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By David Zgodzinski
May 23, 2000
The story of the six blind men and an elephant is Indian.
One blind man touches the trunk and thinks the elephant is
like a snake, another grabs a leg and believes the elephant
is like a tree. Now if the elephant were a country, that
country would be China.
This week, the spotlight is shining on the 1.2 billion
Chinese citizens, and the world will get another glimpse of
that vast country coming of age. The tough old elephant will
be transformed to a girl on prom night. The vote by
Congress to grant China permanent normal trade relations
(PNTR) status will soon be followed by a vote by the WTO
to accept China as a member.
Stakes are high and the perspectives are plentiful.
SirRealist wrote to the Cents and Sensibility - Kimberly
and Friends' Consortium thread on May 10...
5/22= if Congress votes down China's entry into
the WTO, we will not rise till mid-June. The
single best thing that can be done now is to
lobby your Congressional rep to support China
in the WTO. With Clinton, Bush, Bush, Gore,
Carter, Ford, Greenspan supporting it, it would
seem a done deal, but in my life, I've never seen
a more dunderheaded kamikaze House of Reps.
My prediction: they will shoot it down, effectively
putting the last nail in the hide of this
bull-on-life-support.
There are resentments and mixed feelings everywhere. And
while there is movement toward integrating China as much
as possible into the family of nations, there is also
backlash. Fearful unions and anti-communists are able to
join hands in opposing freer trade with China, and as
gdichaz pointed out on May 17...
China is not a monolith. While some factions
including the top political leadership want to get
into WTO, other factions (probably including the
military), do not.
The threads have been looking at the business prospects of
a positive PNTR vote in Congress and then the likely WTO
membership. Rock_nj wrote on May 11 to the Cents and
Sensibility - Kimberly and Friends' Consortium
thread...
Buying CHINA(Chinadotcom) for the potential
China trade frenzy in two weeks.
John wrote to the AMAZON.COM (AMZN) thread...
"Alibaba.com is headquartered in Hong Kong
with R&D and customer service operations in
Mainland China and branch offices in Seoul,
California and London. That's the model I like
when we discussed internet company with focus
in China market. This is a company to watch for
the coming years in B2B. They have heavy
weight Vcs; Softbank and GS.
The image of Alibaba saying ?Open Sesame,? and having
the door to the cave full of treasures open up is a clever
touch. But there were steady reminders that the deal to
open trade with China might not go through. jtow1wrote the
same day...
Perhaps Congress has a problem with a
communist government that still causes
dissenters to disappear.
SirRealist countered...
When J. Carter puts his human rights record on
the line and says this is the single best way to
move China to reform and democracy, I listen....
and I write my wet-behind-the-ears rep and say
"Let China in the WTO." I'm pretty sure Clinton,
Bush, Bush, Ford, Carter and Nixon are not
zackly Commie sympaticos nor are blind to
China's human rights abuses. Come to think of
it, there's plenty of other nations with the
'disappeared' in the WTO already.
Rock_nj had another view on May 11...
If we fully normalize trade relations with the
brutal communist dictatorship known as China,
it will make our embargo of communist Cuba
look even more ridiculous than it already does.
What a double standard! Why should China be
treated any differently than Cuba when both are
communist dictatorships?
With the early blush of capitalism in the ?90s and Chinese
public companies trading on U.S. exchanges, the first
impulse when looking toward a big opening for the country
would be to buy Chinese companies. Some on the threads
looked at the possibilities. CIMA had a suggestion for the
Asia Forum thread...
The half-brother of the President of ASTV runs
New World Development (I believe this is the
largest company in China?). One of the ASTV
Directors helped bail out Donald Trump when he
had his problems a few years back with his real
estate holdings. The relationships with the
government in Beijing government are second to
none.
There is apparently more of an accent on the traditional
way of doing business, and that shades the choice of
stocks. George Cheung wrote to the China.com
Corp-(CHINA) thread...
Pretty Good Connection to High Places in
China. One of the Princelings is onboard. That's
how things gets done in China.
But these are nervous times. Taking risks on foreign
companies in countries with heavy-handed regimes is less
appealing than it was in the last decade. So there has been
discussion about large American multinational companies
that would benefit from an opening of the Chinese markets.
SyncMan wrote to the CSCO - Cisco Systems, Inc. thread
on May 11...
Let's say Cisco becomes number one or number
two in: Building of the Internet II.
Building of the Optical Infrastructure.
A partner (with GE/etc) in turning every major
household device into a web enabled device.
Able to leverage it's lead in growths in China,
India, etc. for the data world that started in the
US.
What will it's stock be worth in 7 years?
MeDroogies expressed some doubts about the Chinese
market to the Compaq thread...
Biggest POTENTIAL...Just because China has
the biggest economy, you have to remember
that's a natural considering something like 1/2
the world's population lives there. But they can't
spend the money the way a Korea can.
Lane Hall-Witt wrote on May 12...
When I try this China play, I will probably focus
pretty heavily on QCOM
Qualcomm has been the Ping-Pong ball in this round of
diplomacy. First there was an announcement that the
Chinese government would allow the licensing of
Qualcomm?s CDMA technology by Unicom, one of the
wireless operators in the country. Then the agreement was
quickly put on hold, possibly making it a bargaining chip in
the political negotiations. Meanwhile, the European telecom
manufacturers also have their hearts set on the Chinese
market. Steven Rogers wrote to the Asia Forum thread...
