Ying Ma's Blog, page 24
January 30, 2013
China and the Dollar Standard
Ronald I. McKinnon, the William D. Eberle Professor of International Economic at Stanford University and author of Unloved Dollar Standard: From Bretton Woods to the Rise of China, spoke to Friends and Foes of Liberty about America’s benefits and responsibilities under the dollar standard, the harm that U.S. monetary policy has inflicted on emerging countries like China and Brazil, and why an appreciation in China’s currency would not tilt the U.S.-China trade balance in America’s favor.
Hosted by Ying Ma, Friends and Foes of Liberty is an Internet radio show that features in-depth discussions with scholars, business leaders and policy experts on China, the free market and U.S. foreign policy.
To listen to the discussion with Prof. McKinnon, please click here, download the episode from iTunes, or use the blogtalkradio player below.
January 12, 2013
The Mother of All Solyndras
Weekly Standard, January 21, 2013, Vol. 18, No. 18
China’s solar power debacle
–Article by Ying Ma
When solar panel maker Solyndra declared bankruptcy in September 2011, the Obama administration defended its $535 million loan guarantee to the company by touting the need to compete with China. At a congressional hearing, Jonathan Silver, then executive director of the Energy Department’s Loan Programs Office, said, “[In 2010, China] alone provided more than $30 billion in credit to the country’s largest solar manufacturers through the government-controlled China Development Bank. That’s roughly 20 times larger than America’s investment in the same time period.”
Since then, China has shown the world that massive government subsidies are no guarantee of business success. Today, the solar industry worldwide is suffering from oversupply, weak demand, and depressed prices, and many of China’s solar manufacturers are fighting huge financial losses, debt, and bankruptcy. Not surprisingly, the Obama administration, which was eager to follow China down the path of spending big on clean energy, has had little to say about the lessons to be learned from the current disarray of China’s heavily subsidized solar industry.
In the past five years or so, China’s solar producers have risen from relative insignificance to world dominance. Their success has been driven by the hard work of Chinese businessmen who chased after capital, entrepreneurs who implemented business plans, and workers who toiled in production plants in polluted cities. Yet the hand of the Chinese government has also been continuously visible.
Bent on promoting China’s leadership in green technology, Beijing has directed a flood of government subsidies, tax breaks, and massive credit lines from state banks into the solar industry, and local governments have offered benefits like cheap land. In the process, China became the largest solar exporter in the world. Its top manufacturers, such as Suntech Power, Trina Solar, Yingli Solar, JA Solar, and LDK Solar, were publicly listed on U.S. stock exchanges. For the year 2012, Solarbuzz, a market research website, estimated that China would account for 76 percent of all solar wafer production in the world.
Yet China has also saturated the solar industry with overcapacity. A recent solar market research report released by GTM Research and the Solar Energy Association reveals that global solar manufacturing capacity stands at 70 gigawatts, even though only an estimated 31 gigawatts are needed. China is responsible for much of the glut, and as another GTM report cited by the New York Times indicates, Chinese companies alone had the ability to manufacture 50 gigawatts of solar panels last year.
Inconveniently for the Obama administration, those market forces that it likes to dismiss affect even companies favored by the state. China’s rush to boost capacity in a hot new industry seemed like a great idea until the market sank. First the 2008 global financial crisis caused a worldwide economic downturn. Then the financial turmoil plaguing Europe since 2010 caused countries like Germany, Italy, and France to reduce government subsidies for solar power significantly. According to the Chinese press, some 70 percent of China’s photovoltaic solar modules are exported to Europe. Thus, Europe’s budget cutbacks have significantly weakened demand for solar imports from China.
In addition, polysilicon, the essential raw material for photovoltaic cell and module products, went from severe shortage to growth in worldwide manufacturing capacity beginning in 2010. As polysilicon became more abundant, the prices of solar products dropped, causing the profit margins of solar companies, including Chinese ones, to plummet.
