Start-ups struggle to repay loans as interest rates rise, says association representing SMEs

GETTING OFF Money

Local start-up Igloo, which specializes in keyed smart digital hair for homes and businesses, is one company feeling the heat. & nbsp,

In order to survive the COVID-19 epidemic, the company took on two mortgages, but now it faces a new challenge: repaying them.

Anthony Chow, the CEO of the company, said,” We are fortunate that we are able to give up one of our money and we’re almost done with it.”

However, in order to get our shareholders’ support to expand its maturity date, we needed to refine the other one and placed in higher interest rates.

The company grew for approximately two years because it needed money to expand its operations.

Less Chance APPETITE FOR VENTURE CAPITALISTS

Startups typically require credit in order to survive, and one method is through funding from venture capitalists( VC ).

However, VCs are reluctant to take on more risks by investing in businesses that don’t clearly show evidence of revenue growth at a time when the recessionary bell is ringing.

In terms of the macro setting environment, rising interest rates, recessionary stress, etc., there is quite a bit of uncertainty. According to Mr. Patrick Lim, Director of the trade association Action Community for Entrepreneurship, which represents neighborhood start-ups.

The size and number of deals have decreased year over year as a dangerous resource, he continued.

” In truth, based on various market research, we have observed a more than 50 % decrease in overall deals completed for the first half of the season, as opposed to the same time last year.”

A FEW HARDER Reach Companies

Learning technology is one industry that has been particularly hard hit, according to observers.

In addition to dealing with higher prices, it is also experiencing a decrease in demand compared to the pandemic, when home-based teaching became the norm.

According to Mr. Jeff Ng, director of Asia Macro Strategy at Sumitomo Mitsui Banking Corporation( SMBC ) Asia Pacific, capital or resource-intensive industries will likely experience the greatest pressures because they require the heaviest debt financing. Real property and various investment-related industries fall under this category.

However, this might be advantageous for different industries, like economical services.

According to Mr. Ng, whenever there is a pattern, there are always some who gain from it and others who suffer. However, higher interest rates may ultimately cause economic growth to be below pattern for the time being.

Businesses running out of money, according to experts, will also have an effect on the supply chain, their enterprise partners, and their staff.

This is a disease or chain effect that could also have an impact on many other businesses and employees. On Wednesday, October 18, Mr. Ng told CNA’s Singapore Tonight that this can have an impact on usage and result in a general economic slump.

RESEARCHING FOR Styles

According to the industry association, in order to persuade owners of their impact, entrepreneurs must respond to styles more quickly.

It is doubling down on mentoring initiatives to help businesses swivel by assisting them in saving money and looking for opportunities to expand their operations in foreign markets.

At our ending, we look at how we can help the start-ups and see how they can evaluate their business model, assess their cost structure, and get through this trying time, according to Mr. Lim.

Igloo is addressing the cash shortage by cutting overhead costs, consolidating warehouses, and stretching every penny.

The company believes that streamlining supply chains will enable it to survive this challenging time and get back on track to achieve full-year success.

We want to prevent taking money as much as we may, Mr. Chow said,” as we think about our progress forth in 2024 and 2025.”

” In order for us as an organization to be in control of our own future, it is crucial that we enter a self-sustaining function, achieve positive cash flow, and achieve success.”

Following YEAR’S Good OUTLOOK

According to Mr. Lim, native start-ups can also prosper because Singapore receives a large portion of the funds now channeled into Southeast Asia, which means local businesses can prosper more successfully than competitors in nearby markets.

He continued by saying that investors are also more interested in industries like finance, agritechnology, ecology, and artificial intelligence, which encourages aspiring start-ups to consider cutting-edge trends and technologies.

Market participants think that while SMEs will need to continue tightening their belts in a challenging environment for the upcoming several months, the outlook for next year is better.

Overall, Singapore continues to experience extremely difficult and challenging development problems this year, so there are probably some ongoing problems. However, we anticipate some better circumstances next season than we did this month, Mr. Ng said.

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China’s GDP surprise can’t mask property mess

The unexpected rise in China’s gross domestic product ( GDP ) may provide more material for anthropologists than economists.

Spending on drinking and restaurants was one of the main use strengths, and it came at a time when some mainlanders may be excused for trying to drown their sorrows in the tumultuous real estate markets.

However, a strong dose of gravity is also necessary given the excitement surrounding the GDP’s 4.9 % increase in the three times that ended September year after year.

Despite strong retail sales, the data indicate that President Xi Jinping’s team has not yet made significant progress in its efforts to combat deflation and maintain the real estate market.

It hardly helps that economists like Louis Kuijs of S & amp and P Global Ratings point out price changes and government data revisions that could have raised third-quarter numbers. For instance, it is unclear how Beijing statisticians used producer price index calculations to account for poor business field prices.

Additionally, China announced the largest-ever decline in the value of regular exports, a move that may have been made to cover up commerce weakness as the world’s demand softened. The analytical adjustment makes annual comparisons seem more reliable because exercise is now being measured from a lower foundation.

The specifics of China’s most recent GDP data suggest that the state of Xi has more work to do to shorten GDP as investors worry about cooked books, whether intentionally or unintentionally. Additionally, the cash flows affecting island assets highlight the need to restore the property market, which can account for up to 30 % of GDP in prosperous times.

Economists are speculating about” Japanization” risks in Asia’s largest economy due to the intensifying drag in real estate and related default dramas. Property investment decreased 9.1 % year over year in the first nine months of 2023. Despite moves & nbsp’s decision to reduce the payment requirements for real estate purchases in the biggest cities in China in September, the contraction is speeding up.

In September, price drops in China’s new homes accelerated. Prices, excluding state-subsidized cover, decreased by 0.3 % in 70 towns measured starting in August.

According to Louise Loo, a China economist at Oxford Economics,” home measures remained extremely poor in September with no evidence of bottoming out.”

According to a recent report from S & amp, P’s credit analysts,” the low number of construction starts, an inventory overhang in lower-tier cities, and ever-tightening escrow restrictions will keep property sales depressed.”

Property designer Country Garden Holdings warned of impending doom this week amid rumors that it may have for the first time defaulted on dollar securities. According to economist Carlos Casanova of Union Bancaire Privée,” most of the financial downside may be traced again to contractionary house investment.” & nbsp,

The most recent real estate developer in China to be unable to pay its bills is Country Garden. Screengrab / CNN picture

China Evergrande Group is still having trouble restructuring its hundreds of billion dollars in onshore loan two years after it filed for bankruptcy. The trust of the home and the company is significantly hampered by deeper worries that developers lack the funds to finish their properties.

Economists predict that additional fiscal and monetary stimulus is on the method as a result. The business is” not out of the wilderness by any means ,” according to economist Stephen Innes, managing companion at SPI Asset Management, despite China’s second quarter figures exceeding expectations.

According to Innes, this progress portends a slight improvement in the Foreign market. To maintain steady progress, however, there are ongoing calls for more policy support due to worries about the recovery’s sustainability.

