Tag Archives: China

Top Executives of China’s State Semiconductor Fund Arrested

A major state-backed investment fund in China is in shambles as several top executives have been arrested. From the MIT Technology Review:


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China’s chipmaking industry descended into chaos last week, with at least four top executives associated with a state-owned semiconductor fund arrested on corruption charges. It’s an explosive turn of events that could force the country to fundamentally rethink how it invests in chip development, according to analysts and experts. 

On July 30, China’s top anticorruption institution announced that Ding Wenwu, the chief executive of the China Integrated Circuit Industry Investment Fund, nicknamed the “Big Fund,” had been arrested for “suspected serious violations of the law.” Ding is not the only person in trouble. Two weeks ago, Lu Jun, a former executive at the Big Fund’s management institution, was also taken into custody, along with two other fund managers, according to the Chinese news outlet Caixin.

‘Made in China’

Let’s back up a bit. In 2014, China’s government created the China Integrated Circuit Industry Investment Fund (CICF) to invest in domestic chip making. Becoming self-sufficient in these critical components is a top priority of the Communist Party.

At that time, China could only make about 10% of the chips it needed. Its goal was to get to 70% by 2025.

The fund made over $30 billion in investments, with $20 billion more planned. But those investments have started to go sour.

The ‘Big Fund’ Takes Big Losses

One of its biggest investments, Tsinghua Unigroup, went bankrupt last year. Unigroup executives are under investigation and CICF’s $2 billion investment is likely up in smoke.

Riven by bad bets and likely self-dealing, CICF has failed to make China self-sufficient in chips. Today, China can only make about 20 or 30% of the chips it needs — well below target.

A Critical Moment

For China, being able to make semiconductors has never been more important. The US and its allies Taiwan, Korea and the Netherlands make virtually all the chips China imports.

The Trump Administration cut major Chinese telecom Huawei off from critical tech in 2019. Now, the US is pressuring Dutch chipmaker ASML not to sell certain chipmaking machines to China.

China is dependent on chip imports and cut off from the latest tech. Its efforts to develop its own industry have been mired in incompetence and corruption.

China’s Missed Opportunity

What should China have done differently?

Rather than giving government bureaucrats a mountain of state money to invest, use real investors!

With the right tax breaks, chipmakers and technology investors would’ve been eager to set up Chinese fabs. Perhaps TSMC would’ve built more plants in China and China would already be self-sufficient.

The Empire Strikes Back

Turns out another country is doing exactly this: the United States.

The recently passed CHIPS Act offers huge tax breaks for making semiconductors in America. Already, Intel, Samsung, and TSMC are setting up plants.

Worse yet for China, the CHIPS act bars companies that get those incentives from investing in cutting edge chipmaking in China.

I don’t think China will succeed in creating a major domestic semiconductor industry any time soon.

Its poor relations with other countries cut it off from foreign help. And China’s politicized investment climate results in little besides bankruptcies and prosecutions.

As much as we Americans complain about our government, turns out they’re actually doing a few things right.

What do you think the future holds for Chinese tech? Leave a comment at the bottom and let me know.

More on China:

Mass Protests in China as Bank Runs Continue

How China’s Tech Industry Dies

China’s Crypto Ban and the Road to Total Control

Photo: “Semiconductor factory in Shenzhen, China” by ILO in Asia and the Pacific is licensed under CC BY-NC-ND 2.0.

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Chinese Stop Paying Mortgages as Real Estate Crisis Spreads

Chinese homebuyers are refusing to pay their mortgages in a boycott that’s spreading across the country. Many fear the homes they’re paying for will never be finished.

Now, suppliers to builders are also defaulting on loans.


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From ABC News Australia:

A fast-growing mortgage boycott across dozens of cities in China has prompted some property suppliers to cease their bank loan repayments, raising fears the escalating situation could trigger a further downward spiral in the sector and even threaten the country’s financial stability. 

Hundreds of landscapers, sculpture-makers and construction companies have expressed their anger that they have been bled dry because some debt-saddled developers did not pay their bills while they continued to service or help build apartments, Chinese media Caixin reported.


