Are you afraid of China?

Current
Now that China is getting strong again, the fear for the West comes again. This time, they are afraid that China is going to rule the world with their cheap products and control of rare-earth minerals. The following are some of the major issues the West have been trying protray China as the villain.
1. Currency Manipulator : The West has accused China saying that the country is trying to manipulate its currency to make them cheaper so that it is competitive compared to products made from the West.

2. Rare-earth minerals : Recently, China has reduced the export of rare-metals by at least 70%. The West again accused China of monopolizing the trade and that act is against policy of WTO. The fact is China has only a third of all rare-metal reserve in the world, there are actually not that rare, it's the West problem for being unable to produce them at a competitive price. Also producing these rare-metal brings a huge toll onto the environment, that is a major issue the chinese government is trying to tackle.

3. Human rights : The West is tryin to create havoc in China by raising human rights issues starting from issues related to Dalai Lama to recently awarding a peace Nobel prize to an imprisoned Chinese activist who fights for democracy.

4. Adding oil and fire to the soured relationship between China and Taiwan. Don't forget, US is the biggest firearm supplier of Taiwan.

You can just see how worry the West are about China, trying every way just to topple China. They have even effectively incorporated this fear into everyone's mind. The advertisement above is just one example. It is not produced by the Chinese that's sure. It is produced by the Americans as a political advertisement for their current mid-term election which will be held this November. It brings a sense of anti-china message in it as well.

HISTORY
Take a look at the video above and you will understand the fear the West have for China. The U.S. have been creating tricks and plans to topple this rising dragon of the East. Even from before during the late 19th Century, the West have started the Opium war with China. Just a little history. China was a prosperous country with various products that the West need such as silk, cotton, grains, porcelain, metals, rare-metals, spices, and many more. During that time, the only thing that China need from the West is simple : Gold or Silver (That was the currency that they use since ancient times). The West have nothing to offer them, the Chinese don't want coffee (they have their own tea), they don't really want anything from the West because the West has nothing to offer. So they figured out a better way to exchange these products. The West introduced opium to the Chinese. Once they got hooked on, they just need to trade opium with them in order to get what they want. They also started selling them firearms (That's what the west is best at : Violence).
Once the Chinese realize the problem, they banned opium trade. The West reacted furiously by sending army to attack China and force them to open up their trading port to continue trading opium. That is what they are best at "Giving people shit and get their treasure".
Even worse, China was forced to surrender Macao and Hong Kong for their rule for 100 years.

Wake up, the 19th century belongs to the U.K, the 20th century to the US. 21st Century belongs to China. Please give China this opportunity.

Malaysia Economy vs Malaysia Politics

The budget Malaysian Prime Minister Najib Razak delivered last week is being interpreted as the opening parry for a possible early election next year. If that's so, he'll have a lot more work to do to spur the kind of growth voters tend to reward when they head to the polls.

That will sound like an odd claim, given the government's projections. The Najib administration pegs GDP growth at 7% for this year and between 5% and 6% next year. Some analysts think those estimates may be on the low side. Exports have rebounded after the global downturn and domestic consumption is rising.

But problems lurk beneath those headline numbers. The economy ran a capital-account deficit for all but one of the past 11 years, an odd situation for a developing country that ought to be importing capital to finance growth. Portfolio investors aren't fleeing the stock market—there was a small portfolio surplus last year. Rather, direct investment, the kind that builds new factories or seeds new businesses, has been exiting since 2007. This outflow amounted to an astonishing 21% of gross fixed capital formation last year, according to the United Nations.

In other words, Malaysians think it's more profitable to invest abroad than at home. One reason is that government, not private entrepreneurship, is driving growth. Government consumption grew 107% between 2000 and 2009, while private consumption grew 78%. On the production side, government services expanded by 77% in that period, second only to the financial industry as a growth engine (83%). This has been financed with deficit spending, which will be roughly 5.5% of GDP next year.

Enter Mr. Najib. To his credit, he said Friday "the time has come for the private sector to resume its role as the engine of growth." But his budget focused mainly on attracting investment to public-private partnerships to build new public works projects, on which he'll spend 137 billion ringgit ($44 billion). That includes 40 billion ringgit for a mass transit system in Kuala Lumpur—the kind of infrastructure Malaysia needs—but also five billion ringgit on a new 100-story office tower. It's worth asking whether thrusting government into the commercial real-estate business is really the best way to let the private sector blossom.

