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Dont fight the CCP?


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On 9/9/2021 at 8:09 PM, beerbaron said:

I would say think what is the long term objective of China and how they will want their policies to go with that objective. There is a well documented 50 year plan that aims to put China as the premier economic power by 2048.

 

 

I agree with the sentiment, but I would have thought part of China's growth would be to become the tech "powerhouse" of the world, so beating on the tech businesses, who along with all the consumer tech stuff that they do, are investing in all the industrial tech that China wants to be at the forefront of seems rather counter-productive.

 

On 9/10/2021 at 1:58 AM, Castanza said:

China graduates more engineers every single year than the US has in total. Hard to ignore the R&D capability. But the political sphere makes it un-investable to me. The success of China and the CCP does not necessarily mean the success of individual companies or further the shareholders. 

 

Coming very close to that same opinion but I find it hard to discount a market which is something like 20% of the worlds population/second biggest economy etc. I also appreciate that there are thousands if not tens of thousands of businesses that are traded actively as @Gregmal suggested, but still find it difficult to discount China's impact on any stock. For example, the copper price earlier this year rose in tandem with the Chinese manufacturing numbers. I am sure that a lot of the other base metals will have similar stories. I would argue that a lot of consumer goods stocks in the large cap space have a large exposure to China (Nike, Apple, etc.). While the argument made above by @Spooky that you wouldnt get completely wiped out as a Apple shareholder if you were to take out Chinese sales, not only does the stock then become extremely expensive but growth projections will crater as well.

 

Maybe investing in a Chinese equity isnt a suitable solution, but just looking at my current portfolio of non-chinese names, over 50% are extremely exposed to China, and most of them are pinning growth projections based on the Chinese consumer.

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image.png.fa3e8ccbef28f55df74d474bce4af8d1.png

 

As part of the 2020 trade deal with the U.S., China has been opening up its financial industry. Earlier this year, JP Morgan got permission to take full control of its securities
business there. Previously, foreign brokers had been required to operate through joint ventures. If you are scratching your head wondering why Beijing is welcoming American securities firms while relations with the U.S. are plumbing new depths, the answer is simple: The move is in China’s interest, too.

 

Beijing has long wanted capital markets to play a larger role in China. Chinese companies rely mostly on bank loans and retained profit for investment, which is quite different from many other major economies. Around 60% of outstanding total social financing, a broad measure of credit in the economy, comes from bank loans, according to data provider Wind, while corporate bonds and equity for non financial companies make up around 12%. In the U.S., equities and bonds provide 73% of funding for non financial corporations. The stranglehold of state-owned banks on the financial system makes it harder for small businesses without good connections to secure long-term funding to grow—even if they have an innovative, well-run business model. And with Beijing more wary of dependence on U.S. stock markets, the problem has become more urgent. The involvement of names like Black Rock could help gain the trust of domestic investors and redirect Chinese household savings out of real estate, which Beijing wants to shift the economy away from.

 

Apart from opening up finance to foreign players, China has rolled out the welcome mat for investors outside mainland China. Off shore investors, including those based in Hong Kong, now hold 7.6 trillion yuan, the equivalent of $1.2 trillion, of Chinese domestic stock sand bonds as of June, according to data from China’s central bank via Wind. That has quadrupled the amount four years ago but is still a drop in the ocean of the country’s $19 trillion bond and $13 trillion stock markets. Such inflows could also help off set  capital outflows from China-based investors and bring discipline to the market.

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  • 2 weeks later...

At least they have a decent sense of humor: https://www.bloomberg.com/news/articles/2021-09-23/xi-s-u-s-envoy-invokes-lincoln-in-declaring-china-a-democracy

 

Meantime: https://www.bloomberg.com/news/articles/2021-09-19/xi-s-celebrity-crackdown-no-match-for-universal-studios-in-china

 

