Moody’s warns US, China it’s time to change their ways

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Moody’s Investors Service is actively and innocently prodding the two largest bears in the world economy.

Experts at the agency threatened to remove Washington’s final AAA credit score next month. The increase in US 10 time bond yields to 17-year peaks was exacerbated by that volley.

Beijing was the next city to speak Moody growl this week. As Asia’s largest economy struggles with an economic slowdown and a worsening real estate crisis, Moody’S changed its outlook on the Chinese government of debt from” stable” to “negative” on Tuesday ( December 5 ).

A day later, Moody’s went even further by telegraphing potential rating steps against state-owned bank tycoons, numerous Foreign government-backed organizations funding system assignments, and even Hong Kong and Macau.

Threatening downgrades for the Industrial and Commercial Bank of China Ltd., China Development Bank, and another behemoths will undoubtedly work if Moody’s is attempting to capture the attention of Chinese leader Xi Jinping. It will also affect international investors who are concerned that Beijing is n’t moving quickly enough to contain contagion risks.

In general, the urge is to respond violently to these instructions. The group of US President Joe Biden carried out that action.

Treasury Secretary Janet Yellen responded to Moody’s risk to drop by saying,” This is a choice I disagree with. Treasury securities continue to be the world’s top safe and liquid asset, and the American market is ultimately strong.

China is also pushing up. Issues of Moody about the aspirations of China’s economic development and fiscal sustainability are unnecessary, the Ministry of Finance of Xi stated on Tuesday, expressing its “dissatisfaction.”

Beijing added that the fallout from financial and property issues is” stable” and that it is working to “deepen measures to tackle risks and challenges.” However, it’s important to take into account the potential benefits of rating agencies like Moody making a timely call for stronger action against the two economical powers.

Janet Yellen, the US Treasury Secretary, disagrees that the country merits a upgrade. Asia Times files / AFP picture

The rules of economic gravity however apply, as Moody’s served as a helpful warning to Biden, Yellen, and Jerome Powell, chairman of the Federal Reserve, in the case of America.

Faith in the money is rapidly eroding as the US federal loan surpasses$ 33 trillion, Biden’s White House raises spending, and the Fed tightens its restrictions with the most vehemence in years.

The price increases in gold and cryptocurrencies are merely the most recent example of how traditional Bretton-Woods economic realities are clashing with contemporary disregard for the ways in which markets you influence perhaps the largest economies.

China, as well. The 24 members of the Communist Party’s Politburo will soon meet to discuss policy priorities and determine rise objectives for the upcoming year. Following that, a course may be charted by the annual Central Economic Work Conference, which will bring up municipal and central government leaders.

A development goal of around 5 % is anticipated for 2024, according to economists at JPMorgan, Standard Chartered, and other major investment bankers.

An optimistic growth target, according to Goldman Sachs economist Maggie Wei,” may help lessen the risk of China falling into a self-fulfilling cycle of melancholy expectations, more depressing growth, and reinforcing negative expectations.”

However, Moody’s is reminding group leaders that economic gravity is more difficult than that.

According to Moody’s, the government and larger public sector may help financially strapped regional and local governments and state-owned enterprises in China, according to its reasoning.

When Moody’s warns of “increased dangers related to functionally and consistently lower medium-term economic growth and the continued reduction of the property sector,” it also speaks for many.

However, it is implied in bold font between the lines that many international investors are n’t buying Xi’s promises to carry out audacious structural reforms. And how new stimulus increases are then “posing wide downside risks to China’s macroeconomic, economic, and institutional strength,” according to Moody.

Chinese President Xi Jinping claims that he now favors more expansion driven by the private sector. Online Screengrab image

China’s finance minister responded by saying that mainland growth is improving in the October–December quarter and that the Chinese economy will account for more than 30 % of global GDP in 2023. That would be consistent with predictions made by the International Monetary Fund ( IMF).

However, there is no timeline for taking action to grow&nbsp, better, rather than just faster, in China’s new rhetoric. According to scholar Lee Lu at Nomura Holdings, more stimulus may become necessary in the short term. We also think it’s too early to say the bottom, he says, “despite the numerous trigger actions announced recently.”

The good news is that Premier Li Qiang is thought to have received Xi’s approval to speed up efforts to reinvigorate the private sector. Li’s team unveiled a 25-point plan package next month to level playing fields and increase funding for private companies.

Eight economic officials and firm tanks are involved in the program, including the All-China Federation of Industry and Commerce, the People’s Bank of China, National Administration of Financial Regulation, China Securities Regulatory Commission, &nbsp, and National Development and Reform Commission.

The goal is to significantly raise the loan to private enterprise ratio in order to increase innovation and productivity and support more powerful supply chains. According to Li’s group, the goal is to guarantee” ongoing revenue solutions” for private businesses that refrain from “blindly stopping, suppressing, withdrawing or cutting off money.”

The NDRC stated this week that China “is comfortable and more capable of achieving long-term robust growth, and constantly bringing new impetus and options to the earth through China’s accelerated advancement.”

