if they assumed they could win the war that followed? Wasn't this the whole point of US China Economic Mutually Assured Destruction?

But yeah if this were immanent, I'd want to take out a mortgage rather than wait for the current housing downturn to run it's course. I suppose it would depend on which is happening faster: housing asset deflation, or Fed money printing & dollar depreciation response.

Even if a downturn is imminent, eminent real-estate investors seem to have an immanent sense of timing and value.

[Morgasbord]

Re: Asia's century.

Even if a downturn is imminent, eminent real-estate investors seem to have an immanent sense of timing and value.

I see what you did there

[llanlad2]

Re: Asia's century.

60 Minutes had a segment on the Chinese electric car industry:

https://www.cbsnews.com/news/electri...ry-60-minutes/

This article pretty much encapsulates why I think China is going to be dominant. 33% of all cars in the world are manufactured in China by companies we've never heard of. It's the largest market.The Chinese have deep pockets due to accumulated savings, can subsidise development but still maintain competitive development. It's not 1 state sponsored company being subsidised. This is a major way in which China is underestimated. They have absolute cut throat competition in many aspects of their economy which runs counter to what many people believe or understand.
Just look at their mobile telephone market. The US has Apple and that's it. Of course none of this means America's standard of living will get worse, or they won't remain powerful and influential. After all the UK is still a wealthy, innovative country with a higher standard of living than when we were knocked off top spot.
It's just inevitable that China will be more powerful in the long run. America can slow down this process or continue wasting capital and speed it up.

[touchring]

Re: Asia's century.

This article pretty much encapsulates why I think China is going to be dominant. 33% of all cars in the world are manufactured in China by companies we've never heard of. It's the largest market.The Chinese have deep pockets due to accumulated savings, can subsidise development but still maintain competitive development. It's not 1 state sponsored company being subsidised. This is a major way in which China is underestimated. They have absolute cut throat competition in many aspects of their economy which runs counter to what many people believe or understand.
Just look at their mobile telephone market. The US has Apple and that's it. Of course none of this means America's standard of living will get worse, or they won't remain powerful and influential. After all the UK is still a wealthy, innovative country with a higher standard of living than when we were knocked off top spot.
It's just inevitable that China will be more powerful in the long run. America can slow down this process or continue wasting capital and speed it up.

I've said this many years ago on this forum. Autocratic capitalism.

[lakedaemonian]

Re: Asia's century.

I've said this many years ago on this forum. Autocratic capitalism.

Or digital authoritarianism.

[llanlad2]

Re: Asia's century.

https://amp.ft.com/content/e2a6ca2a-...mpression=true

Automobiles

Global automakers seek to make China electric vehicle export hub

Attractions include high productivity and strong supply battery chain

An Xpeng Motors G3 electric sport utility vehicle © Bloomberg

April 22, 2019 3:00 am by Tom Hancock in Shanghai

Global automakers are pushing forward with plans to use China as an export hub for the world, particularly for electric cars, after signs from Washington and Beijing that they are getting closer to resolving their year-long trade war.
Ford was forced to cancel plans to export its Focus model from China to the US due to the trade war. But it is “halfway through” developing a model in the eastern city of Hangzhou that will be “made in China for the world”, Tim Slatter, Ford China’s product development executive, told the Financial Times.
“You are going to see Chinese design coming to the west,” he said, adding that US-China trade negotiations could “lead to an environment where we can more easily operate trade between China and other markets”.

BMW will produce an electric version of its X3 sport utility vehicle in China from next year, which will become “the first that we will export [from China] to other markets in substantial volumes”, said Pieter Nota, the company’s chief financial officer.
Carmakers in China exported about 1m vehicles last year, up 16 per cent from 2017, mostly to developing markets such as Iran. Overseas sales are a way for domestic carmakers to weather a downturn in the Chinese market, which has left them with severe overcapacity.
Guangzhou Auto, which suspended plans to export its Trumpchi SUV to the US due to the trade war, said recently that it hoped to turn the model into a “top mainstream brand” in Russia within five years.
Automobile factories in China are often newer and more productive than their overseas equivalents, say executives. The logic of exporting from China makes even more sense for electric vehicles, where the huge local market has already created a supply chain, especially for batteries.
BMW is working with China’s CATL, the world’s largest battery producer.
“China is the number one market for EVs, which is why it make sense from a production perspective to locate in China,” said Mr Nota.
Hybrid carmaker Lynk & Co, which is backed by Chinese automaker Geely, sold more than 120,000 vehicles in China last year and has annual capacity for about 400,000. It aims to sell in Europe but has cancelled initial plans to produce cars in Belgium.
“It’s planned that our first sales in Europe will be built in China. We decided in November to stick to Chinese production,” said Alain Visser, chief executive.
China announced last year that foreign companies would not need to partner with local companies for electric vehicle manufacturing, and would be able to fully own companies making other kinds of vehicles from 2022.
But most are sticking with local partnerships developed over decades, meaning profits from export markets will be shared with local companies.
China’s domestic automakers are reluctant to sell their shares in highly lucrative joint ventures, with Guangzhou Automobile’s head Feng Xingya saying he was “clear” that partners including Toyota and Fiat would not raise their JV stakes.
Volkswagen played down reports this month that it was seeking to buy out local partner JAC Automotive. “We are in very successful co-operation with Chinese partners. There is no general intention for the VW group to overcome this co-operation,” said Stephan Wöllenstein, VW’s China head.

