PRC Economy - New Reflections : Dec 15 2011

All threads that are locked or marked for deletion will be moved to this forum. The topics will be cleared from this archive on the 1st and 16th of each month.
wrdos
BRFite
Posts: 312
Joined: 26 Feb 2004 12:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 30 Dec 2011 06:35

It is simply laughable to compare 1990 Japan with 2011 China.

Japan's population was/is only 1/10 of China. 1990 Japan was a nation with a per capita GDP at the top of world, almost 1.5 times of America at that time. To say, it was already at the peak, so almost no further space left.

The current China is in fact more like Japan in the end of 1960s and early 1970s. Expanding heavy industry sector, increasing urban population, building brand names....... and everyday at least one of your neighbors/colleagues/relatives buying a new and first car.

At the bad side, serious environmental problems, killing traffic accidents and unsatisfying youths.

pankajs wrote:
There are other similarities between China and Japan
1. Export driven economies
2. large trade surpluses
3. Huge foreign reserves
4. Aging population
5. High rate of savings

It is way too early to talk of US recovery. The above is not to say that China will definitely go the Japan way but the Japanese case is definitely worth remembering with respect to any asset price bubble, be it in China or India or Ireland.

paramu
BRFite
Posts: 669
Joined: 20 May 2008 11:38

Re: PRC Economy - New Reflections : Dec 15 2011

Postby paramu » 30 Dec 2011 06:57

wrdos wrote:Japan's population was/is only 1/10 of China. 1990 Japan was a nation with a per capita GDP at the top of world, almost 1.5 times of America at that time. To say, it was already at the peak, so almost no further space left.

You are only partially correct in your analysis. Japan started coming down when its demography started falling, and PRC is facing the same problem without really achieving what Japanese achieved. Unfortunately, it is going to be much harsher for average Chinese.

rohitvats
BR Mainsite Crew
Posts: 7745
Joined: 08 Sep 2005 18:24
Location: Jatland

Re: PRC Economy - New Reflections : Dec 15 2011

Postby rohitvats » 30 Dec 2011 16:12

On the Chinese RE Bubble, based on reading on the net, couple of points stand out -

1. There has been a hell lot of speculative development i.e. somewhere, the end-user has been substituted by the investor segment. In any residential RE market, the long term stability is proportional to the ratio of end-users to investors. Large end-user driven demand is more consistent and leads to price-stability. 93' crash in Mumbai and 97' crash in Bangalore are examples of investor driven market.

2. The massive -ve movement in the residential prices indicates two possible things - (a) the prices have been inflated to such extent that the affordability of the end-users has been breached. Hence, fall off in demand. (b) Even the investors are shying from the market (because he has no one to sell off - the greater fool theory has kicked in) and hence, at the end of the day, the demand has slowed down.

3. Either of the two above cases re-inforces the point 1 - that there is gross oversupply in the market. One american study, quoting Chinese professor, puts the figure at ~65million vacant homes.

4. The -ve movement in the prices also indicates a deeper problem - the inflated value of land. If I understand correctly, the land is obtained through auctions by the Local Government. Which basically means that given the high price of land, the land has to be used immediately. This further means that the developer is under pressure as his capital is stuck and he needs to move the stock. Compare this to situation in India where the land banks have been accumulated at dirt-cheap prices (mostly). The main capital is required only for construction and with residential development being a self-financing model, most of the times, only working capital for intial phases is required. I don't know about construction loand tenures in China but in India, for residential segment, the door-to-door period is not more than 5years (2 for contruction and 2-3 years for repayment).

5. Now comes the real kick in the nuts - As per the some reports I've read, the revenue from land market has reached 30%-40% of budgetary revenue of local governments. And as abcc explained earlier, the local governments are hooked into the revenue from land system. Therefore, COMMUNIST CHINESE GOVERNMENT - needs to ensure that land prices stay high. What an irony!!! And again, as per public data, the share of State Owned Enterprises (SOE) (more central and less local) in the land bought in auctions has increased over the last couple of years. And not only that - SOE have ended up paying on an average 27% higher price for land than the market. Now, while this land may not end up in the market as residential supply, it helps to keep the market at artificially high level. And we have a circular loop - money being transferred from one department to the other.

6. So, what we're seeing is massive imperfection being built into the system and an attempt to delay the inevitable - that is, a massive fall in the RE prices - aka - bursting of RE Bubble. Irrespective of the land prices, the prices of built-up space will inevitably come down - otherwise there is no way there will be movement in the stock and builder will be left holding the lemon. Remember, he bought the land at current prices and needs to sell. And sell fast. his holding capacity is likely to be low. Which further means that banks who've lend to the private sectors are also holding lemons - in India, if push comes to shove, the banks will force the developers to clear inventory so that the debt obligations are met. And then, there is also the securitization law.

I have nary a doubt that Chinese RE market is going to crash - the CPC is simply trying to prevent the inevitable or somehow manage the crash landing.

