Feng's Comments

Chinese Railways and Speculating Pig Farmers

Mon, 26 Oct 2009 19:09:34 -0400

"Even if they were justified in the US or Europe, where the economic value of every hour saved is many times the value in China".

Remember there are much more people in China then in EU or US, and there is a growing middle class in China who would definitely be willing to spend more to save time. Also remember the same kind of train ticket will cost a lot less in China than in US or EU(well, unfortunately, US actually is not there since it doesn't have high speed rail, something I'd really love to have). I can assure you that high speed rails between Beijing Shanghai, Shanghai Hangzhou, Wuhan Guangzhou, Nanjing Hangzhou will be running at full capacity pretty soon after the initial launch. All of my friends, who are middle class in China and mostly by no means rich in aboslute $ income terms, will take it w/o a second of hesitation.

I love the Author's way of thinking. It's funny. Even though the author is spending a good amount of time in China, he is clearly preoccupied with the china bashing perspective. It's a pity that you are not learning a helpful perspective by interacting with middle class chinese people. You really don't need to go to China to write your article. What a pity.

China's economy has a lot of problems, some are structural and may have big negative consequence down the road (such as housing bubble). However, the author has failed to provide any balanced analysis in pretty much all of his articles here. Of course, that's difficult to do if you have decide your opinion even before looking at the situation.

Shift in U.S. - China Dialogue Is Louder than Words

Wed, 29 Jul 2009 16:25:29 -0400

good article. Very rate to see a Western citizen taking an honest/critical view on American policy and hipocricy.

However, the China situation is not as rosy as the impression one could get from reading this article. There is huge asset bubble blewing due to massive government mandated lending. Most of the loans go to state owned company, who subsequently funneled the fund to real estate & stock market. The private small businesses who are in most need of funding still couldn't get any of these loans. China's policy reacting to the crisis was fast and probably better than the US's, but still has tons of problems. The government missed opportunity to distribute the government's wealth to low income people across the country, therefore boosing both society welfare and internal consumption. Instead, it creates huge real estate bubble, eating away middle class's effective purchase power and making rich even richer, and poor even poorer.

Not to mention how dominant State owned companies are in the China economy. Even after the massive bail out, US economy is still much more private sector heavy than China's. I would say, however, that China's government is much more captalism friendly than the US government, which is more socialism. How ironic!

Is China Playing the Protectionist Card?

Wed, 17 Jun 2009 17:58:45 -0400

What's wrong with that? China criticised the "Buy American" policy a few months ago, and the US kept the clause there. Now China is merely following the US's leadship. So China is obligated to buy the world while American, the leading power, is only buying American? Give me a break. Get over the entitlement way of thinking.

The Lurking China Money Deal

Thu, 19 Mar 2009 00:04:49 -0400

You wish China is that foolish to take out $40B just for western countries to stop making requests that China will ignore anyway..... let's say yes they are that stupid, then tomorrow the western start to complain about Tibet really hard, and China needs to pay $400B to let westerns shut up... the day after tomorrow the westerns start to complain about human right in China really hard, how much China need to pay?

Chinese Are Likely to Halt Purchases of U.S. Treasury Debt

Fri, 13 Mar 2009 13:42:27 -0400

Yeah, they are communist and evil! why do we need to honor anything to them? we sure are justified to default on the debt we own them. They are dictators and inferior. We are superior and represents justice in the world! Long live America freedom and justice!

On Mar 13 08:53 AM LogicalSinger wrote:

> << I request the U.S. to maintain its good credit, to honor its promises
> and to guarantee the safety of China’s assets.>>
>
> No problem, Premier Wen, we will honor our promises... just as you
> honored your promise to introduce democracy to China, a promise made
> back when our country opened its borders to your products. You can
> count on us, pal! (toothy grin and wink)

World War III: U.S. vs. China?

Fri, 13 Mar 2009 11:34:49 -0400

Hmm... So any american believes that the US government and media will give an easy pass to a China sub-marine detector 75 miles off a US navy sub-marine base? If you are one of them, I have a lot of admiration to either your hypocrisy or ignorance.

