Green Dumplings

Resource Taxes, Property Taxes – The Tax Man Cometh

Remember the Beatles?  They had many great songs; one my favorites was Tax Man.  A few key lyrics below allude to what is happening in China these days,

"...(if you drive a car, car;) - I’ll tax the street;
     (if you try to sit, sit;) - I’ll tax your seat;
     (if you get too cold, cold;) - I’ll tax the heat;
     (if you take a walk, walk;) - I'll tax your feet…..”

And thus the Chinese have figured out if the provincial and local governments cannot forever sell land, they must come up with other sources of operating income, ideally recurring in nature.  Further, as development in the country continues, people are asking the question “why wreck our province when the other provinces enjoy the benefits of our resources?”  The solution? Taxes.

In the past few weeks there have been two major pieces of news on this front.  First, announced are plans to expand a pilot program implementing resource taxes across the entire country and second, real estate property taxes are to be implemented in Shanghai and Chongqing.  Those 大亨 (“da heng” big shots) with multiple homes or especially high-valued homes seem to be the targets of the tax.

Resource Taxes
China is distinguished by natural resources being found in locations rather remote from where they are used.  Basically, China’s natural resources are in the west and the production, post Cultural Revolution and Great Opening, is along the Pacific coast.  Extractive industries extracted and polluted, the manufacturers had “inputs” and they could manufacture things for the domestic and export markets.

The provinces have never been able to “cash in” on their natural wealth and have been equally unable to fund environmental cleanup of the messes made.  A year ago in the extreme western area known as the Xinjiang Uygur autonomous region (about as far west as you can go in China before you find yourself in Borat’s glorious Kazakhstan), a pilot program was rolled out, taxing oil and natural gas.  The national government decided this pilot was successful and will begin implementing this natural resource tax nationwide over the next five years.  The first beneficiaries of this expansion will be the other twelve western provinces and autonomous regions.

The NDRC has released a few salient details including a targeted 5% tax rate that will also shift depending on the commodity.  Not wanting to ignore the appeal of economics, the tax rate will also be applied to the market price of the commodity rather than the tonnage as was the case with the initial pilot program.  It is worth noting that the taxes will be applied to not just oil and gas, but also to rare earths, water and coal.  Expect to see these taxes passed on along the supply chain.  I find the inclusion of coal, used so much for power and heating, and water to be noteworthy.  The eastern cities, big consumers of both, will likely feel those higher costs.  Certainly economists won’t call it inflation, but the public whose purses will be squeezed certainly will feel that way.

Property Taxes
Property prices here in China remain a hot topic as the numbers climb ever higher despite a barrage of actions and restrictions by the national government to quell the price escalation.  On the demand side, second homes now require a 60% down payment as a means to prevent speculation (and presumably protect the banks from mortgage exposure) and a 10% premium on mortgage lending rates for certain price categories was also tried.

The next step is to roll out property taxes.  To those westerners, it may come as a surprise that property taxes on homes or apartments did not exist in China.  In the west, property taxes make up a significant portion of the local government operating budget.  Here in China, the local government has a hand in the property game because they sell land, owned by the government, to developers.  The proceeds from the land sales have then been used to fund the governmental annual operating budget.  Clearly, not a sustainable model! 

To create a recurring revenue stream for the provincial and local governments, the idea of taxes is appealing.  Taxes targeted at the escalating real estate sector make them even more appealing.  This initial foray into taxation will be modest targeting just Shanghai and Chongqing.  

In Shanghai if one buys a second home with a price of more than 2x the average (watch that word as it is a gameable one indeed!), then an annual tax of 0.60% (60 basis points) will be collected.  If the home has a price of less than 2x the average, the tax rate is 0.40%.  

In Chongqing, the top rate will be 1.2%.  Homes priced at 3x-4x the market average will be taxed at 1% and homes prices at 2x-3x the average will be taxed at 0.50%.  The government acknowledges these are low initial rates as they wish to assess the impact on the market.  I suspect over time the rates will creep higher and as local finances require more money, the bracket ranges will creep lower as well. Of course, the program will likely be extended to other major cities including, ahem, the capital at some future point.  To create a blatantly unequal tax situation over the long-term only adds further pressure to the hukou structure I have discussed in early comments.

In any case, the tax man has arrived and the fine Chinese citizens may feel his chopsticks in their purse soon.  Oh, and what might he come after next?  I hear a lot about congestion pricing for automobiles.