According to scholar Diana Choyleva of Enodo Economics,” Beijing is serious about getting funds flowing to the healthier components of the home field, whether it be personal or state-owned.” &nbsp, They are not satisfied with entrusting the choice to the businesses, which have discriminated against the private market for a number of factors.

Jumpstarting the creation of a high-yield bond market to expand China’s money markets universe is an essential component of the business. Theoretically, a lively and varied range of debt offerings would boost options for private sector financing and boost China’s appeal to investors.

These, Xi’s efforts to make the yuan more popular on international businesses are advantageous. As concerns about the US dollar rise, the battle is gaining momentum. Nothing could hasten that progress more quickly than swiftly and openly putting in place significant reforms.

Here is where Xi and his team needed to win back the confidence of international investors. It is important to note that The Moody’s news did n’t destroy Chinese assets.

The most significant lesson from the Moody’s statement, according to economists at advisory organization China Beige Book, is that their team takes years longer than the majority of China viewers to reach an obvious conclusion. Little brand-new around. Continue.

However, analysts at Citigroup Global Markets predict that in 2024, China’s investment-grade payment issues will be more alluring than those of US counterparts. Following the Moody’s information, Citi experts wrote,” The market has now priced this in to some extent, and China investment-grade has some price.”

In Chongqing, China, a butler is seen strolling along dingy bridges with brand-new residential properties in the distance. Photo: Zhang Peng, LightRocket, CNBC Screengrab, and Getty Images

As Beijing works to regulate real estate markets, Citi experts also cited China’s” stronger, but still fragile micro story.” Chinese money bonds with an investment class are currently up about 5.4 % in 2023.

According to Citi researchers,” China risks are primarily in the price.” The Chinese offshore credit market, which is regarded as an asset and money diversifier for regional investors, tends to do well in times of inland equity-market volatility.

Analysts ‘ concern that China’s time of raising GDP rates solely through stimulus and funding is over, however, is where Moody makes a point.

For starters, “remaining plan room may be limited, as we believe central authorities needs to balance moral liability problems when supporting local governments with substantial debt burdens,” according to scientist Samuel Kwok at Fitch Ratings.

Another is that the quality of mainland growth can only be improved by strong financial retooling that unlocks China’s longer-term growth potential. This trend toward trigger over reform explains why S&amp, P Global Ratings predicts that China will grow below 5 % into 2026.

According to S&amp and P record analyst Eunice Tan, China’s real estate market is still under stress despite stimulus. The cash patterns of property developers and heavily indebted regional government borrowing vehicles are being dented by limited access to credit assistance and higher corporate debt utilize.

As a result, S&amp, P’s Tan claims that the rise website for the Asia-Pacific is moving from China to South and Southeast Asia. Tan notes that this change may limit China’s lenders ‘ medium-term face while enhancing those of India, Vietnam, the Philippines, and Indonesia.

China’s imports decreased by 0.6 %, despite data released on Thursday showing a 0.5 % increase in exports in November year over year. More policy supports are required to promote demand, according to a word from UBS analysts, and the data more dashed hopes of regaining China’s consumption-led economy.

According to OANDA researcher Kelvin Wong, “domestic need has remained weak in China despite continued revival efforts by policymakers via intended monetary and fiscal stimulus steps.”

Therefore, according to Wong,” It seems that the previous one-month treatment of transfer growth recorded in October is probably a “blip” and November’s bad year-on-year growth rate suggests the rolling twelve months of bad growth trend in imports remains intact.”

At the Horgos Port in the autonomous region of north China’s Xinjiang Uighur, business containers can be seen. Image: Xinhua

Global traders are anxiously anticipating the Politburo’s next chamber event as difficulties mount. This once-every-five-year program typically takes place in early December.

The fact that it has n’t been scheduled yet has led to rumors that Xi wants to address a number of pressing issues, such as rising local government debt, deflationary pressures, and real estate to record youth unemployment.

As a madly polarizing 2024 presidential election draws near, the US even faces significant obstacles. The US government’s estimated annualized loan interest payments have increased to the$ 1&nbsp, trillion level, among other things.

Shareholders are free to disregard the financial paths in Washington and Beijing that Moody’s, S&amp, P, and Fitch have to say. However, as payment prospects deteriorate, it is important to keep in mind that some observers, analysts, and investors are n’t buying the party line, despite Biden and Xi’s insistence that they are on top of their individual debt problems.

Following William Pesek on X, previously Twitter, at @WilliamPess

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‘Crazy rich’ Chinese making headaches for Singapore 

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SINGAPORE- &nbsp Deng Xiaoping, China’s past liberal elite who unlocked the once-closed country to the outside world, when famously remarked that “if you open the window for clean air, you have to expect some flies to blow in.”

It’s a proverb that holds true in Singapore as the city-state welcomes an increasing number of carefree, high-net-worth Chinese only to find that not all of their investment is tidy.

2023 was anticipated to be a time of economic growth for China. Instead, Asia’s largest economy has experienced its largest capital outflow in years, with rich Chinese nationals being pushed to Singapore as an immigration secure haven amid slow growth, a regulatory crackdown on private enterprise, and ever-expanding domestic societal controls. In addition, &nbsp,

Singapore, known as the” Switzerland of Asia” due to its political neutrality and accessible banking services, is feeling the inflow of Chinese currency very strongly. High-net for individuals from Hong Kong and mainland China are thought to have played a role in the city-state’s report capital inflows over the past two years.

