Xu had consistently produced returns that were truly unbelievable: His worst-performing fund had grown by nearly 800 percent in five years. He had also survived countless corruption investigations, market falls, purges and other scares. Yet even as his legend grew, Xu remained intensely secretive. ... That equilibrium seemed certain to crumble on June 12, when the Chinese stock market began a free-fall. In the span of three weeks, the market lost a third of its value. ... Unlike in the United States, where institutional investors dominate the market, China’s 200 million mom-and-pop investors make roughly 85 percent of all trades. ... “All these small individual investors are called ‘chives’ in the market,” says Hong Yan, a finance professor at the Shanghai Advanced Institute of Finance. “They get cut over and over again, but they come back every time, like little weeds.” ... By the late 1990s, he became the unofficial captain of a group popularly known as the Ningbo Death Squad. The squad made its reputation by manipulating cheap, relatively unknown stocks, which in the Chinese market are not allowed to rise or fall more than 10 percent in a single trading day. To game the system, the squad devised a strategy: Out of nowhere, it would place a gigantic order for a chosen stock. Other traders, seeing the sudden upward movement in price, would flood in, pushing the stock toward its daily 10-percent limit. Once the stock hit the limit on the first day, the momentum became self-perpetuating. Eager traders rushed to buy the stock as soon as the market opened the next day, propelling it toward the 10-percent limit once again. The movement generated its own publicity and easy profits. After a few days, the squad would sell out, and the stock would tumble back to a lower price as other traders followed. ... “Xu Xiang is always trading,” a longtime friend said. “If he’s not trading, he’s thinking about trading.” ... Nearly every one of the experts I spoke with repeated some version of the same rumor: that Xu was less a financial genius than a puppet of even larger powers. Most often, this explanation was deployed in response to a question that had been troubling observers of the Chinese financial world for months: Why hadn’t Xu stopped earlier? Rumors of his illegal methods were an open secret, and he had already built the most successful hedge fund in China, reaping billions of dollars in personal wealth in the process. Why keep going and risk a reckoning?
Xiaomi’s tale may sound like merely another iteration of that now familiar headline, tech unicorn gallops into wall. But Xiaomi (pronounced “SHAO-me,” with the first syllable sounding like the “show” in “shower”) isn’t just any privately held, multibillion-dollar startup. It’s a rising power in a nation eager to prove that its consumer-oriented companies can compete globally. ... The company didn’t attain that valuation on the strength of its phones, though those get raves in the tech press (and have even made Xiaomi modestly profitable) while selling for half the price of an iPhone. No, private investors judged Xiaomi to be more valuable than FedEx or Caterpillar or Delta Air Lines because of the promise that it could build a network of products, services, and recurring revenues—an ecosystem like Apple’s—not just in China but around the world. ... If anything, Xiaomi’s idea of an ecosystem is more ambitious than Apple’s. Apple focuses on services like iTunes and a tightly focused suite of tablets, computers, and smartphones. Xiaomi envisions a sprawling Internet of things. The company hopes you will someday control your Xiaomi water purifier, Xiaomi air filter, and Xiaomi mood lighting—an entire Xiaomi smart home, essentially—with a few taps on your phone. ... as Xiaomi’s progress slows, there’s growing skepticism that a startup without innovative technology of its own or much success outside of smartphone sales can produce an ecosystem anywhere nearly as big or “sticky” as Apple’s and Google’s. ... Xiaomi’s team works primarily with outside companies. The company partners with hardware startups (and often creates new ones), providing seed money for ecosystem products. Xiaomi avoids taking full control, encouraging the founders to act like risk-taking entrepreneurs. The company gets an exclusive deal to sell most of the startups’ products, and in turn the startups, now numbering 55, get access to Xiaomi’s supply chain, marketing, and even its industrial engineers.
