VW China or VW USA?

The Volkswagen Group has started construction of the first plant that will solely build cars based on the new modular EV platform known as the MEB….

Settled near Shanghai, China, where Tesla also plans a plant, the VW Group’s new EV plant will first build electric SUVs for the SAIC-Volkswagen joint venture starting in 2020.

The Shanghai plant will span nearly 151 acres and feature 1,400 “Industry 4.0” robots for increased automation. VW also said the plant will feature artificial intelligence, augmented reality, and virtual reality components to digitalize the production facility.

In addition to building the MEB-based electric cars, the plant will assemble batteries. And to ensure the electric cars minimize their carbon footprint, the plant will employ 27 types of environmentally friendly technologies. Most of the technologies will focus on water preservation, energy saving, and the reduction of carbon dioxide.

There were rumors of VW making the United States the core of their global electric car production. That was before the election of our fake president. Trump opposes any significant electrification of the US consurmer fleet. He also opposes the sort of green manufacturing regime planned by VW. Folks in Chattanooga, Tennessee, have their hopes up for expansion of existing VW facilities; but – personally – I think they’ll just get enough leftovers to let Republicans brag about their voodoo economics. That’s all.

Transforming Rural China


Cellphones still the best rural access to the Web

❝ Xia Canjun was born in 1979, the youngest of seven siblings, in Cenmang, a village of a hundred or so households nestled at the foot of the Wuling Mountains, in the far west of Hunan Province. Xia’s mother was illiterate, and his father barely finished first grade…

❝ In 1990, in sixth grade, Xia saw a map of the world for the first time. Of course, Cenmang wasn’t on it. Neither was Xinhuang, the city that loomed so large in his imagination. “The world was this great beyond, and we were this dot that I couldn’t even find on a map,” he told me. The same year, the Xias bought their first TV, a black-and-white set so small that it could have fit inside the family wok. Market reforms were transforming China, but in Cenmang changes arrived slowly…

❝ Still, rather than becoming a manual laborer, like his parents and siblings, Xia was able to go to technical college, and afterward he got a job at a local company that produced powdered milk…When the powdered-milk company downsized, he decided that it was time to look farther afield. He moved to Shenzhen, a sprawling coastal city, and found a job as a courier, becoming one of China’s quarter of a billion migrant workers.

❝ Then, eighteen months in, an unexpected opportunity arose. Xia had been making deliveries for JD.com, the second-biggest e-commerce company in China, and he heard that the business was expanding into rural Hunan. A regional station manager would be needed in Xinhuang…

❝ Today, Xia oversees deliveries to more than two hundred villages around the Wuling Mountains, including his birthplace. But, in line with JD’s growth strategy, an equally important aspect of Xia’s job is to be a promoter for the company, getting the word out about its services. His income depends in part on the number of orders that come from his region. Across China, JD has made a policy of recruiting local representatives who can exploit the thick social ties of traditional communities to drum up business. Xia himself is not unaware of the irony: after venturing out to the great beyond, he discovered that the world was coming to Cenmang.

The tale proceeds. It is about economics. It is about human interests and access to education, knowledge. It is about building a new life in a new way. The sort of life-changing experience that becomes opportunity in a society experiencing qualitative growth and change.

Politics Trumps Economics

❝ With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practice the art and science of economics. But by now, the verdict is self-evident: Trump and his team continue to flaunt virtually every principle of conventional economics.

❝ Trade policy is an obvious and essential case in point. Showing no appreciation of the time-honored linkage between trade deficits and macroeconomic saving-investment imbalances, the president continues to fixate on bilateral solutions to a multilateral problem – in effect, blaming China for America’s merchandise trade deficits with 102 countries. Similarly, his refusal to sign the recent G7 communiqué was couched in the claim that the US is like a “piggy bank that everybody is robbing” through unfair trading practices. But piggy banks are for saving, and in the first quarter of this year, America’s net domestic saving rate was just 1.5% of national income. Not much to rob there!

❝…What Trump is doing is not about economics – or at least not about economics as most academics, political leaders, and citizens know it…But why single out economics? The same complaint could be made about Trump’s views on climate change, immigration, foreign policy, or even gun control. It’s power politics over fact-based policymaking.