Building the 5 billion ringgit tower is a questionable issue, do we really need such as tall tower? To Najib and PNB, they said yes "With this new landmark, we'll put Malaysia on the global map of investment community, to spur foreign direct investment (FDI)". They have the same mindset like Dubai, building Burj Dubai (The world tallest man-made building). But remember, what they have is the world tallest building, our current proposed 100 storey building is still far behind the Burj Dubai. Do we really need this expensive building to place us on the map? Does more developed countries like Singapore or even Switzerland has a world freaking tallest building to put them on the map? No. That huge sum of money which is financed from debt should be put to better use.

Meanwhile, Mr. Najib's focus on public works distracts from all the other ways Kuala Lumpur deters private investment. For instance, affirmative-action preferences for majority ethnic Malays are a stumbling block for all investors, foreign and domestic, who understand that hiring the best employees regardless of ethnicity is key to generating returns. Corruption remains a major irritant, and the politicized sodomy trial of opposition leader Anwar Ibrahim raises rule of law concerns.

Mr. Najib tries to take a few steps forward. The budget proposes making government-linked companies sell stakes in some listed companies to boost stock market liquidity. Mr. Najib also would offer three new stockbroking licenses to domestic or foreign banks. But, assuming they're even implemented, these reforms won't amount to much if they aren't backed up by much broader and deeper liberalization to set animal spirits astir. Despite other reform gestures in recent years, a "big bang" does not appear to be on the horizon.

If Mr. Najib is contemplating an early vote, he's wagering on current economic growth, his party's tightening grip on civil discourse, and the lack of viable opposition alternatives to win another victory. That might work in the short term. But investors already are voting against Mr. Najib, and if Kuala Lumpur doesn't change that, it may be only a matter of time before voters follow suit.

*Quotes and figures adapted from Wall Street Journal Asia, article modified by Hong.

Gold Gold Gold

I found this interesting survey box result from the community journal of Wall Street Journal. Even though gold is at its all time high breaking record every other day, a lot of people (73.5%) still think there's room for gold price to rise.



To me, this totally feels like a bubble, it just sounds exactly like the pre-crash of internet bubble (2001) when all internet & technology stocks are at its all time high and people still freaking think that there's plenty of room to grow.

For the case of gold, is there really a real demand for such precious metal? I don't think so, people are parking their money into gold because there's a false believe (gold bug) that gold's value is always stable rising up steadily and would not fall. That's very wrong, most recently, during the crash of 2008/2009, gold's price is so volatile that it fell to a low of less than USD 700 per ounce. Now it's over USD 1350 per ounce. That's almost a 100% rise in less than 2 years. Is that not volatile enough?

For some people, they think the US economy is so bad and the US dollar is depreciating like hell and there's no other better ways to place their money, so they dumb it into gold. And yes, that's the truth, money is flowing into commodity assets and emerging markets such as China, India, Brazil, and South east asian nations such as Singapore, Malaysia, Indonesia and Thailand.

For those that have profited from the rise of gold, it's wise to get out slowly from now. I would be selling my gold assets and probably finish selling all of them before it hits USD 1500 per ounce if it ever happens.

Crude Palm Oil

I've just opened a futures account to trade crude palm oil (CPO). I can see the bright future of palm oil industry. If you look at the agricultural history of Malaysia even before independence, there is a gradual swift from rubber tree plantation to oil palm plantation. Malaya (Under British colonization) made huge profits during the first world war by trading rubber exporting rubber to major countries of the world such as America, Japan and European countries such as Germany. Rubber is needed for manufacturing of tyres which is mass produced for military vehicles during war times. However, during second world war, due to short supply and trade war, the Japanese had invented synthetic rubber! Since then, rubber demand has fallen dramatically throughout the world. Today, it is mainly used for the manufacturing of gloves and tyres. And since then, Malaysia has shifted from a country that rely heavily on rubber plantation and mining to an industrialized country. The focus has been place into plantation of oil palm. Today, Malaysia is one of the biggest exporter of palm oil. Most of our biggest listed companies are some how directly or indirectly involved in the palm oil industry (Sime darby, IOI corporation, United plantation, Genting plantation, ...)

Palm oil can be found in many products ranging from cooking oil and biscuits to bio diesel and medical products. More research will be done on CPO and i'll write more about it in coming weeks.
Thanks