Chinese leader Xi Jinping is vying with little success to turn stock bears into bulls. But over in the bond market, China faces the opposite problem with irrational exuberance pushing long-term yields too low.

That has authorities scrambling to tighten their grip on the globe’s third-biggest government debt market. On Monday, prices tumbled as the People’s Bank of China (PBOC) intervened assertively in the market. It was the worst day in 17 months for China's 10-year treasury futures, sending yields up 4 basis points.

The recent plunge in bond rates is putting downward pressure on the Chinese yuan at a moment when Xi favors a stable-to-firmer exchange rate. The problem for Xi and the PBOC is that bond bulls argue the rally is supported by underlying fundamentals – including slowing growth and deflationary pressures – and has room to grow.

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Germany’s Infineon Technologies has started production at the first phase of its new fab in Kulim, Malaysia, which it expects to become the largest and most competitive 200-millimeter silicon carbide (SiC) power semiconductor production facility in the world.

Known as Kulim 3, the new fab follows the opening of Kulim 1 in 2006 and Kulim 2 in 2016, reinforcing Infineon’s long-term commitment to semiconductor manufacturing in Malaysia. SiC power devices are key to the production of more efficient electric vehicles.

Prime Minister Anwar Ibrahim and Chief Minister of the northern state of Kedah, where the fab is located, joined Infineon CEO Jochen Hanebeck for the official August 8 launch ceremony.

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Chinese technology firms started stockpiling Samsung’s high-bandwidth memory (HBM) chips earlier this year in anticipation that the United States would soon ban their export to China.

China accounted for about 30% of Samsung’s HBM chip revenues in the first half of this year, driven by rising demand from tech giants like Huawei and Baidu as well as new Chinese startups, Reuters reported, citing three unnamed sources. HBM chips are commonly used as artificial intelligence (AI) accelerators.

The Reuters report said most Chinese firms have sought in particular the HBM2E chip, which is one generation behind the HBM3 and two generations behind the most advanced HBM3E. China plans to produce indigenously the HBM2, the most mature, least advanced model.

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As global investors dump US and Japanese stocks, China’s beaten-down markets are suddenly looking more attractive.

The debate over whether China is “uninvestable” has plagued Xi Jinping’s government since late 2020. That was back when Xi’s Communist Party cracked down on tech platforms, starting with Jack Ma’s Alibaba Group.

It hardly helped that Xi’s draconian Covid-19 lockdowns drove China’s growth into the red. Or that Xi’s party was slow to add fresh stimulus to Asia’s biggest economy when it arguably needed it most.

Now, China has a unique opportunity to shine as a bastion of stability as the US and Japanese economies face fast-mounting challenges.

The post China looking like a ‘buy’ as US, Japan markets sag appeared first on Asia Times.

As the Japanese yen surges, investors are grasping for correlations — past events that provide some perspective on what might be in store for currency markets.

The search has turned frantic as the Nikkei 225 Stock Average leads a global sell-off in stocks. The Bank of Japan’s July 31 rate hike was followed by a softer-than-expected US employment report. On Monday, the Nikkei plunged 4,451 points, more than Black Monday in 1987.

Arguably, no good corollary exists thanks to uncertainties surrounding Japan thanks to the “yen-carry trade.” Though the US dollar is by far the global reserve currency, borrowing cheaply in yen and deploying those funds in higher-yielding assets elsewhere became as crowded a trade as history ever saw.

The post Nikkei’s Black Monday 2.0 triggers contagion talk appeared first on Asia Times.

A jump in federal transfer payments, that is, cash outlays to individuals, unleashed the inflation of the 2020s. The Trump administration provided emergency subsidies to individuals during the Covid-19 collapse of 2020, but the incoming Biden administration doubled down on subsidies, even after the economy was in full recovery. In 2022 (“Supply-side inflation and its […]

The post Biden’s to blame for US inflation appeared first on Asia Times.