Steinway, one of the world’s most prestigious musical instrument brands, is looking to China to breathe new life into lackluster sales. To succeed, the company will need more than smart marketing. It will need to fine-tune a cultural mind-set in a country that once dismissed pianos as bourgeois luxuries. ... Steinway dealers have to convince their wealthier clientele that the instruments make good investments, avoiding the overly aggressive sales tactics that tripped up some early efforts. They have to educate parents about the potential payoff of buying a piano that can cost as much as an apartment. And they need to woo music students who are increasingly turning to lower-cost keyboards and so-called smart pianos, which use lights, iPads and other technical tools to teach basic skills. ... The company, known for its painstaking craftsmanship, has grudgingly entered the digital game. ... Founded in 1853 in a Manhattan loft by a German immigrant, Steinway flourished for generations by selling high-end pianos, each crafted by hand from materials like Sitka spruce and cast iron, in the United States and Europe. But the company has suffered as piano playing wanes in the West. Music schools and concert halls have cut back on orders. Piano stores have closed. ... By some estimates, the country has as many as 40 million piano students, compared with six million in the United States. ... As it pushes to remake the country into a cultural superpower, the Chinese government has encouraged students to take up the piano by building concert halls and investing in music education. Among the country’s wealthiest families, the arts have become a source of spiritual fulfillment and a status symbol. In rich coastal cities, real estate scions and technology executives are buying Steinway pianos — some outfitted with diamonds and wood from Africa and India — to complement collections of Porsches and Picassos.
Kos-Read, who is known in China only as Cao Cao, is by far the leading foreign actor working in the country today, having appeared in about 100 movies and television programs since his career began in 1999. He is famous throughout the mainland, and his career has been on a steady upward trajectory. Last December he appeared in the action film “Mojin — The Lost Legend,” currently the fifth-highest-grossing movie in Chinese history. ... just as Hollywood has begun to crack the market, Chinese cinema has come into its own. In recent years, Chinese studios have started shifting away from the agitprop that defined their cinematic output for generations and are instead focusing on genres that draw viewers to theaters in any country: action, adventure, comedy. In February, a sci-fi comedy called “The Mermaid” became the highest-grossing movie ever in China within 12 days of its release, earning more than $430 million. Increasingly, Chinese cinemagoers are opting to buy tickets for movies made specifically for them — like those in the “Ip Man” series — not those that pander to them or lecture them. It is in this sort of film that Kos-Read has finally had the chance to act, rather than portray a stand-in for Western imperiousness. If the Hollywood studios really want to understand how to succeed in China, Kos-Read’s journey makes for a kind of accidental guide.
Some of China's wealthiest companies and individuals bought European clubs, and even more was being sunk into sponsorship and TV rights. ... It was a frenzy of spending that, nevertheless, was rooted in a reality of failure, the Chinese national team chief among them. The humiliation was such that the government had now got involved and decided a new five-year plan was needed to make China an elite player in the world game. The potential for success had come unexpectedly early for the national team, which found itself as the first act in this new play. ... Previously, defeat and failure were to be expected, with many Chinese fans washing their hands of the domestic game and the national team. Now it was unconscionable, and not just because of the money and the attention. Now the match had attained presidential importance. ... Premier Xi Jinping commissioned a 50-point plan called the "Chinese football reform and development program" to revitalise Chinese football. ... “Since Comrade Xi Jinping became general secretary in the 18th Congress of the Chinese Communist Party (CCP), he has placed the development of football on the agenda in order to build China as a great sports nation,” the opening line of the report reads. ... The Evergrande Football School was built 80 miles from the city, high in the hills and away from the smog that blights it far below. Just under 3,000 students live here, in a school that cost $185.3 million to build. It looks uncannily like Hogwarts—part stately pile, part Transylvanian Gothic castle, but with close to 50 football pitches out the back, serviced by 130 teams of differing ability. A 10-foot replica of the World Cup greets you at the front gate.
The city, with its stunning views of the mountains and yacht-dotted harbor, has long been one of the world’s most expensive places to live but price gains have reached a whole new level of intensity this year. Low interest rates, rising immigration, and a surge of foreign money—particularly from China—have all driven the increases. ... After copious warnings over the last six months, including from the Bank of Canada, that price gains are unsustainable, the provincial government of British Columbia moved last week. Foreign investors will have to pay an additional 15 percent in property-transfer tax as of Aug. 2 and city of Vancouver was given the authority to impose a new tax on empty homes. ... Demand for luxury cars has risen alongside housing prices in Vancouver, with 1,100 high-end vehicles on the streets of Vancouver as of Dec. 31, 2015, almost double the 2009 count, according to the Insurance Corporation of British Columbia.