However, according to economist Zhang Zhiwei at Pinpoint Asset Management,” the advancement in fourth quarter financial data makes it less likely for the state to release signal in the fourth quarter, as the growth goal of 5 % is set to be achieved.”

The” financial recovery is still in its infancy ,” adds scientist Harry Murphy Cruise of Moody’s Analytics. The aspirin required to get over a property hangover may be provided directly to households, but this support seems increasingly doubtful.

The likelihood that China will reach its 5 % growth target this year is rising, at least statistically. UBS increased its forecast for mainland growth from 4.8 % to 5.2 % this week. JPMorgan raised its estimate from 5 % to 5.2 %.

However, UBS economists predict that the real estate business will only grow by 4.4 % in 2024. Additionally, the possibility of a Japan-like negative funk may make these numbers appear unduly upbeat.

Shareholders have been anticipating further price declines ever since July, when client rates turned negative for the first time since 2021. More new information only heightened concern about the negative consequences on consumer and business confidence.

According to economist Robert Carnell at ING Bank,” September’s inflation data remind & nbsp, us that, despite some recent firming in activity indicators, Chinese economic recovery remains challenged.”

That might entail more money coming in from the People’s Bank of China and sporadic financial outbursts from regional governments. To enhance the quality of national growth and lessen the frequency of boom / bust cycles, Xi’s team must, however, develop a stabler and more productive property sector.

According to Macquarie Group analyst Larry Hu,” home is the main concern.” According to Citigroup analyst Xiangrong Yu,” plan efforts may be stepped up moving forwards, especially for early next year, with focus on old-villain redevelopment, native debt resolution, financial expansion.”

The issue is that” at the moment, the economy is quite investment-heavy ,” according to Thomas Helbling, deputy director of the International Monetary Fund’s Asia-Pacific system.

The home problems and declining global demand were cited by the IMF as the two biggest obstacles looming over China in a recent report on the country. However, a development concept that promotes pointless loans is also true.

China’s economic unit, which is fueled by loan, needs to be revised. Instagram photo

Beijing, according to Helbling, needs to level the playing field for private companies to engage with publicly traded companies. To promote intake and increase investments in knowledge and technology to increase efficiency, it must also create a robust social safety net, according to him. Changes to pensions are also essential to addressing China’s rapidly aging population.

There is a benefit to rise if you implement those changes, according to Helbling.

According to economist Betty Wang at Australia & amp, New Zealand Banking Group, immediate action is required to stabilize the property market and boost public trust. According to Wang, if more house buyers stop making payments, the pattern will threaten the financial system’s health and cause social problems in the midst of the current economic downturn.

When she tells Bloomberg that” when it comes to home, it’s about renewing trust on the ground ,” purchase director at Fidelity International, Catherine Yeung, speaks for some.

The wider Eastern region is also in immediate danger from China’s property issues. According to analyst Ed Parker at Fitch Ratings,” the emerging market rating outlook is healthy, but the decline in China’s nbsp, property & blb, market, and higher world bond yields are important downside risks.”

Parker points out that given the impact on global trade, commodity prices, and financial market conditions, the” slowdown in China’s & nbsp, property and nfspp, sector and downside risks to its GDP growth add to risks facing EM economies.”

A sudden halt to Chinese banks lending has also cut off a crucial source of funding for many EMs, and China’s differing perspectives from different creditors on debt restructuring are delaying the signing of agreements.

All of this is not taking place in a void. Foreign developers are increasingly in danger as US authorities bond yields reach 17-year peaks. as is the larger Asia place.

China’s problems with home pose a threat to greater Asia. Photo: Facebook

According to Fitch, from 8.3 % in 2022, the emerging market median general government interest-revenue ratio will rise to 9.5 % and 10.3 %, respectively, by 2023 and 2024. According to” Parkers ,” higher-for-longer US bond yields run the risk of a greater and more persistent increase in funding costs. The pressure on finances amounts is increasing due to higher interest payments.

According to Parker, the risk in the future is that” governments will need to tighten fiscal policy to run smaller primary deficits in order to stabilize government debt / GDP, other things equal.”

No matter how near it gets to 5 %, whether for real or just statistically, this will be as big a problem for China as anywhere else. The world’s second-largest economy may experience quick business for watering holes due to the weak real estate sector, which will be at the middle of it all.

Follow William Pesek on X, formerly Twitter, at @ WilliamPessp.

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China weighs options to blunt US sanctions in a Taiwan conflict

Another academics argued in favor of a new economic alliance that was defend China from sanctions tit-for-tat. Ye Yan, an economist at China National Oil and Gas Exploration and Development Company, wrote in January that a coming” anti-sanction business system” that would enable member states to business discounted items hadContinue Reading

5 hot-button issues set to figure strongly in Indonesia’s presidential, legislative elections

THE ECOMETRY

With 270 million residents, this developing nation’s economy will still be vital in the upcoming elections. & nbsp,

According to Mr. Kevin O’Rourke, an analyst with the Jakarta-based political risk consulting firm Reformasi Information Services,” the top three concerns of the voters will remain the same, which are( eradicating ) poverty, & nbsp, job opportunity, and inflation.”

The COVID – 19 pandemic severely affected Indonesia in 2020, causing its economy to contract by 2.07 % that year. & nbsp,

However, it increased by 3.69 percent in 2021, which was a rebound. Yet last year, it saw a growth of 5.31 percent, the highest in about ten years.

However, despite having 270 million individuals, Indonesia also has approximately 26 million poor people as of March of this year. This is comparable to a poverty rate of about 9 %. & nbsp,

The largest economy in Southeast Asia has recently seen an increase in the price of grain as a result of crop loss brought on by the latest protracted dry climate. & nbsp,

Jokowi, as Mr. Widoho is more commonly known, has been monitoring Indonesian markets to make sure there is enough grain available to keep prices low.

A rise in grain prices will lead to an increase in prices. The inflation rate was 5.51 percent the previous month. It was only 1.87 percent in 2021. & nbsp,

Inflation is anticipated to be around 3 % this year, but it could be higher if the rice price situation does not improve. & nbsp,

The price of corn and other cost of living will undoubtedly be people’s top concern when they go to the polls the following year. Rice is a well-liked staple food. In addition, & nbsp,

About 204.8 million Indonesians may be eligible to vote, making the upcoming elections the largest single-day election in the world, according to the election committee. & nbsp,

Fresh voters make up more than half of the available electorate. & nbsp,

Therefore, it’s possible that prospects will talk about addressing unemployment during their campaigns. & nbsp,

According to Mr. Aditya Perdana, a political scientist from the University of Indonesia, younger voters may undoubtedly inquire about their chances of finding employment or even finding work as freelancers. & nbsp,

Indonesia’s poverty rate last year was around 5.86 percent, and it is anticipated that it will be between 5 and 5.7 percent this year. Related numbers were foreseen by Jokowi for the following month. & nbsp,

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India’s rice export ban deserves a global response

The decision by India to” embargo” non-basmati rice exports, which had formerly accounted for a third of the country’s milled rice output, in July 2023 has drawn harsh criticism. & nbsp,

Critics have further argued that India’s decision, which is the largest exporter of rice in the world, could jeopardize its claim to & nbsp, lead the Global South, and go far from its pledges to address global food challenges under the presidency of the G20 in 2023.

