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Biz Analysis 21:39, 26-Oct-2020 Ray Dalio: Don't be blind to China's rise in a changing world CGTN Share Raymond Dalio, co-chairman and co-chief investment officer, Bridgewater Associates, speaks at the 2019 Milken Institute Global Conference in Beverly Hills, California, U.S., May 1, 2019. /VCG People with persistent anti-China bias should clear their minds and not be blind to China's rise in a changing world, Ray Dalio, founder of the largest hedge fund in the world, Bridgewater Associates, wrote in an opinion piece for the Financial Times on Friday. "Prejudice and bias always blind people to opportunity," he argued, before suggesting China skeptics keep their minds clear to see what is actually happening in the country. China's economy grew in 2019 without monetizing debt, Dalio noted, adding that it also produces more than it consumes and achieves a balance of payments surplus. When almost all countries are still struggling against the pandemic, China has achieved some of the world's lowest COVID-19 case rates, the Bridgewater founder wrote, noting that "nearly half the world's initial public offerings will be in China this year, including Ant Financial's $30bn listing, the world's biggest ever. Even Tesla's best-selling Model 3 car may soon be made entirely in China." Dalio opined that many are missing China's extraordinary performance, including its remarkable economic changes over the past four decades, due to a persistent anti-China bias. "Since 1984, (China's) per capita incomes have risen more than 30 times, life expectancy has increased by a decade and poverty rates have fallen nearly to zero," he wrote. He argued Chinese stocks and bonds are undervalued. "China's fundamentals are strong, its assets relatively attractively priced ... These currently account for 3 percent or less of foreign portfolio holdings; a neutral weighting would be closer to 15 percent." In his view, the discrepancy is "at least in part due to anti-Chinese bias" and is going to change. "Chinese markets are opening up to foreigners, who can now access at least 60 percent of them compared with 1 percent in 2015. Benchmark weights in major indices are rising." And Dalio projected that China will "enjoy favorable capital inflows that will support the currency, already at a two-year high, and financial markets too." Meanwhile, he held that the world will inevitably be affected by China-U.S. relations and contended that "time is on China's side." "China's economy is roughly the same size as the U.S.'s and expanding at a faster pace. It has a growing population of well-educated people, with around a third of the world's science and technology university majors, three times the U.S. share," Dalio explained. China rivals the U.S. in advanced technologies, he added, and will probably take the lead in five years. Source

Vince McMahon Is Advising Trump on How to Restart US Economy WWE's Vince McMahon was named as one of a few sports magnates to aid President Donald Trump in restarting the U.S. economy. Talk show and radio host Andy Slater broke the news through his official Twitter. This followed a press conference earlier this week in which Trump stated he was putting together a group of sports commissioners and other executives to form an economic task force. Slater wrote on Twitter, "JUST NOW: Adam Silver, Rob Manfred, Roger Goodell, Gary Bettman, Robert Kraft, Jerry Jones, Dana White, and Vince McMahon are part of a large group that will help advise on how to restart the economy, President Trump says." He followed up with, "MORE: Mavs owner Mark Cuban will also be part of this group." He even quoted the President saying, “We need to get our sports back." This comes after weeks of Trump talking about wanting to restart the economy sooner rather than later. The inclusion of people such as White, Cuban and McMahon did not come as a surprise given their prowess as businessmen and owners in their respective fields. The men also happen to be personal friends of the President. McMahon made a name for himself by turning his father's wrestling promotion company WWF into the global phenomenon that it is today. Recently, he made headlines by furloughing WWE staff, releasing some of its superstars and cutting executives pay as a result of the coronavirus pandemic. Source

Taiwan says China fails to pay up on US$8.6 billion in aid pledges to former allies TAIPEI: Taiwan's foreign minister said on Friday (Nov 22) that China had failed to deliver aid promises worth US$8.6 billion and instead "exported corruption" to nations that had switched allegiance to Beijing from Taipei, amid a tug-of-war for diplomatic recognition. China has in recent months stepped up a campaign to peel away more allies from self-ruled Taiwan, which Beijing considers its territory and so ineligible for state-to-state relations, ahead of a January presidential election in Taiwan. Taiwan's Foreign Minister Joseph Wu said Beijing had made "false" aid promises totalling US$8.6 billion to several of Taiwan's former allies, for various projects from sea ports to highways. "To lure Taiwan's allies to build ties with them, China often makes promises with huge amounts of money. But we realise those promises were not fulfilled," Wu told reporters in Taipei. "We have been telling our allies that don't think you can hugely benefit from China just because of these false promises," he said, citing a long list of projects he said China had failed to deliver to Taiwan's former allies including the Dominican Republic, Sao Tome, Burkina Faso and El Salvador. In Beijing, China said this was a smear. Chinese Foreign Ministry spokesman Geng Shuang said Beijing started "cooperation with many countries on the basis of a win-win" and they were "not only in China's interest but are in the other country's interests". "These real benefits are something the citizens of these other countries can truly feel. These types of cooperation cannot be effaced by anyone's attacks or smear attempts." Beijing has redoubled it efforts to "reunify" Taiwan, flying regular bomber patrols around it and seeking to isolate it diplomatically. That has presented a challenge to Taiwan President Tsai Ing-wen, who is seeking re-election and has seen seven countries drop Taiwan as an ally since she took office in 2016. Wu said China was exporting "corruption and authoritarianism" to those countries and "putting money directly into the pockets of corrupt politicians". "Either China has limited capacity to deliver those promises, or they were just unwilling to deliver those promises," Wu said. "This could be a cautionary tale for our allies." Taiwan now has only 15 diplomatic allies, many of them smaller, less developed nations in Central America and the Pacific like Belize and Nauru. Tuvalu, one of Taiwan's remaining allies in the Pacific, told Reuters this week the nation had rejected offers from Chinese companies to build artificial islands to help it cope with rising sea levels, giving some relief for Tsai. China believes Tsai wishes to push for Taiwan's formal independence, a red line for Beijing which has threatened to attack if this happens. Tsai has repeatedly said she wishes to maintain the status with China, but will defend Taiwan's democracy and security. Source

