China

[UK]

https://www.ft.com/content/885865b1-2320-43c0-b41e-10c1d026202a

 

China has insisted it will stick to its strict zero-Covid policies, saying its extensive testing and quarantine apparatus is sufficient ahead of the 20th Communist party congress, which begins on Sunday.

 

On Thursday, leading epidemiologist Liang Wannian said there was “no timeline” for an exit from zero-Covid rules and earlier in the week the state-run People’s Daily newspaper ran a prominent defence of the strategy. Liang added that the country now had the capacity to test 1bn people in a single day. In Beijing and other major cities, including Shanghai, authorities have tightened measures ahead of the launch of the congress and residents need to test negative every few days to enter most buildings.

 

 

[Lazarus]

I find their zero covid policy mind boggling. 

[crs223]

12 minutes ago, Lazarus said:

I find their zero covid policy mind boggling. 

 

The latest episode of Odd Lots discusses this.  China doesn’t have an effective vaccine.  I think the estimate was 10 million would die if they just let COVID run its course.  Evidentially China is not willing to allow that many to die.  Another option is to buy the pfizer vaccine.  Apparently this too is unpalatable.

[Spekulatius]

8 hours ago, crs223 said:

 

The latest episode of Odd Lots discusses this.  China doesn’t have an effective vaccine.  I think the estimate was 10 million would die if they just let COVID run its course.  Evidentially China is not willing to allow that many to die.  Another option is to buy the pfizer vaccine.  Apparently this too is unpalatable.

It’s not about results, it’s about ideology.

 

His speech at the Congress today sounds like much more of the same,  zero COVID-29, peacefully reunification  more common prosperity etc, more neo Maoism.

https://www.cnn.com/2022/10/15/china/china-party-congress-opening-day-intl-hnk/index.html

https://www.wsj.com/articles/chinas-xi-jinping-hails-communist-partys-self-revolution-in-bid-to-extend-rule-11665894731?mod=hp_lead_pos7

 

Sounds bearish for Chinese stocks, if you ask me.

 

[gary17]

41 minutes ago, Spekulatius said:

It’s not about results, it’s about ideology.

 

His speech at the Congress today sounds like much more of the same,  zero COVID-29, peacefully reunification  more common prosperity etc, more neo Maoism.

https://www.cnn.com/2022/10/15/china/china-party-congress-opening-day-intl-hnk/index.html

https://www.wsj.com/articles/chinas-xi-jinping-hails-communist-partys-self-revolution-in-bid-to-extend-rule-11665894731?mod=hp_lead_pos7

 

Sounds bearish for Chinese stocks, if you ask me.

 

 

 i think we don't know if he is just saying that but policies will slightly shift after he's re-elected. i believe HK has losen the rules now.  

 if zero covid continues, however, it'd be a bit of a pain on inflation but long term may benefit the west as the world moves on to a new supply chain arrangement without china, not to mention slow-down in china due to capital & talent outflow .

 

 

[Spekulatius]

18 minutes ago, gary17 said:

 

 i think we don't know if he is just saying that but policies will slightly shift after he's re-elected. i believe HK has losen the rules now.  

 if zero covid continues, however, it'd be a bit of a pain on inflation but long term may benefit the west as the world moves on to a new supply chain arrangement without china, not to mention slow-down in china due to capital & talent outflow .

 

 

Hopefully not  COVID-29. Also, he was indicating the strong possibility of not so peaceful unification. I found the undertone of his speech very unsettling.

 

By the way, I think it was not an coincidence that the semiconductor restrictions were put in place just before the party Congress. I don’t expect a direct answer form China, but there will be an answer.

 

FWIW, the West is in the process of disconnecting security sensitive industries and supply chain from China. If a major international company does not have a plan in place to manage their supply chain without China within a couple of years, they are taking a major existential risk.

 

Really, it does not come much clearer than that. I am curious what companies like Apple are going to do, Producing 2M iPhones in India is not going to do it.

 

As for what he says and what he does I think Autocrats tend to do what they say. That’s basically the reason they exist and how they rule.

Edited October 16, 2022 by Spekulatius

[gary17]

11 minutes ago, Spekulatius said:

Hopefully not  COVID-29. Also, he was indicating the strong possibility of not so peaceful unification. I found the undertone of his speech very unsettling.

 

By the way, I think it was not an coincidence that the semiconductor restrictions were put in place just before the party Congress. I don’t expect a direct answer form China, but there will be an answer.