In December 2014, Presnell became the first person in North Carolina to be convicted of felony ginseng larceny on private property. He joined other thieves across Appalachia — the mountainous strip of territory extending from southern New York through the Carolinas down into Mississippi — who’ve been arrested, fined, even imprisoned for various ginseng-related crimes, including poaching, illegal possession, and unlawful trade across state lines. ... Cornett went into business for the same reason poachers are keen to rob him. The global market for ginseng root, popularly used as an herbal supplement, is estimated at more than $2 billion. Long a staple of traditional Chinese medicine, ginseng products are also ubiquitous in Korea and increasingly popular in Singapore, Malaysia, and other countries with large ethnic Chinese populations. These days, most ginseng is mass-produced on large, pesticide-sprayed farms under the artificial shade of wood and fabric canopies. Wild ginseng, which tends to grow in temperate forests, is considered more potent and fetches a higher price. Plants like Cornett’s, cultivated in the woods, are closer to wild than to conventionally farmed ginseng. ... Dwindling supply and robust demand have inflated wild American ginseng’s value. In 2014, according to public and academic data, the 81,500 pounds that were legally exported commanded an average wholesale price of $800 per dried pound. That was almost 15 times more than the going rate for farmed roots. Nearly all exports go to China, where a burgeoning middle class is willing to pay marked-up retail prices — sometimes even thousands of dollars per pound. ... Scientists believe ginseng is native to both East Asia and North America because some 70 million years ago, the two land masses were part of a single megacontinent known as Laurasia
Katzenberg admits his greatest motivator is, well, winning. An avid gambler, he got kicked out of summer camp at age 15 for playing cards (that was for M&M’s; these days he plays poker for much higher stakes). But DreamWorks wasn’t always a straight flush. The original production company never lived up to the expectations generated by its high-wattage founders: Katzenberg, Spielberg, and music and film mogul David Geffen. DreamWorks Animation, which became independent in 2004, had more success—but never attained the scale to secure its future in an increasingly conglomerate-heavy Hollywood. ... Still, under Katzenberg’s direction, the animation studio, based in Glendale, Calif., was prolific, sometimes profitable—and most important, prescient. In 22 years, including as a division of DreamWorks SKG, it produced 32 films, garnering more than $13.5 billion in worldwide box-office revenue. ... He was early to recognize that companies other than Disney could turn animated franchises into enduring revenue sources, early to see the importance of streaming-media distribution, and early to spot China’s potential to reshape the industry. ... Developing cartoon movies for kids, done right, can pay off big: If you create lovable and “sticky” characters, you can relatively easily monetize that initial IP investment across multiple movies, TV spinoffs, and lines of merchandise. ... The process is slow and costly. Films take three to four years to complete, progressing from ideation to storyboarding to using computer-generated imagery to animate minute details like the movement of hair and the texture of powdery snow. At DreamWorks Animation, a typical movie cost upwards of $140 million—not including marketing.
The dictator is enjoying a surge of popularity. But the rise of this neo-Maoist movement could upend China’s stability ... In the west, Mao is understood chiefly as China’s “Red Emperor” — a vicious dictator who fostered an extreme personality cult, launched the disastrous Cultural Revolution and masterminded a “Great Leap Forward” that resulted in the worst famine in history. Experts estimate that Mao was responsible for between 40 million and 70 million deaths in peacetime — more than Hitler and Stalin combined. However, while Hitler, Stalin and most of the other totalitarian dictators of the 20th century were repudiated after their deaths, Mao remains a central figure in modern China. The Communist party he helped found in 1921 and the authoritarian Leninist political system he established in 1949 still run the country. ... But this whitewashing of Mao’s legacy is a risky strategy. Thanks to the party’s tight control over education, media and all public discourse, most people in China know very little of Mao’s terrible mistakes. Indeed, the dictator is more popular today than at any time since his death. Last year nearly 17 million people made pilgrimages to his home town — Shaoshan — in rural central China. In the mid-1980s, barely 60,000 undertook the journey. ... They see Mao as a symbol of a simpler, fairer society — a time when everyone was poorer but at least they were equally poor. Those who have studied the resurgence in Mao’s popularity in China see it as part of a broader global phenomenon that encompasses the appeal of Donald Trump in the US, Brexit in the UK and populist politicians on the left and right in Europe. At a time of sharp dislocation and intense resentment towards elites, people in many countries are attracted by nostalgia and tradition. For ordinary people in China, that means Mao and the classless society he envisioned. ... This presidential embrace of Mao has surprised many in China, given that the dictator was personally responsible for the awful suffering experienced by Xi’s own family.