Some European firms will do well out of it too:
Asian recovery is great news for Nokia and
Ericsson, which make products that are
essential accessories for an upscale Asian. It
also means that the U.S. will no longer be the
sole engine of worldwide growth, which is a very
good thing, though the Asian recovery is still
way too dependent on the U.S. market.
The Chinese have been deft at playing the Europeans off
against the U.S. Negotiations last week between the ECU
and China produced an agreement that greases the skids
to WTO membership. The deal with the Europeans allows
for 49-percent foreign ownership of telecom networks, giving
Europe the same terms as a deal agreed to with the U.S.
The deal comes just in time to turn up the heat on
Congress to give China permanent trade status, or watch
as she dances off with the Europeans.
And on May 17, a report from ChinaOnline stated that the
director general of a Beijing University doing studies on
telecom deployment saw no rush to deploy narrowband
CDMA, and foresaw broadband CDMA systems coming
online between 2003 and 2005. Qualcomm seems to have
been left out, and the stock has suffered. Gregory
Mullineaux wrote to The New Qualcomm - a S&P500
company board on May 17...
So no CDMA in China till 2005! By then it will be
WCDMA in China. INTC is able to step up to the
plate and do deals to get it's foot in the door, I
want QCOM to do the same. Why are they not?
Sure WCDMA is not defined yet, but others
seem to be setting themselves up to be players.
Is QCOM being arrogant by holding on to the
dream of 3G by QCOM? Is there some reason
they are holding back?
The frustration of seeing the Chinese market?s potential
appear to slip through one?s fingers may not be limited to
one or two companies. There are conflicting interests in the
ranks of those who support more open trade, and each
believe they will benefit from more trade with China.
Tommaso wrote to the Asia Forum thread on April 27...
The best result of this for the United States
would be increased demand for food. The US
farmers have missed out on the prosperity of the
last decade and many have been ruined. Of
course, this would mean that those of us who
don't grow food will have to pay more, but we
can afford it. That also means US inflation and
higher oil prices. Or so I see it.
But it's good news to have Asia beginning to
prosper and I hope it keeps up. There's less
likelihood of war if people feel things are getting
better.
But where the farmer sees a market for more food, the
genetically modified seed companies see a market for
higher-yielding seeds. Steven Rogers wrote...
If a Chinese farmer could add 50% to his yield
and halve his risk of pest-related crop damage
by using genetically modified strains of rice, do
you think he would hesitate? Do you think he
should?
The U.S. trade deficit for March was a record $30.2 billion --
a billion dollars a day. The vote to open trade further comes
at a time when the U.S. is spending abroad at a feverish
rate. And the feelings about the fairness of doing business
in China won?t change with Congressional approval.
long-gone has posted some new items about China to the
Gold Price Monitor thread. On May 12, he wrote...
Has to be some major dirt behind this:
And then he posted an Associated Press story about Li
Fuxiang, director of China's State Administration of Foreign
Exchange, who leapt from a seventh floor window to his
death. On the same day, long-gone posted another story
this time with his comment...
This might slow any war with China: Has Taiwan
Gone Nuclear?
The story on NewsMax.com quoted a report in the Defense
and Foreign Affairs journal stating that the Taiwanese
government had acquired two nuclear warheads, attached
them to rockets and aimed them at the mainland. The
Taiwanese government denied the report.
?Permanently normal? is a bizarre term to use in regard to a
relationship with a country such as this -- an emotional
teenager in some respects, or a wise old elephant who
never forgets. shamsaee described an airborne chat to the
The New Qualcomm - a S&P500 company thread on
May 18...
Interesting conversation on my flight back with a
Chinese Gentleman this morning. For the sake
of privacy, this Gentleman runs a pretty large
Import export business with offices in Shanghai,
Hongkong and Middle East.
shamsaee described part of the conversation including this
point...
He said there is a speech by the Taiwanese
premiere on the 20th and if any mention of 2
Chinas, then you will see an invasion/blockade
imminently. I pointed out that would ruin WTO
acceptance and he pointed out that its more
important for Europe and USA to do business in
China than China having access to those
markets.
There is a sensitive mix of inferiority and superiority in that
outlook. Colonialism and war and cultural revolution have
left recent scars. But the new China is full of opportunity
and creativity champing at the bit. Everything is in flux and
the markets are having a tough time deciding what to make
of it.
So now the music is starting, and all eyes turn to watch as
China gets up to dance.
Discussion
Threads
Cents and
Sensibility -
Kimberly and
Friends'
Consortium
AMAZON.COM
(AMZN)
Asia Forum
China.com
Corp-(CHINA)
CSCO - Cisco
Systems, Inc.
Compaq
The New
Qualcomm - a
S&P500
company
Gold Price
Monitor
SI Members
Featured
SirRealist
gdichaz
Rock_nj
John
jtow1
CIMA
George
Cheung
SyncMan
MeDroogies
Lane Hall-Witt
Steven Rogers
Gregory
Mullineaux
Tommaso
long-gone
shamsaee
Are there some new developments on your thread? Radical personalities? Hot New technologies? Takeovers? Scandals?
Please let us know. All stories are welcome.
Dave Zgodzinski |