In turn, this has led to skyrocketing real estate and rental costs, which earlier this year helped prices reach a 14-year great. Tales and pictures of” crazy rich” Chinese emigrants flaunting their money in difficult times have gone viral in the meantime, and many people in Singapore have been offended by the outward displays of wealth.

Eugene Tan, a political scientist and law professor at Singapore Management University ( SMU), told Asia Times,” It should not surprise us if Singaporeans are concerned and perceive their city-state is becoming an playground for the rich and feeling extremely priced out.” There is undoubtedly social pressure on the government to solve perceived injustice.

In fact, the political sensitivity of Chinese capital inflows has increased as a result of the arrest and charges of 10 Chinese nationals in August by local authorities, who have been accused of crimes ranging from money laundering to illegitimate playing and scamming.

Cash and other assets worth about S$ 2.8 billion ($ 2 billion ) have so far been frozen or seized in the case. Members of exclusive neighborhood golf clubs and contributors to neighborhood organizations who chose to immigrate and open new businesses in Singapore are among the accused.

One or more of those who are allegedly facing claims have connections to one family offices that the ultra-rich have established to manage their money and investments and that were originally given tax breaks by the central bank.

With minimal income tax rates, no taxes on capital gains or inheritances, strict financial privacy laws, and good incentives for multinational corporations to set up corporate headquarters, this little Southeast Asian country of 5.9 million has long offered banking and investment management services to wealthy people.

Investors can also become permanent residents, though the minimum investment requirement was significantly increased in March from a previous requirement of at least S$ 10 million ($ 7.4 million ) invested in the local business entity, fund, or family office. From 2020 to 2022, about 200 individuals received PR andnbsp through these investments.

In a nearby Straits Times report, rich mainland Chinese flaunt their tastes. Twitter Screengrab and Straits Times picture

Rich island Chinese looking for a way out are drawn to geography and culture as well. About 70 % of Singapore’s people is of Chinese descent, with Mandarin and other frequently spoken official languages being one of the city-states. Popular provincial Chinese cuisines have, have n’t, and also have multiplied as more mainland Chinese workers moved to Singapore.

The incident raises “legitimate concerns whether the emigration regime is weak for that lawlessness is being “imported” into Singapore,” according to SMU’s Tan, even though the government of Singapore has claimed that the current arrests demonstrate its self-proclaimed zero-tolerance for crime and authorities have started a review of anti-money laundering rules for individual family offices.

Social scientist Chong Ja Ian of the National University of Singapore ( NUS) claimed that the case of money laundering involving Chinese nationals “indicates the tension between the need for accountability and effective regulation on the one hand, and the desire to keep bank secrecy and ease of business to get wealth, respectively.” It is challenging to have your cake and eat it to, he continued.

A variable capital company (VCC ) scheme, similar to those well-known in offshore hubs like the Cayman Islands and Luxembourg, has been seized by investment management firms. It offers tax and legal protection for hedge funds, venture capital firms, and private equity firms among others. More than 1, 000 VCCs have been established, re-domited, or established in Singapore this time.

In fixed asset investment commitments for Singapore&nbsp, a record S$ 22.5 billion ($ 16.8 billion ) in 2022, nearly double last year’s S$ 1. 8 billion. According to the Monetary Authority of Singapore ( MAS ) and the central bank, &nbsp, with 76 % sourced from abroad and 88 % invested in overseas assets, the asset management industry oversaw and/or S$ 4.9 trillion ($ 3.6 trillion ) in 2022.

Additionally, there was a huge increase in the number of home offices and single-family offices overseeing the assets of the wealthy and occasionally well-known people last year. The number of individual family practices increased from really 400 in 2020 to 1, 100 in 2022, according to the MAS.

According to the Boston Consulting Group, Singapore now has more than 800 multi-family agencies than it did just 100 years ago.

According to NUS’ Chong, the increase in home offices raises concerns about Singapore’s potential benefits. According to him, family offices “tend to be gentle in terms of their personnel needs and frequently hire account managers abroad.” Furthermore, if money is being moved around a lot, portfolio investments typically do n’t have the same direct positive effects on the local economy as foreign direct investments.

Fund managers in Singapore have been cited by Bloomberg, &nbsp, Financial Times, and other global media outlets as saying that despite significant new money inflows, family offices have largely shied away from investing in capital markets, with accounts of rich newcomers rather lavishly purchasing condominiums and golf club memberships.

According to property consultancy OrangeTee &amp, Tie, andnbsp, which included nearly one-quarter of the 425 recorded “luxury” home purchases, defined by values of at least S$ 5 million ($ 3.7 million ), Mainland Chinese were the top foreign buyers and not the bottom of private property in Singapore in 2022.