India’s export restrictions can also be viewed as reckless if they are motivated more by political considerations than local food safety. India’s urban middle class needs to be placated by lowering rising food costs before the March 2024 votes.

The situation in India is getting worse by the month, and the government has not yet normalized its grain business. Parboiled corn, which makes up 42 % of India’s milled wheat exports, was subject to additional restrictions in January 2023 by New Delhi. & nbsp,

Since then, rice prices have risen to levels comparable to the global food price crisis of 2007 – 2008. Since August 2023, Myanmar & nbsp has also outlawed rice exports as a potential impetus for additional nations to join the bandwagon.

When the American government andnbsp announced in late August 2023 that it would permit exports to nations facing serious food security challenges like Bhutan, Mauritius, and Singapore, a small concession was made, though this hasn’t done much to quiet foreign markets.

In any case, acknowledging the intricate balancing work they perform within the worldwide food order should be the first step in a more positive approach to engaging India and food exporting says more generally. Food-exporting nations have a double obligation to meet the food security needs of their own citizens while also acting as an honest dealer in the global food market.

After Russia’s invasion of Ukraine, when India stepped up to fill the space in global wheat exports caused by the conflict, it is possible to understand the complexity of this double authority. India’s wheat exports increased to over 1.4 million kilograms in April 2022, which is about five times higher than the amount exported in that year. & nbsp,

Nevertheless, rising domestic and international wheat prices and increased maize exports caused home shortages, which culminated in India’s export ban in May 2022 and lasts through 2023.

In addition to outlawing wheat exports, India even rolled back its extensive Covid-19 food supply system, Pradhan Mantri Garib Kalyan Anna Yojana, on January 1, 2023.

Indian men clean paddy rice during the harvest season. In India, and across the developing world, many rural families do not possess formal legal ownership of land they live and work on. Photo: iStock / randomclicks
During the yield period, Hindu men clean rice rice. Many rural families in India and other developing nations do not formally and legally own the property on which they reside and work. Image: Asia Times Records, iStock, and randomclicks

The government decided to reallocate these grains to domestic markets to & nbsp, quell inflation, and satisfy the urban middle class instead of the program’s previous allocation of additional grains for public distribution to poorer consumers.

It is easier to understand India’s current export bans on rice as an expansion of the issues the wheat industry is currently facing. Grains shortages feed into the wheat lack because wheat and rice are substitutes in India’s corn stockpiles. & nbsp,

Due to this routine, local food prices quickly increased in the middle of 2022, necessitating the need for a minimum export price restriction on rice by September of that year. In July 2023, India’s food price prices continued to rise by 11.5 %, prompting the government to impose the most recent import restrictions on corn.

Addressing the” double burden” that lies at the heart of India’s export restrictions would be a more effective strategy than pressuring the country to normalize its corn trade. A bilateral strategy might be a” end way” to stop the spread of an global food price crisis. & nbsp,

In order to close India’s financing gaps in private subsidies and guarantee affordable prices for both its lower-income and middle-class populations, this strategy would entail offering foreign capital assistance. By keeping food prices low and eliminating the need to outlaw grain exports, these subsidies may help supplement the population’s true incomes.

A bilateral strategy would also enable India to keep exporting grain abroad, predicated on the assistance it anticipates in return. In the current worldwide food attempt, this solution would make up for India’s function as a net food exporter. & nbsp,

The Global Food Import Financing Facility & nbsp, proposed by the UN Food and Agriculture Organization to the International Monetary Fund, could be expanded upon by implementing this multilateral approach. & nbsp,

This ability, which may be expanded to include India and other lower-income food exporting nations, aims to assist poorer food-importing nations dealing with balance of payments issues or budget shortages.

Countries that depend on grain business for profit, imports, and usage may start to reflect on prices andnbsp as they seek to maximize profits and reduce costs, possibly causing a situation similar to the 2008 global food price crisis. A international solution may also result in an increase in international grain prices, but the likelihood of a worse crisis could be reduced.

If an expanded American export ban resulted in an international cost crisis, this may undoubtedly cause more price instability. In light of Russia’s conflict in Ukraine and anticipated declines in grain harvests during the El Nino period, exploring international solutions is essential for the previously precarious global food supply network.

Jose Ma Luis Montesclaros is a study fellow with the S Rajaratnam School of International Studies at Nanyang Technological University in Singapore’s Centre for Non-Traditional Security Studies.

This post, which was previously published by the East Asia Forum, has been republished with a Creative Commons license.

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BYD: The top electric car maker that is not Tesla

People looking at a BYD Seal U electric car at the IAA Mobility 2023 international motor show in Munich, Germany.shabby Graphics

Tesla, an electric vehicle manufacturer, has a Chinese competition in the rearview mirror.

This week, BYD, or Develop Your Dreams, saw a sharp increase in shares after the company announced that third-quarter profits would be more than twice as high as they were last year.

BYD is currently subsequent to the US automaker in international sales and back of Tesla in monthly production.

Its success also demonstrates how rapidly China’s car industry is expanding; this month, China overtook Japan as the largest exporter in the world.

It’s a ray of hope for the slow Taiwanese economy, which is recovering from an extreme home problems and record unemployment.

On the other hand, Beijing’s tensions are also rising with many of the countries that are export industry for its electric cars or Vehicles, not the least of which are the US and European Union. This is yet another illustration of how difficult it will be for European nations to stop relying on Chinese goods as the world transitions to new, cleaner technologies.

How BYD created its aspirations

It had an edge right away because BYD was initially a power company that afterwards began producing cars, in contrast to automakers who expanded to include electrical models.

Wang Chuanfu, its chief executive, was born in Wuwei County in 1966 to a farming community in one of China’s poorest provinces. He is then reportedly worth$ 18.7 billion. As a student, Mr. Wang was raised by his older brother and sister after becoming orphaned.

He co-founded BYD in 1995 with his cousin in Shenzhen after earning degrees in architecture and the natural science of metalworking. The pair established a brand for themselves as producers of rechargeable batteries that competed with more expensive Chinese exports and were used in smartphones, tablets, and other devices.

In 2002, it was listed on the stock market. And it quickly expanded by buying Qinchuan Automobile Company, a struggling state-owned automaker.

Beijing officers were looking for a business space that China had complete even though EVs were still in their youth at the time. As the state prioritized the production of renewable energy, they introduced incentives and revenue cuts in the early 2000s.

It was the ideal time for BYD. In essence, the engines that had power EVs were the chargers it had been producing.

Warren Buffet, a US tycoon investor, invested 10 % in BYD Auto in 2008 with the intention of making it” the largest player in the global car market that was certainly going electric.”