This kind of small skirmishes can easily get out of control. And nationalism in both countries could carry a small misjudgement into a major conflict. Some politician in the US probably also has some incentive to destroy China's development to stop it from becoming the #1 superpower in the foreseable future, and help itself dig out this economic turmoil.

China is no match to US millitarily at all. US can easily lock up China's raw material supply and trade route on sea, and destroy a significant portion of China's manufacturing capability by air force without sending one single soldier to China soil. (I do believe sending troops to China soil will not be feasible to the US, hey but if your goal is to build but to destroy, you don't have to send troops). So what could be China's response? Nuclear? Unless US is threatening China's survival, China is unlikely to use Nuclear first because China's capability is not enough to guarantee a complete destroy of US while US can destroy 10 China for sure. But China can send weapens, troops to middle Asia, middle east to build proxies to fight the US.

I hope it will not happen, it is truely an ugly picture. However, we can't completely rule out this possibility if economic environment continue to worsen and this thing becomes a deep depression.

On Mar 12 01:27 PM Buckoux wrote:

> Posted by vaughn: " Last time I checked the US navy will expel any
> military ship within 200 miles without prior permission from the
> US navy."
>
> Then you were not the commander of a US naval combat vessel when
> you checked.
>
> What's the matter with you non-military types, Do you really believe
> the Hollywood stereotype about the military. I can speak for most
> military personal, enlisted and commissioned, and testify that we
> prefer peace much more than combat. The only caveat to that is that
> once a fight has started, it is our duty to go to the fight and win.
> Even if politicians, New York Media and Hollywood tie one hand behind
> our backs. Our burden is not only the battle, but the notion that
> we must win, "fair and square" in a "democratic way" in a short period
> of time, against an enemy that cheats, is totalitarian and has lots
> of time because it controls its own media.

Why I'm Bearish on China

Thu, 12 Mar 2009 13:20:32 -0400

The author doesn't seem to understand that only next export contribute to GDP, not total export.

Apple's Chinese iPhone Torture

Wed, 11 Feb 2009 10:22:52 -0500

Paul,

You raised a great point, I agree it's important for any phone manufactuerer to maintain a good relationship with China Mobile. However, I would argue Apple's approach looks even more stupid from that perspective. Because you give CHL incentive to build good relationship, yet Apple is trying to get CHL to pay them.

Whoever is in charge of Apple's China strategy should be fired immediately, if not 1 year ago. This guy clearly had no understanding of the Chinese market and consumer behavior at all. I want to reemphasize my belief that had Apple launched the iPhone simulaneously in China and US (full price in China, say $700 and subsidized price in the US), Apple was very likely to achieve bigger sales (in terms units shipped) in China than in US. Because Chinese consumers are so much more trendy than the average US consumers and they do love iPhone. Now it's too late because the unlocked phones has already flooded the market at a price of roughly $600 for the 8G version.

I used my own experience to illustrate the point that Chinese consumer are willing to pay a much large % of their income on trendy cell phones in my previous post. Another example, a friend of my sister is asking my to buy a Sony Erisccon X1 phone for her. The phone cost $720 here and is still not available in China. $720 is close to her salary for 1/2 to 1 month. This is not uncommon for Chinese consumers. Of course, I have not done thorough research to support my point that Apple will sell very well at unsubsidized price, but it's very clear to me Apple has missed the key point completely.

As an iPhone lover (love my wife's iPhone much more than my BB to the extent I placed a pair trade on AAPL and RIMM last month, :P) and shareholder, I sincerely hope Apple learn from this mistake.

Apple's Chinese iPhone Torture

Tue, 10 Feb 2009 10:56:43 -0500

Apple has completely mis-gudged the situation in China.

1) They missed the boat in a big way. Even if they sell iPhone at the un-subsidized prcie, say $700, iPhone would still be a big sell in China if they launched it early, possibly bigger than in the US. Yes Chinese consumers are on average much poorer, but the urban people have decent income. More importantly, average Chinese consumer are much more trend conscious than US consumers, it's very common for them to spend a month's salary on a phone. That's what I did when I was a graduate student in China 8 years ago. Now I live in the US, I don't even want to spend 1/10 of my salary on any new cell phone. A key difference is peer pressure.

