Trinh Profile picture
14 Sep, 11 tweets, 4 min read
Taiwanese firms have relocated home thanks to carrots (tax cuts + support) & so Taiwan growth has been rather good in recent years.

The question is why US firms haven't done the same even w/ tax cuts (remember the massive corporate tax cut?) + sticks (tariffs on Chinese goods)?
But perhaps you can see the US-China trade-war clearer by looking at FDI inflows into China. Here is the aggregate & there is no break-down of services vs manufacturing.

Clear here is that aggregate FDI goes lower over the years. The decomposition of it will show the following.
FDI into China shows an increase of investment in services while manufacturing declines.

Aggregate investment declines & details show growth in financial services + healthcare + education but manufacturing FALLS.

In line w/ trends of higher investment in Taiwan & elsewhere.
Here is the data from 2006 to 2018 & you can see that manufacturing FDI declined into China so less foreign flows into manufacturing.
American firms specialize in high-tech, agriculture & services so recent trends in US-China trade & investment show:

*Higher purchases of US agriculture goods
*Higher investment of US service firms into China

Meanwhile, manufacturing FDI other than to serve Chinese markets down
Money flows are rational & have the following trends:

Increase of funds deployed to areas where China will grow (aging + savings = more demand for financial services = Americans rushing in)

China costs higher via tariffs, demographic + geopolitics, supply chain manu FDI falls.
As in, capital chases return & follows structural trends in China of slower growth, aging, and changing of demand to higher quality goods (Tesla investing to serve Chinese market for example) .

As an arbitrage/supply chain manu story, increasingly less attractive given friction.
Btw, to understand the reshuffling story, you have to understand supply chain management.

As in, American firms take inputs from Asians (Taiwanese semiconductor + assembling etc) & then use that to sell to the world consumers.

Whereas Samsung Electrononics differ. See below.
Samsung Electronic is more closed vs Americans more open. As in, they take their own inputs (Samsung Electronic chips) & also assemble their own products (many of which are in Vietnam).

Where Americans tend to outsource both inputs & assembling to firms like Taiwanese & Chinese.
So when the supply chain reshuffling occurs in the manufacturing sector that impact American firms, you will see it more in North Asian reshuffling as they are the ones that operate in Asia on behalf of American firms.

Hence more movement of South Korea + Taiwanese + Japanese.
So just because American firms are not moving home (they weren't ever going to move home as they rely on others to make products), doesn't mean the supply chain isn't being reshuffled.

A lot of North Asian investment rising to the US to serve US markets. Meaning, see in others.

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More from @Trinhnomics

22 Sep
The same, if not worse, side effects for lock-downs.
I also love how no one talks about Sweden anymore & well, what did I say about Sweden?

Am I right or am I right? Marathon & not a sprint.

Lock-downs are not sustainable, psychological, fiscally, socially and economically, so no way u can sustain anything w/ locking people down
Have u ever watched American advert for drugs? Usually, it goes like this. Feel depressed? Take XYZ drug. Shows a woman feeling better after being oh so sad. Then at the end it goes like this.

A man narrates fast: "Side effects include a massive list that's worse than depression
Read 10 tweets
21 Sep
This story on the American middle class: No job, loads of debt: Covid up-ends middle class finance.

I just started reading it & I am like, two incomes of 175k but they got a monthly debt of 9k. I'm afraid to ask what their savings are.

Overconsuming!

wsj.com/articles/covid…
I'm assuming 175k is net income & not gross b/c taxes would eat up roughly half of that already.

I'm curious about the break-down of their household debt & the percentage that is mortgage, student loans, auto & consumer debt.

Worryingly is they are in their 40s...
Where we stand: American stock of debt.

Some good news: credit card debt stock is down & student loans down.
Read 10 tweets
19 Sep
Why do we judge gender equality by certain jobs that we deem more useful to society than others (banking vs teaching or nursing vs being a mom? Women & men start out the same if not women ahead in men in college enrolment but then diverge as they choose diff majors & life choices
From my experience in universities & working, women choose what they like & not forced to focus on more “relationship oriented” education & career choices.

They tend to focus on the humanities & for those that actually enter professions that are more # based, leave b/c...
Only 9% of the nursing population is male & it is a female dominated profession by a ratio of 91%.

In teaching, women make up 76% of total.

Of course these are not economically rewarding jobs but they are socially very rewarding & noble.
Read 30 tweets
17 Sep
Minneapolis city councilors (the same management that wants to disband the police) is telling the city police chief that citizens are terrorized (by other citizens) as the police is absence & wants help & wants to increase funding for the police.🙄

thehill.com/homenews/state…
This is the police chief who been dealing w/ 100 resignation of his officers + 3 months ago councilors wanted to not just defund but disband.

Because residents are being terrorized by other residents, they now attack the chief for policing enough.

startribune.com/mpls-council-m… Image
Statistics of crimes in Minneapolis in 2020:

382 people shot in 2020, the most in 15 years

59 homicides this year (doubled annual average)

100 officers resigned thanks to the leadership of the city that wants to defund the police.

Now they face the consequence & ask for help
Read 4 tweets
17 Sep
What is making California so poor, as in having the highest poverty rate in America?

The simplest answer is management or progressive policy that is actually regressive & limit the supply of housing & raise costs of essentials like housing.
California consistently adds more regulations & barriers to building a home like requiring solar while homelessness rises.

How do u know this? Look at inventories/supply & look at prices. Supply & demand.

What does this do? Puts people in their place & reduces upward mobility.
Exhibit A: Climate change as a cover to add regulations to make it impossible to build affordable housing.

Zoning laws for the sake of whatever (oh the shadow) to limit building higher density housing near public transport so poor & middle class people can have access to housing
Read 4 tweets
17 Sep
Great question by @michaelxpettis & this happens occasionally with China data (industrial profit is one example).

Why is it that when you take the level & calculate the %YoY, you get a diff #? This case, China retail sales -1% vs the +0.5%??? Image
Here is the chart of the %YoY given by NBS for retail sales in blue & the orange line showing what you would get if you calculate from the level they say.

What do you see? A lot of smoothing of data. Image
This data is nominal & not real but I think there must be some sort of revision/smoothing. Trends are the same, and that is that is a gradual improvement, although clearly a discrepancy b/n +0.5%YoY & -1%YoY. This isn't the only data set that has this issue. Industrial profit too
Read 5 tweets

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