 

FWIW, the West is in the process of disconnecting security sensitive industries and supply chain from China. If a major international company does not have a plan in place to manage their supply chain without China within a couple of years, they are taking a major existential risk.

 

Really, it does not come much clearer than that. I am curious what companies like Apple are going to do, Producing 2M iPhones in India is not going to do it.

 

As for what he says and what he does I think Autocrats tend to do what they say. That’s basically the reason they exist and how they rule.

 

Perhaps that is his goal, just like Putin must do something about Ukraine.  these are world leaders have 'mid-life' crisis... they've got the money, the power, and the only thing worth doing with their remaining time is leaving a mark in history.

 

scary for sure.  

 

it's very interesting china uses the word one china 'principle' and the US has always said they have a one china 'policy'.  principle & policy are not the same lol.

 

i just wish these crazy people would just calm down - the world enjoyed so much peace since world war 2.  it's very scary to think of possible conflict over taiwan, and how neighbouring asian countries, japan, korea, north korea, may all kinda get drag into it.  won' be good for stocks.

[Spekulatius]

From the SCMP:

https://www.scmp.com/news/china/politics/article/3196167/incomparable-glory-awaits-china-world-stage-xi-jinping-tells?module=perpetual_scroll_0&pgtype=article&campaign=3196167

 

”incomparable glory” uhh Ooh….

[Spekulatius]

Imagine going to a Costco in China Wednesday and a Thursday at the same Costco someone tests positive. Now everyone who works or visited the Costco (as a customer) within 2 days before an after the positive case needs to quarantine. That’s a story I was told from an manager  whose company does business (with employees)  in China this weekend over a beer. This is zero COVID-19 policy in China in practice.

[maplevalue]

Does anyone know where one can read the entirety of Xi's speech in English?

[plato1976]

4 hours ago, Spekulatius said:

Imagine going to a Costco in China Wednesday and a Thursday at the same Costco someone tests positive. Now everyone who works or visited the Costco (as a customer) within 2 days before an after the positive case needs to quarantine. That’s a story I was told from an manager  whose company does business (with employees)  in China this weekend over a beer. This is zero COVID-19 policy in China in practice.

I want to point out that it's not the quarantine at home as we understand. It's a quarantine that happens at specified buildings (transported by the government bus). First hand information as I can see from my wechat groups (relatives living in china broadcasting real time progress. ) 

[Spekulatius]

50 minutes ago, maplevalue said:

Does anyone know where one can read the entirety of Xi's speech in English?

This seems it:

https://asia.nikkei.com/Politics/Full-text-of-Xi-Jinping-s-speech-on-the-CCP-s-100th-anniversary

[Luca]

12 hours ago, Spekulatius said:

This seems it:

https://asia.nikkei.com/Politics/Full-text-of-Xi-Jinping-s-speech-on-the-CCP-s-100th-anniversary

What do you think will happen for chinese stocks after a taiwan invasion? Will the stock market be cut off as with russia? Even if we hold share in HK? I am thinking of leaving my china positions and buying some tsm  If i loose the total value anyways if the invasion happens id rather hold tsm than alibaba currently...

[Spekulatius]

56 minutes ago, Luca said:

What do you think will happen for chinese stocks after a taiwan invasion? Will the stock market be cut off as with russia? Even if we hold share in HK? I am thinking of leaving my china positions and buying some tsm  If i loose the total value anyways if the invasion happens id rather hold tsm than alibaba currently...

Yes, i think there is a significant probability that the financial markets between of China HK will be cut of from the western financial system. That means that you may not be able to have access to your HK or chinese shares any more.

 

The consequences of such an invasion would be much more severe than with the Ukraine war, due to the relative size of the Chinese economy vs the Russian economy.

[Luca]

2 minutes ago, Spekulatius said:

Yes, i think there is a significant probability that the financial markets between of China HK will be cut of from the western financial system. That means that you may not be able to have access to your HK or chinese shares any more.

 

The consequences of such an invasion would be much more severe than with the Ukraine war, due to the relative size of the Chinese economy vs the Russian economy.

I see it like that aswell.

[Guest]

Slightly off topic but I was surprised and wanted to share. VWO (emerging markets ETF) is down over the past 15 years. Man, I remember 2007 and emerging markets were lighting the world on fire. 15 years later...negative returns. 

