On July 16, 2020 Anonymous introduced
the following interesting summary of a discussion on Hong Kong, China, US, Currency and 5G Semiconductor matters [1] and [2].
(Presenter) What does the market think of the US Presidential Election?
Hong Kong
(Presenter) Economic prosperity of Hong Kong is based on
three factors:
i) free trade port (=zero tariff on all goods)
ii) low corporate tax rate, and
iii) reliable Hong Kong Dollar (HKD) is 100% endorsed by USD and 1USD is fixed to 7.75-7.85 HKD. Does it change?
i) free trade port (=zero tariff on all goods)
ii) low corporate tax rate, and
iii) reliable Hong Kong Dollar (HKD) is 100% endorsed by USD and 1USD is fixed to 7.75-7.85 HKD. Does it change?
(Suzuoki) No tariff and low corporate tax rate policy will
be maintained, but problem is HKD. USA might sell HKD.
(Sanada) As currency supports the sovereignty of a nation, the existence of the HKD itself is unpleasant for China. China is going to change its one country two system approach, and the HKD
becomes unreliable in the international society. This definitely results in an exchange rate depreciation of HKD. China accepts the unreliability of the HKD and China rather
intentionally will change the present status of the HKD, because China’s base
currency is CNY. China is going to establish a CNY economy against the USD. Experts on international finance may say it
will take time to establish a CNY economy. But, if the combination of the AIIB (Asian
Infrastructure Investment Bank) and (the Belt and Road Initiative) successfully grow during the Coronavirus disaster, the CNY economy may happen quickly.
(Presenter) Under CNY economy, what should we do?
(Sanada) We have to adopt to such an ambiguous situation.
(Suzuoki) A "CNY economy" sounds strange, but, there were [Soviet/Russian] Ruble
and USD blocks in the Cold War. China intends this situation.
(Presenter) There is a rumor that leaders of CCP accumulate
wealth such as money laundering and profit return through a Hong Kong loophole [front]. Is this rumour true? Does this monetary process occur?
(Suzuoki) I do not know whether the rumour is true or not,
but, the USA believes it is true and tries to bully China. Leaders of China's CCP insist
officially there is a CNY economy, but they think it is difficult. The USA does not admit [to a?] rule
violation, which the USA have overlooked, any more by China through Hong Kong. [?]
(Sanada) The USA aims to stop flow of technologies, products and
capital to China through Hong Kong, but, China expects this.
China can obtain them through Europe, especially Germany.
(Presenter) Disputes over semiconductors between USA and China are escalating. The USA invited semiconductor equipment from the Taiwan
Semiconductor Manufacturing Company, Ltd (TSMC).
Though South Korea is an ally of USA [3] it has a strong trade connection with
China.
(Suzuoki) The USA directly threatened South Korea's Samsung not to
sell semiconductors to Huawei [2]. Japan
and USA manufacture raw materials such as fluorinated polyimide, photoresist
and hydrogen fluoride for 5G semiconductor of Samsung. Photoresist is a key
material. Dutch
semiconductor company (ASML) was stopped from supplying its product to Huawei by US threats. Japan and USA can
jointly prohibit the export of the above raw materials to South Korea.
(Sanada) Semiconductor related market share of Huawei is 35%
and is surprisingly a bit increasing under current severe sanction. The total
share of Huawei and Samsung is nearly 50% and integration of Huawei and Samsung
is a serious matter for USA. To prevent this, USA made Taiwan to its side.
However, it is not enough because the share of Taiwan is small. Japanese government
starts, receiving US pressure, to give a subsidy (10 trillion JPN = 9
billion USD) to Fujitsu, Rakuten Mobile and NEC for development of 5G
semiconductor. South Korea may be going to China side.
(Presentor) Does Samsung distance itself from South Korean President Moon Jae-inn's administration?
(Sanada) It wants to put a distance, but, cannot. South
Korea government might arrest Lee Jae-yong, head of Samsung.
(Suzuoki) Samsung is a multinational corporation, but, its HQ
is in Seoul and owner family is Korean to whom South Korean law is applied.
(Presentor) Is it a threat by using law?
(Suzuoki) That’s right. Successive South Korean governments
have controlled "Chaebols" in this manner. As South Korean government has
enormous power, it can do anything. Samsung can not go to USA because owner
family and executives are Korean.
(Sanada) In common sense, Biden wins because he has a 10%
advantage over Trump at this time. In the last election, Hillary Clinton was
overwhelmingly picked to beat Trump, but Hillary lost. Therefore, the market doubts current public opinion polls. Trump is appreciated in the economy. Market doubts
to what extent Biden secures national interests of USA. Trump will criticize a
pro-China orientation of Biden, and will point out issues of WHO and Hong Kong,
and this tactic is effective on the public.
[1] Hong Kong
strategy by Xi Jinping and future of free trade: thorough analysis by Sanada*
and Suzuoki**, PRIME news*** Part 1 https://www.fnn.jp/articles/-/61029
* Yukimitsu Sanada, Professor of Aichi Shukutoku University,
expert on East Asian regional economy and international finance
** Takabumi Suzuoki, Journalist and ex-editor of Nikkei
Inc., expert of politics of South Korea.
*** BS Fuji PRIME news, past performers (status at the
time): Y. Nakasone (ex-PM), Shinzo Abe (PM), S. Shii (Chairman of Japan
Communist Party), Y. Koike (Governor of Tokyo), Y. Yoshihide (Chief Cabinet
Secretary), etc.