Chinese usually buy homes and start making payments before they’re complete.

The boycott has spread to 90 cities in mere weeks.

The Chinese government is censoring reports on the boycott, per Bloomberg. So the situation inside China may be even worse than reported.

A real estate meltdown is a catastrophe for the average Chinese saver. Chinese put 70% of their wealth in real estate, compared to 35% in the US.

The property sector accounts for about 25% of GDP. China’s GDP growth has flatlined as the sector sputters.

And it gets worse. Chinese banks have lent huge sums to property developers.

As developers default, bank runs are spreading across China. Government thugs have beaten protesters desperately trying to recover their life’s savings.

Amid a bleak economy and constant COVID lockdowns, workers are struggling. Youth unemployment has spiked, hitting over 19% last month.

Consider the picture for the average Chinese person: most of your savings are tied up in an apartment that will never be completed, the rest is in a bank that’s insolvent, and your only child can’t find work.

Revolution might start to sound good.

In the US, we know that a property crisis fueled by heavy debt can spread quickly. Huge liabilities pop up at different institutions unpredictably.

This undermines confidence in the entire financial system. When that happens, you get a financial crisis.

That’s what China is facing today.

At stake is the legitimacy of the Chinese Communist Party. Officials have staked their power on offering ever-increasing living standards.

Those days may be over.

I can only hope that Chinese citizens prevail and oust a government that has brutalized them for generations.

More on China:

Mass Protests in China as Bank Runs Continue

Will Evergrande Spark a Global Financial Crisis?

China Is Killing its Tech Industry

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Photo: Unfinished Chinese apartment buildings being demolished in Kunming, China

Twilight of the Quick Delivery Startups

Another quick delivery startup is struggling to keep its doors open. Beijing-based Missfresh is fighting huge losses and accounting irregularities.

From a report that broke this weekend in the Financial Times:

Tiger Global-backed grocery delivery start-up Missfresh is fighting to survive as it shuts operations across China, wallows in an accounting scandal and searches for capital to sustain its business.

The upheaval marks a stark turn of fortunes for Missfresh, which pulled in more than $1bn in financing from investors such as Tiger Global and Goldman Sachs and gained a $3bn valuation in New York one year ago. Its market value has now sunk to $88mn.


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Like Gopuff, Gorillas and others, Missfresh opened warehouses of goods across cities. It promised deliveries in 30 minutes or less.

But it’s losing massive sums of money. In fact, management isn’t even sure how bad the losses are:

While Missfresh has been unable to issue audited financials or its annual report for the year to December 31, the company estimated losses last year hit Rmb3.7bn.

Missfresh isn’t the only quick delivery startup getting hammered.

Fridge No More and Buyk both shut down this spring. JOKR exited the US market and Gorillas has done huge layoffs.

Quick delivery is a notoriously difficult business. The costs of opening dark stores, acquiring customers, and paying delivery staff are staggering.

Meanwhile, the competitive market pushes companies to slash prices. The result: terrible margins.

When a startup like Missfresh charges ahead with growth at all costs, the results aren’t pretty. Even massive revenue growth doesn’t matter if the business can never make money.

Remember the old joke:

“We lose money on every sale, but we make it up in volume.”

As an angel investor, I avoid businesses like this.

Quick delivery startups are messy and hard to scale. Meanwhile, high costs and stiff competition mean razor thin margins.

I prefer a pure software business. They’re easier to scale and far more profitable.

For a quick delivery business to succeed, it must have a laser focus on unit economics. Each additional delivery must be profitable.

Otherwise, the company can never make money no matter how many deliveries it does.

Gopuff, the most successful quick delivery company in the US, is laser focused on margins.

Its gross margins, or profit on each additional delivery, are estimated at nearly 50%. That’s significantly higher than Uber’s.

The death of one quick delivery startup after another is great for Gopuff. It removes their competitors!

