Here comes China
In collaboration with Godfree Roberts and his excellent Here Comes China weekly newsletter. This selection is but a fraction of what is a rich, complete and interesting newsletter.
Starting with money flow in a new financial system.
The video is from Godfree’s newsletter and the following comments are mine. I come from a farmer-business family. I guess my first word was cash-flow.
We have a tremendous backlash against CBDC’s (central bank digital currencies). If one looks at these from a non-trustworthy government, and from an individual perspective, it becomes scary, especially if you get told that ‘they’ can cut off your money from your bank at any time. This concept is laughable as a scare story, because, right now your bank can stop your cash-flow as they wish, including credit cards and any payment or spending method. So, the level of risk is purely seated in your own jurisdiction. This is of course exactly why some of us were very happy when Satoshi Nakamoto wrote up his Bitcoin white paper, now around 14+ years ago. There are many scams in the industry, and watch it, when a scam happens, the cryptocurrency gets blamed, and not the scammers. When a scam happens in paper currency, the paper currency is never blamed. So, my claim to fame with cryptocurrencies is that I’ve never lost any money in a scam because there are ways to do it right. A cryptocurrency is simple in a few respects: It is a peer to peer electronic cash, with no banks or third parties in the middle. It is fast and cheap to transact, with no opacity in the process or transaction. Fees or costs are clear.
So, let’s kick this up to big trading, country with country or region with region. We now have a problem in that a new financial system is being stood up, and the main starting point as far as what I can see, is currency swaps and trading in local currencies. Our old money transfer mechanisms are not able to do this. There is no good ‘New Swift’ that can be used. A few months ago, even though Russia does not consider cryptocurrencies as money that you can use to buy bread and milk on the way home from work, they allowed cross-border payments in cryptocurrencies. What this means is that I can use my Bitcoin or Ethereum or ECash to pay for an import of any product that I want to deal with, cross border. This relieved the problem of cross-border payments in the region somewhat. Yet, countries want to own their own digital currencies, just like I want to have my own. China to the rescue, with a CBDC swap mechanism, almost just in time that is peer to peer, cheap, widely accessible, settled in a secure medium and fast. If you remember, this is exactly what a cryptocurrency is supposed to be.
Here comes project MBridge out of Hong Kong, which is an exciting development. So, I can see the first problem that people will notice. There is a BIS (Bank of International Settlements) input to this MBridge project. At this stage, this does not bother me too much. I guess they know which way the wind is blowing and money transfers will change as we move further into a new financial system. Secondly, the following banks are also involved: the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Central Bank of the United Arab Emirates. This is also not a shop for odious loans, but for the transfer of digital currencies, something that I can do even today: it is a mechanism and not a SWIFT and also not a stock exchange. The video is less than 5 minutes long.
Momentum, ‘Big Mo,’ favors China, Russia and their friends. Trade between 90% of the world’s people becomes more frictionless each year, growth is accelerating, infrastructure bets are paying off… What’s not to like?
A Chinese team is the first to control chemical reactions at the atomic level, using lasers to manipulate hydrogen atom reactions. This could eventually lead to more efficient production of chemicals. Read full article →
China dominates AI research, researchers published 70% more top AI papers than the US and twice as many papers overall, 43,000, in 2022. Tencent, Alibaba, and Huawei are among the top ten researchers. AI will add $600 billion to China’s GDP. Read full article →
(This is my favorite snippet on technology! It is such a joy when established science gets overturned!) LAMOST, a 4m. reflector that captures the spectra of thousands of stars at once found low-mass stars (30%-70% of the sun’s mass) were much less common billions of years ago, forcing astronomers to recompute using the now verified variation of the IMF. Read full article →
Meituan’s 200,000th. drone delivery. Average delivery took 12 minutes, compared to 30 for couriers. Drone delivery costs will equal couriers in 5-10 years because of high R&D costs and time to develop for large-scale commercialization policies. Read full article →
Dylan Patel: I can only guess, but I think what finally got the US to be like, “Oh crap,” was the SMIC 7-nanometer. Maybe, if you look at the exact technical specifications, it’s more like an eight, but it’s really cool and amazing that they were able to achieve that. I think that might be what partially lit the fire of the CHIPS Act. One day, on Capitol Hill, Chuck Schumer said SMIC achieved 7-nanometer. Read full article →
SOE Hua Hong Semiconductor Group signed a deal for a $6.7 billion wafer fab in eastern Wuxi, and Hua Hong’s second 12-inch facility in the city. It will produce mature tech like 65-nm, 55-nm and 40-nm. Read full article →
Doing Homework on Covid Numbers:
China is working on monitoring excess deaths from COVID, and needs time to conduct a comprehensive study, “The team has already been calculating the possible ‘excess deaths’ caused by the latest outbreak, which will be provided to the public soon,” said the head of China’s CDC. “Many deaths that did not report in medical institutions, or those that had not been verified as being related to COVID-19 due to lack of nucleic acid testing, have not been included in the statistics. Also, some deaths appear unrelated to the COVID infections but have a certain correlation such as other disease treatments being delayed, and the overall understanding of excess deaths requires more comprehensive information and assessment of more comprehensive social costs caused by the epidemic. “However, compared with the number of deaths in hospitals that can generally be counted immediately, the statistics for excess deaths have a certain lag. In many countries, the excess deaths are greater than the government-declared deaths. It takes weeks or months to have a comprehensive assessment, and excess deaths and deaths reported by medical institutions should be complementary, the expert said. The assessment of excess deaths is more important to evaluate losses in a general way, while deaths reported by medical institutions are important for allocating resources and adjusting epidemic measures,” Chen said. Read full article →
This is quite astounding. Note it is China’s share of global production, and not only domestic production.
Services lose importance during war, relative to agriculture, industry, and construction, forcing us to recalculate economies’ share of the goods-producing sectors to learn how they really compare. Russia and China’s GDP are significantly larger when we consider only directly productive activities. China’s economy becomes nine times stronger than Germany’s and three times as strong as that of the United States. The Russian economy also ends up outranking the German economy and is more than twice as strong as France’s. Read full article →
When Beijing mentions ‘with Xi Jinping at the core’ they do not mean Xi makes all the decisions himself. In fact, the CPC is an elected body of 2,300 members who are divided into a variety of policy groups. Their consensus in the decision-making of the country’s issues is supported by the entire Chinese government apparatus numbering many more thousands of individuals, within research bodies such as the NDRC, overseas diplomatic missions, universities and other research institutes, the military, health and business groups as well as numerous other think-tanks. A collective apparatus then sends its findings to the politburo where these are further debated and discussed. Xi’s position, while active within this, is as a figurehead, announcing and being seen to carry out the remit of the CPC. Western media often portrays Xi as an autocrat: this is a misconception. Read more →