Singha
BRF Oldie
Posts: 66601
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Singha » 30 Dec 2011 16:36

> If I understand correctly, the land is obtained through auctions by the Local Government. Which basically means that given the high price of land, the land has to be used immediately. This further means that the developer is under pressure as his capital is stuck and he needs to move the stock.

I think you are wrong there. the land is grabbed from the farmers by the local Govt by paying some pittance. now the local govt and builders are in bed together (as in India) but diff is that nobody can have legal recourse against them in any format. the local govt leaders may on paper show the developer as having gone through a fair auction but reality maybe they hold some stake in the developer or profit share.

so the land need not be used immediately unless buyers are lining up. it will never be given back to the farmers even if it lies unused for 20 yrs. eventually when demand rises it will be used.

banks have advanced money to developers but being state owned they are always recapitalized with the high savings of depositors. their NPAs are always kept under rug via Govt approval.

its the 'investors' both local and non resident who will lose their shirts now having bought high but nobody to flip it over to or even rent it out to.

bottomline imo - as long as China runs a healthy trade surplus there is always extra 'real' money being added to the economy every month, and some of it gets deposited in banks who use it to help the party & developer run projects. as long as the money keeps rolling in, they can keep on doing this...no matter of the ROI on such projects be very low at present...atleast it keeps millions of jobs in construction sector going.

abhischekcc
BRF Oldie
Posts: 4277
Joined: 12 Jul 1999 11:31
Location: If I can’t move the gods, I’ll stir up hell
Contact:

Re: PRC Economy - New Reflections : Dec 15 2011

Postby abhischekcc » 30 Dec 2011 17:04

Rohit,

The 93 crash of Mumbai may have been because of the glut caused by the forcible occupation of land, which was taken away from the poor under the guise of communal riots in the aftermath of the RJBM demolition.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 30 Dec 2011 17:13

Singha wrote:bottomline imo - as long as China runs a healthy trade surplus there is always extra 'real' money being added to the economy every month, and some of it gets deposited in banks who use it to help the party & developer run projects. as long as the money keeps rolling in, they can keep on doing this...no matter of the ROI on such projects be very low at present...atleast it keeps millions of jobs in construction sector going.

The Surplus is no longer guaranteed and is the reason for all the talk about charting a new course and the stress on fiscal policy to spur domestic demand.

China may post trade deficit next year: adviser
(Reuters) - China's trade balance faces the risk of sliding into a deficit for the first time in two decades in 2012 as export demand in Europe and the United States slumps, an academic adviser to the central bank said on Tuesday.

China needs a "very proactive" fiscal policy to spur domestic demand next year amid weakness in Western economies, Xia Bin told Reuters in an interview late on Monday during a visit to Taipei to promote his new book.

But he also said that the world's No.2 economy will not loosen monetary policy, which he said now has "about the right tone."

"The U.S. economy won't be good next year and Europe will be worse, meaning weak external demand for China. We can't rule out the possibility of a trade deficit," Xia said.

"To increase domestic demand, fiscal policy must be very proactive, reform of the tax system should be speeded up and wages raised to stimulate consumption," he added. He did not give a forecast for any deficit.

Xia, head of the financial research institute at cabinet think tank Development Research Center, sits on the 15-member monetary policy committee of the central bank but does not have real influence on key decisions on interest rates or China's yuan currency.

The People's Bank of China has loosened credit conditions recently to help small firms and promised to "fine-tune" policy if needed to support economic growth, which slowed in the third quarter to 9.1 percent, its weakest in more than two years.

rohitvats
BR Mainsite Crew
Posts: 7745
Joined: 08 Sep 2005 18:24
Location: Jatland

Re: PRC Economy - New Reflections : Dec 15 2011

Postby rohitvats » 30 Dec 2011 17:33

Singha wrote:> If I understand correctly, the land is obtained through auctions by the Local Government. Which basically means that given the high price of land, the land has to be used immediately. This further means that the developer is under pressure as his capital is stuck and he needs to move the stock.

I think you are wrong there. the land is grabbed from the farmers by the local Govt by paying some pittance. <SNIP>.


Nope. All the land belongs to the government. Indivisuals and developers are leased land on long term basis and during this period, can do anything with the property. The developers take land from the Local Governments through auction. This has been practice since 2004. And now, when the private segment has reduced participation, the Central government owned enterprises have starting picking up land. This is another way of sustaining artificial price levels.

rohitvats
BR Mainsite Crew
Posts: 7745
Joined: 08 Sep 2005 18:24
Location: Jatland

Re: PRC Economy - New Reflections : Dec 15 2011

Postby rohitvats » 30 Dec 2011 17:35

abhischekcc wrote:Rohit,

The 93 crash of Mumbai may have been because of the glut caused by the forcible occupation of land, which was taken away from the poor under the guise of communal riots in the aftermath of the RJBM demolition.


