Noteworthy Links (November 2020)

Major Brands Lobby to “Water Down” Xinjiang Forced Labor Bill
(China Digital Times, 11/30/2020, John Chan)

China sanctions leaders of US groups over Hong Kong actions
(AP, 11/30/2020)

Taiwan’s GlobalWafers in talks to buy German peer for $4.5bn
(Nikkei Asia, 11/30/2020, Cheng Ting-fang)

Two Chinese warplanes intrude into Taiwan’s ADIZ
(Taiwan News, 11/28/2020, Matthew Strong)

The first lesson of doing business in China: the state comes first
(The Economist, 11/28/2020, Chaguan)

Public order in Singapore has been shaken by a hand-drawn smiley face
(The Economist, 11/28/2020, “Crime in Singapore: A city reels”)

As China’s power waxes, the West’s study of it is waning
(The Economist, 11/28/2020, “China Studies: Barriers to Sinology”)

Lawmakers throw pig guts, punches on Taiwan parliament floor
(AP, 11/27/2020)

Australia Feeling the Force of China’s Escalating Trade War
(China Digital Times, 11/27/2020, John Chan)

Twelve Hong Kong fugitives to face prosecution in China after three months in detention
(HKFP, 11/27/2020, Kelly Ho)

Man jailed for 21 months for throwing eggs at police
(RTHK, 11/26/2020, Maggie Ho)

Beijing confirms jail sentence for Taiwanese professor
(Focus Taiwan, 11/25/2020, Lawrence Chiu and Chiang Yi-ching)

Blinken to value Taiwan’s positive role in world affairs: Paal
(Focus Taiwan, 11/25/2020, Stacy Hsu and Chiang Yi-ching)

China’s authorities issue gag order about virus to doctors in Wuhan
(Kyodo News, 11/25/2020)

Guaranteed Government Bailouts: Is The End Nigh?
(, 11/24/2020, Houze Song)

Taiwan to protect sovereignty with new submarines amid China tensions
(Reuters, 11/24/2020, Ann Wang)

China’s Surveillance Infrastructure Powered by U.S. Tech
(China Digital Times, 11/23/2020, John Chan)

Joshua Wong, Agnes Chow remanded in custody
(RTHK, 11/23/2020, Francis Sit)

Malicious Tip-Offs Stifle Academic Freedom in China, Analysts Say
(VOA, 11/20/2020, Dahai Han)

China Signs World’s Biggest Trade Deal, Encompasses 30% of Global Economy
(China Banking News, 11/15/2020)

Hong Kong pro-democracy legislators hand in resignations
(Associated Press – AP, 11/12/2020, Zen Soo)

Hong Kong opposition lawmakers all quit after four members ousted
(The Guardian, 11/11/2020, Lily Kuo and Helen Davidson)

HK Chief Executive Fires Four Legislators, Prompting Resignation of Entire Opposition
(China Digital Times, 11/11/2020, John Chan)

Xi Jinping’s Strength Is China’s Weakness
(New York Times, 11/9/2020, Richard McGregor)

Switzerland of Asia: Singapore increases presence as tech hub
(Nikkei Asia, 11/5/2020, Mercedes Ruehl)

Hong Kong: People invited to snitch on their neighbours
(BBC, 11/5/2020)

2020 Forbes China Rich List Members See 64% Wealth Boom During COVID-19 Pandemic
(China Banking News, 11/5/2020)

Derailing of Jack Ma’s Ant IPO Shows Xi Jinping’s in Charge
(Bloomberg, 11/4/2020, Enda Curran, Sofia Horta e Costa and Lulu Yilun Chen)

Beijing Resists Pressure to Investigate Origins of COVID-19
(China Digital Times, 11/4/2020, John Chan)

Chinese Authorities Stop Ant Group IPO, Stunning Observers
(China Digital Times, 11/3/2020, Joseph Brouwer)

Noteworthy Links (October 2020)

A Plenum, a Plan… and a Paramount Leader?
(China Digital Times, 10/29/2020, Joseph Brouwer)

What to Expect from China’s New Five-Year Plan
(Rhodium Group, 10/26/2020, Vincent Zhu)

China Wants a Baby Boom. Its Parents Aren’t Interested
(Sixth Tone, 10/24/2020, Wang Lianzhang)

China’s Top Finance Regulators Send Raft of Policy Signals at 2020 Financial Street Forum
(China Banking News, 10/22/2020)