New Vehicle Technology Strategies – China and the US

Accenture recently released an interesting report comparing and contrasting the prospective trajectories for next-generation transport technologies in the US and China.  It can be found HERE.  While interesting, I feel it is burdened with some flaws: it pulls punches, it fails to recognize first-mover advantage and, worst of all, it appears to have completely forgotten the basic business school lesson on “sunk costs” (hint: when assessing future investment, one CANNOT include costs already incurred and must focus only on prospective investment and returns).

Overall, the report makes clear stark differences between the investment opportunities in China and the US when it comes to transformational vehicle and fuel technologies.  While the US has a fairly stable base of around 245 million cars, by my counting, China is forecast by Accenture to reach the 200 million mark by 2020.  Much of that trajectory will depend on domestic economic health in the next few years and I would bet a bottle of cold Yanjing (我最喜爱的啤酒) that the 200 million mark will be reached sooner than 2020 since the Chinese Ministry of Public Security (where license plates come from) notes there already are 85 million plated cars on the road and a total vehicle (eg, including trucks) of 199 million as of September, last.  In any case, as the Chinese middle class becomes richer and represents a broader segment of society, cars will continue to be the hot item for the newly “arrived.”

In short, auto fleet growth in the US is a function of either an expanding population (and I don’t mean at the waist line) or a desire for some proportion of families to own yet another car.  In China, the dynamic is more akin to that in the US during the post-WWII recovery period, albeit perhaps at a 6-8x pace.

To me, the punch-pulling begins in the first three summary points where Accenture suggests that the US and China have “specific similarities” including (1) significant government and private activity across a broad range of disruptive technologies, (2) an understanding of the importance of R&D and long-term policy and (3) an awareness of the significance that disruptive technologies and diverse fuel mix can have on competitiveness.  

I hate to say it, but it sure seems to me that Accenture is putting lipstick on pig when it suggests the US has any comprehension of how vitally necessary are robust R&D programs and SENSIBLE long-term policies.  Further, the US appears to be taking an ostrich-like position on policy, especially as it relates to supporting innovative transportation technologies with effective federal programs to short-circuit, or better, neuter inconsistent and often conflicting state policies.  Lastly, I interpret Accenture’s commentary as an attempt to spin a strategy that aims to support legacy investment at both the vehicle fleet and refining levels as one that protects or improves competitive posture.  It doesn’t: trying to harness innovation to the gating pace of a mature and slowing industry is sheer folly.

In terms of raw R&D innovative capacity, the report argues that the US retains a solid lead in scientific breakthrough research.  I agree.  Consider though, timing.  It may take years or decades for some of that pure science R&D to turn into commercially viable technology.  The US strategy is described as one where government and private investing funds a broad range of possibilities to give us the most optionality.  Nonsense – that is an excuse for an undisciplined lack of national industrial policy.  Back in the 60’s John Kennedy didn’t say “…. Heh, lets go fly around … somewhere out there in space…”  Rather, he said, “ We are going to the moon.”  Clear, crisp and focused, with a destination.  The innovation from that effort paid dividends for decades.

China’s strategic posture is, in one sense, enviable in that they have a bit of a “blank canvas” before them, unburdened by a the politics and business of legacy infrastructure.  The US has a large installed base of vehicles and a complex refining industry designed to pump out gasoline, not to mention an utterly gummed up regulatory posture.  Further, China has decided to focus on a few technologies that are uniquely suited to China’s own resources.  Could they fail miserably?  Sure.  Will they?  I doubt it.  The Chinese view these matters through a lens of national strategic importance.

The report suggests that China, with a narrower focus and a more coherent (my words, not Accenture’s) national policy, is likely to have a first mover advantage on developing next-gen vehicle architectures.  This is a big deal.  Remember Betamax vs. VHS (those are old video tape standards if you have forgotten)?  Betamax was the better technology from Sony and VHS was the cheaper, easier option.  VHS buried Betamax in a few years as it was the early volume leader.  While there may be lots of great research going on in the US, China will be implementing and commercializing technologies long before we are.  In that process, competitive advantage is earned and competitive barriers built.

China is forecast, not surprisingly, to focus much of their efforts on electrification of transportation while the US (and Western partners) focus on next-gen petroleum or bio-fueled vehicles where the entrenched agricultural, petroleum and vehicle interests seek to preserve their roles and protect their interests.  The one point that Accenture makes that I do agree with whole-heartedly is that “… - In the United States there will be clear winners and losers; in China, in the context of high growth, there will be winners and big winners.”  As we think about the US competitive posture, we would do well to consider the dreadfully high cost of worrying too much about legacy investment.  After all, we don’t use too much BASIC, DOS or FORTRAN these days do we?