[WayWardCloud]

Yep! And if you look under the hood of VWO you'll see that even though the name hasn't changed we're talking about two completely different allocations. Capital has flown from Latin America (particularly Brazil and Mexico) and into Asia (particularly China, India, S. Korea and Taiwan). So the story is really about Latin America failing to live up to investors (very lofty) expectations, their hopes moving East... just in time to get destroyed by Xi.

 

I wonder sometimes if because those ETFs package together such different areas of the world under the "emerging" umbrella (which by the way makes no sense : S. Korea and Taiwan are developed economies and have been for a while) the slow re-balancing between them make you always about 5-10 years late to the party. For example let's say tensions keep rising in Asia and as a result Latin America receives a lot of US investments to relocate factories and gets a great decade, we'll miss the pendulum completely once again since VWO only has a 10% allocation left in the region.

Edited October 17, 2022 by WayWardCloud

[Libs]

Re Taiwan- interesting point made in a letter to the WSJ today: China ( unlike Russia) imports most of their food. They would be in a world of hurt if sanctions hit. That alone may deter XI.

[Spekulatius]

51 minutes ago, Libs said:

Re Taiwan- interesting point made in a letter to the WSJ today: China ( unlike Russia) imports most of their food. They would be in a world of hurt if sanctions hit. That alone may deter XI.

Not just food, but also crude oil, LNG, coal, raw materials etc. Think about how easy it would be to blockade all these things outside the Chinese sea for the US navy with help from the Japanese.
The Chinese have no navy ships whatsoever to protect their trade lines outside the Chinese sea. They would be on the ropes in 4 weeks.

[james22]

Semiconductors: China Is Fucked

 

https://www.battleswarmblog.com/?p=52980

[Viking]

1 hour ago, james22 said:

Semiconductors: China Is Fucked

 

https://www.battleswarmblog.com/?p=52980

If 25% of what the author suggests is accurate… Wow! The gloves are off. So how does China respond? Taiwan is the obvious move. It becomes even more important to bring Taiwan back into the family. And when does this shit show hit Apple right between the eyes? Might want to buy that favourite Apple device while they are still available.

Edited October 18, 2022 by Viking

[LC]

It’s really wild to think that no Chinese citizens have the intellectual chops to develop and manufacture these chips. I mean, is this really true? After how much the Chinese IP theft storyline has been pushed the past 10+ years? I have no first or even secondhand knowledge here so curious if anyone on the board can provide some insight.

[Spekulatius]

Just now, LC said:

It’s really wild to think that no Chinese citizens have the intellectual chops to develop and manufacture these chips. I mean, is this really true? After how much the Chinese IP theft storyline has been pushed the past 10+ years? I have no first or even secondhand knowledge here so curious if anyone on the board can provide some insight.

The IP theft has definitely going on in semis. They can develop this tech too, but it takes time and they may never be able to catch up if the west keeps innovating. Right now, they are at least 10 years behind. I don't know how long it takes for China to get to the current leading edge, but it is possible that if they get totally cut off from western leading edge tech, that they can never catch up because the western companies keep the innovation edge the same.

 

Also keep in mind that it is much harder to copy tech that you can't buy any more. Something like leading edge equipment won't get into Chinese hands any more. Even blueprints and electronic records (if they can steal them) only go so far.

 

I don't think China is totally screwed, but they totally need to reboot their semiconductor development effort and probably start from basics in many respects.

[Castanza]

4 hours ago, LC said:

It’s really wild to think that no Chinese citizens have the intellectual chops to develop and manufacture these chips. I mean, is this really true? After how much the Chinese IP theft storyline has been pushed the past 10+ years? I have no first or even secondhand knowledge here so curious if anyone on the board can provide some insight.

Communism is a hell of a suppressant. Story used to be “Russia probably has some crazy technology!”. Turns out they didn’t either. 
 

There is some good discussion on this in the Intel thread on this. Idk if it’s they can’t, vs the barrier to entry and accumulated knowledge base on process makes it extremely difficult to catch-up. 

Edited October 18, 2022 by Castanza

[crs223]

Assuming this is true…

 

I have to say I am impressed with the USA.  I assumed we were too consumed with preferred pronouns and other “intangibles” to resist China.

 

Im particularly scared about education in US vs China — e.g. SAT not required for college entry.

 

China unleashed COVID, fentanyl, and IP theft for decades — all we did was send a harassment squad to Taiwan for a lousy photo op.