Residential real estate prices in Singapore increased by 14 % last year, according to data from the Knight Frank Real Estate Consulting Group. &nbsp,

Authorities increased the property tax charges imposed on Singaporeans and permanent occupants who buy andnbsp, second- and third-year homes in April in an effort to calm the marketplace. The tax was set at an eyewatering 60 % for international buyers. According to reports, foreign buying andnbsp accounted for 7 % of all real estate transactions in the first quarter of this year, an increase from roughly 6 % from 2017 to 2019.

Singapore-housing-property-society, FOCUS, by Idayu SupartoThis photo taken on January 23, 2010 shows people playing basketball in front of the Pinnacle@Duxton, a made by government public housing apartment in Singapore. Eager shutterbugs lined their tripods across the fences overlooking a panoramic skyline of Singapore’s city centre as families and curious visitors milled around the 156-metre high rooftop garden. Tall turnstiles guard its entrances and visitors are required to pay an admission fee of five Singapore dollars to see the view. AFP PHOTO/ROSLAN RAHMAN / AFP PHOTO / ROSLAN RAHMAN
The cost of accommodation in Singapore is constantly rising. Roslan Rahman, AFP, and Asia Times Files

Since then, the demand from foreign buyers has decreased to about 4 % of all transactions so far in 2023. According to &nbsp, the MAS, which on November 27 stated that personal prices may continue to fall as a large number of innovative products are scheduled for completion, residential property prices have since moderated from an increase of 11.4 percent year over year in the first quarter of 2023 to 4.4 % by the fourth quarter.

The Financial Times reported in April that the MAS had indirectly directed andnbsp, bankers, and regulators to avoid talking about the cause of rising cash outflows. An unnamed executive&nbsp, who was quoted in the report, said,” We have n’t been explicitly told not to talk about China, but there is a sense that talking about it publicly will not be welcomed.”

The central bank has advised money managers against aggressively courting company from Hong Kong because the region has experienced heated political unrest in 2019 and has lost waves of international businesses and executives as a result of alleged extreme Covid-19 lockdowns. Singapore has worked to avoid the perception that it is taking advantage of China’s problems.

In relation to current arrests of Foreign nationals related to money laundering, Singaporean officials have more lengthy denied any pressure from Beijing.

There has been some rumor that this operation was carried out at China’s request, both domestically and internationally, in media sources. Regarding the August prosecutions, which included people wanted in China for fraud and illegitimate online gaming, Josephine Teo, Singapore’s following minister for household affairs, told parliament in early October.

According to SMU’s Tan, the idea that Singapore has acted in response to Chinese pressure “makes for eye-catching stories but fails to recognize Singapores ‘ acute awareness to its independence being trampled on.” While dealing with transboundary illegal activities is crucial, He&nbsp stated that” Singapore wo n’t be coerced or bullied into serving as a policeman for China.”

According to NUS Chong, if Singapore comes to be seen as a healthy destination and an outflow, that was “introduce problems” in Singapore-China ties. If Singapore keeps drawing in a lot of money and the PRC market finds itself in need of more money to spur growth or deal with its debt problems, he said, Singapore will have to take that risk.

Despite speak of sluggish consumer demand, China’s economy has not yet experienced the post-pandemic recovery that many had predicted. Instead, the growth of the second-largest economy in the world has sputtered, and a widening interest rate difference with the US has contributed to the renminbi’s 16-year low, making it one of Asian currencies that has performed the worst this year, falling by 6 %, measured andnbsp, against the U.S. money.

China has seen net capital outflows in 2023 for the first time in four years, according to Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis SA, pointing to negative foreign direct investment ( FDI) flows despite a sizable trade surplus. She continued by saying that fixed-income outflows and loss pressure on the renminbi have been exacerbated by the US Federal Reserve’s aggressive policy.

According to China’s data, international businesses operating there are not simply declining to spend their profits but are also, for the first time, massive online sellers of their existing investments in Chinese businesses and repatriating the funds. In the first three quarters of 2023, FDI&nbsp’s outflows exceeded$ 100 billion, and analysts predict that they will continue to do so as a result of trends, current & infrp.

In display slides reviewed by Asia Times, Herrero stated that” the recent tolerance of the Fed’s voice is helping to succumb amortization pressure and may also help plant off the capital outflows.” She continued by saying that a real estate problems, declining industrial income, and stagnant economic growth have all contributed to net capital outflows into China’s stock markets.

Chinese stocks have been among the worst performers in the world in 2023, with an annual loss&nbsp of 9 % for the MSCI China Index, following a 23.6 % decline for 2022 and 22.8 % for 20, despite initially optimistic expectations. Chinese shares traded in Hong Kong, Shanghai, Shenzhen, and New York have lost$ 955 billion in market capitalization this year, according to Bloomberg data.

Regarding concerns about Singapore’s growing unaffordability for visitors, Nydia Ngiow, a managing director at BowerGroup Asia, an consulting firm for policy advice, stated that” for sentiments did not stem from the new influx of Chinese citizens.” Singapore’s rapid economic growth over the past few decades has been fueled by policies that promote business and wealth, which ultimately led to an increase in inequality.

