Chinese Suicide | Learning by Proxy
China's days of economic ascendance are falling prey to one man's ego!
Every great empire that has ever existed in the world has eventually fallen prey to the ego of one man who was handed a fully formed country. The one thing that we can be certain of is that history repeats itself. China earned its place in the world through the sacrifice of billions. That sacrifice is going to be squandered to sate the ego of one man.
Chinese Suicide
Mao Zedong oversaw the Cultural Revolution during his 33-year reign in China. It was a complete disaster. After his death, Deng Xiaoping took over as the Chairman of the Chinese Communist Party (CCP). He was the one who insisted on ensuring that every Chairman has a 3 year limit as the Chairman of CCP. China does not have elections, they do not follow democracy. But the CCP used to follow a system through which people were promoted from within the party to rise up to Chairman.
That was until in 2018,
The decision announced on February 25th to scrap term limits for China’s president, Xi Jinping, pierces the veil of Chinese politics. It reveals that, at a time when the ruling Communist Party is presenting China to the world as a modern, reliable and responsible state, capable of defending globalisation, the internal political system that the party monopolises is premodern, treacherous, inward-looking and brutal. It also shows that Chinese leaders’ own attempts to make the party otherwise have not got far.
Source: Economist
When you have the ultimate power within an organisation or a country, you start to feel unshakeable. This in turn results in very poor decisions being made and that results in something akin to the Cultural Resolution cited above.
The clampdown on Hong Kong over the past few years is a classic example of a poor decision by someone who cannot believe that his power is being questioned.
One of the things that supported the rapid rise of China over the last 20 years was the free run of capitalism and the promotion of businesses at all costs. As a result, there were businessmen who grew more and more powerful and that does not portend well for an authoritarian. Last year, Alibaba’s financial arm was on the verge of being listed in Hong Kong, when the Chinese government went after them and killed their IPO. Jack Ma has all but disappeared from the scene in the meantime.
Now, the qualifying factor for a company to be pulled up seems to be a listing on stock markets overseas.
Chinese regulators have gained a reputation for aggressive action, but even hardened investors were shocked by the announcement of a probe into ride-hailing firm Didi (DIDI.N) just two days after its $4.4 billion New York stock market debut.
While Didi's initial public offering (IPO) prospectus did mention some of the regulatory risks to its operations, there was no indication that the Cyberspace Administration of China (CAC) would begin investigating the company and ban it from accepting new users during the review. read more
Source: Reuters
Didi is the Uber of China and a ban from accepting new users can be crippling to their business. China has been a place that was always hostile to international companies. They chased Google and Facebook out of the country. It is indeed surprising that they are going after their own!
In the year 2000, China was not a very affluent economy but as the years progressed their wealth has grown. It is projected that in the next 10 years, China might even surpass the USA to become the largest economy in the world. Having said that, they do not exist in a void and shunning international capital is not going to do them a lot of good.
The measures could have far-reaching implications for a raft of China’s tech giants that are planning IPOs offshore, and for the global investment firms that hold stakes in them. Many investors bought into fast-growing Chinese startups expecting to cash out after the companies list on global exchanges.
In the U.S., IPO bankers scrambled over the holiday weekend and into Tuesday to understand the directives coming out of China, according to people familiar with the matter. Some fielded calls from furious fund managers who had purchased shares of Didi in its IPO last week, only to watch the company lose a huge chunk of its value—as of midday Tuesday, Didi’s stock was 12% below its IPO price.
A big question on those investors’ minds: Who knew what, when? Didi has said it wasn’t aware of Chinese regulators’ plans to put it under cybersecurity review and ban new downloads of its app ahead of its IPO.
Source: WSJ
The investors in the US are going to get vary of investing in any future IPO given how arbitrary and sudden decisions in China can be. Many of these companies have invested in other startups overseas and that might also come under question with several of these startups wanting the Chinese investors out. They would want their structure and ownership to be clear rather than hanging by a thread once such actions are taken.
On Monday, China's cybersecurity watchdog announced probes into truck-hailing platforms Yunmanman and Huochebang, as well as job listing site Boss Zhipin. New users cannot register for these three apps during the investigation.
Yunmanman and Huochebang are China's two major truck-hailing apps and label themselves as "Uber for trucks." They merged in 2017 to create a new firm — Full Truck Alliance, which listed on the New York Stock Exchange last month, and is currently valued at $21 billion.
Source: CNN Philippines
Didi is in focus because it is one of the better-known companies but it is not the only one in trouble with the Chinese authorities.
You don't want foreigners to own your company, you don't want foreigners to invest. But you want them to take loans from you and keep buying from you. How long will that party last?
Xi Jinping is probably going to remain, chairman, till he dies. He is bound to make missteps and his ego will ensure that he puts more resources behind those mistakes.
Shorting is a term used in the stock market where you sell a share when it is high and then buy it later after it falls. How do we 'short' China?
Transportation
Transportation is one of the biggest contributors to global emissions and therefore global warming. While industry contributes just as much, transportation also happens to be the most visible. This augured well for Elon Musk and helped him turn a bad investment in a high-speed electric car company into at least a legitimate one.
The one thing perhaps the entire industry and the world agrees on is that oil HAS to go. Countries in Europe were the first to take steps towards it, but Belgium has taken by far the boldest step.