As China recovers from the pandemic, will zombie firms return?
(Peterson Institute for International Economics, China Economic Watch, 10/21/2020, Tianlei Huang)

CCTV Airs Disappeared Taiwan Citizens’ Confessions, War Games
(China Digital Times, 10/15/2020, Joseph Brouwer)

5 takeaways from Xi Jinping’s speech during 40th anniversary visit to Shenzhen
(South China Morning Post, 10/14/2020, Holly Chik)

Behind Xi Jinping’s Steely Façade, a Leadership Crisis Is Smoldering in China
(The Diplomat, 10/9/2020, Sarah Cook)

Mixed Signals on China’s Energy Picture?

If you think understanding China’s energy future is difficult, it may not be you…

Coal on the rise in China, US, India after major 2016 drop                        (Matthew Brown and Katy Daigle, AP, 06.26.2017)

China energy demand may already have peaked: researchers
(David Stanway and Alister Doyle, Reuters, 06.30.2017)

To be fair, the AP article focuses on domestic Chinese coal production, finding:

China’s production rose more than 4 percent through May, according to government figures, compared to a drop of more than 8 percent for the same period a year earlier.

while the Reuters article focuses on China’s total energy consumption, noting that, according to a study by the China Academy of Social Sciences (CASS):

China’s total energy consumption is expected to fall to the equivalent of 4 billion tonnes of standard coal in 2020, which would represent a decline of 8 percent from last year.

The Reuters article also quotes Qiang Liu, director of CASS’s Institute of Quantitative and Technical Economics, as saying:

“(Peak demand) could be this year or next year”

Of course, the Reuters article goes on to say:

The CASS study suggests Beijing is cutting coal use far faster than expected

which does bring the subject of coal directly into the article, at least in terms of consumption, if not production.

Perhaps CASS is just wrong?

As Reuters notes, the study comes weeks after President Trump decided to quit the Paris agreement on climate change and ahead of the July 7-8 Group of 20 summit in Hamburg, Germany.

Moreover, according to Reuters:

The CASS forecast contrasts with China’s 2016-2020 energy plan that said total energy use would grow around 2.5 percent a year until 2020 and a forecast by state-owned China National Petroleum Corp for energy consumption to peak by 2035.

Is there anything else that could explain the seeming divergence between trends in domestic Chinese coal production and consumption?


Don’t fight China, the Federal Reserve of Coal
(Nathaniel Taplin, WSJ, 06.29.2017)

According to the Taplin article, China – far and away the world’s largest producer and user of coal – has been struggling with excess capacity at home for nearly half a decade, and:

China is now poised to curtail coal imports

in particular:

Chinese state-owned media said Wednesday that many of China’s small or midsize ports were already refusing imported coal shipments, although major ports appear to still be open.

The rationale:

State media said regulators want any benefit from its “supply side reforms” – that is supply curbs – to remain in China.  Translation: higher coal prices and profits at home, not abroad.

Now, if the decline in coal imports were large enough, it is possible that domestic coal production could increase even as overall coal consumption fell.

Is that what’s going on?  Who knows.  An increase in domestic coal production coupled with flat or declining coal consumption is also consistent with an increase in domestic coal inventories.

They say patience is a virtue; so stay tuned, and in time, maybe we’ll learn more.


Mixed Signals on China’s Energy Picture?


Where will the vehicle that replaces today’s gasoline/diesel powered automobile come from?

One way to think about this question is to evaluate possible replacement technologies, pick a favorite, and figure out which countries around the world seem to be making the most progress effectively developing the technology. There’s nothing wrong with such an approach. In fact, it seems pretty sensible.

That said, this essay takes a slightly different approach to gaze into the future. Instead of trying to understand specific technologies, this note tries to consider some institutional constraints that may make it more challenging for certain economies to become the location of such dramatic innovation.

What kinds of economies seem like they may be fertile environments for vehicle innovation? What kinds of economies seem less likely to be locations for dramatic vehicle innovation?

This note suggests the following:

(1) economies that are known for being innovative are more likely to be the location of dramatic vehicle innovation than those that are not known for their innovation.

(2) all other things being equal, larger countries are more likely to be the site of a particular innovation than smaller countries.

(3) already having some vehicle production in the country is a plus, because the advantage of having some familiarity with the non-engine aspects of vehicles outweighs the potential disadvantage of having current producers slow down the adoption of a new vehicle platform.