GE, State Grid and China’s Smartgrid, Ganbei (干杯)

Surrounding Premier Hu’s visit to the US, GE has inked several deals here in China.  One that catches my eye is an agreement between GE and the State Grid and the Chinese Academy of Sciences to work together to develop and commercialize a range of smartgrid standards here in China to facilitate grid-scale energy storage, electric vehicle charging, distribution network management and local micro-grids. These efforts are expected to unfold through 2012 and will be funded with an unknown portion of GE’s aggregate US$2 billion commitment.

State Grid is mapping out standards in 22 areas relating to transmission, renewables integration, distribution network management, reliability, load dispatch, among other things, that are believed necessary to build out a power infrastructure to support both the urbanization and continued expansion of China’s industrial base and the ever increasing energy demands of families.  

Nationwide, China believes aggregate smartgrid investment will be on the order of US$100 billion over the next ten years.  Total Chinese power sector investment in the same period is estimated by State Grid to be on the order of US$586 billion (that’s a lot of dough).  The first project State Grid is undertaking over the next five years is a US$75 billion ultra-high voltage (1 million volts DC compared to western grids of several hundred thousand volts in either AC or DC form) transmission grid that is intended to be the backbone of the smartgrid effort.

Bottom line: China is building a power infrastructure to accommodate the future.  The US regulatory model and legacy grid infrastructure are, I believe, likely to prove to be impediments to similar forward thinking investment in the US.  Too darned much politics and far too many poorly educated folks in the role of decision-makers.

Envision Packets in Sedan Chairs

Let’s face it – the US wireless telecom infrastructure is in a sad state. For a presumptive First World country to be so hobbled by technological troglodytes like AT&T and Verizon simply boggles the mind. While the Allies may have bombed Europe’s continental telecom system into oblivion in WWII, at least the benefit was the Europeans were able to rebuild with technologies unburdened by the dead hand of “legacy infrastructure” that has ensnared the US public as a result of a blinkered obsession of “more, for less” without regard to quality and investment necessary for innovation.

So what does that little rant have to do with China? A lot. Consider “4G,” the alleged higher-bandwidth family of future technologies for wireless telecom. It may surprise you (it did me!) that one of the new 4G standards, “TD-LTE” was developed here in China by those unsmiling folk at China Mobile (if you were getting your tail kicked daily by China Unicom for having a real 3G standard network and iPhone, you might understand their unhappy faces). Interestingly, China Mobile's 4G standard is being rolled out worldwide, in particularly in portions of Sprint/Clearwire’s US network. Japan’s Softbank Willcom unit is reported to be planning to upgrade to TD-LTE and India’s Reliance Industries is adopting the standard as well. Industry analysts at Ovum suggest Australia, Malaysia and New Zealand may well also adopt the standard. In the past months there have been other announcements noting that China is building wireless networks in countries of resource-rich trading partners. While such actions are consistent with China’s mercantilist external strategies, I am fascinated to see significant portions of the more developed world possibly making the Chinese TD-LTE architecture a key element of the future wireless infrastructure.

Certainly one can be concerned about security issues with a telecom infrastructure, but the bigger story here is one relating to innovation. Many in the West seem to be relaxed given the perception of an innovation deficit in China. Might the TD-LTE situation, along with recent military systems (carrier-targeting ballistic missiles, stealth fighters, weaponized satellites etc.) serve as a wake-up call that perhaps the West should not be so sanguine? There are more masters and PhD degree engineers graduated here in China every year than in the US. Initial designs may be buggy and balky, but the Chinese will figure it out… and at a rate faster than I think many expect.

China Restrains Polysilicon Production

The Ministry of industry and Information Technology, the NDRC and the Ministry of Environmental Protection have jointly announced new rules that I believe will restrain speculative polysilicon expansion here in China.

The new rules require that new poly foundries be (1) greater than 3,000 metric tons in capacity, (2) use less than 60 kwhr/kg of electricity and (3) by located no closer than 1,000 meters from either watershed or environmentally protected areas.

Currently approximately 60% of China's notional 170,000 (not actual) metric tons of capacity is comprised of plants with less than 3,000 metric tons of metric capacity.