2) They hold no card in negotiation with China Mobile. China Mobie has such a strong market position, why would they want to give Apple money just to get their users to use this phone? And anyway user can buy the unlocked phone in China as the other comments reveals. Additionally, consumers in China are not used to have a subscription plan.

My suggestion to Apple: stop negotiation with any carriers in China, just start sell your iPhone in China directly. You've missed the boat this time because iPhone is not as hot as it was 2 years ago. But next time, when you come up with new things. Set the price 2X what an unsubsidized price would be in the US in China. It will sell.

Why the Mixed Signals on China's Economy?

Mon, 02 Feb 2009 12:04:49 -0500

The domestic spending during lunar new year period was up by some 7% or so from same period last year. How about that number for the US and other countries?

China is certainly impacted seriously, but it is in much better shape than either US or Europe and will do much better than these two enties in the next few years. Just a few reasons,

1. Huge wave of urbanization still in the midst. There is a need for huge infrastructural build and government is doing exactly that.

2. Government is much more efficient and fast acting than any western government. Some benefit of being an authoritarian one.

3. Big foreign reserve and very low fiscal debt position. They have a lot of space for stimulation.

4. Chinese people are more hard working, optimistic and resilient than the spoiled westners. (no disrespect, the american were probably equally hard working, but they have been spoiled in the last few decades. They are no match to the Chinese worker today in terms of resilience and hard working. You don't need to look afar to find evidence of this. Just compare the number of people who complain about the government instead of diging deep in the US and in China.) btw, The so called magic 8% is complete bushit. in 1990's, the state owned enterprises (SOE) reform made about 40 MM people jobless, there were no major social unrest.

5. Export is about 36% of GDP. But the export contributed GDP is about 15% of GDP. Sure the export slump had a huge impact and chain reaction on the overall economy. But it's not the end of the world for the Chinese economy.

Obama Begins Jawboning Campaign with Chinese President Hu

Mon, 02 Feb 2009 11:44:11 -0500

Agree, change the title to "China is stealing from America" would be appropriate.

Everyone Is Working Hard to Increase Global Trade Imbalances

Wed, 31 Dec 2008 00:22:37 -0500

I agree that a lot of stuff are more expensive in China than in the West. It's quite funny that a pair of Nike shoes made in China is cheaper in the US than in China. However, getting rid of tarrif would benefit the western countries more than China. China has stated very clearly that the biggest contribution that can make to the world economy recovery is to take care of the its own business. So China is not dragging down the world as the US is doing (and letting the world pay the american's bill), but don't expect China to foot the bill for the world.

I think a good way of encouraging spend is government guranteeing minimal level of income to old people, especially those in rural areas.

Making medical care free wouldn't work. Nothing good will come free. That's socialism. And Chinese people and leader don't need other to teach them again that socialism doesn't work.

China Is Looking Fragile

Sat, 27 Dec 2008 15:10:39 -0500

The widely held belief that China has to maintain >7% GDP growth rate to avoid significant social unrest is non-sense. For several reasons,

1) From a cultural perspective, Chinese culture is much more hierachical than the western culture. Chinese people are one of the most resllient nations. In hardship, they tend to work towards better tomorrow. Only in extreme situation, they rebel. GDP growth <7% and milions people can't find a job is not one of those extreme situations. In early 90's when the government reformed the state run enterprises and put millions people out of job, there were some unrest but the country managed through w/o major problem.

2) People understand the problem stemmed from the western world, and the government has done everything possible to protect the economy. The government is not at fault for the hardship.

3) Unlike what the western media portrays, most Chinese people are appreciative to what the government has done in general over the past 30 years. Having suffered from revolutions before 1978, majority of people agrees with the party/government that maintaining a stable society, avoiding aggressive unrest and reform (such as the one went in Soviet Union in 1990's) are of paramount importance. Despite the coming hardship, resorting to large scale social unrest and reform is not going to resonate well with the people.