(4) having some degree of a car culture is helpful

(5) to the degree that the development of a new vehicle to replace current gasoline/diesel powered automobiles requires a concerted national effort, then countries that have no oil production are less likely to be conflicted (and so, more likely to be the site of such vehicle innovation) than those that are oil producers.

If one is willing, at least for a moment, to entertain the above notions, what countries look most promising?

To answer this question, it is helpful to have some data. This note considers the five points above as follows:

To measure a country’s general degree of innovativeness (point #1), this essay uses the World Economic Forum’s innovation index as found in its 2015-2016 Global Competitiveness Report.

To measure a country’s size (point #2), this essay uses July 2015 population estimates from the World Factbook.

To determine the amount of vehicle production in a country (point #3), this essay uses 2015 statistics from OICA (the Organisation Internationale des Constructeurs d’Automobiles).

To proxy the depth of a country’s car culture (point #4), this essay looks at the number of motor vehicles per 1000 people in different countries around the world based on data found in the Wikipedia entry “List of countries by vehicles per capita”, much of which appears to come from 2010-2011 World Bank data.

To determine the relative importance of oil production to a country (point #5), this essay looks at the ratio of a country’s production of crude oil, NGPL (natural gas plant liquids), and other liquids divided by its total petroleum consumption based on 2013 data from the U.S. Energy Information Agency (EIA).

Looking at the twenty most innovative countries in the world as per the Global Competitiveness Report along with all major vehicle producing countries (those producing at least a million vehicles in 2015), we find the following (please see Table 1. Country Information).

Using the criteria noted above, the most promising locations for the development of a vehicle that will replace today’s gasoline/diesel powered automobiles appear to be Japan and Germany. After that, France and South Korea also look like possibilities.

Japan and Germany are both innovative (the 5th and 6th most innovative economies in the world according to the WEF’s Global Competitiveness Report), large (populations of more than 120 million and 80 million respectively), are already substantial vehicle producers (having made over 9 million and 6 million vehicles respectively in 2015), have reasonable consumer appreciation for cars (roughly 588 motor vehicles per 1000 individuals), and very modest oil production (0.4% and 4.1% of total petroleum consumption respectively).

France and South Korea are similar in many respects, just not as large (with populations of 66 million and 49 million respectively) and perhaps not quite as innovative (the 18th and 19th most innovative economies). They also produce fewer vehicles (1.97 million and 4.56 million vehicles respectively) and have slightly lower vehicle densities (578 and 450 vehicles per 1000 individuals). That said, oil production is similarly modest (with domestic production meeting 1.5% of France’s total consumption and 0.9% of South Korea’s total consumption).

While Switzerland is ranked as the world’s most innovative country, it is ultimately small (population of only 8 million) and does not produce motor vehicles. Israel (the Global Competitiveness Report’s 3rd most innovative economy) shares a similar profile.

Now, if it turns out that the existence of a sizable domestic motor vehicle industry is, in fact, a hindrance to developing a replacement for today’s vehicles, then Switzerland and Israel look pretty good (as long as size is not so important). That said, if the truth is somewhere in between (i.e. it’s helpful to have some motor vehicle production, as long as the domestic industry is not too big), then Finland may be a reasonable bet (2nd most innovative economy, 69,000 vehicles produced in 2015, population of 5.4 million), or if Finland is just too small, then perhaps the Netherlands (8th most innovative country, 44,000 vehicles produced in 2015, population of 16.9 million) or Taiwan (11th most innovative country, 351,000 vehicles produced, population of 23.4 million).

While, in many ways, the United States (4th most innovative country, population of more than 320 million, more than 12 million vehicles produced in 2015, roughly 809 motor vehicles per 1000 individuals) looks at least as promising as Germany or Japan – in fact its scores on all of the measures just noted are higher than those of both Germany and Japan – the United States has a potential problem in terms of unity of effort. If the development of a replacement for today’s gasoline/diesel powered vehicles requires a concerted national effort, then the existence of a pretty substantial domestic oil industry (in 2013, domestic production represented about 59% of total consumption) may present a challenge.

That said, one shouldn’t count the U.S. out. There is a lot of wealth in the United States, and if a solution is amenable to individual effort and all that is needed is an eccentric billionaire with a vision, then the U.S. may just be the site of such innovation. Heck, if Elon Musk is right, the future may already be here.