The carnage in this sector makes me even more attentive to unit economics in my investments. There’s no sense throwing money at business models that just don’t work.

What do you think is the future for quick delivery? Leave a comment at the bottom and let me know!

More on tech:

Did LinkedIn Just Build the Future of Work?

Are You a Venture Scale Business?

How to Write Investor Updates

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Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor.

I wrote a detailed review of Misfits here.

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Mass Protests in China as Bank Runs Continue

Major news out of China as over 1,000 protestors in Zhengzhou demanded their savings back:


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There are runs on several Chinese banks. The depositors, desperate not to lose their life’s savings, are taking great risk to speak out.

From the Indian Express:

In a rare large protest in China, over one thousand angry bank depositors, who have been protesting for access to their frozen funds, faced off with the police in Henan province leading to a violent clampdown Sunday.

Depositors of four rural banks in this central province have not been able to withdraw their funds since April. Sporadic protests have been going on since May.

Many smaller Chinese banks promised high interest rates to attract deposits. They advertised those rates on platforms run by Chinese tech giants like Baidu and JD.

Now, these small banks are finding themselves unable to pay those high rates. Worse yet, some banks have been infiltrated by criminals who are siphoning money out:

In the present case it is being alleged that these banks attracted deposits by offering attractive terms and high interest rates. A report in the South China Morning Post in May said that while Bank of China offers 2.75% a year interest on five-year deposits, the found banks in question were giving around 4.5% a year on their deposit products through third-party platforms.

Also, a statement by the Henan police on July 10 said that a criminal group had gradually taken control of several rural banks and was moving out funds.

Behind the peril facing Chinese banks is a weak economy. Intense COVID lockdowns this year have hammered economic activity.

An overheated property market is also crumbling. This has triggered defaults at major property developers, including Evergrande.

Something interesting happens when people see depositors struggling to get their money out. They start wondering about their own bank.

This is how a contagion could spread through the Chinese banking system. Cue It’s a Wonderful Life, without the happy ending.

The Chinese government’s violent repression of small savers in Zhengzhou may be just the beginning.

China is in a sensitive period. The 20th Party Congress, enormously important to the Communist elite, happens in November.

At that meeting, Xi hopes to secure a third term in office and effectively become leader for life. He and his underlings are likely to repress any “disturbance” during this time.

Already, China’s massive surveillance apparatus is being turned on these small savers.

Zhengzhou protesters have had their “health codes” turned off. Without the green QR code on their phones, they can go nowhere and do nothing.

The health code system was created to stem COVID. Predictably, it’s now being turned against dissidents.

I’m not a particularly religious man, but this Orwellian act reminded me of a passage from the Bible:

It forced all the people, small and great, rich and poor, free and slave, to be given a stamped image on their right hands or their foreheads,

so that no one could buy or sell except one who had the stamped image of the beast’s name or the number that stood for its name.

Revelation 13:16-17

I hope these decent, hardworking people will get their life’s savings back. I also hope we always resist this type of tyranny here at home.

What do you think is next in China? Leave a comment at the bottom and let me know.

More on China:

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

How China’s Tech Industry Dies

China’s Tech Crackdown Means Economic Decline

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Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Citadel Loans Supported Chinese Surveillance

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Citadel made a major loan to a Chinese surveillance company in 2006. This shadowy company, which doesn’t even appear to have a website, has sold surveillance equipment to China’s Communist government.

From a new report from Crain’s Chicago Business:

…in 2006, Citadel loaned $110 million to China Security & Surveillance Technology. The company used the funds to acquire “10 of the 50 biggest surveillance companies in China.” That has opened it to charges that it “provid(ed) much of the surveillance infrastructure for the ruling Chinese Communist Party, including technology used to alert police of possible unsanctioned protests and internet cafes to track down democracy advocates and dissidents.”

Citadel CEO Ken Griffin doesn’t seem to find the loan problematic, according to a statement he released:

“In 2006, China Security & Surveillance Technology—a company listed on the New York Stock Exchange—was raising further capital to pursue growth opportunities. CS&ST was hoping to be selected as a key partner in providing security capabilities for the 2008 Beijing Summer Olympics and the 2010 Shanghai World’s Fair to ensure those events would be safe for everyone.