He was correct, too. Due in large part to BYD, China currently dominates global EV output. Beijing is eager to hold onto that advantage; in June of last year, it offered EVs$ 72. 3 billion in revenue breaks spread out over four years, providing the biggest motivation at a time when sales have slowed.

Experts claim that BYD’s original business, batteries, are responsible for its expansion. Making them in-house saves BYD a ton of money because they are among the most costly components of an Vehicle. Tesla and other rivals rely on third-party makers for their batteries.

BYD founder Wang Chuanfu at his Shenzhen headquarters

shabby Graphics

According to a UBS report, Tesla’s Chinese-made base Model 3 sedan is outperformed by the BYD Seal by 15 %.

Seagull, BYD’s entry-level EV, costs$ 11,000 to purchase. Tesla just unveiled a Model 3 sedan, which went on sale for nearly$ 36 000 in China.

Additionally, the Chinese firm appears to be a strike outside of the EV market; earlier this year, it overtook Volkswagen of Germany as China’s top-selling automaker.

Tesla vs. BYD

When asked about BYD and Chinese rivals in a 2011 broadcast meeting, Elon Musk laughed. At the time, Tesla was also a fresh publicly traded company and had just unveiled the Model S, the primary vehicle they had ever introduce.

Mr. Musk perhaps regrets his reaction today. According to latest China Passenger Car Association information, Tesla sold 74, 073 Chinese-made EVs in September, a decrease of about 11 % from the previous year.

BYD, which sold 286, 903 vehicles in the same time span, was in striking contrast to this. That represents a nearly 43 % increase in sales of EVs and gasoline-electric hybrid models.

The humorous twist is that Tesla is to blame for EVs’ rising reputation in China. Users were not persuaded to purchase EVs by natural incentives until Tesla arrived.

According to Counterpoint Research auto analyst Ivan Lam, it is still” one of the favorite EV brands in China ,” and it continues to be well-liked by younger consumers.

China loosened the regulations to permit foreign companies to completely unique manufacturing and sales operations in the nation when the world’s largest auto market wanted to import more EVs. Prior to that, businesses like General Motors and Toyota required a local partner in order to actually construct factories in China.

When that changed, Tesla seized the chance. Tesla continues to be the biggest producer of electric vehicles made in China and the second-largest owner of Batteries there.

Mr Musk walks with Shanghai Mayor Ying Yong in the rain

shabby Graphics

Mr. Musk has ambitious plans to grow his presence in China and construct sizable power warehouses that would serve as a sort of EV grid and charging stations.

He has, however, also focused on India, which is positioning itself as a rival to the Chinese business, as conflicts between Washington and Beijing worsen. Following a meeting with Indian Prime Minister Narendra Modi in June, Mr. Musk stated that Tesla would arrive in India” as soon as physically achievable.”

Does the contest be won by Chinese electric vehicles?

For tradition carmakers, whose company is also driven by gasoline engines, the lane is quickly becoming more constrained. By 2030, as natural subsidies to combat climate change grow, experts predict a geological move.

European and British automakers are having trouble staying competitive. However, China’s apprehension may lead to legislation that will make the market in Europe less visible to rival Chinese automakers.

In order to shield EU producers from a” storm” of imported, less expensive Chinese EVs that it claims profit from Beijing’s incentives, the European Commission has started an investigation. Ursula von der Leyen, the country’s president, asserted that the EU was still aware of the impact China had on its thermal industry due to its” unfair trade techniques.”

However, for the time being, Europe, which is struggling with inflation and energy costs, is enjoying BYD’s cheap, efficient cars.

Foreign Batteries were the hot topic at the largest auto show in Europe, which was held in Munich in September. Mercedes Benz, BMW, and Volkswagen’s home country is struggling to maintain its production of electric vehicles for the international market.

” Value is in high demand all over the world. And according to Mr. Russo, that is a statement of common value.

And he continues,” China is the place that you provide that to the world best now.”

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Civilization and its enemies: a letter to a Chinese friend

I had the privilege of writing the entry for Professor Wen Yang’s book The Logical of Chinese Civilization next year. China Daily published an abridged version of & nbsp. How has Foreign society survived for 5,000 years while all other societies in Western Asia and Europe vanished? & nbsp,

Professor Wen contends that while the West also reflects the traits of its hunter-gatherer grandparents, China developed a sedentary lifestyle thousands of years ago. & nbsp,

I noticed that China” assimilated individuals representing six main and 300 small language groups.” China united its diverse peoples through a common method of characters and downstream infrastructure, while native spoken languages, religion, and culture flourished. This is in contrast to Europe, which required its people to convert to Christianity in order to enter Western civilization. & nbsp,

But absorption occasionally failed. The Han dynasty was in danger from the wandering Xiongnu in the third century BCE. In order to deal with north nomad, the Han Dynasty tried a variety of strategies, including paying tribute to the warriors and marrying Chinese ladies to Xiongnu monarchs and encouraging the adoption of Taiwanese culture. These strategies included offensive and defensive wars. & nbsp,

The Han Dynasty was unfortunately forced to battle the Xiongnu. General Wei Qing’s troops did not overcome a sizable Xiongnu power until 124 BCE. The risk of the barbarians persisted. The Mongol and Manchu warriors conquered all of China more than a thousand years after.

Chinese culture was so resilient that it eventually assimilated the savage invaders, though not without great suffering and loss. All of the major systems used in the Industrial Revolution in Europe were created by the Tang and Song empires. Why did China never experience the Industrial Revolution, researchers wonder. The solution may be that barbarian invaders disrupted China to the point where its advances were unable to develop.

The threat of barbarians still exists despite China’s spectacular military prowess and unmatched economic growth. I’ve heard Chinese scholars claim that the United States purposefully incubated jihadists to destroy China during numerous trips to China over the past ten years. Although I don’t think the US intentionally did this, China undoubtedly suffered as a result of British mistakes in the so-called Global War on Terror. & nbsp,

In a file photo, East Turkestan Islamic Movement( ETIM) Ethnic Uighur soldiers are seen flying their flag. Photo: Facebook

In order to have the Sunni uprising against the American-sponsored Shi’ite majority government in Iraq, the Bush administration gave General David Petraeus a blank check in 2008. Past Sunni military officers received salaries from Petraeus totaling US$ 16 million per month.

The foundation of ISIS was afterwards formed by a large number of Sunni soldiers who were funded and armed by the US. According to an a & nbsp report released by the Defense Intelligence Agency in 2012, America’s support for Sunni jihadists in Syria encouraged the rise of ISIS.

Uighurs fighting in Syria take aim at China, according to a report by The & nbsp on the Associated Press in 2017. According to the AP statement:

Since 2013, dozens of Uighurs, a Muslim majority from northern China who speak Turkic, have traveled to Syria to station with the Turkistan Islamic Party and fight alongside al-Qaida, taking important part in numerous wars. As the six-year issue comes to an end, Syrian President Bashar Assad’s forces are currently engaged in combat with Uighur combatants.