These restrictions could serve to eliminate the tendency of the sector to swing into conditions of excess capacity.

Winds of Change In Steel

Roughly two-thirds of China’s electricity flows into the primary materials and heavy manufacturing sector.  This is in contrast to the US where perhaps 30%-35% of electricity is consumed in these areas.  Thus, cleaning up many of the post-Culture Revolution heavy industry sites is an effective way improved energy utilization here in China.

It seems an opportune time as well to undertake a clean up and rationalization of the steel sector here in China.  If you think business has been rotten in the West, consider the plight of the Chinese steel sector.  Not only have raw materials (iron ore, coking coal) experienced dramatic price increases, the export market for steel has experienced huge volatility.  In 2008 China exported 48 million metric tons.  Yet in 2009, Chinese exports imploded to a meager 2.9 million tons, a 94% slowdown.  Yet in 2010, exported steel was reported up 73% back to 42.6 million tons.  This is all against a backdrop of total steel production growth (e.g., total produced for domestic and export use) of 13.5% in 2009, 11% in 2010 and, according to the Australian Bureau of Agriculture and Resource Economics, a forecast 7% expansion in production in 2011.  What to do when such dramatic shifts are moving through an expanding sector and you are trying to reduce energy intensity metrics?  Look for the volatility to highlight the proverbial weak sisters and consolidate accordingly.

China has over 800 steel makers and government hopes to foment a consolidation phase so there are perhaps 200 makers by 2015.  In doing so, the “Top 10” players will be allowed to control, collectively, up to 60% of the market compared to the 44% they now represent.  Why?  Concern about future profitability I suspect.  Consider that the bulk of the raw ore comes from an old-fashioned cartel comprising BHP-Billiton, Vale and Rio Tinto, among others.  To best deal with coordinated sellers, better to have fewer large buyers rather than a highly fragmented buyer group.  The profit situation, despite the appealing volume growth in the sector is not pretty.  Insiders have been leaking the profits earned by the Chinese steel makers in 2010 were less than half of what was paid to the ore sellers. It certainly seems the Chinese believe their finished product should be worth more than the rocks from which it comes.

In any case, Hebei Iron & Steel is the largest player here in China and is reported to be driving the consolidation effort, taking 10% stakes in a variety of smaller firms.  Presumably they will move to acquire larger stakes in the future.  The national government is offering support for this consolidation in the next Five Year Plan (2011-2015)  by cutting electricity and/or credit to those firms that do not want to play the consolidation game. To further pressure the weak sisters, the national government has cancelled 13% and 9% export tax rebates on cold- and hot-rolled coil.  

Were I a Chinese steelmaker not enamored with the consolidation idea, I would look at strategies to shift my production higher in the value chain:  new things like next-generation steels for the auto and rail sectors and specialty steels for the energy sector, or perhaps specialty formed products.  Continuing to play the low-cost generic product game for the volatile export sector seems like an invitation to “be on the menu rather than be seated at the table.”

 

Bundle Up in Linzhou

In the department of unintended consequences, it would seem there are a few chilly people in Linzhou these days.  I have written before about the aggressive efforts the national and provincial governments are making toward achieving energy intensity reductions.  This situation, however, is one of those “you won't believe what they’ve now done!” events.  Indeed, the government is serious about eliminating and destroying inefficient old energy facilities, but not to the extent of ruining the lives of citizens.  Yet, one better stay the wrecking ball until a replacement power source is in place, especially during the winter.

Somehow, it appears one or perhaps several provincial officials and utility operators did not fully comprehend what would happen when the Linzhou Youchang Power was closed in the New Year as part of a national effort to eliminate inefficient power generation plants.  Among other things, this plant provided electricity (and I suspect steam) to two of the town’s central heating plants.  In the first week of January, the power plant was shut down and demolition commenced.  

This closure resulted in power being cut off for the heating plants.  One of the two heating plants was able to cadge power from the local steel mill, but the other heating plant was not.  The upshot:  cold tootsies for 3,500 families, no heat for several hospitals, government buildings and schools.

Although a new power plant was supposed to be functional last year to replace the shuttered one, construction fell behind schedule.  I can imagine a fair bit of finger pointing, especially since Linzhou is experiencing a balmy sub-zero winter as is Beijing.  I wonder what the Mandarin phrase for “measure twice, cut once” is?

