Macro Macchiato

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All I want for Christmas is Huawei

I started 2019 with a research note about The Asian Century, concluding that within ten years we would all be in the Belt and Road Initiative, whether we liked it or not. Not a year later, the Belt buckle is straining while the Road is longer with many more winding turns than the Chinese ever expected. The pushback started before 2019 of course, but it has intensified this year. And the focus hasn't been only on China's massive mining, engineering and construction firms which are central to the BRI, but its telecoms champion Huawei and its ship operators Cosco as well as its manufacturers shipping goods to the US. In January, the US Justice Department charged China's telecoms champion Huawe

Will we get a good deal for Christmas?

The US and China announced their Phase One trade deal on Friday, though it has not yet been signed by either side. The deal reduces some US tariffs on goods it imports from China while increasing Chinese purchases of US agricultural products and energy. US Trade Representative Robert Lighthizer told media on Sunday that, while there will still be some ‘routine scrubs’ to the text of the deal, the deal is “totally done, absolutely.” Lighthizer announced that the USD 160 Bn of tariffs scheduled to be imposed on Sunday would be suspended. The 15% tariff rate already imposed on USD 120 Bn of Chinese goods will be halved to 7.5%. A further USD 250 Bn of Chinese exports to the US will still be sub

Too early to talk of decoupling? Macro Macchiato 09/12/19

On Friday China announced that it would waive import tariffs for some soybeans and pork shipments from the US. It was promoted as a goodwill gesture but is clearly self-interested. China’s swine herd has been devastated by African Swine Fever, so China needs to import protein. Already in the first nine months of this year, US exports of hogs to China and Hong Kong were up 47% despite higher costs (data from China customs). China is buying soybeans from Latin American traders who in some cases are reselling American soybeans and taking a profit off the top, leaving the Chinese government embarrassed. The Chinese gesture comes in addition to a number of short-term waivers to US soybean export

China's BRI hits a brick wall

I’ve been writing a course on the evolution of the Chinese shipping industry over the last 40 years and its likely trajectory over the next 20 years, to be hosted by Lloyd’s Maritime Academy. It starts this week in case you’re interested. And if it tickles your fancy, here’s a webinar introducing the subject. Anyway, it’s impossible to write about such matters without considering the Belt and Road Initiative; a sneaky preview of some of the course content reveals that in some directions the BRI has been bumping into BRICK walls. Some people think the BRI is a jolly marketing wheeze to artificially stimulate China’s neighbouring economies to the level where their middle classes can buy all th

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