Meanwhile, it has not helped that the U.S. Commerce Department imposed tariffs on Chinese solar products in 2012, while the same year the European Union proceeded to conduct investigations into anti-dumping practices and unfair government subsidies in the Chinese solar industry.
As a result, Chinese solar companies face a gloomy outlook. The industry may have reaped enormous government financial support that drew open envy from President Obama; but according to the state newspaper China Daily, numerous small and medium-sized solar cell manufacturers have gone bankrupt, and more than 80 percent of China’s 43 polysilicon companies have stopped production, as prices and orders have declined. China’s largest solar manufacturers are battling severe financial problems.
LDK Solar, the largest maker of solar wafers in the world, faces a mountain of debt totaling about $3.6 billion. Xinyu, the company’s hometown in Jiangxi Province, has come to the rescue. Last July, the city government approved a measure to fund approximately $80 million of LDK’s loans. Then in October, LDK raised some $23 million by selling a 19.9 percent stake to Heng Rui Xin Energy, a renewable energy company partly owned by Xinyu.
Suntech, the world’s largest solar panel maker, also needed a bailout from its local government. Burdened with over $2 billion of debt, it received nearly $32 million in emergency funds in September. The loan was or-ganized by the city of Wuxi in Jiangsu Province, where Suntech is headquartered, and was extended by the local branches of state banks, including the Bank of China and the China Development Bank.
Local bailouts provide much-needed cash to large employers, but they do not necessarily please central planners. Beijing, well aware of the overcapacity, has instructed China’s solar industry to consolidate. In late December, Premier Wen Jiabao chaired a meeting of the State Council, China’s cabinet, to reemphasize what everyone knew to be Beijing’s wish: Let the solar industry reduce production and undergo mergers and reorganizations. Local governments, frightened by the prospect of massive layoffs if large solar employers go bankrupt, have ignored Beijing’s call. Whatever the Obama administration may believe about state omnipotence or the Chinese government’s power to push clean energy projects with a snap of the fingers, state planning is hardly so simple or efficient in practice.
For a state-driven economy like China’s to outcompete market liberalism, it would have to routinely pick the right winners and losers, according to Peter Thiel, president of Clarium Capital Management. But Thiel, founder of PayPal, an early investor in Facebook and LinkedIn, and a man who knows something about picking winners and losers, noted in a phone interview nearly three years ago that he is skeptical that central planning can get the job done, especially when it attempts to shape industries not yet proven and innovation not yet seen.
The Obama administration lacked the same foresight, and its hubris and hostility toward free markets have led it to waste taxpayer money on Solyndra and other clean energy projects. Some of the companies that have filed for bankruptcy since Solyndra’s -failure include electric car battery maker A123 Systems, which received $249 million of stimulus money; energy storage systems maker Beacon Power Corp., which received a $43 million loan guarantee from the Energy Department; and solar conversion technology developer Satcon Technology Corporation, recipient of a $3 million grant.
The investment losses incurred by the Obama administration in its green energy portfolio no doubt pale in comparison to the billions spent by the Chinese government to nurture and prop up its renewable energy companies. Nevertheless, the turmoil in the Chinese solar industry teaches that massive state spending cannot forestall changes in market conditions, though it can -distort market incentives and lead to overcapacity, inefficiencies, and other unintended consequences. The logic of the free market applies across national borders and without regard to the wishes of big-government dreamers.
Less Courage, More Free Market
PJ Media, January 11, 2013
–Article by Ying Ma
In cities across America, free-market ideas have been losing the battle against the welfare state for a long, long time. The November 2012 elections merely offered the latest depressing results. To reverse the tide, free-market believers should think about a brand new approach: stop demanding courage as the price of admission.
To read entire article, please click here.
January 4, 2013
China’s Economic Miracle
Ying Ma spoke to Reason TV about China’s economic miracle and her book, Chinese Girl in the Ghetto. She talked about living through the crumbling of Maoism and the beginning of China’s historic economic reforms. She also explained why American policymakers and pundits are mistaken to laud China’s state-centric approach to economic growth.
