Thread to come: my opinion of China's third plenum has improved markedly w/latest decision. Party agreed on crucial issues incl:
fiscal federalism (more local revenue and central spend)
social safety net
personal bankruptcy
market as "decisive" is back
politics.people.com.cn/n1/2024/0721/c… Consumption not a theme but could boost it:
1. Stronger more mobile social safety net less tied to fiscally shaky local gov incl pension, unemployment ins and health ins
2. increasing labor income in nat'l income
3. access to local pub svc incl schooling w/o Hukou. This is BIG.

Quick thread on gov taking shares in Alibaba/Tencent:
1) State-owned companies (sovereign wealth fund & others) have long had shares in all sorts of CN firms incl Ali
2) These "golden" shares more worrying: special rights like board seats and micromanaging elements of firm 3) BUT the shares in Ali case are in media subsidiary, NOT in core business--underscoring sensitivity of media's influence on public opinion. Will have to see if Tencent shares follow this playbook
ft.com/content/65e608…

Thread on BIS clarification on chip export controls: reduces uncertainty & unintended consequences
1. Most restrictions are by "fab" facility. Clarifies if multiple buildings at one campus fine to keep servicing uncontrolled trailing edge if sep building bis.doc.gov/index.php/docu… Why? Balances ensuring US equipment/maintenance not used for controlled stuff (machines are big, not easily moved) but also doesn't unintentionally destroy trailing edge mfg that's the vast majority of CN chip output, which would hit global chip supply chain hard

Pub Day! Eight years of work distilled into one book you'll love if you're into the future of money, finance, tech, China, and more. Read this thread for a sense of what's inside and why it matters for the US and world. publicaffairsbooks.com/titles/martin-… Why write a book on it? I moved to Beijing in 2013 just as fintech began changing not just payments, but daily life in CN. I saw it leapfrog what I was used to--cash to fully digital payments in the blink of an eye, and all the innovation that enabled. Had to share this story! 2/

Just out: my piece on the huge deal export controls announced by US and 30 (and counting) other countries. Plus implications for china. A quick 🧵 piie.com/blogs/realtime… US has given Russia the Huawei treatment and more, applying not only controls on US exports but also extraterritorial controls that could bite any goods made w/US tech. Controls on RU military/defense harsher than on Huawei! Needed because US only supplied 3% of Russia imports.

Thread on property taxes in China: the thorniest of thorny issues and crucial to China's development! Even Xi may not be able to knock enough heads to get this one done…
1/Many in China received their homes as compensation for Zhu Rongji's SOE layoffs in 90's...

https://twitter.com/Lingling_Wei/status/1450464560717119489

2/The homes are now worth millions, but owners' pensions/cash flows are miniscule, unable to afford recurring property tax of 1-2% of home value, as is common.

It would be EXTREMELY unpopular to impose taxes that forced them (including many officials) to sell. Not just the rich

Huge news: pboc white paper on china’s #cbdc just out! Expect a big thread after I’ve had enough coffee to read and process it…
pbc.gov.cn/WZWSREL2dvdXRv… 1/biggest deal in here is confirmation that foreigners can use the digital RMB in CN. Not sure whether they can leave the country with eCNY still in wallet...

Also confirmed major eCNY use at Beijing Olympics with digital wallets, wearable payments tools built into outfits, etc.

Thread on big news from Biden Admin today: revoking ad hoc mess of TikTok and WeChat executive orders and replacing with a more consistent, comprehensive framework to evaluate foreign app security.

I advocated for this last August here: piie.com/blogs/realtime… 1/n First major piece of news to me is quite provocative TBH official designation of China as a "foreign adversary." It is the only one mentioned, though the rules will extend beyond China it's clear the target whitehouse.gov/briefing-room/…

Quick thread on #digitalyuan privacy issues: privacy protections from merchants, tech, etc. look quite good (from gov is diff story). In US, you give all credit card credentials to anyone you pay, trusting they won't keep charging you or lose/sell credentials 1/n 2/n These in US are "pull payments," you auth someone to pull money from your acct. Privacy & security in US w/these *has* gotten better with Apply pay and chip cards that encrypt info to protect your identity and card info. eCNY is different, allowing you to "push" payments

Thread on Invisible China: Scott Rozelle and Natalie Hell's illuminating and scary deep dive into rural China's ills and stark inequality. No matter how bad you think it is, it's worse there---more like a developing country than a global superpower. 1/n 2/Rozelle rolled up his sleeves to understand the CN most only see from plane or train windows. Issues in health and education, bringing down human capital of 300m rural Chinese, could trap it in middle income status.

Think future like Mexico/Turkey now, not Korea/Taiwan

One thing I've been thinking about recently is that for Chinese firms, an IPO can be dangerous. Why? Attracting the wrong sort of attention. A quick thread with two examples (Ant is obviously one) 1/n Ex 1: Qudian, a high interest small loan company that raised nearly $1b USD list October 2017, company then was only 3 years old. It had 7m borrowers and $5.6b in loans at the time of IPO. The secret to its success? Partnership with Alipay, whose user base turbocharged growth 2/n

A quick thread on today's big new additions to the @CommerceGov entity list, why they may backfire, and why will be hard to roll back: 1/n The main firms that can now no longer buy US tech or goods are SMIC (China's main semiconductor manufacturer)--but only for the most advanced semi tech, DJI (world-leading drone company), a big state construction and shipbuilding company, some in biotech, and universities 2/n

Thread: Adding Ant to the entity list is a terrible idea.

If the bar to harsh US actions against a CN company is simply global success and innovation, USG plays into and strengthens the CN hardliner view that it US just wants to take CN down
scmp.com/news/world/uni… Note the lack of real national security justification to give this action ant real legitimacy. No sanctions violations like ZTE/Huawei, and Ant isn’t actively going after US users, so “sensitive data” on Americans is bogus. Alipay is accepted in US but mainly for CN tourists.

#Ant Prospectus Thread: Ant dwarfs any other #fintech company, but in past (frustratingly for researchers like me) disclosed few, sporadic details abt user #'s, assets, pymnt vol, bad loans, etc.. Prospectus is a treasure trove 1/n 2/n
Payments: 711 million active Alipay users, 1/2 of China's entire population. 80m merchants accept.
118 trillion RMB (17t USD) in payments last 12 mo, 622 billion x-border

Credit: 500m authorized borrowers, 2 tn RMB in consumer and small business loans outstanding

Cannot overstate how big a deal this is: proposed rules for ICT supply chain exec order dropped today from @CommerceGov would give gov't unprecedented , sweeping authority over the tech sector. This goes miles beyond Huawei 1/n (h/t @pstAsiatech)
commerce.gov/news/press-rel… @CommerceGov @pstAsiatech It would create a new #CFIUS like body at commerce for case-by-case review if one wants to import or install ICT tech/equipment/software developed in "foreign adversaries" (e.g. China, Russia). If commerce/intel community thinks it is risky, can force changes, and reject 2/n

Quick thread on #China response to #Facebook #Libra. It is the greatest threat to Chinese fintech dominance now and they know it. CN tech firms have not yet gained many users internationally, unlike US tech. US tech has not, however, had fintech success of Alibaba/Tencent 1/n 2/n In response they are speeding up central bank digital currency plans with Ant Financial, and even raising the possibility of loosening domestic cryptocurrency regulation to ensure there is a Chinese competitor. My primer on CN crypto regulation: piie.com/blogs/china-ec…