The regional Brussels government announced on June 25 a new ban on fossil fuel-powered cars in region that will come into effect over the next 14 years. New sales of diesel cars will be prohibited 2030, and new gasoline car sales will be illegal in 2035. The move is in accordance with existing efforts in Brussels to reduce pollution, and the EU goal of achieving net-zero carbon emissions 2050.
In order to meet these timelines, government leaders have rolled out a broader plan called the “Low Emission Mobility Brussels” roadmap that encourages use of public transportation and will build infrastructure for electric vehicles. Under the plan there will be 22,000 charging stations in the region by 2035. The hopes to reduce total transport emissions by around 70% by 2030.
Source: Quartz
Not too far from the continent, London has decided to take a slightly different approach from that of the rest of the world towards cleaning up with public transport. Hydrogen Fuel Cell powered buses.
London’s iconic red double-decker buses are getting a bit greener. London mayor Sadiq Khan announced city will add to its fleet hydrogen fuel-cell double-decker buses that produce no pollution.
The 20 new buses join the 500 electric and 3800 hybrid buses already in service as part of efforts to improve the city’s air quality, as well as to make all of London buses zero emission by 2030.
Source: Quartz
There is a philosophical battle when it comes to clean transportation. Battery based transportation requires batteries to be charged, often involves chemicals that are harmful to the environment and a very difficult recycling process for the batteries once they are exhausted. Hydrogen Fuel Cells by comparison just combine hydrogen and oxygen to produce water and some energy. You refuel the vehicle with hydrogen instead of petrol.
The main argument against hydrogen fuel cells has been safety which Elon Musk is the first to point out. He does not tell you that he straps on the same hydrogen to his rockets and sends them to space, then it magically becomes safer! He has set the research in Hydrogen fuel cells back by decades single-handedly.
I am glad to see countries adopting it nevertheless. Reminds me of Edison (D.C.) versus Tesla (A.C.). Edison did everything in his power to bring down alternating current and his argument against it was that it was not safe! All of us use AC and not DC today. It is ironic that Elon Musk who is the modern-day Edison is running a company called Tesla.
Meanwhile, on the other side of the pond, Americans are still struggling to figure out how to get heavy-duty vehicles to run on electricity (battery).
While some trucks cover over a thousand miles in a day, others operate at short range. These vehicles are more feasible for electrification in the near term, according to Brennan Borlaug, a researcher at the US National Renewable Energy Laboratory and the lead author of a recent Nature Energy study on electric-truck charging infrastructure.“We see this as being probably the first step on the path to heavy-duty-truck electrification,” Borlaug says. Because these trucks usually drive relatively short distances and return to the same place every day, they don’t need high-capacity batteries and ultra-fast public charging infrastructure—requirements that manufacturers are still working to meet for long-range vehicles.
However, the researchers weren’t sure if the grid could handle many electric trucks simultaneously charging in one place. Unlike electric cars, which have relatively low power requirements and would be distributed through neighborhoods, fleets of electric trucks might strain electricity distribution systems.
Source: MIT Technology Review
Throwing more money and research behind a bad technology. That is the greatest achievement of Elon Musk.
Playing with Fire
In 10 days from that tweet, cases have doubled in America. In the meantime, across the English speaking world in the Northern Hemisphere there is an incredible experiment underway!
Baseball and Basketball seasons are in full swing in America with full capacity crowds. Across the country, people have gotten rid of masks. Especially those who are not vaccinated. Cases numbers are shooting up in middle America which is a predominantly right-wing bastion where there is a lot of vaccine hesitancy. The sporting events are the oil needed to catalyse the spread of the virus.
Across the pond, the blond mop (read Boris Johnson) has decided that all restrictions are to come off on the 19th of July. In the meantime, COVID went from the May lows of 1000 cases a day to 34000 cases a day in Britain.
Source: Worldmeters
To make Indian leaders look like novices, England went ahead with Cricket at Lords, Tennis at Wimbledon and Football at the Wembly - all with full capacity crowds. And now, the restrictions will be removed.
Roughly 60,000 fans packed Wembley Stadium on Sunday to watch Italy defeat England in the final of the Euro 2020 football tournament. The same weekend, Wimbledon’s Centre Court was full: 15,000 people witnessed Novak Djokovic and Ashleigh Barty win their singles titles. And on Saturday, 23,000 spectators filled Lord’s Cricket Ground, where England played Pakistan.
Now England waits, with anxious anticipation, to see how many of these sports devotees fall ill with Covid-19.
All three events were part of England’s move towards July 19, when the economy reopens completely following the coronavirus pandemic. At Lord’s and Wimbledon, there were no limits on attendance; Wembley was two-thirds full, as it was during the Euro semi-finals earlier in the week. As the first major sporting contests permitted to play to such massive crowds since the pandemic began, they were also trials. The goal: to help the government understand not only if such fixtures are safe, but also the kinds of protocols that full-capacity events will need in the near future.
Source: Quartz
This August will be interesting to watch. I think the people who should be most worried are not the ones who might get infected by COVID and perhaps even die. The people who should be worried are the ones in leadership positions at Pfizer, Moderna and AstraZeneca. The impatience amongst leaders to make it seem like they have moved mountains has resulted in these events.
By August we will know how well these vaccines really work in the real world where new strains are being born by the week!
In the meantime - Japan - "Hold my beer! Watch me put together the Olympics".
Also
When you are the RICHEST person in the world but also petty!
That is not a phoenix, it’s Mount Etna erupting!