So what does this company do? It appears to have gone private since Citadel’s loan, but here’s how the company described itself in an SEC annual report it filed while a public company:

We are primarily engaged, through our indirect Chinese subsidiaries, in the manufacturing, distributing, installing and servicing of surveillance and safety products, systems and services, and developing surveillance and safety related software primarily for governmental entities and their affiliates, non-profit organizations, and commercial entities in China.

In other words, the company sells surveillance gear to the Chinese government, among others. Citadel’s involvement with this business is concerning, given China’s oppressive surveillance of its population.

Ethnic and religious minorities such as Uyghur Muslims are particularly hard hit. From The Guardian:


The US has accused China of committing genocide and crimes against humanity for running a mass detention, repression and sterilization campaign against Uyghurs and other mostly Muslim ethnic minorities. Countless reports have detailed detainees enduring torture, coerced abortions as well as re-education in what former secretary of state Mike Pompeo described as the “forced assimilation and eventual erasure” of Uyghurs by the Chinese government.


The surveillance system propped up by these often global companies serves to facilitate that genocide, argues Dolkun Isaa, president of the World Uyghur Congress advocacy group.


“The goal of these surveillance tactics is not only to instill fear in Uyghurs’ minds that every aspect of their behavior is monitored, but most importantly to single out Uyghurs for detention in the internment camp system,” Isaa said.


Griffin may be right that China Security & Surveillance Technology bid on an Olympic contract. But it appears that he and his company didn’t ask any questions about what else the company does.

Citadel’s “make money now, ask questions later” attitude has also made it a target of a federal investigation here in the US.

I only hope someone holds this company accountable.

More on markets:

Citadel Under Federal Investigation

Mass Firings at Citadel Right Before Federal Probe

NYSE Investigating Shopify Stock Plunge; Citadel Involved

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Photo: Citadel LLC CEO Kenneth Griffin

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Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me.

Every fruit and vegetable is super fresh and packed with flavor.

I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy!

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Our Man in Hunan

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On a quiet block just south of bustling 42nd Street, my wife and I ducked into a doorway and disappeared.

This isn’t a spy novel. But it is an incredible lunch.

Hunan Manor in midtown Manhattan serves outstanding Chinese food firmly rooted in the traditions of the motherland. You’ll find American dishes like an excellent General Tso’s, but also traditional recipes like scallion pancakes.

We sat down today in the surprisingly spacious dining room and within minutes, our waiter brought my wife’s spicy hot and sour soup and my enticing spring roll. Biting down with a satisfying crunch, I could tell this torpedo of flavor was freshly fried.

A few minutes of conversation later, out came the entrees. For the lady: ginger shredded beef with peppers. For me: Hunan style shrimp in a thick, piquant sauce.

The shrimp were cooked perfectly. Their texture was springy and yielding, unlike the little overcooked stones so many restaurants pass off as shrimp.

But the missus’ beef stole the show. The char on the thin strips of flesh, coupled with the perfume of ginger and tender peppers, made for a perfect dish.

I found myself wishing for tortillas to put the beef in, fajitas style. It’s interesting to see how different cultures approach similar ingredients and put their unique stamp on them.

We both ordered off the lunch combo menu, which I highly recommend. Everything is between $9.50 and $12.50, and that includes rice and either soup or a crispy spring roll.

You’d be hard pressed to find a better deal in town!

There will be no blog tomorrow. I have an acting gig. 🙂

See you Thursday!

More on food:

Manhattan’s Burger Baron

The Best Mexican Food Is In…New Jersey?

Alphabet City’s Best Pizza

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been great so far.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me.

Every fruit and vegetable is super fresh and packed with flavor.

I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

China’s Crypto Ban and the Road to Total Control

You just went to a protest marking the anniversary of the Tiananmen Square massacre. You were scared, but you went. You wore a mask and took a winding route home. No one could have seen you.

