ZTE: To Live Or To Die
On April 16, the U.S. Commerce Department banned China’s smartphone maker ZTE from getting any US technology products for seven years, threatening the company’s survival. The case comes as the United States and China are gearing up for a potential trade war, with the high-tech sector among the concerns for both sides.
The sanctions have exposed ZTE’s lax compliance and reliance on foreign suppliers for key components, arousing concerns in China far beyond trade. Why was ZTE targeted? Why is the company so vulnerable to a ban. What will be the impact on China’s high-tech firms? Will U.S-China cross-border technology investment stop abruptly? Is indigenously developing chips worth it? How can we understand “independence” in the age of globalization?
Returning Home to Start Businesses
After a huge amount of migrant workers flock to cities to seek jobs, some of them have chosen to return to rural areas. Underlying the counter-trend movement are profound social reasons: urban public policies’ restrictions on migrant workers, the household hukou system, soaring housing prices, incomplete social security, limited education opportunities, growing opportunities in rural areas coming with urbanization, etc.
Caijing investigated those who return home to work or start a business and found that planting, farming and breeding, and construction-related industries, with relatively high risk and pollution, attract most returning entrepreneurs. Financing is the biggest obstacle for them and the central government’s incentive policies are also weak in implementation.
Can China Prevail in Car Battery Competition?
Car batteries are the main battleground for players who vie to take the lead in the new energy vehicle industry. Chinese enterprises, profiting from a growing market and supporting policies, grew rapidly after 2010 and surpassed Japanese and South Korean companies in sales in 2017. However, Japan’s top industry players are still technology leaders in terms of the battery’s energy density, security, cycling life and cost.
Under the competitive pressure and motivated by domestic subsidy policies, many Chinese players are investing more in the production of ternary lithium batteries with higher energy density. The research and development of next-generation batteries is the top priority for Chinese enterprises, who are expected to have a competitive edge if they can realize the industrialization of the solid-state battery in five years.
Rural Reform: The Launchpad of China’s Take-off
This year marks the 40th anniversary of China’s reform and opening-up. At the beginning of the reform, great efforts were put on the SOE reform, which was characterized by “market socialism” and resulted in the out-of-control aggregate demand, surging financial deficit and economic chaos.
However, some initiatives by farmers at the bottom rung of society, which gave rural labor greater incentive to work and raised productivity, unexpectedly made a breakthrough for China’s reform. Higher productivity in rural areas enabled surplus labors’ transfer to non-agricultural sectors in cities. The success of rural reform provided both experience and material base for the comprehensive reform. In this sense, rural reform was the true launchpad China’s four decades’ rapid growth.
Keys to Survive the Crypto Bear Market
Bitcoin has been in a deep bear market since the beginning of 2018 after a round of price spikes in the fourth quarter last year, with the trading price plunging under $7,000 in March, even lower than the estimated breakeven costs of massive mines and independent miners at $10,200 and $8,600 respectively.
However, whether it is profitable to mine bitcoin also depends on factors such as computing power and electricity cost, which varies widely around the world. Miners pool their resources together to generate blocks quicker. Eight out of the ten largest bitcoin mining pools in the world are Chinese, while massive mines are a way to reduce infrastructure costs. The bear market will shut down some players and those who survive might be stronger.