The rich should pay more, according to Singapore’s taxman. iStock / Getty Images pictures

Ngiow observed that despite Singapore’s efforts to court the powerful, government policies have recently undergone a “leftward shift.” Ngiow stated that “examples of these steps include increased taxes on large incomes and pleasure goods, such as luxury cars, and a proportionate increase in taxes based on the value of private property.”

This year, the city-state increased its tax rate from 220 % to a staggering 320 % on high-end vehicles with an open market value greater than S$ 80, 000 ($ 59, 560 ). Along with making improvements to extravagance property taxes, government increased the personal income tax rate for top-tier workers in 2022, focusing on the top 1.2 % of citizens.

While the migration of Chinese citizens to Singapore is undoubtedly a moving point for the nation because it highlights the number of ultra-wealthy people, Ngiow continued, noting that “deep financial assistance and large investment flows between the two nations go much deeper than disputes over some businessmen,” this is unlikely to significantly strain relations between China and Singapore.

Observe Nile Bowie @NileBowie on X, originally Online.

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Upgraded Singapore-China free trade agreement among 24 signed at annual top-level meeting

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Mr. Wong and Vice Premier Ding concurred during the JCBC meeting that cooperation between the two nations had been” comprehensive and progressive” and that both sides should” continue to adopt a forward-leaning approach,” according to Singapore’s Prime Ministers Office ( PMO ) on Thursday.

The impact of climate change, the digital revolution, and international political tensions on lives and livelihoods were noted by Mr. Wong and Mrding&nbsp at their earlier bilateral meeting, according to PMO.

They “also affirmed the significance of fostering greater human interaction and trade between the two nations, as well as exploring partnerships to improve communication, including cross-border economic communication,” according to PMO.

Mr. Wong and Vice Premier Ding co-chaired the JCBC meeting as well as the 24th China-Singapore Suzhou Industrial Park Joint Steering Council ( JSC), the 15th Sino-Somali Tianjin Eco-City JSC, and the 7th Chinese-Southern Singapore ( Chongqing ) Demonstration Initiative on Strategic Cooperation.

These JSCs evaluate the three lineup government-to-government jobs ‘ development and talk about potential future collaboration.

UPGRADE PROTOCOL CSFTA FURTHER

Singapore will gain more market access to China’s service sectors under the China- Singapore Free Trade Agreement ( CSFTA ) Further Upgrade Protocol, according to a press release from the Ministry of Trade and Industry ( MTI).

In 22 industries like construction, retail and wholesale, and structural and industrial planning service, China has committed to not limiting foreign ownership restrictions for Singapore investors.

China was Singapore’s fourth-largest buying companion in the service sector in 2021, while Singapore was the third largest.

According to MTI, Singaporean investors and service providers will “also like more democratic and clear guidelines that level the playing field for them to participate in and trade with China.”

According to MTI, a fresh services book will be established in the area of telecommunications to help business collaboration for innovation and development as well as provide clearer rules and increased transparency for regulatory processes.

Chinese Minister of Commerce Wang Wentao and Singaporean Minister for Trade and Industry Gan Kim Yong signed the CSFTA More Upgrade Protocol.

” I hope companies will take advantage of this increased partnership to acquire options in China, and I look forward to working more closely with my Chinese rivals to improve our assistance in areas of common attention,” Mr. Gan said.

China’s initial extensive diplomatic free trade agreement with an Asian nation, the CSFTA, went into effect in 2009.

When it was updated in 2019, bilateral trade and investments increased on average by 7 % and 7.7 %, respectively.

The 16th JCBC gathering in 2020 saw the start of negotiations for this most recent update, which ended last quarter.

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Axiata names Nik Rizal Kamil as Group CFO

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visit is essential to the group’s mission to grow into a long-lasting dividend company.Prior to February 2021, he served as the team CFO at RHB Bank.As of January 1st, 2024, Axiata Group Bhd will be without a group CFO, and the position has been filled by Nik Rizal Kamil Nk Ibrahim…Continue Reading

Is there a basic problem with autonomous driving?

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( See&nbsp,” Artificial intelligence faces serious roadblocks,” Asia Times, July 18, 2017 ) The viability of autonomous vehicles for general use in public traffic has long been questioned. Years later, after spending billions of dollars, we are faced with the fact that the technology still falls short of standards for dependable public traffic use.

When the autonomous-driving division of General Motors, Cruise, was shut down by the California Department of Motor Vehicles next fortnight, this shortcoming came to light. The expulsion was brought on by an event on October 2 in which a human-operated aircraft struck and pushed the feminine pedestrian into the course of an uncontrollable Cruise car.

She was dragged on 6 meters after the driverless vehicle collided with her, came to a stop, and then tried to pull over to the side of the street. Undoubtedly, the demands of this circumstance were not met by the vehicle’s computer system.

It’s not because there has n’t been enough technological investment; through extensive road operation, billions of dollars have gone into developing autonomous vehicles with sophisticated sensors and sophisticated software.

There was a perception that these cars were getting ready to handle the complexity of regular highway customers. In addition to GM’s defeat, the self-driving vehicle manufacturer TuSimple&nbsp Holdings is liquidating, wiping out billions of dollars in market value.