China Medical Embraces Molecular Diagnostics

Fri, 26 Dec 2008 00:10:23 -0500

there has been very limited information on CMED.

The growth numbers look good, but the stock has dropped precipitously in recent days. This makes me feel there are probably things the regular investors don't know. The sale of the HIFU business makes sense. But the fact it was sold to the majority shareholder and chairman of CMED makes me feel nervous. Is there anything going on behind the door? We know a lot of companies in China play this kind of games to cheat money from investors.

My positions in CMED has lost 50-60% value, I am debating on whether I should hold on to it, or cut my loss. If there are indeed fishy things going on with the company, my shares could lose all the value.

China's Economy Is Stuck on the Runway

Wed, 26 Nov 2008 17:25:47 -0500

The idea of an immediate proper health care would make people spend immediately is pretty off. If the government takes this approach, chances are they end up stuck with a screwed health system even worse than american's. Which would be a huge liability for the long term development of China. Just think about the health care mess the US is facing today.

Plus, people don't necessary have no health care. My parents are retired and have good healthy coverage (much better than what average american has). Yet they are still saving a lot. It's also a culture thing. And I am sure it will change over time, but the idea of having a health care in place will make this change over night is quite laughable.

Lastly, the history has proven than when ever the developing countries take the advices from the west experts, they got burned. When they don's listen, they do fine. Western countries say you need to open your financial market for your development, so there is asian crisis in 97. (btw, they also mandated heavy doses that they themselves today refuse to take, such as let those bad banks go belly up). China has benefited a lot by learning and experiencing in its own pace. That approach had benefited so much for the country. As shown in the minor impact to the Chinese financial services industry in today's crisis. Just keep doint it, China will be just fine.

Welcome to the New China

Mon, 17 Nov 2008 19:03:23 -0500

I am one of those who bet on China. I short heavily on S&P and hold a lot of CAF. I will hold my short position till Dow goes to 7500. While CAF may sink with it in short term, long term I am quite confident it will give me good return.

In the recent 5 days, S&P is down 5% while CAF is up 10%. I think the market starts to realize US has a bigger problem and worse growth outlook than China. It seemed quite obvious to me but I guess people just don't believe it.

China Gets It Right, But Hurts America

Thu, 13 Nov 2008 19:25:26 -0500

I agree with canb888's comments.

Many people confuse a country's foreign reserve as the government's money. They are different things. China needs to pay $ or euro out (take in chinese yuan) from its foreign reserve when foreign investor wants to withdraw their investment, or domestic companies needs $ or euro to buy foreign goods.

Yes china's foreign reserve is heavily invested in US treasury. But China's fiscal stimulus package is not using the foreign reserve. there might be trickling down effect in the sense more domestic companies need $ to buy foreign goods due to the expansion, hence less reserve. But there is no direct relation on fiscal expansion and foreign reserve investment.

China Gets It Right, But Hurts America

Thu, 13 Nov 2008 19:19:19 -0500

"At last count the U.S. had a $14.3 trillion dollar economy. China has a $1.3 trillion dollar economy."

Where did you get that number? from 1990? In fact, the author's number is correct the GDP of China is roughly 1/5 of the US. It doesn't take any one much effort to check it out on google.

4 Chinese Stocks Positioned for the Rebound

Wed, 15 Oct 2008 21:32:26 -0400

Thanks China Stock Guru. I found your recommendation insightful.

Can China Weather a Downturn?

Sun, 12 Oct 2008 14:28:25 -0400

The Chinese banks don't have as high leverage as their Western peers have. In fact, they were not even close. In China buying a house/apt requires 30% downpay.

This articles reminded me of the old rhetoric from the Western officials who have been lecturing the Chinese bankers/officials for its banking system's lack of openness and NPL over the years. And it's very funny to hear that again.

China for sure will be impacted by the global slowdown. But China will continue to grow at >7% and I don't see a financial crisis in China's banking system in the short term.

The US Treasury Gave $10bn (and Maybe More) to China

Mon, 08 Sep 2008 11:51:38 -0400

I am not sure if the author has problem with bond holder, or China government.