TOKYO – With all the focus on the US Federal Reserve and Bank of Japan, it’s easy to forget where the most important monetary calls are being made this year: Beijing. Sure, Fed Chairman Jerome Powell said Wednesday (July 31) that big actions are coming. A September interest rate cut is “on the table,” provided […]

The post Forget the Fed and BOJ; PBOC holds the monetary cards appeared first on Asia Times.

This week is offering quite the split screen to investors hoping China would step up efforts to raise its capital markets game.

On one screen, the China Securities Regulatory Commission (CSRC) pledged to improve market operations, strengthen comprehensive research capabilities, deepen response mechanisms to manage market risks and hone regulations for trading.

On the other, signals that Beijing is increasing opacity surrounding the flow of capital. Specifically, how much capital international funds deploy into and out of Asia’s most volatile major stock market.

The post Less transparency, less faith in China stocks appeared first on Asia Times.

In 2015, the Chinese government announced the strategic industrial development policy known as Made in China 2025. Of the ten key industries targeted, new energy vehicles (NEVs) have arguably achieved the greatest success, changing the dynamics of the global auto industry and thoroughly alarming US and European governments.

They have also attracted the attention of US scientist and Pattern Computer CEO Mark Anderson, who sees an unprecedented challenge to Western supremacy in the technologies that support China’s hyper-competitive electric vehicle (EV) industry. Pattern Computer is a machine learning and AI company headquartered in the state of Washington.

In an essay entitled “THE RACE FOR AUTONOMOUS AI: The Key to Global Technical and Economic Dominance,” which appeared in the July 7 edition of his Strategic News Service Global Report on Technology and the Economy, Anderson identified the EV as an enabler for critically important technologies.

The post Chinese EVs and the race for autonomous AI appeared first on Asia Times.

TOKYO — Suffice to say, 2024 hasn’t turned out the way Japanese Prime Minister Fumio Kishida expected.

Rather than being a standout in Asia, Japan’s economy is skirting recession. The Bank of Japan still hasn’t hiked interest rates, though Tokyo had fully expected a tightening move or two by now.

Instead of coasting to victory in September’s Liberal Democratic Party election, Kishida’s approval rating is stuck in the low 20s. Deflation-plagued China is acting more of a drag on than growth engine for Asia.

Yet the biggest blow to all Kishida thought he knew about 2024 is coming from Washington.

The post Why the ‘Trump trade’ has Asia in a panic appeared first on Asia Times.

Pan Gongsheng isn’t famed for acrobatic skills. But on Monday (July 22), the People’s Bank of China governor embarked on a routine that will test his monetary balance, agility and motor coordination in tantalizing ways. The PBOC’s move to cut a key short-term policy rate for the first time in almost a year surprised many traders. […]

The post China cuts key rate amid worst deflation since ’99 appeared first on Asia Times.

While investors reassess their exposure to Nvidia and TSMC in light of Donald Trump’s remarks about Taiwan, Canadian AI chip, software and hardware design company Tenstorrent stands out as a competitive alternative to TSMC, one that works with IC foundries in South Korea and Japan. In an interview with Bloomberg Businessweek published on July 16, […]

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At this week’s Third Plenum meeting, President Xi Jinping’s Communist Party sent many of the right signals to skeptical investors worried about the trajectory of Asia’s biggest economy – including pledges to “unswervingly encourage” the private sector. But Xi’s team picked a risky moment to keep global investors guessing about how it plans to revitalize a US$17 trillion […]

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Chinese leader Xi Jinping can’t be happy his Third Plenum extravaganza is competing for headlines with events 11,000 kilometers from Beijing.

In Xi’s defense, it’s hard to compete for headlines with an assassination attempt against former US President Donald Trump half a world away. That, coming just over two weeks after Trump’s fiery debate with a cognitively challenged President Joe Biden.

But Trump's choice of JD Vance as his running mate could signal an even bigger upstaging of Xi’s grandest economic plans going forward.

The post Trump’s JD Vance problem is now China’s, too appeared first on Asia Times.