Closed Fuel Cycles In Gansu

In early January, the Chinese announced with fanfare a “great breakthrough” reported to make uranium sixty times more efficient.  Technical translation was not too good in this case.  Essentially, the Chinese have developed, at a nuclear research facility in Gansu province, a spent fuel reprocessing strategy known elsewhere in the world as a “closed fuel cycle.”  Indeed, a technical achievement requiring a lot of skill and resource.  The US ceased reprocessing back in the 1970’s under President Carter.  The UK, France, Russia and Japan all continue to operate reprocessing lines.

Today, the Chinese went on to clarify what China National Nuclear Corporation (CNNC) really might have meant.  In short, it will likely be 10 years before you see any spent fuel enter the processing cycle and then an ensuing 4-5 years to cook the spent fuel into plutonium to be mixed back into fuel for electricity generation.  This is meaningful, though, as it demonstrates that China is planning for nuclear power to be a significant element of the mix and that they wish to minimize their long-term dependency on foreign supplies of uranium.

All those countries with re-processing know-how treat the technology as highly classified.  Every one has their own unique implementation based on the costs (direct and indirect) that country believes appropriate to bear.  There are varieties of reprocessing cycles and the “full on” fast breeder approach designed for maximum reprocessing yields is what gets one to the point of saying “sixty times more efficient.”

If you want to read more expert explanations of this stuff, please take a look at the excellent public resources from that fine school in Cambridge MA, MIT,  The Future of Nuclear Power  and The Future of the Nuclear Fuel Cycle .

Let me take a crack at a simple explanation of what is going on here.  At the most basic level, China believes it now understands how to build a high yield fast breeder reactor to consume post fission waste and convert non-fissile U-239 into Pu-239 (plutonium, the stuff that goes boom) and the related chemical extraction, purification, metal fabrication and waste processing operations that, collectively constitute a “closed” fuel cycle.  The adjective “closed” is used here because you can build systems that create more fissionable stuff to be burned for electricity than one consumes. No laws of thermodynamics are being broken, just basic nuclear fission principles.  This stuff is not cheap and has associated with it a host of waste, safety and weapons proliferation issues.  China does not view costs the same way as might the West and from a security perspective, things here in China can be a tad more, shall we say, assertive, when making certain no one goes where one is not welcome.

Ok.. Quick Fission 101.  Most nuclear reactors that make electricity are big pots of water with a heating element inside them.  That heating element is a thing called a “core” and looks like a pretty nifty piece of metals engineering.   In that core is a mix of powdered metals inside metal tubes or plates.  Overall, there might be 3-5% uranium-235 in the fuel when we start up.  There are multiple flavors (“isotopes”) of uranium.  Uranium with 235 neutrons (U-235) is the one that naturally splits apart (fissions) easily and is the principal fuel for nuclear power generation.  Uranium with 238 neutrons (U-238) is referred to as depleted uranium since it does not do much other than sit there and be quite dense (ever hear the phrase depleted uranium ammunition?).  Normally the U-235 is what is in the core and as it fissions, or splits apart, it releases neutrons.  Those neutrons bang around in the water and slowly transfer their high energy to the water, making it hot (this process is called thermalization and, despite the name, has nothing to do with making the water hot, but instead relates to the neutron energy level).  As the neutrons lose their energy, they can then, interestingly, serve to trigger neighbor U-235 atoms to fission as well.  This is called a self-sustaining chain reaction. There are lots of ways to control it, so don't fret, and it is too darned complicated and not worth talking about here.

After about 5-10 years of heating water with neutrons, the U-235 concentrations decrease and the buildup of fission waste products reaches the point where we can say, effectively, “out of gas” even though there remains considerable amounts of useful U-235 in the tired fuel.  Since uranium is relatively inexpensive (~$60/kg) we use up the fuel and send it to the graveyard to be stored somewhere safe until we either decide we need to reprocess it (for example if uranium were to become quite expensive or inaccessible because some foreign government decided it did not want to sell it to others) or figure out something else clever to do with it.  This entire process is called the “Once Through” process and is how things in the West pretty much operate as there is a liquid and economic uranium market, at least for now.

So what if we decided to recover the “unburned” U-235 from the exhausted fuel?  Indeed, we can.  Just remember nothing is cheap.  And what about all the other nuisance nuclear “ash” in the exhausted fuel (ok, ok.. the engineers refer to this as “actinide waste”)?  It might also have some value other than as a trope in a bad sci-fi movie.