Recommended

• Carmakers gear up for China sales recovery

BMW’s announcement in October that it would buy a majority stake in its venture with local player Brilliance Automotive for €3.6bn was eased because Brilliance is one of China’s weaker car companies, with limited funds for investing in new facilities.
For the production of an electric Mini in China, the German company is partnering with China’s Great Wall, one of the country’s largest domestic carmakers.
BMW executives said this was because the Chinese company had more experience making low-priced cars and because low initial sales volumes would make building a dedicated new facility more risky.
Sharing a platform with a Great Wall would “justify the production capacity set-up”, said Mr Nota. “The plan is to develop jointly this car with Great Wall engineers next to BMW engineers, so both companies will add knowhow.”
Additional reporting by Wang Xueqiao

[llanlad2]

Re: Asia's century.

https://amp.ft.com/content/e2a6ca2a-...mpression=true

Automobiles

Global automakers seek to make China electric vehicle export hub

Attractions include high productivity and strong supply battery chain

An Xpeng Motors G3 electric sport utility vehicle © Bloomberg

April 22, 2019 3:00 am by Tom Hancock in Shanghai

Global automakers are pushing forward with plans to use China as an export hub for the world, particularly for electric cars, after signs from Washington and Beijing that they are getting closer to resolving their year-long trade war.
Ford was forced to cancel plans to export its Focus model from China to the US due to the trade war. But it is “halfway through” developing a model in the eastern city of Hangzhou that will be “made in China for the world”, Tim Slatter, Ford China’s product development executive, told the Financial Times.
“You are going to see Chinese design coming to the west,” he said, adding that US-China trade negotiations could “lead to an environment where we can more easily operate trade between China and other markets”.

BMW will produce an electric version of its X3 sport utility vehicle in China from next year, which will become “the first that we will export [from China] to other markets in substantial volumes”, said Pieter Nota, the company’s chief financial officer.
Carmakers in China exported about 1m vehicles last year, up 16 per cent from 2017, mostly to developing markets such as Iran. Overseas sales are a way for domestic carmakers to weather a downturn in the Chinese market, which has left them with severe overcapacity.
Guangzhou Auto, which suspended plans to export its Trumpchi SUV to the US due to the trade war, said recently that it hoped to turn the model into a “top mainstream brand” in Russia within five years.
Automobile factories in China are often newer and more productive than their overseas equivalents, say executives. The logic of exporting from China makes even more sense for electric vehicles, where the huge local market has already created a supply chain, especially for batteries.
BMW is working with China’s CATL, the world’s largest battery producer.
“China is the number one market for EVs, which is why it make sense from a production perspective to locate in China,” said Mr Nota.
Hybrid carmaker Lynk & Co, which is backed by Chinese automaker Geely, sold more than 120,000 vehicles in China last year and has annual capacity for about 400,000. It aims to sell in Europe but has cancelled initial plans to produce cars in Belgium.
“It’s planned that our first sales in Europe will be built in China. We decided in November to stick to Chinese production,” said Alain Visser, chief executive.
China announced last year that foreign companies would not need to partner with local companies for electric vehicle manufacturing, and would be able to fully own companies making other kinds of vehicles from 2022.
But most are sticking with local partnerships developed over decades, meaning profits from export markets will be shared with local companies.
China’s domestic automakers are reluctant to sell their shares in highly lucrative joint ventures, with Guangzhou Automobile’s head Feng Xingya saying he was “clear” that partners including Toyota and Fiat would not raise their JV stakes.
Volkswagen played down reports this month that it was seeking to buy out local partner JAC Automotive. “We are in very successful co-operation with Chinese partners. There is no general intention for the VW group to overcome this co-operation,” said Stephan Wöllenstein, VW’s China head.

Recommended

• Carmakers gear up for China sales recovery

BMW’s announcement in October that it would buy a majority stake in its venture with local player Brilliance Automotive for €3.6bn was eased because Brilliance is one of China’s weaker car companies, with limited funds for investing in new facilities.
For the production of an electric Mini in China, the German company is partnering with China’s Great Wall, one of the country’s largest domestic carmakers.
BMW executives said this was because the Chinese company had more experience making low-priced cars and because low initial sales volumes would make building a dedicated new facility more risky.
Sharing a platform with a Great Wall would “justify the production capacity set-up”, said Mr Nota. “The plan is to develop jointly this car with Great Wall engineers next to BMW engineers, so both companies will add knowhow.”
Additional reporting by Wang Xueqiao