However, China’s worst worries might start with the end of the war in Syria.

Ali, who would only give his first name out of concern for retaliation against his family back home, said,” We didn’t worry how the battle went or who Assad was.” We only intended to return to China after learning how to use the arms.

The same anti-civilizational warfare that taught jihadists to kill Chinese includes Hamas.

During trips to China, I had the opportunity to hear the opinions of eminent Chinese scholars and military managers as a panel member of an Israeli foundation that was involved with Israel-China relationships. A persistent worry has been the possibility of warfare spreading to Southeast Asia. The Chinese scientists emphasized that China has close ties to numerous Arab nations and a Muslim community that supports the cause of the Palestinians. & nbsp,

I don’t intend to give China advice on how to do diplomacy because China has its own grounds for remaining impartial on Israeli-Palestinian problems. Nevertheless, some aspects of the issue might not be fully understood.

Israel’s treatment of Hamas over the past few years has been modeled after the Han dynasty in its original attempts to appease the Xiongnu. Israel urged Qatar to give Hamas$ 40 million per month in incentives. According to reports, the mind of Mossad visited Qatar in 2020 to advocate for such grants. Israel opened the Gaza borders to 20,000 Arabs working in Israel over the course of the previous year in an effort to improve financial problems. & nbsp,

The Netanyahu government believed it had all strategic bases covered and that it could bribe Hamas to remain on the sidelines as it negotiated diplomatic relations with Saudi Arabia, as I stated in an & nbsp, October 11 essay & ndrp for the American website Law & amp, Liberty. It lulled itself into a careless cloud that obscured the ancient world’s recalcitrant elements that opposed the Abraham Accords’ modernizing impulse.

That is where the” knowledge loss” began, allowing tens of thousands of Hamas jihadists to invade Israel and kill more than 1,300 people, including hundreds of children and teens. Israel’s tragedy reports are not a tool of American propaganda. The majority of them are known to us thanks to video posted online by Hamas, which aims to frighten both Israelis and the rest of the world.

According to Professor Wen’s theory, Hamas is a holdover from the pre-civilizational, wandering earth that won’t accept assimilation. A two-state option is not what Hamas wants. According to its contract, Israel must be destroyed and an Islamic state should be established in its place. This is not a typical cultural issue that can be resolved by dividing the issue in half. & nbsp,

According to Hamas’ Charter,” The Islamic Resistance Movement is a recognized Palestinian movement, whose loyalty is to Allah, and which practices Islam.” Israel will be and may continue to exist until Islam destroys it, just as it destroyed another before it ,” it adds, attempting to raise the banner of Allah over every square inch of Palestine.

As alarms sounded behind and Hamas rocket attacks were launched from the Gaza Strip, smoke billowed over private Jewish areas. NDTV Screengrab picture

According to remark in guancha.cn, per capita income in the West Bank, where Israel continues to be the supreme power, is twice that of Gaza, which Hamas annexed in 2007 after Israel withdrew from the region on its own. Its arbitrary massacre of defenseless civilians, including children, is eerily similar to ISIS ‘ tactics.

No state has the right to survive if it allows a neighbor to off thousands of its citizens. Israel has no other option but to exterminate Hamas. In order to win sympathy from the rest of the world, Hamas tries to increase the number of casualties among its own civilizational people, as I explained in the remark for guancha.cn that was cited. Hamas asserts that it is battling Zionist” occupation.” nbsp

In actuality, Israel gave the Palestine Authority control of Gaza after formally ending its occupation in 2005. In 2007, Hamas deposed the Palestine Authority administration. More than 20,000 rockets have been fired at Israeli civilian goals since then by islamist terrorists. These were a lot of rudimentary products. & nbsp,

Some returned to the densely populated Gaza Strip, as I noted in my opinion from 2022, and killed a lot more Arabs than Israelis. One of many instances of criminal rockets killing Gazans more than Israelis was the loss of a hospital in Gaza on October 17.

Because Hamas uses Gazan civilians as human shields, Israeli actions in self defense will eventually result in human deaths. This will stoke Arab sentiment throughout much of the earth. The optimistic public stance of China is not unexpected. However, China should carefully consider where its interests in the Gaza fight lie.

China is worried about the free flow of oil from the Persian Gulf, which supplied 54 % of China’s oil imports in 2022, in the short term. With imports to Saudi Arabia almost tripling between 2018 and 2023, China’s business success in the Persian Gulf has matched its political accomplishments. Iran is the primary supplier of arms to Hamas and aids in the ongoing issue. China may undoubtedly advise Iran to prevent increase.

However, China’s involvement in the fight goes beyond just power security. China’s export to the Global South, which have doubled since 2019 and now outnumber those to developed industry, have a significant impact on its financial future. & nbsp,

China is bringing digital and physical infrastructure to billions of people who are currently at the periphery of the global economy, integrating them quickly into global markets, as I stated in my 2020 book: & nbsp, You Will Be Assimilated: China’s Plan to Sino-Form the World and in many subsequent articles. & nbsp,

China exports investment and technology to support the attempts of young people in the Global South as its local labour force shrinks. China wants to double its infrastructure-driven development model around the world, which is both an economical and a hegemonic essential.

China is a global modernizing army. China’s reputation in the Global South, where the general public has a favorable view of China, has improved thanks to the Belt and Road Initiative. However, this will not take place without criticism. Anti-modern tendencies from pre-civilizational parts in society still exist and represent the biggest barrier to China’s aspirations. & nbsp,

Numerous Chinese citizens have been killed in terrorist attacks by Hamas-like jihadists in Pakistan, and according to press reports and nbsp, security concerns are impeding Chinese investment in the$ 65 billion nation. & nbsp,

Anti-civilizational aspects around the world will take center and look for new target if Hamas survives the current conflict with Israel. Israel is currently at the center of society. The underlying interest of China is for the warriors to be driven out of Gaza.

The path of least resistance suggests a global split along professional – and anti-American lines. Israel became an American friend following the 1967 War as a result of Cold War planning. & nbsp,

But, it is not a creature of the United States. Israel made a concerted effort to stay out of the Ukraine War and keep cordial ties with both Russia and China. Prime Minister Benjamin Netanyahu declared he may travel to China in June. & nbsp,

China's President Xi Jinping and Israel's Prime Minister Benjamin Netanyahu. Photo: AFP
Later in 2018, Benjamin Netanyahu, the prime minister of Israel, and President Xi Jinping of China met. Asia Times Data / AFP image

America is forced to support an alliance that has been brutally attacked in the current crisis, and its critics are aligning themselves against it. That will only result in more conflict and subsequent issue escalation. & nbsp,

For the time being, Iran is unlikely to get involved, but it will make an effort to gird Israel in the future. Israel is prepared to use its numerous atomic weapons if its survival is in jeopardy. Although I don’t think a world war is imminent, the escalation of tensions between Israel and the rest of the world could result in an impending disaster.