RTFA. Please. You don’t have to agree with Stephen Roach 100% of the time. His experience and knowledge-based analysis is a helluva place to start, though!

Nine of the world’s largest tech firms ain’t anywhere near Silicon Valley


FoxConn data centers

China is now home to nine of the world’s largest public tech companies in terms of market value. They include Alibaba, Tencent, Ant Financial, Baidu, Xiaomi, Didi Chuxing, JD.com, Meituan-Dianping, and Toutiao.

With well over a billion citizens and an ever-growing market, China’s rise in the tech market is understandable. Compared to the United States, the Asian country is outpacing, in leaps and bounds, the number of degrees awarded in science and engineering. This highly skilled labor force is paying off in China’s tech world and its expansion.

Just five years ago the Asian giant had only two of the world’s biggest public tech companies in market value. The United States boasted nine of the largest.

I know all of the rationales Americans – more than any Westerners outside of the UK – roll out to disparage faster and more dynamic growth in Asian countries. I worked for American and British firms sourced significantly from Japan, Taiwan, Hong Kong, China over a few decades. Some of the crap excuses worked for a few years; but, in every case, the reason those producers ran right past their Anglo-American counterparts was higher standards, a willingness to invest time and money in education, trained staff to accomplish product development and production more efficiently.

The single best example, nowadays, would be FoxConn – a Taiwan company mostly manufacturing in Mainland China. Ask anyone with knowledge of American manufacturing and assembly experience how long it takes to completely switchover a plant from one product line to another? You’ll get an answer measured in weeks. FoxConn takes hours, perhaps a couple of days. Because they will pay 1500 process engineers to takeover that plant floor and rollout a changeover in that time frame. I don’t know any American firms that can scrape together that many spare engineering staff – or would.

And I don’t know of any state in the GOUSA that’s capable of or concerned about educating engineers or researchers ready to develop similar systems here in the US – or in the UK. Yes, cultures are different in many ways. But, I’m just offering real reasons why we don’t compete.

Paper cutting tradition and spring blossoms


Click to go to article and more examplesPhoto/China News Service

A Chinese mom and her daughter drew several girls with graceful postures on paper and then cut out the dresses from their depictions. They held the papers in front of blossoms in a park in Beijing on April 3, turning the spring blossoms into pretty dresses.

Dinosaur with iridescent feathers


Click to enlargeVelizar Simeonovski, The Field Museum

❝ The discovery that dinosaurs were feathery, not leathery, means we’ve had to rethink how they might have looked – and now there’s evidence that at least one dinosaur could have been as brilliantly coloured as some of the most jewel-hued modern birds.

Caihong juji, a name that means “rainbow with the big crest” in Mandarin, was a tiny, duck-sized dinosaur from China. The fossil it left behind indicates a bony crest on its beak, and a brilliant, iridescent ruff of feathers around its neck – the earliest evidence of a colour-based display…

❝ It’s difficult to tell for certain what colour the feathers were, but the fossil was so detailed that it preserved the shape of the melanosomes, the organelles inside cells responsible for pigmentation.

And when the team compared these melanosomes to those of living birds, they most closely resembled melanosomes found in the iridescent, rainbow-hued feathers of hummingbirds.

RTFA for more on the find – and analysis. And special thanks to UrsaRodinia.

China selling off oil it no longer needs

The pace at which China exports the fuel it doesn’t want is set to jump by more than four times in 2018, according to the nation’s biggest energy producer.

That’s a harbinger of bad news for processors in the rest of Asia — from South Korea to Japan and India — who now have to contend with higher crude prices as well as the threat of the flood dragging down refining margins. Government-issued quotas to sell oil products abroad may also expand this year in order to ease a large supply glut in the domestic market, an analyst at China National Petroleum Corp. said on Tuesday.

China’s net oil-product exports — a measure that strips out imports — may climb about 31 percent to 46.8 million metric tons this year, CNPC said in its annual report released in Beijing. Shipments rose about 7 percent in 2017.

In particular, exports of diesel — also known as gasoil — are expected to soar 47 percent to 23.8 million tons in 2018 from a year earlier, according to the CNPC report.