In the middle of an otherwise mundane Congressional hearing on July 9, US Treasury Secretary Janet Yellen made an extraordinary admission: De-dollarization is now her biggest fear.

Though it might sound obvious to many, it’s a stark about-face for a US economy czar who’s long denied the dollar is in danger of losing its status as dominant reserve currency because of sanctions or other policy missteps. In March 2022, for example, Yellen said “I don’t think the dollar has any serious competition and it’s not likely to for a long time.”

The former Federal Reserve chair noted that “when you think about what makes the dollar a reserve currency, it’s that we have the deepest and most liquid capital markets of any country on earth. Treasury securities are safe, secure and immensely liquid. We have a well-functioning economic and financial system and the rule of law. There really is no other currency that can rival it as a reserve currency.”

The post Yellen’s de-dollarization fears will only get worse appeared first on Asia Times.

TOKYO - After years of head fakes, prevarications and disappointments, is the Bank of Japan finally on the verge of a credible monetary tightening?

A growing number of investors are betting that the BOJ’s July 30-31 policy meeting will be the moment global markets have been waiting for several years now. One big reason: May saw the biggest base pay jump since 1993, an increase that could seal the deal for an interest rate hike.

Are markets right? Only time will tell given punters’ dreadful track record of predicting BOJ pivots. For 15 years now, the BOJ has pledged ad nauseam that it would “normalize” interest rates and end a quantitative easing (QE) experiment first launched in 2001.

The post Is Bank of Japan finally ready to really raise rates? appeared first on Asia Times.

The sixth World Artificial Intelligence Conference held at the Shanghai World Expo Exhibition and Convention Center from July 4-7 was a demonstration of China’s position as a fast follower creating a large, diverse and multinational alternative to a US-centered AI industry.

More than 500 companies working on large language models, machine learning, the use of AI in smartphones, PCs and wearables, healthcare and other AI-enabled services, industrial AI, intelligent robots and autonomous vehicles participated in the event and showed off their products in the exhibition hall.

Most were Chinese but Amazon Web Services, Dell, GE, GM, Google, Microsoft, Tesla and Qualcomm also attracted crowds of visitors.

The post China flexes AI muscle at Shanghai expo appeared first on Asia Times.

Anyone hating their job at the moment should spare a thought for Federal Reserve head Jerome Powell. In real time, investors can observe the extent to which Chairman Powell is confused about the direction of US interest rates.

Traders have stopped laughing at former Treasury Secretary Lawrence Summers’ contention the Fed’s next step will be to tighten, not ease. There’s little humor to be found in the Fed’s dilemma as inflation gyrates, the dollar soars and US electioneering descends into chaos.

Loads of prominent economists still think Summers is dreaming. Among them is Mark Zandi, chief economist at Moody’s Analytics.

The post Which will mess up the most – Fed, BOJ or PBOC? appeared first on Asia Times.

China’s leadership gathering later this month could be the moment policymakers devise to defuse the US$13 trillion time bomb imperiling Asia’s biggest economy.

Though China’s property crisis gets the headlines, debt troubles plaguing municipalities across the nation also require urgent action.

At issue is the explosion of local government financing vehicles (LGFVs) in recent years. Such debt, the vast majority of it the off-balance-sheet kind, now almost rivals China’s annual gross domestic product (GDP).

The post China to defuse its $13 trillion LGFV debt time bomb? appeared first on Asia Times.

Huawei and ZTE are cranking up and rolling out 5G-Advanced network services, expanding the Chinese telecom giants’ global lead in mobile communications. The new technologies were on display at the Mobile World Congress (MWC) exhibition staged in Shanghai from June 26-28.

Compared with conventional 5G telecommunications, 5G-Advanced (abbreviated as 5G-A and also known as 5.5G), “represents a 10-fold improvement in performance across the board… as well as significant reductions in overall network power consumption,” according to Counterpoint, a technology market research organization.

In addition to much faster uplink and downlink speeds, 5G-A offers superior positioning and timing, industry analysts say.

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