After close to a month, where two Canadians were arbitrarily arrested in China, the Government of Canada has updated their travel advisory. Better late than never.
Latest updates: Risk level(s) – risk of arbitrary enforcement of local laws; Laws and culture – death penalty, penalties for drug-related offences
Government of Canada issues new travel advisory to China for arbitrary arrest, death penalty, 2019-jan-14
China’s economy and its challenges are complex. Let me jot down some notes:
Overall Trends
Xi Jinping assumes office 2013
Economic reform started 2014-15, but Chinese equity markets crash Aug 2015, so reforms stop
-harsh capital controls: strict control of foreign exchange transfers, especially for purchase of int’l shares, real estate
-provincial, city gov’ts borrowed huge amounts, now deleveraging campaign
-anti-corruption campaign, increased importance of CCP -> slowed growth
-stock market down 30%
-real estate bubble
-trade war and tariffs with US
-aging of labour force
-pharmaceutical scandals
-XJP wants total allegiance to CPP for all people, companies
-yuan devalues 9% to just over 7:1 US
There are marked differences on how people are arrested, go to trial and convicted in Canada and China. I have read so many first hand accounts of Chinese arrest and torture that they are too numerous to mention. There are many common methods used in China, and common through numerous different areas of China. The differences are stark: Canada adheres to the Rule of Law, human rights and transparency, while China is very uncertain, oblique, and treated on a case-by-case, “Rule-is-law”, basis.
Huawei, one of China’s large computer companies, has been accused of selling US computers to Iran. The US asked and planned with Canada to arrest Huawei CFO Meng Wanzhou, when she was on route from Hong Kong to Mexico. The arrest occurred on 2018 Dec 01. Shortly after this China arrested two Canadians in China fo “endangering national security”. They have not been heard from since. It is widely understood to be retribution against Canada by China for assisting the US for the arrest.
Abandon All Hope All Ye Canadians Who Enter Here. SCMP
The first arrest was Canadian ex-diplomat Michael Kovrig, detained in China today for unknown reasons. The second Canadian was Michael Spavor, who runs an NGO specializing in tours to North Korea.
It is probably not so clear cut, but what was once a unified World Trade Organization WTO, appears to want to split into two camps, based on their form of government. On one side is the democratic Western group, now countered by China and Russia in the totalitarian group. This cleaving seems to be necessary because of fundamental differences of the independence of companies from their governments.
Yet again, some of China’s air quality PM 2.5 readings are off the chart. Literally, and this is really terrible for people’s health. PM 2.5 measures air pollution particles smaller than 2.5 microns, which when inhaled are too small for the body to remove, so they stay there forever.
China needs to do much better to protect the health of citizens. Pollution report
Air Quality PM2.5 2018 Dec 02 10:00 Toronto time, readings for China: Xi’an 592, Beijing 268 vs Toronto at 17. Terrible for your health.
China’s increasingly strict foreign exchange controls is hurting not only Chinese individuals and companies, but also impacts international firms repatriating profits from China. This will make foreign firms think twice about Chinese investments.
Foreign Exchange Controls
Chinese nationals have a limits of $50k US/yr for foreign exchange. This has been the case for many years, though I cannot determine when it started. Before you could send more money overseas by declaring it, but as of 2017 January these rules have been tightened up and now exclude purchases of real estate or overseas securities.
This article “Why the trade war will usher in a long, drawn-out bear market, with stocks, bonds, credit and property all at risk” by Andy Xie took some time to think about.
Shakeout of Speculators
Historically low interest rates have allowed people to take out debt cheaply. These funds have been sued to purchase risky assets. This has led to speculation. Now that interest rates are rising this will force speculators to use more expensive funds to service their debt. Over leveraged companies will not survive.
Information is power, and information, to most people of the world is the internet. For most, this starts with a Google Search. In 2010 Google exited China, due to a massive hack by the Chinese government into Google servers. Now, beckoned by the call for making money, Google is again rethinking China. Can Google stand by its ethics of “Do no Harm” while working with the Chinese Government? There will be some compromizes required.