For the teams of students involved in this year’s RoboMasters tournament, the stakes were clear: 350,000 RMB (roughly $53,000) in prize money, more than four times the average salary of a Chinese worker. Winners achieve celebrity status among the 6 million fans who watch the action stream live online, as well as a shot at landing a job at at DJI, the Chinese drone maker that created this competition. Over the last two years the company has hired around 40 engineers out of the tournament. ... For DJI, the stakes are reversed. It is battling to win top talent in some of technology’s hottest fields: computer vision and autonomous navigation. Over the last three years, the company has emerged from obscurity to become the market leader in the booming consumer drone market, setting the pace for innovation in the category. ... The city became the heart of the world’s supply chain for consumer electronics. But while it conquered the business of manufacturing for others, the quality of products designed and engineered in Shenzhen were largely inferior to those with roots in the West. Over time, however, that dynamic began to change. ... DJI epitomizes that evolution. In 2006, Frank Wang, an engineering student obsessed with remote-control helicopters, started Dà-Jiāng — which roughly translates to "without borders" — Innovations Science and Technology Corporation. His target market consisted of professionals who used remote-control aircraft for filming and photography, and hardcore hobbyists who built their own flying machines for fun. At the time, everyone built their units from scratch, there was no casual consumer market, and few people used the word "drone." ... Like many early Shenzhen companies, at first DJI made just a single component: flight controllers. ... PricewaterhouseCoopers estimates that the drone industry will grow from a few billion dollars this year to more than $120 billion by 2020.
My time in China has taught me the pleasure and value of craftsmanship, simply because it’s so rare. To see somebody doing a job well, not just for its own reward, but for the satisfaction of good work, thrills my heart; it doesn’t matter whether it’s cooking or candle-making or fixing a bike. ... the prevailing attitude is chabuduo, or ‘close enough’. It’s a phrase you’ll hear with grating regularity, one that speaks to a job 70 per cent done, a plan sketched out but never completed, a gauge unchecked or a socket put in the wrong size. ... implies that to put any more time or effort into a piece of work would be the act of a fool. China is the land of the cut corner, of ‘good enough for government work’. ... sometimes there’s a brilliance to chabuduo. One of the daily necessities of life under Maoism was improvisation; finding ways to keep irreplaceable luxuries such as tractors or machine tools going, despite missing parts or broken supply chains. ... More usually, chabuduo is the domain of a village uncle who grew up with nothing and can whip up a solution to anything out of two bits of wire and some tape.
Under Cheng, Didi has expanded in just four years to 400 Chinese cities. The service lets users digitally hail and pay for taxis, private cars, limousines, and commuter buses. Cheng says 80 percent of all taxi drivers in China now use Didi to find passengers. So many people use the app, it can be difficult to get a cab during rush hour without it. Investors recently valued Didi at $35 billion, making it one of the most valuable private companies in the world. Uber, with operations in almost 500 cities on six continents, is worth $68 billion. ... Cheng was born in Jiangxi province, a landlocked region in eastern China famous for being the cradle of Mao Zedong’s Communist revolution. His father was a civil servant, his mother a mathematics teacher. He says he excelled at math in high school but during his college entrance exams neglected to turn over the last page of the test, leaving three questions blank. He got into the Beijing University of Chemical Technology, less prestigious than the upper-echelon schools. ... it turned out that Didi had a few advantages over the competition. Some were copying Uber’s U.S. strategy of working with limousine and town car chauffeurs. But there are far fewer black cars than yellow cabs in China. ... Instead of imitating competitors and giving away smartphones to drivers, an expensive proposition for a capital-strapped startup, they focused on providing their free app to younger drivers who already had phones and were likely to spread the word about Didi.