Yup. Countries smart enough to walk away from fossil fuels, pollution, economists and politicians with fossilized brains – end up with “problems” like selling off the excess crap they no longer need or want. One of the early results from switching to renewables like wind and solar-generated electricity.

Will Complacency Be Tested in 2018?

❝ After years of post-crisis despair, the broad consensus of forecasters is now quite upbeat about prospects for the global economy in 2018. World GDP growth is viewed as increasingly strong, synchronous, and inflation-free. Exuberant financial markets could hardly ask for more…

❝ As was evident in both 2000 and 2008, it doesn’t take much for overvalued asset markets to fall sharply. That’s where [a] third mega-trend could come into play – a wrenching adjustment in the global saving mix. In this case, it’s all about China and the US – the polar extremes of the world’s saving distribution.

China is now in a mode of saving absorption; its domestic saving rate has declined from a peak of 52% in 2010 to 46% in 2016, and appears headed to 42%, or lower, over the next five years. Chinese surplus saving is increasingly being directed inward to support emerging middle-class consumers – making less available to fund needy deficit savers elsewhere in the world.

❝ By contrast, the US, the world’s neediest deficit country, with a domestic saving rate of just 17%, is opting for a fiscal stimulus. That will push total national saving even lower – notwithstanding the vacuous self-funding assurances of supply-siders. As shock absorbers, overvalued financial markets are likely to be squeezed by the arbitrage between the world’s largest surplus and deficit savers. And asset-dependent real economies won’t be too far behind.

I agree with Stephen Roach’s analyses of global economics, macro or otherwise, much of the time. He’s done the research and pursued an active living from managing his understanding of economic trends. Especially in Asia. Now, he’s back in the US – back in the US – back in the USA – trying to broaden the understanding of global economics inside a nation where a larger percentage of the population prefer to pray for guidance than to investigate, analyze and learn.

Know any politicians who’ve noticed China becoming a global innovator?

❝ China has achieved much since 1978, when Deng Xiaoping initiated the transition to a market economy. In terms of headline economic progress, the pace of China’s transformation over the past 40 years is unprecedented. The country’s GDP grew by nearly 10 percent per year on average, while reshaping global trade patterns and becoming the second-largest economy in the world. This success lifted 800 million people out of poverty, and the mortality rate of children under five years old was halved between 2006 and 2015.

The question now is whether China, well positioned to become the world’s innovation leader, will realize that opportunity in 2018 — or soon after

❝ Earlier this month, Apple CEO Tim Cook declared that, “China stopped being a low-labor-cost country many years ago, and that is not the reason to come to China.” The country’s manufacturing strengths now lie in its advanced production know-how and strong supply-chain networks. Understandably, China’s leadership wants to increase productivity and continue to move further up the value chain.

I suggest you read the article. Even though your representatives in Congress will (1) probably act surprised by this and (2) stamp their little feet in anger and fear – fact remains that international trade usually is a cooperative affair and the political maundering is only for that telenovela called electoral politics.

In China, Slower Growth Is Acceptable to Tackle Debt, Smog


Click to enlargeChinatopix

China can achieve a goal of doubling the size of its economy by 2020 even if annual expansion slows to 6.3 percent, according to a senior Communist Party official, signaling a greater willingness to tackle debt and pollution at the expense of growth…

In its blueprint for 2016 to 2020, China set a minimum annual growth target of 6.5 percent for the five-year period to achieve the goal of doubling gross domestic product from 2010 levels…Over the weekend, Yang Weimin, an official from the Communist Party committee overseeing economic policy, said annualized growth of 6.3 percent in 2018-2020 would do.

Based on current economic performance, the 2020 target won’t be a “huge barrier,”…China is seen growing 6.8 percent this year and 6.5 percent in 2018, according to economist estimates compiled by Bloomberg…

Yang’s remark is “a heads up on how the new thought will be implemented,” said Zhu Ning, deputy director of the National Institute of Financial Research at Tsinghua University in Beijing.

There have been times when the United States was governed and advised by technocrats, economists and, yes, even politicians who understood the value of adjusting the course of government to benefit most of the people. Not just the moneybags who could afford to belong to the Fake President’s country club.