Reason TV is the online video division of Reason, a libertarian monthly print magazine that promotes free markets and free minds.
December 11, 2012
Is Chinese Culture the Secret Ingredient for Economic Success?
Friends and Foes of Liberty, December 10, 2012
Chinese culture can contribute significantly to a country’s success, according to William Ratliff, research fellow and former curator of the Americas Collection at the Hoover Institution and research fellow at the Independent Institute.
Dr. Ratliff argues that culture in general and Chinese culture in particular matter a great deal to a nation’s economic and political development. He spoke with Friends and Foes of Liberty about the role of culture, the resounding success of the Asian Tigers–Hong Kong, South Korea, Singapore and Taiwan–in the latter half of the 20th century, and the unfulfilled expectations of the Arab Spring.
Dr. Ratliff has written and lectured on the politics of Asia and Latin America and how traditional cultures and institutions influence modern conditions and prospects for political and economic development. Within these regions he has focused on China, Vietnam, Argentina, Venezuela, Chile, Cuba, and Nicaragua. He also writes on Chinese relations with Latin America and on US foreign policy.
Hosted by Ying Ma, Friends and Foes of Liberty is a show featuring in-depth discussions with thinkers, doers and leaders about freedom, geopolitics, international affairs and U.S. foreign policy.
To listen to this episode, please click here or use the player below.
November 30, 2012
China at the Nexus of Telecom and U.S. National Security: Should the U.S. Be Worried?
In this day and age of intense partisan rancor in Washington, one thing that regularly brings Republicans and Democrats together is their distrust of China. And one Chinese company that both the left and the right seem to love to hate is Huawei Technologies, the largest telecommunications equipment manufacturer in the world.
In October 2012, the House Intelligence Committee released a report warning the U.S. government and private companies against doing business with Huawei. The Chairman and the Ranking Member of the Committee pointed out that Huawei can insert malicious hardware or software implants into its equipment, and allow the Chinese government to wage cyberwarfare, conduct economic espionage, and disrupt U.S. telecom networks that affect everything from electric power grids to banking and finance systems to rail and shipping channels.
Friends and Foes of Liberty spoke with Mr. William Plummer, Vice President of External Affairs at Huawei, about the accusations against the company, its relationship with the Chinese government, the vulnerabilities of the global telecommunications supply chain, and the politics of the U.S.-China relationship.
Hosted by Ying Ma, Friends and Foes of Liberty is an Internet radio show featuring in-depth discussions with thinkers, doers and leaders about freedom, geopolitics, the global marketplace and U.S. foreign policy.
Listen to the discussion by clicking here, downloading the podcast on iTunes, or using the player below.
Interview with Huawei Technologies about China, Telecommunications and U.S. National Security
Friends and Foes of Liberty, November 30, 2012
In this day and age of intense partisan rancor in Washington, one thing that regularly brings Republicans and Democrats together is their distrust of China. And one Chinese company that both the left and the right seem to love to hate is Huawei Technologies, the largest telecommunications equipment manufacturer in the world.
In October 2012, the House Intelligence Committee released a report warning the U.S. government and private companies against doing business with Huawei. The Chairman and the Ranking Member of the Committee pointed out that Huawei can insert malicious hardware or software implants into its equipment, and allow the Chinese government to wage cyberwarfare, conduct economic espionage, and disrupt U.S. telecom networks that affect everything from electric power grids to banking and finance systems to rail and shipping channels.
Friends and Foes of Liberty spoke with Mr. William Plummer, Vice President of External Affairs at Huawei, about the accusations against the company, its relationship with the Chinese government, the vulnerabilities of the global telecommunications supply chain, and the politics of the U.S.-China relationship.
Hosted by Ying Ma, Friends and Foes of Liberty is an Internet radio show featuring in-depth discussions with thinkers, doers and leaders about freedom, geopolitics, the global marketplace and U.S. foreign policy.
Listen to the discussion by clicking here or using the player below.