"As President Xi Jinping’s government looks to tame China’s celebrities, the popularity of a new Universal Studios theme park in Beijing shows Hollywood’s enduring soft power among the nation’s 1.4 billion people. Tickets for the grand opening on Monday, priced at 638 yuan ($99), sold out within 30 minutes of going online last week -- as did rooms costing as much as 20,000 yuan at the resort’s two hotels, according to state-run media. Fliggy, an online travel site operated by Alibaba Group Holding Ltd., last week apologized for overselling the 500 yuan Universal Express Pass that lets visitor skip lines.  The park became the most-searched topic on China’s Twitter-like platform Weibo on Monday morning, as hundreds of visitors queued for entrance in the rain while those inside posted videos of “Harry Potter” experiences. A grand opening ceremony was attended by top officials, including Beijing party chief Cai Qi, according to state-backed news outlet The Paper. The surging demand underscores the challenge Xi faces in dampening the appetite for celebrities among the general public, as the Communist Party looks to curtail foreign influences and promote the concept of “common prosperity.” A commentary published widely in state-run media last month warned against “fan culture” and “worshiping Western culture.” The popularity of the Universal Studios theme park shows resistance to the Communist Party’s tightening of cultural standards after decades of allowing Western influences, according to Adam Ni, co-editor of China Neican, a newsletter on Chinese public policy issues. “As powerful as the party is, it will have to contend with countless everyday decisions by the Chinese, which would together make up the moral fabric of the People’s Republic,” he said. In the lead-up to the park’s public opening, dozens of Chinese celebrities -- including “Crouching Tiger” actress Zhang Ziyi and supermodel Liu Wen -- visited attractions related to “Jurassic Park,” “Transformers” and “Harry Potter.” Photos of other guests dressed in Hogwarts cloaks, and posing with “Minions” and “Megatron” characters, became trending topics on China’s Twitter-like Weibo. “Universal Beijing Resort is popular with the Chinese because there is part of the global culture that the Chinese thirst for,” Ni added. “Beijing is trying to reinforce this dichotomy between ‘Chinese’ and ‘foreign,’ but there is still much admiration and curiosity for foreign cultures in China. So the public attitude towards Western culture is two-faced.” The project, which is expected to attract 30 million visitors a year, is a joint venture between the state-owned Beijing Shouhuan Cultural Tourism Investment Co. and Comcast NBCUniversal. It has been in the works since 2001. China’s newly appointed ambassador to the U.S. last week compared one of the attraction’s roller coasters to bumpy diplomatic ties between Washington and Beijing. “After all tumbling and shakes, the roller coaster came to a soft landing in the end,” Qin Gang, who visited the park before moving to the U.S. in July, wrote on his official Twitter account, signaling a note of optimism. "

 

 

 

 

 

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On 9/23/2021 at 2:41 AM, UK said:

At least they have a decent sense of humor: https://www.bloomberg.com/news/articles/2021-09-23/xi-s-u-s-envoy-invokes-lincoln-in-declaring-china-a-democracy

 

Meantime: https://www.bloomberg.com/news/articles/2021-09-19/xi-s-celebrity-crackdown-no-match-for-universal-studios-in-china

 

"As President Xi Jinping’s government looks to tame China’s celebrities, the popularity of a new Universal Studios theme park in Beijing shows Hollywood’s enduring soft power among the nation’s 1.4 billion people. Tickets for the grand opening on Monday, priced at 638 yuan ($99), sold out within 30 minutes of going online last week -- as did rooms costing as much as 20,000 yuan at the resort’s two hotels, according to state-run media. Fliggy, an online travel site operated by Alibaba Group Holding Ltd., last week apologized for overselling the 500 yuan Universal Express Pass that lets visitor skip lines.  The park became the most-searched topic on China’s Twitter-like platform Weibo on Monday morning, as hundreds of visitors queued for entrance in the rain while those inside posted videos of “Harry Potter” experiences. A grand opening ceremony was attended by top officials, including Beijing party chief Cai Qi, according to state-backed news outlet The Paper. The surging demand underscores the challenge Xi faces in dampening the appetite for celebrities among the general public, as the Communist Party looks to curtail foreign influences and promote the concept of “common prosperity.” A commentary published widely in state-run media last month warned against “fan culture” and “worshiping Western culture.” The popularity of the Universal Studios theme park shows resistance to the Communist Party’s tightening of cultural standards after decades of allowing Western influences, according to Adam Ni, co-editor of China Neican, a newsletter on Chinese public policy issues. “As powerful as the party is, it will have to contend with countless everyday decisions by the Chinese, which would together make up the moral fabric of the People’s Republic,” he said. In the lead-up to the park’s public opening, dozens of Chinese celebrities -- including “Crouching Tiger” actress Zhang Ziyi and supermodel Liu Wen -- visited attractions related to “Jurassic Park,” “Transformers” and “Harry Potter.” Photos of other guests dressed in Hogwarts cloaks, and posing with “Minions” and “Megatron” characters, became trending topics on China’s Twitter-like Weibo. “Universal Beijing Resort is popular with the Chinese because there is part of the global culture that the Chinese thirst for,” Ni added. “Beijing is trying to reinforce this dichotomy between ‘Chinese’ and ‘foreign,’ but there is still much admiration and curiosity for foreign cultures in China. So the public attitude towards Western culture is two-faced.” The project, which is expected to attract 30 million visitors a year, is a joint venture between the state-owned Beijing Shouhuan Cultural Tourism Investment Co. and Comcast NBCUniversal. It has been in the works since 2001. China’s newly appointed ambassador to the U.S. last week compared one of the attraction’s roller coasters to bumpy diplomatic ties between Washington and Beijing. “After all tumbling and shakes, the roller coaster came to a soft landing in the end,” Qin Gang, who visited the park before moving to the U.S. in July, wrote on his official Twitter account, signaling a note of optimism. "