Empty auto showrooms may be the most obvious economic indicator. © Reuters China's economic slowdown just got real. The world is well aware that Asia's biggest economy is growing at its slowest pace since 1992. The 6% growth in gross domestic product recorded for July to September reflects a rapid weakening of demand from abroad as the trade war damages production. Yet three developments last week suggest China may be in more trouble than President Xi Jinping's government admits. First, warning signs are flashing over corporate profits. Beijing's official data on GDP, inflation and production often generate doubt, but China Inc.'s deterioration is unmistakable. Last week, the Nikkei Asian Review detected cratering profits in the first nine months of 2019 across a broad range of pivotal industries. Carmakers, commodity producers, bricks-and-mortar retailers and some property developers are in the red -- dramatically, in certain cases. These are all the sectors any government would target to support growth, yet each is caught between U.S. President Donald Trump's trade war and Xi Jinping's attack on financial excess. Along with the trade fallout, industries including autos are smarting as the government cuts subsidies. Empty auto showrooms may be the most obvious economic indicator: Nikkei reported a year-on-year drop in net profits of almost a third at 161 auto-related domestically listed companies in the first nine months of 2019. More broadly, said research company Shanghai DZH, aggregate net profits of more than 3,600 nonfinancial names fell 2.2% during that period. This is not an epic decline, but it belies the conventional wisdom that growth is stabilizing. Instead, Xi's team has a traction problem. Traditional pump-priming -- public works spending, tax cuts, local-government debt issuance -- is not working its magic. This has the central bank springing into action, our second indication China Inc. is reeling. In recent months, the People's Bank of China stayed largely in the background as GDP dipped toward 5% territory. That changed last week when Governor Yi Gang cut interest rates on one-year loans. That was not a massive easing -- from 3.3% to 3.25%. Yet PBOC watchers are now wagering on reductions in the benchmark lending rate. So far, says analyst Andrew Batson of Gavekal Research, the PBOC has been focused on "selective easing," or incremental rate moves to reduce strains in credit markets. "It is almost as if their plan is to kill economic pessimism by inflicting the infamous death by a thousand cuts," he says. The five-basis-point cut in one-year rates hints at a more assertive posture. It is a balancing act, though. Since taking the helm in March 2018, Yi has sought to wean state-owned enterprises and banks off excessive stimulus. The concern is that banks would resume lending to their riskiest borrowers; bad loans jumped 4.3% in the third quarter. The concern is banks would resume lending to their riskiest borrowers. © Reuters The trade war is forcing Yi's hand. Factory prices are veering toward outright deflation. Not Japan-like "lost decade" stuff, but the 1.2% drop in producer prices in September year-on-year is more alarming than the fall in corporate profits. The third indicator of trouble is that Xi wants to make a deal. In recent months, Trump tried to claim Washington and Beijing were on the verge of a giant trade pact -- only to see Beijing deny it. Last week, it was Xi's team moving markets with talk of detente. On November 7, both sides confirmed tariffs may be rolled back in a "phase one" trade deal. It is far from the comprehensive redesign of Sino-U.S. dynamics Trump promised -- more like a face-saving strategy than the realignment of advantages or incentives. Yet it would be a boon for export-dependent Asia and trade-battle-weary markets. Like Trump, Xi is keen to rack up his own wins on the global stage. A clear one last week was French leader Emmanuel Macron jetting to Beijing. In decades past, European leaders would raise global concerns on trade, climate change and Iran with the American president. Macron seeking an audience with Xi instead had plenty of geostrategic symbolism. Emmanuel Macron seeking an audience with Xi Jinping had plenty of geostrategic symbolism. © AP Ending outright trade hostilities would buttress China's trustworthiness as a more stable partner than Trump Nation and would set China aside from the anti-free trade crowd. That crowd includes Indian Prime Minister Narendra Modi, who last week wrecked India's standing in this regard by rejecting the Regional Comprehensive Economic Partnership trade deal. Japan's Shinzo Abe is squandering Tokyo's capitalist street cred in his bilateral brawl with South Korea. In the short run, a truce with Trump relieves pressure on China's all-important export sector so that Beijing can keep growth north of 6%. Longer term, it allows Xi's team to prepare China Inc. to dominate the future of automation, renewable energy, biotechnology and self-driving vehicles. Neither outcome is likely, though, if Xi limps into the new year. Warning signs emanating from corporate China demand immediate attention. The good news is that the PBOC seems to be on the case, as does Xi's trade negotiation team. It is no sure bet, though, that Xi and Trump will suspend the hostilities. Trump's policies are a study in chaos and incoherence. One thing is clear: China must act assertively to get ahead of mounting risks to its economic trajectory. Source