Remember the not so useful U-238 from above?  It wont’ fission by itself, even if incited to do so be all types (e.g. energy levels) of neutrons.  Yet it can be converted into plutonium-239 if it absorbs just the right kind of neutron.   And Pu-239 can fission and be used as a fuel like U-235 (or be swiped by ne’er do-wells for Dr. Evil purposes).  

In order to efficiently convert the U-238 to Pu-239, one must have just the right kind of neutron.  The type of reactor that makes that kind of neutron is referred to as a “fast” breeder reactor.  The neutrons are “fast” (they have high energy levels compared to “slow,” lower-energy “thermal” neutrons).  
Making a fast breeder reactor requires a completely different set of skills because the reactor does not use water.  It uses liquid/molten metals and is controlled and managed in ways profoundly different than those methods used to keep water-filled reactors in control.  For that nuisance, though, there is a benefit:  A fast breeder can consume as fuel the highly radioactive actinide ash created in electricity generation in addition to being able to burn Pu-239.  

As they say on TV, “No, wait, there’s more!”  You can surround the “core” of  fast breeder reactor with a “blanket” of U-238.  After tanning in that bath of fast neutrons for 4-5 years, the U-238 has become Pu-239.  At this point, the blanket can be harvested and the Pu-239 extracted.  Hard to believe, but you can actually design these things to generate more Pu-239 than they consume, so long as you have actinide ash from electricity generation to power the breeder.  The “manufactured” Pu-239 can then be extracted and mixed back into a raw U-235 fuel as a fuel “extender” (think hamburger helper).  Thus, we are able to reduce the raw U-235 demand and more efficiently use the U-235 we have and get some energy out of the “ash” waste.  The downside is there still are waste streams from the breeder process and then you have the weapons proliferation issue. Oh, then there is also the issue of a breeder reactor being more technically challenging to control and if it goes boom, it really will be a very messy BOOM.

In short, the Chinese have said they believe they have worked out a full system design for this breeder process.  Why?  Well, national interests, desire to not rely on imported uranium sources, a profoundly different concept of cost vs. the West, no effective public opposition, ability to secure a facility in ways the West would find more challenging (assume you will be shot if you can even see the darned place in the distance) and some degree of national pride.

CNNC says it will take them 10 years before they can begin commercial operation.  I think this means it will take them 10 years to build the breeder reactor, source the spent fuel and build all the attendant reprocessing bits.  Then the spent fuel will need to be cooked and processed into Pu-239 for subsequent mixing into the U-235 fuel stream.  Say another 5 years or so.  Thus, we are likely ~15 years away from China being able to actually operate a closed fuel cycle and that assumes everything goes smoothly.  The Chinese note their process is “home grown” and thus they may encounter some bugs as they work to scale up to commercial-level operations.

While a step forward for China’s nuclear industry, it is not yet something that will have much impact, near-term, on the current uranium market.  It does demonstrate, again, that China does think and plan for the long-term because nuclear power will be a key element of the power portfolio as the Chinese decarbonize their economy.

 

A Hungry Economy

Some interesting summary stats are popping up in the New Year.  To refresh everyone, China is mightily dependent on imported raw materials to power the economy.  ~70% of the country’s copper needs are sourced through imports, ~65% of potassium chloride (fertilizer and industrial chemicals) needs are similarly imported and more than 50% of the country’s oil and iron ore needs are imported.

One can imagine that domestic exploration is an area of focus for the country.  News coming from recent party and ministry conferences suggests that some resources are being located at rates faster than they are being consumed.  China reports having located an additional ~40,000 metric tons of uranium (presumable U3O8), an amount that is approximately equal to 80% of annual global appetite, another 193 billion metric tons of coal and approximately 2.5 million metric tons of lithium carbonate (handy stuff for lithium batteries).  

Perhaps most interesting are China’s comments about seeking to establish an expanding international mining presence as the country searches for inputs to the economy.  Such efforts will bring the West and East into more frequent competitive contact.  Again, I suggest a thought reading of Stefan Halper’s recent book entitled Beijing Consensus.

 

Maginot Line - Part 2

It seems those fun guys in the "watch the internet for unharmonious behavior" department have begun blocking those blogs that use Typepad as their hosted publishing platform.

It will be refreshing when China learns to not fear a multitude of opinions as the country has such tremendous potential to prosper and advance with a broader flow of information.  Does this recent imposition of blockading commentary presage a heightened degree of concern or anxiety?  I guess so!