Rising macroeconomic and geopolitical tensions are creating both opportunities and risks for global investors across the entire global capital markets. We continue to emphasize our five key macro themes, many of which we think can perform against a variety of economic backdrops. First, we believe that assets with Yield and Growth will continue to outperform. Second, we would avoid exposures linked to China’s structural slowing, though we do finally see some emerging investment opportunities in China’s ‘new’ export strategy. Third, we see the opportunity for a significant and potentially sustained upward revaluation in the securities of large domestically-oriented economies. Fourth, the dismantling of the traditional financial services industry has emerged as both a blessing and a curse for investors; we outline our approach for navigating this complicated segment of the global economy. Finally, given the bifurcation across markets that we are now seeing, we believe folks should consider increasing exposure to complex stories, including earnings misses, restructurings, and/or corporate repositionings; at the same time we would be selling simplicity in instances where future earnings streams appear over-priced.
Since 2014, the PGA, the world’s most prominent golf association, has run PGA Tour China Series, a professional league that gives promising young players a shot at graduating to higher competition in the U.S. It’s analogous to Double A minor league baseball in America: Players can put in a couple of years in China and—if they perform well enough—earn an automatic berth into another league that’s one rung below the PGA Tour. The China Tour, in turn, offers golf something it desperately needs: better access to the enormous and growing middle class that makes the country a huge growth opportunity for the sport. ... In a country of 1.4 billion, the potential for the sport is certainly as vast as anyone’s imagination. Estimates of the number of Chinese golfers fall around 1 million, a small fraction of the 24 million who play in the U.S. If just 2% of China’s population played, up from less than 0.1% today, China could become a $2-billion-a-year market for golf products. That would be a godsend for an industry whose growth has sputtered in the U.S. and Europe, where manufacturers like Nike and Adidas are getting out of the golf-equipment business, and courses are closing. ... the country has only about 600 courses (the U.S. has 15,000). Virtually none are the type of cheap, municipal links that cater to beginners. Almost every course is a private club located far outside the city center, behind closed gates manned by security guards. A round during the weekend pushes $200 or more, four or five times the norm in the U.S.—in a country where the typical urbanite has only about $5,000 a year in disposable income.
The medical student told me to use his name. He said he didn’t care. “Maduro is a donkey,” he said. “An a**hole.” He meant Nicolás Maduro, the President of Venezuela. We were passing through the wards of a large public hospital in Valencia, a city of roughly a million people, a hundred miles west of Caracas. The hallways were dim and stifling, thick with a frightening stench. ... Why were hospitals so heavily guarded? Nobody threatened to invade them. The guards had orders, it was said, to keep out journalists. Exposés had embarrassed the government. ... For decades, the country had been ruled by two centrist parties that took turns winning elections but were increasingly out of touch with voters. A move to impose fiscal austerity was rejected, in 1989, with a mass revolt and countrywide looting—a paroxysm known as the Caracazo—which was put down by the Army at a cost of hundreds, perhaps thousands, of lives. Chávez was an Army lieutenant colonel, from a humble background—his parents were village schoolteachers. He crashed the national stage in 1992, by leading a military-coup attempt. The coup failed, and Chávez went to jail, but his televised declarations of noble intent caught the imaginations of many Venezuelans. He offered a charismatic alternative to the corrupt, sclerotic status quo. After his release, he headed a small leftist party and easily won the Presidency. ... He soon rewrote the constitution, concentrating power in the executive. ... After Chávez barely survived a 2002 coup attempt, the Cubans also sent teams of military and intelligence advisers who taught their Venezuelan counterparts how to surveil and disrupt the political opposition Cuban-style, with close monitoring, harassment, and strategic arrests. ... Polar employs about thirty thousand workers (it is the country’s largest private employer) and is responsible for more than three per cent of Venezuela’s non-oil gross domestic product. Besides corn flour and the country’s top-selling beer, Polar produces pasta, rice, tuna fish, wine, ice cream, yogurt, margarine, ketchup, mayonnaise, and detergent. Yet it operates in an atmosphere of continual uncertainty, its planners and logistics mavens never sure what roadblock or subterfuge the government will toss up next. ... The crisis has a small but crucial constituency, starting with the generals and other high government officials who are thriving financially, mainly through smuggling, graft, and import fraud.
