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It Looks Like Nixon Never left China

Nixon’s unfavorable historical record is due to a number of events, including his attempts at price controls. It would appear his influence from opening China remains.

From China Economic Review:

The government has been stepping up efforts to keep inflation under control lately. Premier Wen Jiabao announced a freeze on energy prices, meaning no increase in the price of oil products, natural gas and electricity. Then the NDRC said large food producers would have to get government approval if they wanted to raise prices… As Spring Festival (and its attendant price-gouging) approaches, the cabinet also toughened regulations on price manipulation, raising the maximum fine to US$137,000. And with inflation hitting an 11-year high in November, the last thing the government would want is even higher prices over the festive season.

China has been very kind to component manufacturers by providing an engine of growth over the last five years. Most of what Huawei bought was consumed domestically. If the Chinese government makes a decision to halt this growth in the name of slowing income disparity and keeping 700M peasants at bay, they won’t be too concerned about the collateral damage caused to Western chip and module companies.


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