 

 

 

 

 

I will say at least China understands the influence the “arts” have on a society

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The flip side of China is that when the place gets into trouble .....

they implement solutions on a scale that few others can match, or tolerate.

 

https://oilprice.com/Energy/Energy-General/Oil-Prices-Soar-As-Beijing-Orders-Energy-Suppliers-To-Stock-Up-For-Winter.html

Bloomberg: government officials "ordered the country’s top state-owned energy companies to secure supplies for this winter at all costs."

 

There are few things as powerful as a junkie on the edge, pushing hard for their next fix.

The why you invest in the commodities a China uses, and not China itself.

 

SD

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https://www.wsj.com/articles/algorithms-vs-regulators-battle-royale-kicks-off-in-china-11634125270

 

China is taking a first step toward regulating algorithms. How that experiment goes could help Western regulators understand what to embrace—and what to avoid—as they ponder tougher controls on Western social-media giants too. China launched a sweeping three-year plan last month to regulate the use of algorithms, setting itself up as a potential trailblazer as governments around the world step up regulation of Big Tech. According to draft rules released in August, companies can’t use algorithms which lead to addiction or excessive spending. Users should also have the right to opt out.

 

The broad-based regulations, if implemented strictly, could fundamentally shake up the business models of many successful internet companies. For example ByteDance, the owner of TikTok, has succeeded largely by recommending catchy content with the help of its powerful algorithm. To be sure, some aspects of China’s proposals are clearly targeted at maintaining government control. Guidelines from the internet watchdog say algorithms should uphold core socialist values and promote positive energy. Democratic societies are unlikely to accept such strictures, and even more benign rules would likely face court challenges. But watching how China’s moves work out—and how large any collateral economic damage ultimately is—could still prove useful to other countries which also are grappling with the enormous societal impact of internet companies. The European Union proposed a bill in April to regulate artificial intelligence systems in some so-called high-risk uses like critical infrastructure, college admissions and loan applications. In the U.S., Congress recently conducted a hearing on Facebook after The Wall Street Journal’s investigations into the social-media giant.

 

The biggest problem for regulating algorithms is how opaque they are. That is becoming a bigger issue as more decisions are made by machines which learn through crunching a vast amount of data. It isn’t easy, sometimes even for the creators of algorithms, to pinpoint the exact reason why an artificial intelligence makes a particular decision. Biases embedded in the training data could unknowingly seep into the decision-making process. And algorithms can also narrowly focus on some objectives, like amplifying viral content, without considering other impacts. Moreover, they are also continually updating, which makes regulation even harder.

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8 hours ago, UK said:

https://www.wsj.com/articles/algorithms-vs-regulators-battle-royale-kicks-off-in-china-11634125270

 

China is taking a first step toward regulating algorithms. How that experiment goes could help Western regulators understand what to embrace—and what to avoid—as they ponder tougher controls on Western social-media giants too. China launched a sweeping three-year plan last month to regulate the use of algorithms, setting itself up as a potential trailblazer as governments around the world step up regulation of Big Tech. According to draft rules released in August, companies can’t use algorithms which lead to addiction or excessive spending. Users should also have the right to opt out.

 

The broad-based regulations, if implemented strictly, could fundamentally shake up the business models of many successful internet companies. For example ByteDance, the owner of TikTok, has succeeded largely by recommending catchy content with the help of its powerful algorithm. To be sure, some aspects of China’s proposals are clearly targeted at maintaining government control. Guidelines from the internet watchdog say algorithms should uphold core socialist values and promote positive energy. Democratic societies are unlikely to accept such strictures, and even more benign rules would likely face court challenges. But watching how China’s moves work out—and how large any collateral economic damage ultimately is—could still prove useful to other countries which also are grappling with the enormous societal impact of internet companies. The European Union proposed a bill in April to regulate artificial intelligence systems in some so-called high-risk uses like critical infrastructure, college admissions and loan applications. In the U.S., Congress recently conducted a hearing on Facebook after The Wall Street Journal’s investigations into the social-media giant.