In the next 15 years India will see more people come online than any other country. Last year e-commerce sales were about $16 billion; by 2020, according to Morgan Stanley, a bank, the online retail market could be more than seven times larger. Such sales are expected to grow faster in India than in any other market. This has attracted a flood of investment in e-commerce firms, the impact of which may go far beyond just displacing offline retail. ... India’s small businesses have limited access to loans; most of its consumers do not have credit cards, or for that matter credit. The e-commerce companies are investing in logistics, helping merchants borrow and giving consumers new tools to pay for goods. ... Amazon wants to make India its second-biggest market, after America. For the time being, though, with just 12% of the market, it lags behind the home-grown successes, Flipkart (45%) and Snapdeal (26%). All three, as well as some smaller competitors, are spending at a blistering rate. ... The prospect of a second market growing to a near-Chinese size attracts those who made a packet the first time round. ... Indian regulations bar foreign-backed e-commerce firms from owning inventory, and so acting as a straightforward retailer is not an option. As a result India’s top e-commerce companies look much more like Alibaba.
Instead the question is whether something basic has changed in the direction of China’s evolution, and whether the United States needs to reconsider its China policy. For the more than 40 years since the historic Nixon-Mao meetings of the early 1970s, that policy has been surprisingly stable. From one administration to the next, it has been built on these same elements: ever greater engagement with China; steady encouragement of its modernization and growth; forthright disagreement where the two countries’ economic interests or political values clash; and a calculation that Cold War–style hostility would be far more damaging than the difficult, imperfect partnership the two countries have maintained. ... The China of 2016 is much more controlled and repressive than the China of five years ago, or even 10. ... Dealing with China is inescapable. It is becoming more difficult, and might get harder still. ... the assumption was that year by year, the distance between practices in China and those in other developed countries would shrink, and China would become easier rather than harder to deal with.
Over the past several months, I’ve interviewed Henry Kissinger, the former secretary of state, numerous times on the subject of America’s role in the world. Our conversations took place before this week’s election, but were informed by the foreign-policy differences between the candidates. ... There is obviously a gap between the public’s perception of the role of U.S. foreign policy and the elite’s perception. I think the new president has an opportunity to reconcile the two. He has an opportunity, but it is up to him to seize it. ... I’m fairly confident that China’s reaction will be to study its options. I suspect that will be Russia’s reaction as well. ... I think most of the world’s foreign policy has been in suspense for six to nine months, waiting for the outcome of our election. They have just watched us undergo a domestic revolution. They will want to study it for some period. But at some point, events will necessitate decision making once more. The only exception to this rule may be nonstate groups; they may have an incentive to provoke an American reaction that undermines our global position. ... Universities, he said, “like to teach history as a series of discrete problems. And they above all don’t want to teach Western history. They believe that the West has committed so many crimes that they are not entitled to single it out. That is a thought that would never occur to a Chinese. To return genuine pluralism to the campuses—to examine even ideas conventional wisdom rejects—has become a major national challenge.” ... What most annoyed Kissinger was the manner in which Obama talked about some other world leaders.
He compared his forthcoming transformation to that of a caterpillar changing into a butterfly. “If you are the President of the country, you need to be prim and proper,” he said. His inaugural speech, in June, was obscenity-free. ... The resolution didn’t last. Duterte’s war on drugs has resulted in the deaths of more than three thousand people, drawing condemnation from human-rights groups and Western governments. ... Duterte does not, as he has put it, “give a sh*t” about human rights, which he sees as a Western obsession that keeps the Philippines from taking the action necessary to clean up the country. He is also hypersensitive to criticism. ... Duterte has an eighty-six-per-cent approval rating in the Philippines, but his break with America has proved controversial. Opinion surveys regularly find the Philippines to be among the most pro-American countries. ... Although he styles himself a revolutionary, Duterte seems uncertain about what kind of order will replace the one he aims to overthrow, or whether he will be around to see it. He often intimates that he may not live to finish his term, whether because of overwork and age—he is seventy-one—or something more sinister. “Will I survive the six years?” he asked recently. “I’d make a prediction: maybe not.”