Despite these ongoing setbacks, optimists continue to believe that artificial intelligence ( AI ) software will eventually enable vehicles with better driving performance, potentially saving countless lives by reducing human-caused accidents.

Prior to the disqualification, GM had estimated that its autonomous taxi business would generate US$ 50 billion in revenue by 2030. The subsidiary was valued at$ 30 billion in a 2021 funding round, reflecting this upbeat forecast.

Why is this software so difficult, given the wonders brought about by new AI software technology?

These self-driving cars stand out from other robots made for commercial or industrial settings in a significant way. Regular robots are made to perform predetermined programming tasks, like soldering or manufacturing painting.

To reduce harm to the creation line, the robot stops or engages in predetermined techniques if expected events interfere with the assigned process. These default-programmed techniques can be confidently carried out in standard production environments.

Then think about a self-driving car. Mechanical performance can become programmed because the planned activities are constrained if it is intended to operate in a controlled environment where things are repetitive, such as closed streets or restricted tracks. For example, driverless trains on inter-airport rail lines run properly because track access is restricted. The cameras may pick up on any obstructions and stop the train if they occur.

However, an autonomous car like the GM vehicle, which can move easily through available traffic, must function properly under virtually limitless circumstances. In essence, it is anticipated that the car will mimic human knowledge. Despite assertions that these cars will surpass people drivers, human knowledge continues to be important due to its special abilities.

Customers accidents are by nature arbitrary occurrences that differ from one another in some ways. Rapid considering and access to information that the vehicle robot cannot see, such as external data that automated sensors might not be able to pick up, are necessary to handle such situations. No amount of training can get the car ready to handle any kind of transportation situation.

To” coach” these vehicles, thousands of kilometers of traffic driving have been used, and billions of dollars have gone toward software upgrades. However, they occasionally run into situations where the” trained” conditions do n’t match reality and the vehicles perform worse than what would be expected of human drivers.

Will additional investment overcome these mechanical restrictions, and will autonomous vehicles outperform people drivers? are the remaining questions. They’ll probably find their specialty in handled settings, in my opinion. Taking the place of common people driving? Hmm.

Henry Kressel is a long-time private equity investment in tech companies as well as an innovator, technologist, and writer.

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What we know about Evergrande’s financial future

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BEIJING: A Hong Kong court granted Chinese real estate behemoth Evergrande until the end of January to put together a restructuring plan on Monday ( Dec4 ), giving the troubled company much-needed breathing room as it teeters on the verge of bankruptcy. The enormous debts of the real estate tycoonContinue Reading

PBOC’s Pan telling hard, uncomfortable truths

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At a moment of peak uncertainty about the direction of China’s economy, People’s Bank of China (PBOC) Governor Pan Gongsheng is surprising many by speaking in unusually direct terms.

Some of the ambiguity of the “Xi Jinping thought” era is a government big on soaring reform rhetoric and fuzzy on nuts-and-bolts specifics. It’s here where Pan’s burst of economic realpolitik is both refreshing and telling.

The bottom-line message: kindly give China some space and tolerance to pull off modern history’s greatest effort to transition away from property and infrastructure to new drivers of economic growth. Oh, and that period of 8-10% annual growth? It’s not coming back.

“The traditional model of relying heavily on infrastructure and real estate might generate higher growth, but it would also delay structural adjustment and undermine growth sustainability,” Pan told bankers in Hong Kong on Tuesday (November 28).

He added that “the ongoing economic transformation will be a long and difficult journey. But it’s a journey we must take.”

Pan went on to say that “China’s real estate sector is searching for a new equilibrium” to achieve “healthy and sustainable growth” of the “high-quality” variety.

Nor did Pan shy from discussing the biggest potential cracks in China’s financial system. He admitted, for example, that financially fragile regions in the west and north of the country may have “difficulties servicing local government debts.” Expect more defaults, in other words.

Such off-script admissions of turbulence to come are relatively rare in official Communist Party circles. Normally, the top-down impulse in the Xi era has been to project an image of economic omniscience and omnipotence. As such, Pan’s foray into straight talk is useful, intriguing and timely.

On Thursday, China’s National Bureau of Statistics released fresh signs that the manufacturing and services sectors shrank in November, fanning expectations for increased state support as the economy faces intensifying headwinds.

The manufacturing purchasing managers index dropped to 49.4 while non-manufacturing activity slid to weaker than expected 50.2.

Manufacturing data is down in a slowing Chinese economy. Photo: Asia Times Files / Imaginechina via AFP / Liang Xiaopeng

Granted, central bankers as a profession tend to speak in vague and non-committal ways. Obfuscation, in other words, is a monetary policymaker’s tool — their modus operandi — to keep all options open at all times.

A top practitioner of the discipline was Alan Greenspan, who chaired the US Federal Reserve from 1987 to 2006. As he once joked to a business forum: “If I’ve made myself too clear, you must have misunderstood me.”

Yet Pan is hardly playing rhetorical games as he telegraphs a long, bumpy road ahead. Naturally, this had PBOC watchers wondering if a new, more activist monetary strategy might be in store in Beijing.