In resent exclusive interview of US Under Secretary of State, Keith Krach, by “The Dong-a Ilbo”, he requested South Korea join the EPN (Economic ProsperityNetwork = anti-China network), and suddenly said “Samsung is a good company.”
This was a direct threat to Samsung if it sells semiconductors to Huawei, USA
will crush you”( this part was omitted in this article).
Anonymous
6 comments:
In other news, https://defense-update.com/20200716_proteus-jv.html
IAI and STEngg to form a JVC to market and manufature anti-ship missiles including a clean sheet 5th generation missile named "Blue Spear".
Hi Pete
NYT reported a draft of travel ban CCP members on July/15/2020 [1]. Chinese government and media (Ministry of Foreign Affair, Global Times, China Youth Daily) show fierce reaction against just article of one foreign newspaper, because a slogan of CCP members is “Anti-American is work and staying in America is life”. Many families of CCP members, editors of Chinese paper, retired CCP members live in USA. Sanctions against Huawei and the South China Sea are nothing to CCP members, because they are county’s matters not their private matters [2]. Minds of Chinese officials are as same as those in the era of Qing dynasty [3] and Trump administration well understands China.
[1]https://www.business-standard.com/article/international/us-weighs-sweeping-travel-ban-on-china-s-communist-party-members-120071700021_1.html
“US weighs sweeping travel ban on Chinese Communist Party members”
The Donald Trump administration is considering a sweeping ban on travel to the US by members of the Chinese Communist Party and their families, according to people familiar with the proposal, a move that would almost certainly prompt retaliation against Americans seeking to enter or remain in China and exacerbate tensions between the two nations.
The presidential proclamation, still in draft form, could also authorise the US government to revoke the visas of party members and their families who are already in the country, leading to their expulsion. Some proposed language is also aimed at limiting travel to the US by members of the People’s Liberation Army and executives at state-owned enterprises, though many of them are likely to also be party members.
Details of the plan, described by four people with knowledge of the discussions, have not yet been finalised, and Trump might ultimately reject it. While the president and his campaign strategists have been intent on portraying him as tough on China for re-election purposes, Trump has vacillated wildly in both his language and actions on the Chinese government since taking office in 2017. He has criticized. China on some issues, particularly trade. But he has also lavished praise on President Xi Jinping pleaded with Xi to help him win re-election and remained silent or even explicitly approved of the repression in Hong Kong and Xinjiang.
There are practical issues as well. The Chinese Communist Party has 92 million members. Almost three million Chinese citizens visited the US in 2018, though the numbers have plummeted because of the coronavirus pandemic and the current ban on most travellers from China. The US government has no knowledge of party status for a vast majority of them. So trying to immediately identify party members to either prevent their entry or expel those already in the US would be difficult.
[2]https://www.youtube.com/watch?v=gGWjQF_0uCw
Professor Shi Ping, Takushoku University.
[3] https://en.wikipedia.org/wiki/Officialdom_Unmasked
“Officialdom Unmasked” is a novel in the era of Qing dynasty describes behavior and mind of Chinese officials. You will find behavior and mind of CCP members are same as those of officials in Qing dynasty.
Regards
Hi retortPouch
Re: " https://defense-update.com/20200716_proteus-jv.html IAI and STEngg to form a JVC to market and manufature anti-ship missiles including a clean sheet 5th generation missile named "Blue Spear"."
With 5th generation usually implying "more stealthy than current" anti-ship missiles, I wonder whether some former US https://en.wikipedia.org/wiki/AGM-158C_LRASM engineers have retired, immigrated to Israel, and will build an Israeli LRASM for the benefit of Israel and Singapore?
This is akin to what I suspect the Popeye Turbo in fact being an Israeli Tomahawk which the US wouldn't provide due to proliferation bad PR of a US Tomahawk carrying an Israeli nuclear warhead.
Cheers
Pete
Thanks Anonymous [at July 18, 2020 at 12:57 PM]
Yes its tough to be a CCP member, especially if you are an Uyghur in a concentration camp guarded by Han Chinese with guns - see https://en.wikipedia.org/wiki/Uyghurs#Persecution_of_Uyghurs_in_Xinjiang
But hey, if you are a Han Chinese CCP member, you yourself may be frugal, but your non-CCP kids may be Rolls-Royce driving US$ millionaires or US$ billionaires, such is the government-corporate Capitalism that REALLY governs China.
Oh to be Huawei Royalty... :)
Cheers
Pete
South Korea siding with China? What a joke.
China is SK´s competidor in 5G and other fields, so there is no way of that happening.
Japan already stopped exporting semiconductor raw materials to SK but SK is already producing them and replacing japanese supplier for suppliers from other countries. This move was such a disaster for japanese semiconductor raw material and equipment industry that some japanese companies are moving to Korea in order to avoid bankrupcy.
Japan has no 5G technology so decided to begin investing in 6G technology, but without 5G technology it seems to be a very difficult goal to achieve.
Hi "Unknown" [at July 29, 2020 at 11:59 AM]
From what you say South Korean (SK) - Japanese (J) economic friction continues and I dare say SK-J geo-political relations are not any better.
The main beneficiary of SK-J tension is China. SK has no protective sea between it and China - so SK feels compelled to turn up at China's mega-military parades https://www.lowyinstitute.org/the-interpreter/why-park-geun-hye-attended-chinas-world-war-two-military-parade
- not to mention other unseen collaborations.
Regards
Pete
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