November 16, 2012
Interview with Ward Connerly: Civil Rights for All
Friends and Foes of Liberty, November 15, 2012
Friends and Foes of Liberty spoke to Ward Connerly, founder and President of the American Civil Rights Institute, about his efforts to end state-sponsored, racial and gender preferences across America. Mr. Connerly discussed the insidiousness of quotas and preferences, the impact that President Barack Obama has had on the national racial discourse, the Fisher v. University of Texas at Austin affirmative action case currently before the U.S. Supreme Court, and the need to constantly remind Americans that civil rights is not just for one group of people but for everybody.
Mr. Connerly has gained national attention as an outspoken advocate of equal opportunity for all Americans, regardless of race, sex, or ethnic background. Since the mid-1990s, he has led efforts to end racial and gender preferences in public education, public employment and public contracting–through the passage of voter ballot initiatives on the state level. Mr. Connerly has successfully shepherded such ballot initiatives to passage in California, Washington, Michigan, Nebraska, Arizona and Oklahoma.
Hosted by Ying Ma, Friends and Foes of Liberty is an Internet radio show that features in-depth discussions about freedom, geopolitics, the global marketplace and U.S. foreign policy.
Listen to the discussion with Ward Connerly by using the player below or by clicking here.
November 1, 2012
A Conversation with Gen. Paul Eaton
Friends and Foes of Liberty, November 1, 2012
Major General Paul D. Eaton spoke to Friends and Foes of Liberty about the economy, looming defense cuts, the war in Afghanistan, containment of the Iranian nuclear crisis, the politicization of the officer corps, his preferred candidate for the upcoming presidential election and other topics.
Hosted by Ying Ma, Friends and Foes of Liberty is an Internet radio show that features in-depth discussions about freedom, geopolitics, the global marketplace and U.S. foreign policy.
Gen. Paul D. Eaton is a senior adviser of the National Security Network and had served more than 30 years in the United States Army, including in combat and post-combat assignments in Iraq, Bosnia and Somalia. As a major general he was assigned to Iraq from 2003 to 2004 as Commanding General of the Coalition Military Assistance Training Team (CMATT), where he designed, manned, trained and equipped the Iraqi armed forces for the Iraqi Ministry of Defense and the security forces for the Interior Ministry. Prior to that assignment, he commanded the Army’s Infantry Center and was Chief of Infantry for the Army.
Listen to the interview with Gen. Eaton by using the player below, by clicking here, or by downloading the podcast on iTunes. [Apologies for the bad echo during the first five minutes of the discussion.]
A General’s View of Obama and Romney
Friends and Foes of Liberty, November 1, 2012
Why should U.S. citizens give President Barack Obama another four years as President? GOP presidential nominee Mitt Romney claims that Obama has performed poorly on the economy, is gutting the U.S. military and has weakened U.S. leadership around the world.
Tune in to find out why retired Major General Paul D. Eaton disagrees. Gen. Eaton spoke to Friends and Foes of Liberty about why he approves of President Obama’s foreign policy record and supports the President in the upcoming election. Gen. Eaton talked about the economy, looming defense budget cuts, the war in Afghanistan, containment of the Iranian nuclear crisis, the politicization of the officer corps and other topics.
Hosted by Ying Ma, Friends and Foes of Liberty is an Internet radio show that features in-depth discussions about freedom, geopolitics, the global marketplace and U.S. foreign policy.
Gen. Paul D. Eaton is a senior adviser of the National Security Network and had served more than 30 years in the United States Army, including in combat and post-combat assignments in Iraq, Bosnia and Somalia. As a major general he was assigned to Iraq from 2003 to 2004 as Commanding General of the Coalition Military Assistance Training Team (CMATT), where he designed, manned, trained and equipped the Iraqi armed forces for the Iraqi Ministry of Defense and the security forces for the Interior Ministry. Prior to that assignment, he commanded the Army’s Infantry Center and was Chief of Infantry for the Army.
Listen to the interview with Gen. Eaton by using the player below, or download the podcast on iTunes. [Note: Unfortunately, there is a bad echo during the first five minutes of the discussion.]
