China

[Hektor]

Barron's continues to be down on China

 

https://www.barrons.com/articles/china-hot-jack-ma-alibaba-a1d688b9

 

China Is Looking Like a Hot Investment Again. Look Before You Leap In.

Investors should stay wary of China until its leadership establishes a record as a reliable counterparty—which could take decades. 

 

China is a great investment—if you don’t look at the past too closely.

 

Just forget about Jack Ma, the founder of Alibaba Group Holding , and ignore the concerns voiced over the past decade that no one has made money investing in China. Instead, focus on recent dramatic market pops, like Monday’s 8.5% rally, which the pundits celebrated as the biggest daily move since 2008.

 

If you ignore the inconvenient facts, buying stocks and bullish call options and selling put options on China themes is attractive because China’s leaders will likely keep stimulating the economy.

 

If only it were that easy.

 

[Milu]

Congrats to all the china bulls, looks like you are finally getting a bit of positive momentum after a long period of pain. China has always been in the too hard pile for me, I don't live there, don't use any the services of any of the big name stocks (alibaba, JD, PDD), and don't know much about the leaders of these companies which makes it too hard for me to be comfortable owning them, and that lack of comfort would likely cause me to lose faith if they started dropping again. I just stick to what I know well which are mainly large US and Western European companies. Perhaps I will miss out on some of the big gains you guys will receive should China go into a new boom period but that's ok.

[Luke]

https://www.scmp.com/news/china/science/article/3280584/made-china-2035-will-it-topple-us-hi-tech-and-military-manufacturing-10-years?utm_medium=email&utm_source=cm&utm_campaign=enlz-today_international&utm_content=20241002&tpcc=enlz-today_international&UUID=6d0f8903-f8b8-4bf5-8477-621847965327&next_article_id=3280755&article_id_list=3280584,3280755,3280766,3280741,3280735,3280709,3280820,3280777&tc=4

 

China will overtake the United States in hi-tech and advanced military manufacturing within a decade, according to a prominent Chinese strategist. “Overall, the decline of the US manufacturing industry and its weakened competitiveness in the global market have become an irreversible trend,” said Lu Yongxiang, former vice-chairman of the National People’s Congress, in a commentary published in the Chinese Journal of Mechanical Engineering on September 9. Lu, who is also former president of the Chinese Academy of Sciences, is known for his foresight as a mechanical engineer, and has been influential in helping to shape the Chinese government’s long-term development strategies. He has also served as the director of the expert advisory board for the “Made in China 2025” programme under the State Council, China’s cabinet. While the US has maintained its lead in hi-tech and advanced military equipment production, its advantages are rapidly diminishing, according to Lu. “It is estimated that by 2035, ‘Made in China’ will surpass the United States and become the global leader,” Lu said in the article. Lu also predicted that China’s economy will be larger than America’s by that time. “The world will enter a new era,” he added. In 2010, China’s manufacturing output surpassed the US according to the Chinese government, which cited statistics from the World Bank. However, Chinese factories lagged significantly in terms of technology and product quality. In 2015, Beijing launched a 10-year plan to narrow the gap, and this plan is expected to be renewed every decade. However, “Made in China 2025” has since drawn significant responses from Washington and its allies. Both the Trump and Biden administrations have imposed measures such as trade tariffs, semiconductor export controls and “small yard, high fence” policies to restrain China’s development. Yet, according to an investigation by the South China Morning Post, most of the goals outlined in the “Made in China 2025” plan have already been achieved. Among them, the rise of high-end industries – such as shipbuilding, electric vehicles, drones, renewable energy, and industrial robots – has been much faster than expected, leaving behind competitors in the United States and other developed countries. Last year, Chinese shipyards secured orders to build more than 1,500 large ships worldwide, while only five orders went to the US. China contributed about one-third of the total global manufacturing output last year, roughly double that of the US. Still, China’s manufacturing sector lags behind the US in some advanced fields, especially in advanced weapons production, according to Lu. “Lockheed Martin’s pulse line in the United States maintains an annual assembly capacity of only 12 aircraft, but during wartime, relying on global supply chain collaboration, it can produce one aircraft every two days,” he wrote. China has now produced more than 200 J-20 stealth fighters, surpassing the number of F-22s made by the US, but far fewer than the more than 1,000 F-35s that have been made. China has produced only two operational aircraft carriers, while the US has 11.