You arrive home to your Hong Kong apartment and decide to check your bank account. Did the rent get deducted yet?

But when you log in, you see the balance has gone from 21,000 yuan to zero.

A notice appears to contact your local Party office.

This is the future China wants to bring about. Its tools:

1) The social credit score
2) The digital yuan
3) The banning of cryptocurrencies other than the digital yuan

Today, China banned bitcoin and all other cryptocurrencies. All, that is, except its own digital yuan, which debuted this spring.

It wasn’t hard to see this coming. China banned cryptocurrency mining earlier this year. This is part of a long term trend toward total control under Xi Jinping.

China’s government has cracked down hard on tech companies, Hong Kong dissidents, and even seemingly random targets like celebrities.

What’s next? About five years ago, China’s government created a social credit score. Any action that upsets the government, from farebeating to protesting, can have dire consequences. One may be unable to get a loan, a job, or access the internet.

After the crypto ban, the next logical step for China’s dictatorship is to ban cash and all non-digital yuan. Then, all money is electronic, traceable, and centrally controlled.

Step out of line, and your life savings could be gone.

It’s a dark, dystopian future. But I strongly suspect it’s coming.

We in the United States and the rest of the free world should guard against any such thing being done here. I will be wary of attempts to ban cryptocurrencies or cash as paving the way for similar control. Control that has no place in a democratic society.

More on China tech:

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

How China’s Tech Industry Dies

China Is Crushing One of Its Most Innovative Companies

Photo: “1984” by jason ilagan is licensed under CC BY-ND 2.0

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

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Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Will Evergrande Spark a Global Financial Crisis?

A massive Chinese property developer is teetering on the edge of bankruptcy, roiling markets worldwide today:

Worries about spreading contagion from troubles in China’s property market sent U.S. stocks toward their steepest declines in months on Monday.

The retreat came amid concerns over property developer China Evergrande Group. Market participants increasingly believe that Beijing will let Evergrande fail and inflict losses on its shareholders and bondholders. The company’s debt burden is the biggest for any publicly traded real estate management or development company in the world.


What Is Evergrande?

Evergrande is an odd company. It is one of China’s largest property developers but also has its hands in electric cars, soccer and bottled water. It has more debt than any other real estate company on the planet.

Sales have slowed in recent years, along with China’s economy. Rather than devising a new strategy or pulling back on growth, Evergrande has continued to build at a breakneck pace, earning lower and lower margins.

It’s the old “We lose money on every one, but we make it up in volume!” mistake. And as if to make things even worse, they’ve expanded to businesses they know nothing about. What unique insights does a property developer have on the bottled water market?

Risks in China

If Evergrande goes down, who’s going down with them? Probably mostly Chinese banks, as they’re the major holder of the embattled conglomerate’s debt. JP Morgan estimates that China Minsheng Bank has the largest exposure.

China Minsheng bank is an interesting company. In a banking sector dominated by state owned banks, China Minsheng was the first bank mostly owned by the private sector.

In a moment when Xi is trying to centralize the economy and promote state owned business, he could let it fail. The state owned banks could pick up the pieces, cementing their position.

But if a massive property developer like Evergrande fails, perhaps taking some major banks along with them, the Chinese financial system could be badly shaken.

Add this to crackdowns on numerous tech companies and even seemingly random targets like celebrities, and I could see a crisis in confidence in Chinese markets.

They’re already weak:

What About the US?

I think US markets are overreacting today. The institutions with heavy exposure to Evergrande appear to be mostly Chinese, not American. Moreover, trade with China is just 6% of US exports.

In all, I could see China’s economy and markets taking a significant hit, but I think the damage will be contained.

Investors in China, good luck.

More on China:

How China’s Tech Industry Dies

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

China’s Tech Crackdown Means Economic Decline

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

NYC’s Best Chinese Noodles

A wiry young man takes a small baton of dough from a tub. He flattens it and gives it a little stretch. Then, he quickly yanks it out to a length of several feet and dramatically slaps it back down. Whack, whack!