Including, perhaps, a pivot toward quantitative easing (QE) with Chinese characteristics. Though the PBOC hasn’t officially gone the QE route, the central bank spent the last few months — Pan took the helm in July — expanding its balance sheet with aggressive lending to banks.

The PBOC’s total assets jumped 8.6% year on year in October to 43.3 trillion yuan (US$6.1 trillion), the biggest increase since at least 2014. Again, neither Pan nor his staff are talking explicitly about QE. And notable PBOC leaders of the past threw cold water on the prospects for Chinese QE.

In 2010, Zhou Xiaochuan, governor from 2002 to 2018, cautioned that QE policies, particularly in the US, were causing havoc globally.

In September 2021, Pan’s immediate predecessor, Yi Gang, warned that runaway, Japan-like asset purchases “would damage market functions, monetize fiscal deficits, harm central banks’ reputation, blur the boundary of monetary policy and create moral hazard.”

At the time, Yi said that “China will extend the time for implementing normal monetary policy as much as possible and there is no need for asset purchases.”

Yet the need for big asset purchases has gone full circle as China’s post-Covid rebound disappoints. China’s worsening property crisis is pushing the PBOC toward more assertive strategies to boost liquidity.

Some of this has been to absorb a boom in government bond issuance to add fiscal jolts to an ailing economy and to support green sector pursuits.

In a report earlier this week, the PBOC said it’s working to “unblock the monetary policy transmission mechanism, enhance the stability of financial support for the real economy, promote a virtuous economic and financial cycle, and keep prices reasonably stable.”

This has the PBOC mulling a strategy of providing upwards of 1 trillion yuan ($141 billion) in cheap financing for construction projects. Under Beijing’s Pledged Supplementary Lending (PSL) program, the PBOC will channel low-cost long-term liquidity to policy banks to boost lending to the infrastructure and housing sectors.

This plan is at least nominally QE-adjacent. Though more targeted than the QE employed by the Bank of Japan, which pioneered the technique in 2000 and 2001, and the Fed, the PBOC’s plan would make large-scale bond purchases behind the scenes aimed at depressing yields.

Economists can’t help but connect the dots and label this expansion of the PBOC’s balance sheet as “Chinese-style” QE.

Analysts are looking for signs of quantitative easing with Chinese characteristics. Photo: Facebook

“Beijing might have finally recognized the need to introduce quantitative easing or money printing for the collapsing property sector,” notes Nomura economist Ting Lu. “We believe Beijing will eventually need to reach into its own pockets, with printed money from the PBOC – such as PSL – to fill up the vast funding gap and secure the delivery of pre-sold homes.”

Economists at Goldman Sachs said in a recent note to clients “we think additional broad-based monetary policy easing is still needed to facilitate the large amount of government bond issuance and improve sentiment towards growth.”

It’s a controversial step, one that divides economists.

In an August note to clients, Robert Carnell, economist at ING Bank, warned that “QE would put the Chinese yuan under further weakening pressure, which it is very clear the PBOC does not want and would make it much harder for them to manage the yuan. It would also raise the risks of capital outflows, which they will also be keen to avoid.”

Count Carnell among economists who think the answer to China’s troubles lies with Xi’s reform team, not earlier PBOC policies. “As for government stimulus policies, these, we think, will tend to be along the lines of the many supply-side enhancing measures that we have already seen.”

Carnell adds that “the way through a debt overhang is not to print more debt, though it may be to swap it out for lower-rate central government debt, or longer maturity debt to ease debt service.

“Enhancing the efficiency of the private sector will also play a key role, though this and all the supply-side measures will take a considerable time to play out. The tiresome chorus clamoring for more stimulus is unlikely to stop in the meantime.”

This week, Xi made a rare visit to Shanghai just as his team unveiled a 25-point plan to reinvigorate private sector innovation and productivity.

Others argue that the end justifies the means. “Some traditionalists would argue that central banks should not engage in asset allocation, except through the interest-rate channel,” said Andrew Sheng at the University of Hong Kong.

“But QE has already proven to be a powerful resource-allocation tool capable of transforming national balance sheets. An innovative, well-planned QE program … could support China’s efforts to tackle some of the biggest challenges it faces,” he adds.

Like central banks in high-income countries after the 2008 financial crisis, “the PBOC could still avail itself of quantitative easing, with large-scale purchases of government bonds giving commercial banks more liquidity for lending,” notes Shang-Jin Wei, a former Asian Development Bank (ADB) economist.

Wei adds that “if the goal is to achieve higher inflation – as is the case in China today – there is no mechanical limit on the additional stimulus that can be applied to the economy through this channel.”

Wei channels Mario Draghi when he argues “China needs the ‘whatever it takes’ approach that the European Central Bank pursued a decade ago when it, too, was facing a debt-deflation spiral. The PBOC should publicly declare a strategy to monetize a big portion of government debt and to incentivize more private equity investment.”

Pan hasn’t done that, of course. And it’s debatable that he will. But as China grapples with an unprecedented property crisis, it will fall to the PBOC to grease the skids via liquidity as local governments dispose of bad debts.

The enterprise will echo the role the BOJ played in the early 2000s to facilitate the discarding of toxic loans undermining what was then Asia’s biggest economy.