 

The biggest problem for regulating algorithms is how opaque they are. That is becoming a bigger issue as more decisions are made by machines which learn through crunching a vast amount of data. It isn’t easy, sometimes even for the creators of algorithms, to pinpoint the exact reason why an artificial intelligence makes a particular decision. Biases embedded in the training data could unknowingly seep into the decision-making process. And algorithms can also narrowly focus on some objectives, like amplifying viral content, without considering other impacts. Moreover, they are also continually updating, which makes regulation even harder.

Do you think there is a chance that lawmakers understand mathematical algorithms well enough to regulate them?

dumb and dumber there's a chance GIF | b-reddy.org

 

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2 hours ago, Spekulatius said:

Do you think there is a chance that lawmakers understand mathematical algorithms well enough to regulate them?

dumb and dumber there's a chance GIF | b-reddy.org

 

 

Rather cynically - One doesn't have to understand the algorithms to regulate them. If the rule is tailored to penalize certain outcomes (worst still - hold owners responsible), the creators / owners of the algorithm (who purportedly understand them) will be incentivized forced to change them.

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2 hours ago, Spekulatius said:

Do you think there is a chance that lawmakers understand mathematical algorithms well enough to regulate them?

dumb and dumber there's a chance GIF | b-reddy.org

 

 

i imagine job will be done by this or similar agency:

 

https://www.bloomberg.com/news/articles/2021-10-12/china-said-to-expand-anti-monopoly-bureau-as-crackdown-widens

https://www.investing.com/news/stock-market-news/exclusive-china-readies-plan-to-elevate-status-of-antitrust-unit--sources-2642157

 

Learning from the best:

 

"Beijing has looked to European antitrust authorities as a model as it seeks to upgrade its antitrust capabilities, one of the people said. In August, SAMR's antitrust office said on its website that it had invited experts from the EU and United States to hold online courses for Chinese "antitrust talents". "Compared to other major anti-monopoly enforcement authorities in the world, the authorities in China currently have fewer staff, which needs to be changed in the future," Wu Zhenguo, head of SAMR's anti-monopoly bureau, told industrial online journal The Antitrust Source in a July interview"

 

However:

 

"The State Administration for Market Regulation will boost staffing at its anti-monopoly bureau, which will be split into three separate divisions focusing on antitrust investigations, market competition and mergers oversight, according to people with knowledge of the matter, asking not to be identified as the information hasn’t been made public. It’s planning to increase the number of antitrust officials from over 40 currently to 100, before reaching 150 within five years, two of the people said. "

 

Seems like really small number, FTC gave like 1000+ people, but perhaps it is not comparable/different.

 

 

 

Edited by UK
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I thought this was a fascinating read: https://palladiummag.com/2021/10/11/the-triumph-and-terror-of-wang-huning/

 

"Instead, they see Wang’s America: deindustrialization, rural decay, over-financialization, out of control asset prices, and the emergence of a self-perpetuating rentier elite; powerful tech monopolies able to crush any upstart competitors operating effectively beyond the scope of government; immense economic inequality, chronic unemployment, addiction, homelessness, and crime; cultural chaos, historical nihilism, family breakdown, and plunging fertility rates; societal despair, spiritual malaise, social isolation, and skyrocketing rates of mental health issues; a loss of national unity and purpose in the face of decadence and barely concealed self-loathing; vast internal divisions, racial tensions, riots, political violence, and a country that increasingly seems close to coming apart."

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The reality is that a PM has to be diversifing at the commodity level ... and NOT the country, or even industry level.

Case in point; today's magnesium market. https://www.mining-technology.com/news/magnesium-curb-price/

 

The most effective diversification would be by energy use - options/futures + climate change arbitrage. This particular black swan is magnesium, but the reality is that the world is seeing a near simultaneous swarm of these black swans, as there are many similar very stressed sectors (cement, steel, chips, vaccines, etc). Supply chain shocks that drain the ocean everywhere , lowering all boats.

 

Depending on model, current new car factory order 'waiting lists' are approaching 6-9 months.

Auto plant production is not just slowing down, new car releases are being deferred as well. Deflation.

 

 SD

 

Edited by SharperDingaan
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