- Also: Reuters - Good Shots 5-15min
The overuse of antibiotics has transformed what had been a hypothetical menace into a clear and present one: superbugs, bacteria that are highly resistant to antibiotics. By British government estimates, about 700,000 people die each year from antibiotic-resistant infections worldwide. If trends continue, that number is expected to soar to 10 million a year globally by 2050—more people than currently die from cancer. ... Research has found that as much as 90 percent of the antibiotics administered to pigs pass undegraded through their urine and feces. This has a direct impact on farmed seafood. The waste from the pigpens at the Jiangmen farm flowing into the ponds, for example, exposes the fish to almost the same doses of medicine the livestock get—and that’s in addition to the antibiotics added to the water to prevent and treat aquatic disease outbreaks. The fish pond drains into a canal connected to the West River, which eventually empties into the Pearl River estuary, on which sit Guangzhou, Shenzhen, Hong Kong, and Macau. The estuary receives 193 metric tons (213 tons) of antibiotics a year, Chinese scientists estimated in 2013. ... distribution networks that move the seafood around the world are often as murky as the waters in which the fish are raised. Federal agencies trying to protect public health face multiple adversaries: microbes rapidly evolving to defeat antibiotics and shadowy seafood companies that quickly adapt to health regulations to circumvent them, moving dirty seafood around the world in much the same way criminal organizations launder dirty money. ... China’s rates of drug resistance remain among the highest in the world. ... harvested in China but was passed through Malaysia, where it acquired Malaysian certificates of origin. This illegal transshipping, as the maneuver is called
Despite years of economic growth, popular discontent at widespread corruption has grown stronger. A series of scandals about everything from shoddy housing to out-of-date vaccines has led to public cynicism about companies and the government’s ability to enforce rules. Social-credit scoring aims to change that by cracking down on the corrupt officials and companies that plague Chinese life. And it aims to keep a closer track on public opinion. In a society with few outlets for free expression, big data might paradoxically help make institutions more accountable. ... But it could also vastly increase snooping and social control. In other countries there have been many scare stories about Big Data leading to Big Brother. Most have proven false. But China is different. It is a one-party state, with few checks on its power, a tradition of social control and, in President Xi Jinping, a leader even more prone to authoritarianism than his immediate predecessors. The extent of social-credit scoring will depend on what the government intends, whether the technology works and how the party responds to public concerns. ... China treats personal information differently from the West. In democracies, laws limit what companies may do with it and the extent to which governments can get their hands on it. Such protections are imperfect everywhere. But in China they do not exist. The national-security law and the new cyber-security law give the government unrestricted access to almost all personal data.
It’s been six years since we first wrote about the coming G-Zero world—a world with no global leader. The underlying shifts in the geopolitical environment have been clear: a US with less interest in assuming leadership responsibilities; US allies, particularly in Europe, that are weaker and looking to hedge bets on US intentions; and two frenemies, Russia and China, seeking to assert themselves as (limited) alternatives to the US—Russia primarily on the security front in its extended backyard, and China primarily on the economic front regionally, and, increasingly, globally. ... These trends have accelerated with the populist revolt against “globalism”—first in the Middle East, then in Europe, and now in the US. Through 2016, you could see the G-Zero picking up speed ... with the shock election of Donald Trump as president of the US, the G-Zero world is now fully upon us.