Resolving local government debt troubles, made worse by an explosion of local government financing vehicles (LGFVs), is vital to stabilizing China’s $61 trillion financial sector while China Inc is already grappling with cratering real estate markets.

The idea, argues state-run Xinhua News, is to “optimize the debt structure of central and local governments” to improve the quality of national growth.

PBOC Governor Pan has markets dissecting his every move on rates. Image: BBC Screengrab

As China embarks on what Pan calls a “long and difficult journey” of disruption, the PBOC is on the frontlines. “Looking ahead,” Pan said, “China’s economy will remain resilient. I’m confident China will enjoy healthy and sustainable growth in 2024 and beyond.”

Yet as Pan just explained with unusual frankness, “China is experiencing a transition in its economic model” driven by a belief that “high-quality, sustainable growth is far more important” than rapid expansion.

Doing whatever it takes to get there may have China pivoting in ways most never expected – and in ways almost certain to unnerve global markets.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

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Man sues woman after losing S,500 investment following hacking of trading platform, loses

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In: South-East Asia

SINGAPORE: A man who invested S$49,500 (US$37,100) on a purported Australian foreign exchange trading platform lost all the money after the platform and its website was supposedly hacked due to a loophole in the security system.

He then sued a woman who had helped him set up his trading account, claiming that she had perpetuated a fraudulent scheme to scam innocent investors into thinking they were investing with a legitimate company.

However, the court threw out the suit in a judgment made available on Thursday (Nov 30).

The plaintiff, Mr Foo Ching Chee, claimed that he was introduced to a man named Mr Tan Choong Tat, also known as Eugene, around early 2020.

According to Mr Foo, Mr Tan said he was selling investment products for a company called Equity Advisers. Equity Advisers was purportedly an Australian licensed forex trading company headquartered in Melbourne.

Mr Tan purportedly told Mr Foo that he could make substantial profits by investing with him and another woman – Ms Ang Chew Tee, also known as Amy.

Mr Foo claimed that he relied on what Mr Tan and Ms Ang told him and remitted S$4,500 to Mr Tan in April 2020.

After this, Mr Foo said he was given more material about the profitability of Equity Advisers, in order to induce him into investing.

For example, he was told that he would make profits of between 15 per cent to 25 per cent of his investment sum if he invested more than US$10,000, and that any trading loss would not exceed 5 per cent of the investment sum.

According to Mr Foo, Ms Ang also said she was an agent of Equity Advisers and was its Singapore representative. 

As a result of what Ms Ang and Mr Tan said to him, Mr Foo invested a total sum of S$49,500 in Equity Advisers.

THE HACKING 

On Sep 29, 2020, Mr Foo was informed that his investments and profits with the company were gone. He could not log into his trading account to check his account balance.

A day later, Equity Advisers issued a notice saying that its trading platform and website had been hacked, due to a loophole in the security system.

When Mr Foo managed to access his trading account in October 2020, he saw negative values of his account balance and profits, with other investors appearing to have similar outcomes.

He wrote to the Australian Securities and Investments Commission to find out if Equity Advisers was legitimate, and realised that while there was a company with such a name offering financial services, it was a different company from the one he had invested with.

Mr Foo sued Ms Ang, claiming the sum he had invested, with interests and costs. At first, he also wanted to sue Mr Tan, but did not manage to as Mr Tan was not served with court papers within a certain time frame.

MS ANG’S DEFENCE

In her defence, Ms Ang said she was not an agent or employee of Equity Advisers and never said so to Mr Foo. Instead, she was simply a regular investor who helped others transfer their funds to the company in a voluntary capacity.

Unfortunately, the scheme turned out to be a scam and many investors, including Ms Ang, lost their money.

She was first introduced to the company in February or March 2020 when a friend took her to a presentation by the company.

She said she only got to know Mr Foo through a WhatsApp group chat created by Mr Tan in March 2020. WhatsApp transcripts showed that Mr Foo was already an investor even before he was added to the chat, Ms Ang claimed.

She said she never set out to mislead Mr Foo or defraud him, and that she genuinely believed Equity Advisers was a legitimate company based in Australia providing a live foreign exchange market trading platform.

After news of the hacking incident broke, Ms Ang said she anxiously waited for updates together with the rest of the investors but was left hanging without a plausible explanation.

She said she was also a victim of the scam, suffering losses of S$100,000 including investment accounts under her family members’ names. She said she was “in no way responsible” to Mr Foo for his own losses.

While Mr Foo made arguments on how Ms Ang had filed a police report only after Mr Foo sent her lawyers’ letters, Ms Ang explained that she did not make a report earlier as she believed it would be futile.

At trial, she said: “Frankly speaking, make police report also cannot get … back the money. Why I want to waste time?”

However, she eventually filed a police report to inform the authorities about the incident.

Magistrate Teo Jing Lu found that Mr Foo had not proven his case. Instead, evidence pointed to the “much more probable conclusion” that Ms Ang did not know that the investment scheme was really a scam in disguise.

He dismissed the claim and asked parties to file submissions on costs and disbursements.

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