Peter Zeihan -- China -- In His Book, 2022 -- November 1, 2023

Locator: 45888CHINA.

Themes -- 2023. 

From Bloomberg and Nikkei Asia yesterday.

Chips: US to embargo.

Link to Peter Zeihan.

From twitter today:

Portland Theft -- Nike — Does Anyone Care? September 9, 2023

Locator: 45586China.

China: the feature article in the current issue of Barron's has to do with China.The thesis: China's growth era is over. Factors: nation's property rout, weak exports, and unfavorable demographics. Peter Zeihan discussed the third factor at length in his 2022 book,

• Peter Zeihan, The End Of The World Is Just The Beginning, published June 14, 2022

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Iconic Portland Store Announces Permanent Closure

Outside the "Northwest," this may not catch much attention but in Portland, this has to be a very, very big story. Nike and Portland are joined at the hips, as they say. See wiki.

And now Nike has announced it will permanently close its "factory store" in northeast Portland at 2650 NE Martin Luther King Jr Boulevard. Link here.

The store opened in 1984 and became a Portland institution, eventually outgrowing its original home and moving to its current location in 2000. But the outlet went on an indefinite hiatus last year following a prominent rise in shoplifting.

Nike quietly closed the store at some point in October, with no official statement other than a message on the company's website saying "Closed for the next 7 days." Seven days quickly turned into weeks and then months with little word from Nike, although there were indications that the company was working behind the scenes to try to get the doors back open.

A bit of history, back on Novembeer 15, 2022, when the store closed due to theft and safety issues.

Folks might remember, back in March, 2023, Walmart announced it would close all its stores in Portland, for the same reason.

In public discussions, both the city and Nike. said they were interested in working to keep the store open, but a close reading of the published remarks and reading "between the lines," it seemed clear that neither the city nor Nike had much interest in keeping the store open.

It doesn't take a rocket scientist to come up with solutions that would have kept the store open. Apparently the community had no interest. Or  no rocket scientists.

My hunch: other big box stores in Portland and other cities across the US will watch closely.

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The Book Page

The Art Of Painting, Albert C. Barnes, c. 1925 -- 1965.
The Art Of Renoir, Albert C. Barnes and Violette de Mazia, c. 1935 -- 1959.

Notes.

Less Likely That China's Economy Will Overtake That Of The US -- September 3, 2022

Link to The WSJ. 

Another story in which I am no longer interested.

Posted for the archives. Tagged.

From the linked article:

HONG KONG—The sharp slowdown in China’s growth in the past year is prompting many experts to reconsider when China will surpass the U.S. as the world’s largest economy—or even if it ever will.

Until recently, many economists assumed China’s gross domestic product measured in U.S. dollars would surpass that of the U.S. by the end of the decade, capping what many consider to be the most extraordinary economic ascent ever.

But the outlook for China’s economy has darkened this year, as Beijing-led policies—including its zero tolerance for Covid-19 and efforts to rein in real-estate speculation—have sapped growth. As economists pare back their forecasts for 2022, they have become more worried about China’s longer term prospects, with unfavorable demographics and high debt levels potentially weighing on any rebound.

In one of the most recent revisions, the Centre for Economics and Business Research, a U.K. think tank, thinks China will overtake the U.S. as the world’s biggest economy two years later than it previously expected when it last made a forecast in 2020. It now thinks it will happen in 2030.

The Japan Center for Economic Research in Tokyo has said it thinks the passing of the baton won’t happen until 2033, four years later than its previous forecast.

Other economists question whether China will ever claim the top spot.

Having said that, an interesting graphic at the linked article:

From an earlier post:

Notes From All Over -- The Early Morning Edition -- Part 2 -- August 24, 2020

Top story of the day, and it's not even 6:15 a.m. CDT:

 Re-posting:

China: gears up for record breaking US crude oil haul.

U.S. oil exports to China are set to reach a record next month in a sign that Beijing is stepping up purchases to meet its commitments under a landmark trade deal reached earlier this year.

