It originally began as an email to Robert Wenzel and was later flushed out into a proper article based on conversations I’ve had with KY Leong and Mark DeWeaver.

So with apologies to Mish (whom I called out earlier), my bullishness was incorrect. I should also point out that Lew called this stupendous bubble many months ago.

With any luck, other, more media-savvy libertarians (two in particular) will also stop trying to peddle Sino-based indices to potential clients. China is not the US in 1909.

Bubble, what bubble?

One example that I highlight in the footnotes: stocks have risen 79% in Shanghai (since January) and took a 5% nose-dive two days ago when there were rumors that policy makers will “curb inflows” — to cool off the officially recognized bubble. Who knows when it will officially peak, so buyer beware…

Other bearish articles of interest:

- Notes on a real estate trip in China (Pettis)
- RMB 15 trillion in new Chinese lending, can we turn this thing off (Pettis)
- China: Bogus Boom? (AEI)
- Beijing Borrows $8.8 Billion for Financial District (Bloomberg)
- Murky world of local finance exposes holes in China’s stimulus programme (Dragon Beat)
- The Four Cheapest Plays in Emerging Markets (Barron’s)
- China warns banks over asset bubbles (Financial Times)

Here are some recent posts of interest:
- The west should heed advice from China’s bank regulators (Link)
- Is China ready to “empty the bird cage’? (Link)
- Time to stop talking of renminbi as reserve currency (Link)
- Why the crisis is good for China’s Pearl River Delta (Link)
- China’s land-rights reform is vital but not enough (Link)
- How real is the threat of social unrest from China’s army of unemployed? (Link)

There is one story that seems very discouraging: “Venture capitalists pin growth hopes on green tech” via CNet.

In the chart, notice that the semiconductor space is looking to invest the least in the coming 3 years and will in fact have the largest decrease. While that is a huge industry and should be qualified with specific niches, the belief that “Moore’s Law” will continue unabated may indeed run into an economic wall before the physical miniaturization one.

See also: The End of Technological Growth and Price Deflation?

Yea, KFC operates more than 2500 restaurants out here and McDonalds has just over 1000. In the small city I live in, there are 3 KFCs and 1 McDonalds (and several knock-offs).

Here are some case-studies discussing this growth phenomenon:
- KFC in China (IBS CDC)
- Kentucky Fried Chicken in China (Ivey Business Journal)
- KFC – ‘a foreign brand with Chinese characteristics’ (John Sexton)
- McDonald’s in China (ICMR)
- McDonald’s China takes on KFC with drive-through concept (Meat Process)

And because I went to a mini-version last week: Chinese tea culture

- Chinese group buys NT$6 bil. local Taiwan products (China Post)
- China’s Online Game Revenue Reached CNY5.514 Billion In Q1 2009 (China Tech News)
- China Goofs Off Online, We Buy Stuff (SAI)
- BitAuto: A Chinese Canary in an Online Ad Coal Mine (TechCrunch)
- Taiwan’s National Stadium gets solar panel roof (Engadget)

And three interesting biographies regarding China’s reform:
- Zhao Ziyang
- Hu Yaobang
- Liu Shaoqi

An oldie but a goodie: Crazy English: The national scramble to learn a new language before the Olympics (New Yorker)

That is zero flights for sixty year.

I remember sitting in an expat bar in Kaohsiung at the beginning of last April listening to the Belgian owner fret over the day that peaceful exchanges took place. He, along with most others, feared that the PRC would invade and blow the island up.

The very opposite has occurred.

Not only has trade expanded, but so have visitors from the mainland. From zero a week to more than 3000 a week (and now with even more liberalization, 7000+). In addition, while Taiwanese-based companies could invest on the mainland (billions have been spent erecting factories), mainlanders can now invest in the island; approximately $1.2 billion from the QFII program is predicted to flow that way this year.

As a consequence, my friends still living on the island have said everyone seems to be less frantic than a year ago. (Of course, warm feelings probably were also helped with this big purchase of LCD monitors.)

To mark the peaceful occasion, here is another photo from the March 2008 election:

This is just outside my apartment and is taken like 10 seconds before the other one I’ve shown (I lived off of Fuguo road, between Boai and Mintzu). Other election photos here and the wiki entry on the event.

Obama could really learn from this case-study on how to deal with Cuba!

See also: 5 Reasons Why the PRC will not Invade Taiwan shortly after the Olympics
Some Dusty Pictures of Taiwan