Tag Archives: China

Short-Selling China

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Billionaire investor James Chanos, who spotted problems with Tyco, Enron and other one-time Wall Street high-flyers, is at it again. Only this time, he has not a company but a country in his sights: China.

In a November interview, the hedge-fund manager said, “The Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.”

This runs counter to the prevailing wisdom that China has plenty of upside left to its growth. Nevertheless, it echoes observations by some in our industry who have pointed out that China is building electronics manufacturing capacity for the sake of capacity, and that at some point, a crash is inevitable.

I strongly recommend you read the linked article.

Trading Up

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A group of five Democratic Senators (including Arlen Specter) this week introduced the Trade Enforcement Priorities Act of 2009 (S. 1982), which among other things mandates the US Trade Representative to identify trade enforcement priorities and prioritize which foreign countries’ practices on which it will focus its enforcement efforts in the coming year.

It’s nice to see this bill taking shape, as trade — particularly with China — has been a constant sore spot for out industry for a decade.

America needs a well-established policy, and one that has some teeth. This appears a step in the right direction.

Will China Eat Its Chip Investments?

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For anyone consumed with China’s future as a semiconductor manufacturing power, this Business Week piece is a must-read.

And be prepared for a debunking of everything you’ve read about the inevitability of China’s future dominance of the sector.

The piece recaps a new book by a pair of University of California-Berkeley professors whose research finds:

  • China’s silicon designers haven’t mastered high-end inventions.
  • Academic programs produce quantity at the expense of quality.
  • The sector suffers from a lack of business success stories.
  • The path of government funding toward building plants is rife with local governmental interference and redundant investments.
  • Rampant overcapacity.

According to Business Week, the authors compare China’s rise to that of Japan’s, noting certain similarities and a few key distinctions. I haven’t read the book yet, but I’m going to.