China may hope that Israel is successful in eradicating the barbarians who pose a short-term threat to Israel’s existence and, over the long term, to civilization itself if it wants stability in the area and the development of civilization. & nbsp,

David P. Goldman, a deputy editor for Asia Times, serves on the SIGNAL ( Sino-Israel Government Network and Academic Leadership ) Advisory Board.

This article’s opinions are his own and do not always reflect those of any organizations to which he is affiliated.

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Country Garden: China property giant default fears grow

Aerial view of a housing project built by China's property giant Country Garden.shabby graphics

Country Garden, the largest private estate developer in China, is thought to be the most recent real estate juggernaut to default on its international loan.

A default would be one of the largest corporate debt restructurings in the nation, with the company owing$ 11 billion(£ 9 billion ) in debt and another$ 6 billion in onshore loans.

Its potential definition raises questions about China’s ability to recover from the pandemic.

China’s real estate market, which makes up a fourth of the business, is experiencing significant problems.

According to the most recent statistics, the nation’s economy expanded 4.9 % in the three months between July and September. Compared to the 6.3 % growth in the second quarter, that is slower.

Despite Beijing’s efforts to increase cover need, the number of home sales is also lower than it was last year.

According to the most recent data, the nation’s real estate investment decreased by 9.1 % during the first nine months of the year.

The crisis-stricken Country Garden reported a record$ 6.7 billion($ 5.2 billion ) loss for the first six months of the year in August. Given the size of the debt, if its definition is confirmed, Country Garden’s offshore lenders will begin talks with the company ‘ financial counselors to launch a restructuring process that may take several months.

According to Raymond Cheng, Standard Chartered’s North Asia main purchase officer,” This will spark our worries about the housing market in China.”

In order to regain confidence and trust in the market, markets will probably seek a more coordinated policy approach, Mr. Cheng continued.

The current real estate market turmoil in China began when Country Garden’s competition Evergrande was declared to be in proxy in 2021. Police are currently keeping an eye on Evergrande’s president.

When new regulations to regulate the amount of money that large real estate firms may acquire were implemented in 2020, China’s housing market was rocked.

Evergrande, which was once China’s top-selling developer, amassed debts totaling more than$ 300 billion as it aggressively grew to become one of the largest corporations in the nation.

With a number of other developers defaulting on their debts and abandoning empty construction projects across the nation, the government’s property industry has been affected by its economic issues.

China is also dealing with different issues, such as slow economic growth, rising regional government debts, and record-high youth unemployment.

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US preparing for a two-front China-Russia war

A recent US Congress report urges a strategic defensive posture review of simultaneous near-peer conventional and nuclear threats.  

This month, the Congressional Commission on the Strategic Posture of the US released a report urging the country to be prepared for a two-front conflict against China and Russia.

The report says that US defense strategy and strategic posture must change to properly defend its vital interests and improve strategic stability with the two nuclear-armed adversaries while advocating that critical decisions should be made now to address nuclear threats expected to arise during the 2027-2035 timeframe.

It also assessed that the US needs to address the looming nuclear threat with a comprehensive strategy and force structure adjustments. Although it says the fundamentals of US deterrence strategy remain sound, size and composition adjustments are needed to its nuclear capabilities.

The report also emphasizes the importance of non-nuclear capabilities for the US strategic posture, including strengthened infrastructure and risk reduction efforts. It notes allies and partners are crucial to the US approach in the new emerging threat environment.

The report recommends that the US Congress fund the expansion of the US nuclear weapons defense industrial base and the Department of Energy (DOE)/National Nuclear Security Administration (NNSA) nuclear security enterprise. It also suggests that Congress should ensure funding stability for the defense industry to respond to innovative Department of Defense (DOD) contracting approaches.

The report’s recommendations include deploying a stronger space architecture with offensive and defensive elements, prioritizing funding for long-range precision strike programs, developing homeland missile defense systems and transferring missile defense responsibility to the Military Departments by October 2024.

The report says that the US should maintain and strengthen its network of alliances and partnerships to deter aggression, ensure regional security and boost economic prosperity through access to international markets.

It warns that withdrawing from these relationships would benefit adversaries, increase the risk of aggression and reduce the US and its allies’ security and economic prosperity.

Asian allies: South Korean President Yoon Suk Yeol, US President Joe Biden and Japanese Prime Minister Fumio Kishida on a stroll during the recent Camp David Summit. Image: EAF

It also recommends exploring nuclear arms control opportunities and researching potential verification technologies to support future negotiations in the US national interest that seek to limit all nuclear weapon types.

The foundation of US national defense, including the defense of allies and support of military operations, is based on the concept of nuclear deterrence that has been in place since 1945.

In a January 2023 article for the US Naval Institute, Daniel Post outlines the value and limits of nuclear deterrence. Post says that the unparalleled destructiveness of nuclear weapons underpins their deterrent value, making them desirable to acquire alongside conventional military capabilities.

Given that, he says the US nuclear strategy must aim at manipulating the rational calculations of adversaries by understanding how its capabilities are perceived by the other.

Post also says nuclear weapons are useless to coerce other states but are effective when held in reserve as a defensive capability, denying benefits and imposing costs on aggressors once deterrence has failed, noting that they deter nuclear and other major strategic attacks on the US and its allies and major state-on-state wars between nuclear powers.

Along with nuclear deterrence, conventional deterrence is more applicable to a broader range of circumstances, has greater flexibility than nuclear weapons and is not subject to the political constraints of the former.

Robert Haffa Jr argues in a 2018 article for Strategic Studies Quarterly that the US should reinforce the logic of conventional deterrence as a central concept of its defense policy. However, Haffa points out that the main issue with conventional deterrence is its tendency to fail. Given that, he says Cold War-era conventional deterrence strategies are inadequate for today’s great power competition.

According to Haffa, a modern approach to deterring US adversaries should focus on non-nuclear threats, be intense and overwhelming in threat, focus on US and allied strengths and adversary weaknesses, and be able to punish, deny and utilize advanced technologies and weapons systems across the globe.

China and Russia have multiple approaches to negate US nuclear and conventional deterrence, running a spectrum between threatening to use nuclear weapons and unconventional means.  

China’s nuclear stockpile is growing. Image: Asia Times Files / iStock

In a September 2022 article for the Heritage Foundation, Patty-Jane Geller says that China’s growing nuclear forces could potentially increase the risk of unintentional escalation.

Geller says that if China perceives a favorable nuclear balance of power over the US, it may become more tempted to use nuclear weapons in a conflict. She also says that if the US lacks tactical nuclear capabilities, China may perceive a US response to limited nuclear use in the Indo-Pacific as unreliable.

She notes China’s nuclear arsenal expansion, including the acquisition of delivery methods that can threaten the US homeland, could weaken US extended deterrence commitments, making the US less willing to defend its allies. This situation, coupled with the risk of unintentional escalation due to miscalculations or mistakes, increases the potential for a Chinese nuclear strike, Geller argues.