Chinese crude buyers have chartered about 19 tankers for September to send roughly 37 million barrels of oil to China, according to provisional tanker fixtures. If these proceed as planned, the exports would surpass a record set in May at 35.2 million barrels, according to U.S. Census data compiled by Bloomberg. The May volume was also the most by any U.S. oil buyer for a given month, data show.

Under phase one of the deal, the world’s largest oil importer promised to buy an additional $200 billion of U.S. goods and services in 2020 and 2021, including $52 billion in energy products, in an agreement signed in January. Purchases so far have lagged that target. A review of the deal that was set for for August 15 was canceled, and has yet to be rescheduled.

Idle Rambling -- The Chinese Trade War -- August 15, 2018

Updates 

Later, 6:28 p.m. CDT: after writing the note below, it suddenly dawned on me. If relatively mild sanctions -- some of which have not even been implemented yet -- are supposedly hurting China this much, think what much stricter sanctions are doing to Iran: a much smaller nation, and a much less diverse economy. Something tells me the big story below has to do with the country not mentioned: Iran.

Original Post

I promised a reader I would get back to him regarding this article in yesterday's New York Times: Trump's trade war is rattling China's leaders.

For now, I'm going to assume folks can get to the article who want to see the article. If unable due to a paywall, the lede:

Trump’s tariffs and trade threats. But as it becomes clear that a protracted trade war with the United States may be unavoidable, there are growing signs of unease inside the Communist political establishment. 

In recent days, officials from the Commerce Ministry, the police and other agencies have summoned exporters to ask about plans to lay off workers or shift supply chains to other countries.

With stocks slumping and the currency dropping 9 percent against the dollar since mid-April, censors have been deleting a torrent of criticism online, some of it directed at President Xi Jinping’s leadership.

I found the article fascinating, and "right on target."

These are some random data points that pinged around in my little mind when I read the article.

• most recently, about four weeks ago (?), Scott Adams mentioned in passing but very clearly stated that China will blink / acquiesce / drop tariffs / come back to the bargaining table once we see one or two large banks in China fail -- Scott Adams didn't pick that out of thin air -- his source was impeccable, no doubt, only because it seemed to be such an odd prognostication
• despite the media trying to convince us otherwise, Trump is a very, very smart man -- he would not take serious action on any issue without really understanding the issue -- and unlike most presidents, he is not politically ideological -- he is laser-focused on American business
• Trump is a business man; he is an international businessman; he knows what's going on in China, Russia; his detractors are not business men, they do not know what is going on in China, Russia
• unlike most politicians: no "bridge is too far." He is willing to meet one-on-one with anyone, and willing to bargain
• several years ago, I commented that China's Achille's heel is its huge young, male population. A legacy of the one-child mandate, China has a huge, male population -- China needs to keep them employed; even a small country like Saudi Arabia knows they can't have a dispossessed young male population; this bullet, by the way, should be the #1 bullet in this list, but I put it here for a reason
• a lot of folks don't think a country can implode overnight; hellooooo -- take a look at Venezuela; Chinese leaders know that no country is "too big to fail"
• because China is autocratic / dictatorial, anti-Trumpers think China can outlast Trump; perhaps China can, but there are a lot of very, very rich, strong, influential business leaders and political leaders that are more worried about numero uno (themselves) than their leader -- a very, very rich banker whose bank fails ...
• and, finally, a lot of Chinese probably don't like the idea of a premier who is now "premier-for-life"

From the linked NY Times article:

If the trade war escalates — and Mr. Trump has shown no sign of backing down — some worry that the public’s faith in the economy could be shaken, exposing the nation to much more serious problems than a drop in exports. New economic data on Tuesday showed slower growth in investment and consumer spending, and there are fears that the financial crisis in Turkey could spread.