This is Very Fresh Noodles in New York City. Found inside the cavernous Chelsea Market, it’s served chewy, hand pulled noodles to drooling patrons since 2016.

I visited last Friday with my wife. I pretended to pore over the menu, but I knew what my stomach really needed: La Mei Taiwanese Beef Noodle Soup.

The bowl was soon in front of me, steaming and filled to the brim. Just picking up the noodles with your chopsticks will whet your appetite. They’re thick, luscious, and glistening from the broth.

I greedily shoveled them into my mouth. The texture and flavor were perfect. The soup was aromatic and spicy, tasting of star anise. The beef is rich, incredibly tender, and falls apart in your mouth. At first I looked for extra chili oil, but soon realized I didn’t need it. These spices have a delayed reaction!

Very Fresh Noodles also has a scorching Dan Dan Mian and numerous vegetarian dishes, including the toothsome mock duck my wife ordered. There is counter seating inside and lots more comfortable seats along the sidewalk, some covered.

I’ve never had better Chinese noodles. If you’re in the area, give it a try!

Have a great Labor Day weekend everyone!

More on food:

The Best Bakery in NYC (It’s Not Levain)

The Best Mexican Food Is In…New Jersey?

NJ’s Best Apple Cider Donut

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Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

China’s government has just launched the latest salvo against its own technology industry:

China on Monday issued strict new measures aimed at curbing what authorities describe as youth videogame addiction, which they blame for a host of societal ills, including distracting young people from school and family responsibilities.

The new regulation, unveiled by the National Press and Publication Administration, will ban minors, defined as those under 18 years of age, from playing online videogames entirely between Monday and Thursday. On the other three days of the week, and on public holidays, they will be only permitted to play between 8 p.m. and 9 p.m.

This is likely to have a substantial effect on major Chinese tech companies like Tencent and NetEase, leaders in videogames. The new regulation is the latest development in a crackdown on companies in ride sharing, food delivery, educational tech, and more.

I see two major issues with this crackdown:

Economy

If you can have your business regulated out of existence at any time, you might not start one. And if you do, it will be a lot harder to attract investors.

Tech companies rely on venture capital to grow. That funding is already beginning to dry up. No wonder the number of Chinese companies reaching $1 billion valuation (“unicorns”) is falling off a cliff:

I invest in American startups regularly. There is zero possibility I’d invest in a Chinese one. The odds of the government one day deciding your industry is bad for “social stability” are just too high.

Without capital, Chinese tech companies will wither.

Society

Imagine the U.S. government telling you, “Sorry Timmy, you can only play video games from 8 to 9pm on weekends. Oh, 7 is better for you? Well too bad.”

In the context of a free society, this is unthinkable. In China, the government is taking on the role of a parent. It’s another step to totalitarianism, where the government controls all aspects of life.

And China’s crackdown goes way beyond tech:

Zhao Wei, one of China’s most prominent actresses, saw her presence mostly scrubbed from the country’s internet overnight. Her fan page on Weibo, China’s heavily censored version of Twitter, was shut down. Movies and television shows she starred in — some going as far back as two decades ago — were taken off streaming platforms, with her name also removed from the cast lists.

On Chinese social media, some comments said the crackdown was reminiscent of the Cultural Revolution, a decade of political and social turmoil between 1966 and 1976 during which arts and culture were restricted to promoting party propaganda.

It was not immediately clear why Zhao was targeted.

The message from Xi Jinping is clear: he wants the people quiet and obedient. Anyone who stands out for any reason, be it an actress or a tech tycoon like Jack Ma, will be dealt with.

If you’re in China now, I urge you to emigrate. This will not end well.

More on China and tech:

China’s Tech Crackdown Means Economic Decline

China Is Crushing One of Its Most Innovative Companies

How China’s Tech Industry Dies

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Photo: “Chinese Soldiers in The Forbidden City – Beijing, China” by Patrick Rodwell is licensed under CC BY-NC-ND 2.0

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order.