Every investor understand (or should) the risk and rewards of Fannie and Freddie's bond and stock. Some people bet government bail out, therefore chose to invest in Bond. Some people bet no government bail out, and chose to speculate in Stock. It was a fair game. Complaining the gain of bond owner is pathetic.

If you don't have problem with Bond owner in general, but just have problem with China government because they are not american, then maybe you should ask your government to forfeit all corporate and treasure bonds owned by China government? They are the bad guy anyway, and default on the bad guy is always justified?

Just as Silver leaf put it, "So much for morale hazzard"!!!

Is China's Economy Slowing?

Thu, 19 Jun 2008 23:32:38 -0400

James, as inflation runs up, the government will have to tighten the monetary policy. that will cool the real estate market. Exactly what has already been happening. The cooling will fuel the expectation of a further price drop, and further cool the market. I don't have the exact number, but a large portion of the real estate purchase is for investment/speculation purpose. These purchase will disappear.

China's Improved Living Standard Contributing to Global Economic Growth

Sat, 12 Apr 2008 14:01:27 -0400

Windinmyface2, I applaud for your questioning the main street message in this country w.r.t the Chinese people and government. I only wish there are more American people like you!

As a Chinese living here for the past 7 years, I was very pissed off by the biased, one sided Western media coverage on Tibet and Olympic recently. We, American and Chinese alike, all know the media in China are controlled and not completely trustworthy. The Western Media's reporting in the recent month on Tibet and Olympic proved that they are no much better. To find the truth and build an informed opinion, one really needs to think independently and look for facts presented by both sides. Watch these videos on Youtube and I think you will start to understand why 99.99% of 1.3B Chinese people, not only the government, are so pissed off by the recent events.

youtube.com/watch?v=uS...
youtube.com/watch?v=ac...

Your point about American politician and Media depicting Chinese as a people living in dire communist's rule without any freedom, aspiring for Western's help to gain their human rights and freedom is also right on. This popular thinking is really driven by the Western's sense of Western superioricy and condesension. These people know nothing about what majority of Chinese people feel and think, but claim they are doing something good for them? claim they are only against the China government but helping the Chinese people? When they hear different voice, they say, "oh, these people are brainwashed". In fact, mostly likely they are brainwashed by the mainstreet media, because Chinese people know the China media is not completely trustable therefore look for the other side's story, not so for these feel good western free Tibet prosters, most of who don't even know where Tibet is.

China Medical: A Cure For My Portfolio?

Mon, 25 Feb 2008 23:47:13 -0500

thanks for such a well written and informative article !

When Will China Overtake the U.S. Economically?

Mon, 25 Feb 2008 23:12:07 -0500

good analysis but the author seems to neglect two things

1. the appreciation of the Chinese currency. the appreciate of local currency happened in all other asian countries when they underwent their rapid development. China will be no exception. plus, acknowledge it or know, the US is going to get out of its debt through depreciation of $. this generation in the US enjoyed the status and benefit earned by the previous generation but unfortunately will squander it and not pass that on to the next generation. it's quite a shame to me.

2. although the working population in China will decline, but the educated working populaiton will continue to increase. The Chinese emphasize education much more than does the American. The improved education of China's workforce will likely more than offset the decline of the population.

Overall, from a historical perspective, China was a leading force economically, politically and technologically. It only lagged behind the rest of the world starting from early 19th centuray. The Chinese are hard working, intelligent, and have a very strong focus on education. These qualities helped China to be a major power in the past, and are still there to help China regain its status.

China surpassing the US economically is a natural thing given it's population size. And it's a good thing for the world. I see only political turmoil can stop China from becoming the biggest economy, if that happens, it's certainly not a good thing for Chinese, but it will not be a good thing for the rest of the world either.

My 2008 Predictions and Investment Plan, Part II - Emerging Markets, Gold and Ag

Thu, 10 Jan 2008 20:51:22 -0500

nice article. Last year 100% of my portfolio is China, this year I will put 30% into Agriculture. China up, agriculture up, $ and US market down.

I laugh at the conventional wisdom that international investment is risky. to me, continuing to invest majority of asset in $ and US market is the biggest risk.