In terms of China’s challenging of US conventional deterrence, Andrew Erickson writes in the 2023 book “Modernizing Deterrence: How China Coerces, Compels, and Deters that the conventional missile component of the People’s Liberation Army-Rocket Force (PLA-RF) is increasingly important in China’s deterrence and warfighting, supporting the goal of achieving information dominance, command of the air and control of the sea to thwart a US and allied intervention in Taiwan.

Erickson says that PLA-RF doctrine anticipates and seeks to respond effectively to strategic, operational and technical trends. He notes that such trends may include the ability for rapid global precision attacks, placing more stress on mobility, rapid reaction, force survival and protection, and developing penetration aids.

In the case of Russia, Lydia Wachs notes in a November 2022 article for Stiftung Wissenschaft und Politik that with Russia’s dwindling arsenal of conventional precision weapons and NATO’s strategic adaptation, Russia’s strategy is likely to change, with an increase in reliance on tactical nuclear weapons. Wachs notes that Russia’s perceived conventional inferiority compared to US precision strike capabilities has driven Moscow’s increased reliance on tactical nuclear weapons.

She says that the increased role of nuclear weapons in Russia’s deterrence strategy and strengthened posture in areas bordering NATO could weaken European security and stability. Wachs says this could exacerbate Moscow’s threat perception and influence escalation dynamics, impacting the stability of potential crises between NATO and Russia.

She adds that if Russia’s reliance on non-strategic nuclear weapons increases, Moscow’s appetite for arms control on short- and medium-range missiles will likely erode further.

In terms of conventional deterrence, Tim Sweijs and others write in a January 2022 report for the Hague Institute of Strategic Studies (HCSS) that Russia poses a hybrid threat to NATO and Europe through using proxies, covert activities, cyber capabilities, political subversion and economic influence.

In conjunction with that, Ruben Tavenier notes in a February 2018 article for the JASON Institute for Peace and Security Studies that Russia uses a combination of non-military (covert) and military (overt) deterrence to destabilize adversaries, limit potential threats and guarantee victory in a potential conflict.

Tavenier mentions that Russia accomplishes those ends by deterring, coercing or containing an adversary by destabilizing it covertly and reducing its military, political and economic capabilities.

Given the near-peer challenges facing the US deterrent posture, Doreen Horschig and Nicholas Adamopoulos write in an article this month for the Center for Strategic and International Studies (CSIS) that the US should consider a Conventional-Nuclear Integration (CNI) strategy that emphasizes greater coherence between conventional and nuclear forces to manage escalation in regional conflicts, develop integrated options to strengthen deterrence and deny adversaries any advantages gained by nuclear use in a regional conflict.

A MH-139A Grey Wolf helicopter flies over F E Warren Air Force Base, October 22, 2021. The Grey Wolf will replace the UH-1N Huey, overcoming current limits in speed, range, endurance, payload and survivability, to support Air Force nuclear enterprise modernization. Photo: US Air Force / Airman 1st Class Darius Frazier

Horschig and Adamopoulos believe that CNI can improve the resiliency of conventional forces in nuclear war by dispersing operational bases, improving operational capability in potentially contaminated environments, and hardening of command, control and communications (C3) systems.

This way, they say, adversaries will be deterred from limited nuclear escalation, thus ensuring that US and allied forces can still achieve their warfighting objectives.

Such a strategy, Horschig and Adamopoulos say, can give decision-makers more flexibility and reduce the prospects for a limited nuclear war. However, they also point out that CNI blurs the lines between conventional and nuclear forces, thereby increasing the risk of nuclear escalation.

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Didi, Huawei lead the way for a China bounce back

If ever there were a business story proving the folly of sanctions in today’s hyper-integrated world, it’s Huawei and the runaway success of the Mate 60 Pro smartphone it unveiled last month.

For years now, Huawei has been central to US efforts to stymie Chinese tech development. Since 2019, when Donald Trump was in the White House, Huawei has been on Washington’s “Entity List.” That greatly limited the Shenzhen-based company’s access to key technology, essentially knocking it out of the smartphone game.

Well, not so much. “This is a breakthrough for Huawei, which has not been able to produce a 5G mobile phone since 2020 and has seen its once-commanding global market share shrivel to basically zero,” says analyst Tilly Zhang at Gavekal Research.

“It’s led to fierce debate over the efficacy of the US measures,” Zhang says, “with boosters in China and critics in the US claiming that the new phone shows the sanctions are ineffective and that China has already overcome them.”

In reality, Zhang says, “it’s more of a symbolic victory for Huawei that will not fundamentally change the trajectory of China’s technology sector under US sanctions.”

And yet it’s also a strong case study not just of Beijing’s ability to steer around trade curbs, but also of what China Inc needs to do to raise its game.

Didi Global is simultaneously offering another case study. Didi was among the most recognized global brands caught up in the tech crackdown President Xi Jinping launched in late 2020. Now, the ride-hailing juggernaut plans to list in Hong Kong early next year.

The comeback — and Didi’s success in restoring relations with Chinese regulators — is all the more remarkable considering the drama surrounding its forced delisting last year.

Its ill-fated New York initial public offering (IPO) came as Xi’s team was reining in top internet platforms, starting with Alibaba Holdings and later extending to Didi, Baidu, ByteDance, JD.com, Meituan, Tencent and others.

Naturally, Didi needs the blessings of Xi and Premier Li Qiang to arrange any new share listing. It set the stage for an IPO by acceding to regulators’ concerns about corporate governance and data privacy — and paying an 8 billion yuan ($1.1 billion) fine in 2022.

Didi was forced to take a ride-hailing break after authorities demanded changes to its data-collection practices. Photo: Asia Times Files / AFP

Damage has been done, of course. The company’s market share at home dropped to about 70% today from 90% before Xi’s tech clampdown. Yet like Alibaba, Didi is offering peers a blueprint for how to make peace with the regulatory squeeze of recent years — and come out the other side with a still dominant position.

While a work in progress, Alibaba’s metamorphosis into a holding company with six different business groups offers its own pointers to mainland chieftains. Now add Huawei and Didi to the list of companies reminding Beijing that the way forward is savvy restructuring and disruption, not giant stock bailout funds.

Xi’s Communist Party is considering creating a state-backed stabilization mechanism, backed by hundreds of billions of yuan of public funds, to stabilize a shaky US$9.5 trillion stock market.

Global funds have been net sellers of mainland stocks in recent months amid disappointment over the strength of China’s post-Covid economic recovery. Recently, China’s sovereign wealth fund bought about US$65 million of stock in the nation’s biggest banks.

A broader stabilization fund would be akin to how Beijing dealt with the stock crash of 2015. That was when Shanghai shares fell by more than 30% in just three weeks.

This “national team buying,” as Li Fuwen, a fund manager at Guangdong Value Forest Private Securities Investment, puts it, is a more potent way “to salvage confidence” than others Xi has taken, including tax cuts and lower stamp duties.

David Nealis, president of consultancy Ceres Ltd, adds that the policy “sounds like an opportunity.”

Yet many market players are critical of the stock-buying fund, arguing it treats the symptoms, not the underlying causes, of China’s market rout.