China’s leaders have argued that they can outlast Mr. Trump in a trade standoff. Their authoritarian system can stifle dissent and quickly redirect resources, and they expect Washington to be gridlocked and come under pressure from voters feeling the pain of trade disruptions.

But the Communist Party is vulnerable in its own way. It needs growth to justify its monopoly on power and is obsessed with preventing social instability. Mr. Xi’s strongman grip may be hindering effective policymaking, as officials fail to pass on bad news, defer decisions to him and rigidly carry out his orders, for better or worse.

Wouldn't it be ironic if North Korea turned out not to be the big story of the year, but rather talk of regime change in Beijing?

A bridge too far? From the linked article:

“All of this coming together suggests Xi’s grip on authority has been loosened,” said Willy Wo-lap Lam, a longtime observer of Chinese politics at the Chinese University of Hong Kong. “He’s unable to fill his function as the final arbiter who settles differences among his closest advisers.”

It is unlikely Mr. Xi’s position is in any jeopardy. But the trade dispute, along with a scandal over tainted vaccines and protests over failed investments, have already emboldened some critics of his sweeping centralization of power.

And Scott Adams' comment on banks?

The worst case for China, however, is that the trade war undermines economic confidence. The nation’s housing market teeters on a mountain of debt, and low-interest loans from state banks have built overcapacity in many industries. The worry is that prolonged trade tensions could cause money to rush out of China despite currency controls and prompt much bigger financial and economic troubles.

And so it goes.

China Rising: Based On GDP, China Overtakes Japan; China #2 Behind USA -- Nothing To Do With The Bakken

Updates

January 10, 2014: China surpasses US as world's largest trading nation. The [London] Guardian is reporting:

China became the world's largest trading nation in 2013, overtaking the US in what Beijing described as "a landmark milestone" for the country.

China's annual trade in goods passed the $4tn (£2.4tn) mark for the first time last year according to official data, after exports from the world's second largest economy rose 7.9% to $2.21tn and imports rose 7.3% to $1.95tn. As a result total trade rose 7.6% over the year to $4.16tn.

The US is yet to publish its 2013 trade figures, but with trade totalling $3.5tn in the first 11 months of the year, it is unlikely to beat China. The shift in the trading pecking order reflected China's rising global dominance, despite a slowdown in economic growth last year. [I remember some time ago I pointed out that the Chinese economy would soon become the #1 economy in the world; one reader took me to task on this prediction.]

Two days later, this headline: Oil Prices Rise After Chinese Export Report

Oil prices rose Monday as China said exports in January surged, a sign that the global economy was gaining steam.

China said that exports jumped 37.7 percent -- more than double the rate in December -- to $150.7 billion. A rise in Chinese exports suggests consumer demand is rising as well, and that could expand consumption of gasoline, diesel and other fuels.

Original Post

Link here.

Although it's only expected to be temporary, China is now #2, behind the USA in terms of GDP.

Japan’s economy contracted for the first time in five quarters as exports slowed and government stimulus faded, a pullback projected to be temporary as demand from China and U.S. revives output this year.

Gross domestic product shrank an annualized 1.1 percent in the three months ended Dec. 31, following a revised 3.3 percent expansion in the previous quarter. The median forecast of 26 economists surveyed by Bloomberg News was for a 2 percent drop. 

That's a pretty significant miss by the economists: the forecast was a 2 percent drop; actual number was 3.3 percent. (1.3 represents 65 percent of 2.0 --- they were off by 65 percent.)  [If your plane trip was expected to be two hours, but it took 3 and a third hours, the trip was 65 percent longer than planned.]

It's only a matter of time before China holds the number 2 slot "permanently." If China and Japan are this close now, it's just a matter of time before China beats Japan on a regular basis.

The "contest" for GDP ranking between Japan and China reminds me of the race for the #1 ranking in market cap between XOM and AAPL. 

It should be noted that, sort of on a related note, GM sold more cars in China than the US last year (2010) which is a first for GM -- selling more cars in China than the US in one year.