1. Independent America: Trump rejects the comparative weakness of the presidency, and he wants to more directly project American power in service of US national interests
2. China overreacts: Xi will be extremely sensitive to external challenges to his country’s interests at a time when all eyes are on his leadership
3. A weaker Merkel: Could the Europeans have resolved their financial crises without the Germans forcing a solution?
4. No reform: The reform needle won’t move in 2017. Save for a few bright spots, money won’t know where to flow
5. Technology and the Middle East: Technology, a force for economic growth and efficiency, also exacerbates political instability
6. Central banks get political: In the US, there’s risk of an open conflict between the Federal Reserve and the White House
7. The White House versus Silicon Valley: Technology leaders from California, the major state that voted in largest numbers against Trump in the election, have a bone to pick with the new president
8. Turkey: Ever-fewer checks on executive power will leave the private sector vulnerable to political whims
9. North Korea: It’s making consistent progress on an intercontinental ballistic missile capability that would allow it to hit the West Coast of the US with a nuclear weapon
10. South Africa: South Africa’s political infighting will undermine the country’s traditional role as a force for regional security
Red Herrings: US domestic policy, India versus Pakistan, Brazil
1. Still brooding about his loss of the popular vote, Donald Trump vows to win over those who oppose him by 2020. ...
2. The combination of tax cuts on corporations and individuals, more constructive trade agreements, dismantling regulation of financial and energy companies, and infrastructure tax incentives pushes the 2017 real growth rate above 3% for the U.S. economy. Productivity improves for the first time since 2014.
3. The Standard & Poor’s 500 operating earnings are $130 in 2017 and the index rises to 2500 as investors become convinced the U.S. economy is back on a long-term growth path. ...
4. Macro investors make a killing on currency fluctuations. ...
5. Increased economic growth, inflation moving toward 3%, and renewed demand for capital push interest rates higher across the board. The 10-year U.S. Treasury yield approaches 4%.
6. Populism spreads over Europe affecting the elections in France and Germany. ...
7. Reducing regulations in the energy industry leads to a surge in production in the United States. Iran and Iraq also step up their output. ...
8. Donald Trump realizes he has been all wrong about China. Its currency is overvalued, not undervalued, and depreciates to eight to the dollar. Its economy flourishes on consumer spending on goods produced at home and greater exports. Trump avoids punitive tariffs to prevent a trade war and develops a more cooperative relationship with the world’s second largest economy.
9. Benefiting from stronger growth in China and the United States, real growth in Japan exceeds 2% for the first time in decades and its stock market leads other developed countries in appreciation for the year.
10. The Middle East cools down. ...
Deng Xiaoping created the city from bucolic nothing in 1980 as the pilot of his special economic zone project. These zones were meant to create safe places for Western companies to do business—and they worked. Even though China is not the boom-country it was two years ago, favorable trade policies and cheap skilled labor lure companies and entrepreneurs from across the globe to Shenzhen’s nimble factories. Before the SEZ, there were some 30,000 people in the area. Today, Shenzhen’s population is north of 10 million, and its port is one of the busiest in China. You already know this: Your iPhone is made here. Everything is made here. ... As of 2013, there were 22,000 permanent foreign nationals living in the city, and nearly 8 million others visiting every year. The expats range from the manufacturing-industry vet with a house and a spouse to the fresh-off-the-plane Kickstarter romantic with a pocketful of pledge cash to the English teacher who can’t tell a diode from a dinner plate.
Investments into a vast network of harbours across the globe have made Chinese port operators the world leaders. Its shipping companies carry more cargo than those of any other nation — five of the top 10 container ports in the world are in mainland China with another in Hong Kong. Its coastguard has the globe’s largest maritime law enforcement fleet, its navy is the world’s fastest growing among major powers and its fishing armada numbers some 200,000 seagoing vessels. ... The emergence of China as a maritime superpower is set to challenge a US command of the seas that has underwritten a crucial element of Pax Americana, the relative period of peace enjoyed in the west since the second world war. ... China understands maritime influence in the same way as Alfred Thayer Mahan, the 19th century American strategist. “Control of the sea,” Mr Mahan wrote, “by maritime commerce and naval supremacy, means predominant influence in the world; because, however great the wealth of the land, nothing facilitates the necessary exchanges as does the sea.” ... The five big Chinese carriers together controlled 18 per cent of all container shipping handled by the world’s top 20 companies in 2015 ... The total size of these investments is difficult to calculate because of sketchy disclosure. But since 2010, Chinese and Hong Kong companies have completed or announced deals involving at least 40 port projects worth a total of about $45.6bn