Economist Victor Shih at the University of California, San Diego says “that’s basically re-nationalization,” running counter to Xi’s pledges 10 years ago to let market forces play a “decisive” role in China’s future.

Economist Trinh Nguyen at Natixis says the problem is that “underwhelming economic data and dejected retail investors” are fueling more sell orders than buying opportunities.

It’s a movie China investors have seen before, says Jeroen Blokland, founder of advisory True Insights. “In 2015, China did something similar, giving China Securities Finance Corp nearly $500 billion in firepower to stop the crash in Chinese stocks. It did not help. Chinese stocks dropped by another 20% after the announcement of the intervention.”

An investor is seen in front of an electronic screen showing stock information (green for losses) at a brokerage house in Hangzhou, Zhejiang Province, China. Photo: China Daily via Reuters
An investor is seen in front of an electronic screen showing stock information (green for losses) at a brokerage house in Hangzhou, Zhejiang Province, China. Photo: China Daily

Morgan Stanley analyst Laura Wang adds that previous interventions had no real lasting effect — including in 2015. “Whether the market could be effectively stabilized or reversed into an upward trend is not, in our view, solely dependent on such state purchase actions.”

What’s needed, Wang notes, is credible financial reforms that increase trust among foreign investors.

In the short run, investors are troubled by Xi’s reluctance to act bigger and bolder in rolling out fresh stimulus efforts to boost the economy and cushion the blow of a property slump. Xi worries that opening the fiscal and monetary floodgates might incentivize more bad lending behavior and that doing so would squander efforts to reduce leverage.

“Whatever does emerge from Beijing over the coming months, it likely won’t be quick enough to make any meaningful difference to 2023,” says Robert Carnell, head of Asia-Pacific research at ING Bank. “At best, it should be viewed as a pain management tool for the transition to a less leveraged economy.”

But structural reform is the key to stabilizing stocks. Priorities include strengthening China’s capital markets, financial infrastructure and corporate governance. Others: incentivizing innovation, increasing productivity and expanding opportunities for economic disruption.

Easier monetary and fiscal policies or bailing out markets won’t prod local governments to devise more competitive business environments, build social safety nets needed to get households to spend more and save less or address the nation’s fast aging population.

Stimulus won’t accelerate China’s transition from debt-and-investment-driven growth to a more domestic-demand-led model. It’s not sufficient to bolster foreign investors’ confidence to bet big on China.  And it can’t stabilize the nation’s deeply troubled property markets.

That’s not to say the People’s Bank of China central bank shouldn’t ease in the months ahead. As the government moves to sell bonds to smooth out growth, “the PBOC may need to step up its liquidity support and lower interest rates to accommodate the issuance, which adds conviction to our call for another cut to reserve-requirement ratios and a policy rate cut in the fourth quarter,” says analyst Maggie Wei at Goldman Sachs Group.

Yet Xi’s team must work faster to repair China’s shaky property sector. Two years after China Evergrande Group defaulted, fellow giant developer Country Garden is signaling it may miss payments on offshore obligations — as soon as this week. Country Garden’s debt load was about US$196 billion at the end of 2022.

A “default would likely hurt homebuyer confidence, especially in lower-tier cities where its properties are concentrated, which would undermine policies to boost sales across the country,” says analyst Rick Waters at the Eurasia Group risk consultancy.

China’s Country Garden is the latest property developer that can’t pay its debts. Image: Screengrab / CNN

However, Waters notes, “Beijing is likely still reluctant to bail out the company. In fact, the government launched an investigation against Evergrande that prevents it from restructuring debt. If Beijing does help, it would probably focus on acquiring and completing unbuilt residential projects.”

A stock-buying fund, circa 2023, does get at a big paradox of the Xi era: if these periodic interventions work, why are they still necessary 10 years on?

To be sure, the bear market signals emanating from Shanghai today aren’t as dire as in the summer of 2015. Those chaotic declines slammed bourses from Tokyo to London to New York and fueled contagion fears.

At the time, Xi’s government scrambled to loosen rules on leverage and reduce reserve requirements. It also delayed all IPOs, suspended trading in thousands of listed companies, allowed apartments to be used as collateral to buy shares and lobbied households to invest in stocks out of a sense of patriotism.

The common thread between then and now is Team Xi’s penchant for prioritizing market-opening efforts over reforms – a tendency to over-promise and under-deliver financial upgrade-wise.

Since 2015, Xi’s regulators accelerated steps to open equity markets wider and wider to overseas investors. As Beijing increased quotas for foreign funds, it prioritized getting its government bonds added to benchmarks like the FTSE-Russell.

Likewise, moves to include Shanghai and Shenzhen stocks in benchmarks like MSCI outpaced reforms needed to prepare China Inc for global prime time. Flipping the script requires methodically increasing transparency, ensuring companies tighten corporate governance, building reliable surveillance mechanisms like trusted credit rating companies and erecting a robust market infrastructure before the world shows up with its funds.

A freer media also would help Xi’s inner circle intensify anti-corruption efforts and would be a natural ally in policing the malfeasance that distorts economic incentives and squanders the benefits of rapid gross domestic product (GDP).

But as Huawei and Didi are demonstrating, the ways in which top tech names are emerging from three years of regulatory shocks offers intriguing counterprogramming as the property sector continues to stumble.

Huawei alone is causing big ripples among Western tech communities who assumed US export controls curbing access to chip supplies had sidelined China Inc. Huawei’s 7-nanometer chip, which powers the smartphone’s processor, was designed in-house and manufactured by the mainland’s top chip vendor, Semiconductor Manufacturing International Corporation (SMIC).

While there are questions about whether Huawei’s 5G capabilities match Apple’s, the 7-nanometer chip “demonstrates the technical progress China’s semiconductor industry has been able to make without Extreme ultraviolet lithography (EUV) tools,” says Dan Hutcheson, vice chair of TechInsights.

Huawei’s exhibit dominated this year’s Mobile World Congress held in Barcelona. Image: Facebook

Significantly, Hutcheson says, the componentry used for Huawei’s Mate 60 Pro showcases the progress of Xi’s signature “Made in China 2025” plan. It aims to dominate everything from semiconductors to electric vehicles to renewable energy to artificial intelligence to biotechnology to aviation.

In part, Huawei’s success “does signify” that Beijing’s tech subsidies are gaining traction, says analyst Hanna Dohmen at the Washington-based Center for Security and Emerging Technology. Without the role of state-backed SMIC, Huawei’s feat would’ve been much harder to pull off.

Yet Huawei is reminding US President Joe Biden’s White House, which this week doubled down on restricting access to cutting-edge tech including semiconductors and chipmaking gear, that China Inc has the wherewithal to navigate around sanctions.

Didi, meanwhile, is demonstrating in other ways how China’s most innovative tech platforms are shifting into higher gear. Xi’s reform team would be wise to lean into these promising case studies, implementing reforms to ensure they’re more the norm than the exception.

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

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