 

According to US media reports, some senior American military officers say that a war between China and the United States could break out as early as next year. China, meanwhile, is undergoing a painful economic transformation, with traditional industries such as real estate, retail and fossil fuel-powered car manufacturing shrinking, resulting in significant job losses. The average output measured by value of a Chinese worker is also significantly lower than the average American worker. “We must turn the crisis into opportunities,” Lu wrote. A long-term advantage of China’s manufacturing sector was in technological innovation, he said. “China’s research and development intensity has reached 2.64 per cent [of GDP], surpassing the average level of [European Union] countries,” he wrote. Advanced infrastructure also helps create an excellent environment for investment in manufacturing. “China not only ranks first in the world in terms of the length of high-speed rail and highways, but we also lead in the ultra-high-voltage transmission network. “Furthermore, China is also at the forefront in the construction of gigabit-level optical cables and 5G broadband wireless communication networks,” Lu said. “China not only possesses a vast pool of innovative human resources but also the world’s largest and rapidly growing domestic market for manufacturing. This makes China an irresistible attraction for global innovative talent and international capital.” Although the birth rate is declining, China’s quality of life has improved, which has also helped to increase the competitiveness of its manufacturing sectors. China’s average life expectancy is now 78.6 years, while the US sits at 77.5 years, according to government data. “A nationwide health and epidemic prevention network, a healthcare database, and advanced facilities for medical research and clinical medicine covering a population of 1.4 billion provide a solid scientific and technological basis for national health,” Lu said. The cause of the decline in US manufacturing lies in strategic misdirection, a lesson that Lu said was worth learning. “In the global division of the manufacturing industry chain, the United States has transferred labour-intensive, low value-added manufacturing to developing countries, while focusing on retaining hi-tech research and development and vigorously developing virtual economies such as stocks, securities and financial investments,” he wrote. “However, due to excessive financial bubbles, constant provocation of international conflicts, and intense partisan strife within the country, the US manufacturing industry is accelerating its shift from the real to the virtual economy. “The ageing of infrastructure in the United States, coupled with the declining attractiveness of manufacturing to the younger generation, has also accelerated the continuous decline of US manufacturing.” Both candidates in the US presidential race have made revitalising the manufacturing industry one of their top priorities. US Vice-President and Democratic candidate Kamala Harris said she would boost investment in hi-tech industries such as chips and aerospace. The Republican contender, former US president Donald Trump, promised radical measures to bring manufacturing jobs back to the country. During a campaign speech last Wednesday in Savannah, Georgia – a vehicle manufacturing hub and home to one of the country’s largest ports – Trump said a vote for him would result in a “mass exodus” of manufacturing from US allies South Korea and Germany, as well as economic rival China. “We will take other countries’ jobs. We’re going to take their factories,” he said.

[mattee2264]

It is pretty stupid really. China want us to take their low-skill manufacturing jobs so they can move up the value chain and take advantage of the scientific and technological capabilities they've been building as well as their strategic resource base. 

 

 I can't help feeling that long term China may well be an absolutely fantastic investment bet to the point that it probably doesn't matter whether it may be currently overbought on the assumption that the stimulus package (and assumed future stimulus packages) prevent an economic depression.

 

 Short term things seem murky though. A consumer economy is easy to stimulate with stimulus checks and low interest rates. But investment has been a huge driver of the Chinese economy and there is a massive overhang of malinvestment and even low interest rates and easier credit conditions are unlikely to be enough to stimulate investment. And if the government tries to replace the investment spending by making its own investments a further misallocation of capital is even more likely.  

[nsx5200]

https://www.wsj.com/world/china/for-chinese-tech-startups-beijing-fills-a-funding-void-left-by-vcs-deeb0e2c?mod=hp_lead_pos8

"A sharp drop in venture-capital funding for Chinese startups is leading Beijing to be more involved in grooming the country’s tech industry, a strategy that threatens to handicap China’s efforts to catch up with Western technologies in the long run."

"State-owned companies with minimal tech connections are joining the push. Kweichow Moutai, a leading producer of baijiu, a liquor served at state banquets, and its smaller rival Luzhou Laojiao recently made investments in chip-related companies. "

 

Source from WSJ, a source with known anti-China bias, so calibrate accordingly.

 

A different dynamic than what we in the U.S. are used to, so maybe it's worth taking another look at those state-owned companies that have bond-like qualities, now with a lottery upshot (or unnecessary drag...).

[Luke]

Chinaaaaaaaaaaaa!!!!

 

 

[Luke]

Picture of @RichardGibbons

 

[RichardGibbons]

3 hours ago, Luke said:

Picture of @RichardGibbons

 

 

LOL!  I'm awesome!