The 2015 Global Agenda for Economic Freedom: Making Sense of the Recent ...

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China's 'casino mentality': Pro

Paul Hickey, Bespoke Investment Group, shares his thoughts on China's selloff and its likely impact on U.S. markets. Stick with U.S. stocks says Hickey.

Video (3:08)

http://video.cnbc.com/gallery/?video=3000394994


#china #chinese #stockmarket

China’s Economy Besieged by Buildup of Unsold Goods

The following is an excerpt from an article in 

The New York Times
Friday, August 24, 2012

China’s Economy Besieged by Buildup of Unsold Goods

By KEITH BRADSHER

GUANGZHOU, China — After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.

The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors.

But the main nongovernment survey of manufacturers in China showed on Thursday that inventories of finished goods rose much faster in August than in any month since the survey began in April 2004. The previous record for rising inventories, according to the HSBC/Markit survey, had been set in June. May and July also showed increases.

“Across the manufacturing industries we look at, people were expecting more sales over the summer, and it just didn’t happen,” said Anne Stevenson-Yang, the research director for J Capital Research, an economic analysis firm in Hong Kong. With inventories extremely high and factories now cutting production, she added, “Things are kind of crawling to a halt.”

Problems in China give some economists nightmares in which, in the worst case, the United States and much of the world slip back into recession as the Chinese economy sputters, the European currency zone collapses and political gridlock paralyzes the United States.

China is the world’s second-largest economy and has been the largest engine of economic growth since the global financial crisis began in 2008. Economic weakness means that China is likely to buy fewer goods and services from abroad when the sovereign debt crisis in Europe is already hurting demand, raising the prospect of a global glut of goods and falling prices and weak production around the world.

Corporate hiring has slowed, and jobs are becoming less plentiful. Chinese exports, a mainstay of the economy for the last three decades, have almost stopped growing. Imports have also stalled, particularly for raw materials like iron ore for steel making, as industrialists have lost confidence that they will be able to sell if they keep factories running. Real estate prices have slid, although there have been hints that they might have bottomed out in July, and money has been leaving the country through legal and illegal channels.

For more, visit www.nytimes.com.

U.S. Filmmakers Eager to Feed China’s Appetite for 3-D

The New York Times
Monday, August 13, 2012

U.S. Filmmakers Eager to Feed China’s Appetite for 3-D

By JONATHAN LANDRETH

BEIJING — Zheng Huan and Tang Xiaomei, infrequent moviegoers from rural Jiangxi in southeast China, saw their first 3-D film last week while visiting the capital.

It was not James Cameron’s “Titanic 3-D,” the highest-grossing film here this year and the third highest of all time, with $153 million in ticket sales. Instead, it was a swirling martial arts fantasy, “Painted Skin II,” which Mr. Zheng said hurt his eyes but Ms. Tang said was captivating.

The two are a shade older than the 18- to 34-year-olds who made Mr. Cameron’s earlier 3-D hit, “Avatar,” the highest-grossing film in China, with $208 million in ticket sales. Hollywood is aggressively pursuing that age group now that China is the leading export market for its films in terms of box-office receipts.

Last Wednesday, Mr. Cameron’s 3-D technology company, the Cameron Pace Group, announced that it would set up shop in Tianjin, a northeastern port city, as part of a government-backed joint venture there. Last spring, Imax said it wanted to install 229 giant screens nationwide.

The initiatives underscore the extent to which American entertainment that makes the viewer part of the show has gained a foothold in the Chinese market. With movie tickets costing as much as 120 renminbi ($19) for 3-D and 180 renminbi ($28) for Imax, these American technologies are delivering content to Chinese consumers who are increasingly focused on authenticity and a high-quality theater experience that cannot be pirated.

Currently, 7,000 of China’s 11,000 screens are 3-D capable. RealD, a 3-D technology company based in Beverly Hills, said it had nearly 750 3-D screens across China and planned to install 1,250 in the coming years.

For more, visit www.nytimes.com.

Two Ways to See China’s Problems - Economic View

The following is an excerpt from an article in 

The New York Times
Sunday, August 12, 2012

Two Ways to See China’s Problems - Economic View

By TYLER COWEN

CHINA is confronting some serious economic problems, and how Beijing does — or doesn’t — respond to them could bend the course of the global economy.

First, China’s real estate bubble is deflating. But its economy also seems to be suffering from what we economists call excess capacity — an overinvestment in capital goods, whether in factories, retail stores or infrastructure.

So what now? The answer depends in part on your school of economic thinking.

Keynesian economics holds that aggregate demand — the sum of all consumption, investment,  government spending and  net exports — drives stability, and that government can and should help in difficult times. But the Austrian perspective, developed by the Austrian economists Ludwig von Mises and Friedrich A. Hayek, and championed today by many libertarians and conservatives, emphasizes how government policy often makes things worse, not better.

Economists of all stripes agree that China may be in for a spill. John Maynard Keynes emphasized back in the 1930s the dangers of speculative bubbles, and China certainly seems to have had one in its property market.

Keynesians would argue that Beijing has the tools to stoke aggregate demand. It could, for example, adjust interest rates and bank reserve requirements, instruct state-owned banks to maintain lending, or deploy some of its $3 trillion in foreign exchange reserves. The government also appears to have many shovel-ready construction and infrastructure projects that could help the economy glide to a soft landing and then bounce back.

The Austrian perspective introduces some scarier considerations. China has been investing 40 percent to 50 percent of its national income. But it is hard to invest so much money wisely, particularly in an environment of economic favoritism. And this rate of investment is artificially high to begin with.

Beijing is often accused of manipulating the value of its currency, the renminbi, to subsidize its manufacturing. The government also funnels domestic savings into the national banking system and grants subsidies to politically favored businesses, and it seems obsessed with building infrastructure. All of this tips the economy in very particular directions.

The Austrian approach raises the possibility that there is no way for China to make good on enough of its oversubsidized investments. At first, they create lots of jobs and revenue, but as the business cycle proceeds, new marginal investments become less valuable and more prone to allocation by corruption. The giddy booms of earlier times wear off, and suddenly not every decision seems wise. The combination can lead to an economic crackup — not because aggregate demand is too low, but because the economy has been producing the wrong mix of goods and services.

Chinese Company and Employee Deny Any Involvement in Hacking Attacks

Excerpt from an article in

The New York Times

Saturday, March 31, 2012

Chinese Company and Employee Deny Any Involvement in Hacking Attacks

By DAVID BARBOZA

SHANGHAI — Tencent, a Chinese Internet company, denied on Friday that one of its employees had been involved in a recent breach of computers belonging to Japanese and Indian companies, as well as Tibetan activists.

The company and the employee suggested that his identity might have been confused with someone else’s.

The company released a statement soon after Trend Micro, a computer security company with headquarters in Tokyo, released a report on Friday describing the breach. It was the result of a nearly yearlong effort to hack into computers and steal information from hundreds of companies and individuals in several countries, the report said.

The report never identified a hacker by name. But it linked the attacks to an alias used by a graduate of Sichuan University in western China who wrote several articles on computer hacking and defense. The researchers found the alias through its connection to an e-mail address and a QQ number, the Chinese equivalent of an instant messaging screen name.

The New York Times identified the owner of the alias as Gu Kaiyuan, based on online records of his writing. Mr. Gu is now an employee at Tencent, which offers social networking, instant messaging, online gaming and other online features.

On Thursday, when asked about the attacks, Mr. Gu said, “I have nothing to say.” On Friday, however, he denied involvement.

Chinese Official to Hear Trade Theft Tale

Excerpt from an article in The New York Times
Wednesday, February 15, 2012

Chinese Official to Hear Trade Theft Tale 

By JONATHAN WEISMAN

WASHINGTON — China’s next leader, Xi Jinping, may never have heard of American Superconductor Corporation before he arrived here Monday, but by the end of his visit United States officials hope to make the small Massachusetts wind-energy company an object lesson in the impact of Chinese trade secret theft on American business.

Senator John Kerry, chairman of the Senate Foreign Relations Committee and a Massachusetts Democrat, plans to raise personally with Mr. Xi the case of a company that saw 70 percent of its business evaporate last year after a Chinese partner enticed one of its employees to steal the crown jewel of its technology.

“It’s a very clear and, in our judgment, egregious, palpable demonstration of the practice that we are deeply concerned about,” Mr. Kerry said, “but it’s not the only one. There are so many things: cyberattacks, access-to-market issues, espionage, theft. These are major points of discussion between us and China.”

Both President Obama and Vice President Joseph R. Biden Jr. warned Mr. Xi on Tuesday that they had been hearing more and more from United States businesses about intellectual property and trade secret theft, but they did not specifically mention American Superconductor. However, background material on the company’s experience was included in briefing papers distributed before the arrival in Washington of Mr. Xi’s delegation, and a top administration official said the Chinese were aware of United States frustration over the case.