Nope. It was a classic case of investors being more than the end-users. Remember, this timed with the movement in the BSE and subsequent crash.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 30 Dec 2011 18:38

rohitvats wrote:2. The massive -ve movement in the residential prices indicates two possible things - (a) the prices have been inflated to such extent that the affordability of the end-users has been breached. Hence, fall off in demand. (b) Even the investors are shying from the market (because he has no one to sell off - the greater fool theory has kicked in) and hence, at the end of the day, the demand has slowed down.
(c) Easy Credit is the prime reason for the run up in prices and the crash that follows.

1. In case of the US, the bust was linked to the so called "sub-prime mortgage" not without reason. Easy credit by another name.
2. In China, if you look at the link titled "Abandoning GDP fixation", the Chinese government source admits the following "The lion's share of this flood of fluidity {Easy Credit} has gone to the property market and virtual economy rather than the country's real economy, such as agriculture and small and medium-sized enterprises."
3. In Japan's case, from wikipedia article titled "Japanese asset price bubble" "Some economists, such as Paul Krugman, have argued that Japan fell into a liquidity trap {Easy Credit} during these years."

When easy credit is available, speculators rush in where angels fear to tread and bubble in stock and property follows most naturally. It is reason the Chinese have said "Despite being encircled by a treacherous external economic environment, the country has shown more determination than ever to shy away from any enormous economic stimulus packages". Lets us see if it is able to hold the line.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 30 Dec 2011 19:58

An oldish article but worth reading ...

China 'faces subprime credit bubble crisis'
Monetary tightening in China threatens to pop the $1.7 trillion (£1.07 trillion) credit bubble in local government finance and expose the country's simmering "subprime" crisis, according to the Communist Party's economic guru.
Cheng Siwei, head of Beijing's International Finance Forum and a former deputy speaker of the People's Congress, said interest rate rises and credit curbs to cool overheating were inflicting real pain on thousands of companies used by local party bosses to fund the construction boom.
The local governments depend on land sales for 40pc of their revenue so the process has become incestuous and self-feeding. Such reliance on property sales revenues has greatly aggravated the post-bubble crisis in Ireland.
Mr Cheng said China is entering a "very tough period" as growth runs into the inflation buffers, threatening the sort of incipient stagflation seen in the West in the 1970s and leaving the central bank with an unpleasant choice. "The inflation rate and the growth rate are conflicting with each other: it is very troubling," he said, describing what is known to economists as the Phillips Curve dilemma.

rohitvats
BR Mainsite Crew
Posts: 7745
Joined: 08 Sep 2005 18:24
Location: Jatland

Re: PRC Economy - New Reflections : Dec 15 2011

Postby rohitvats » 30 Dec 2011 20:27

^^^True. Ideal response in an inflationary economy would be to curb the lending rate and ensure that a bubble does not arise. And keep a watch-out on those loans to the developers. Something the RBI did. Another important point - the banks do not lend to acquire the land. But Chinese central bank doing this will lead to lowering of demand by end-users--->low demand for land-->No revenue to the local authorities. Plus, the prices will crash. All in all, Chinese are caught in the maya onleeeeee.

satya
BRFite
Posts: 718
Joined: 19 Jan 2005 03:09

Re: PRC Economy - New Reflections : Dec 15 2011

Postby satya » 30 Dec 2011 21:28

Two issues regarding PRC's RE sector : one is debt payment on this Lalaji says no problem PRC can manage with able Shanghai accountants doing what they do best with directives from Beijing . :mrgreen:

Bigger question is future stream of revenue as per general information available via open sources RE sector in selling -building-leasing -tax forms a substantial part with estimates ranging from 20-40% of local government's revenue. So with what they plan to replace this loss of revenue with what's the alternative ? Sure Beijing can help but not annually . Lalaji says this is million RMB question .


IIRC in Haryana during late Ch.Bansilal's regime in 1997 there was a financial crisis of sort when prohibition was enforced that led to substantial loss of revenue & Government had to dig in the developments reserve fund of HUDA( state owned urban development agency ) & that too worked for mere 2-3 months before there was almost complete dry up of state funded infrastructure projects. But senses came back & prohibition was lifted apart from fund tht came as part of GoI's VRS followed by introduction of VAT 2 or so years later.

Thing is there's no way Beijing can regularly contribute 20-40% of local governing bodies budget regularly without i dont know cloud based accounting originating in Shanghai :rotfl:

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 30 Dec 2011 22:45

China's Shaky Economic Foundation

Two weeks ago peasants in Wukan, a fishing village in the prosperous southern Chinese province of Guangdong, took over their village, throwing out local leaders. Because of long unanswered grievances, they risked their lives, barricading roads into the village and facing down the police. Their central concern was the sale of collectively owned village land to property developers, which has impoverished most residents while enriching their leaders.
China’s rural population is at the bottom of the global commodity chains of both Chinese and transnational corporations. Unhindered by regulations, these companies utilize China’s land and rural labor for the environmentally and socially unsustainable production of goods consumed the world over. While consumers everywhere benefit from inexpensive products and corporate profits, the real costs are borne by China’s most vulnerable.
The Wukan incident reveals the shaky foundation of China’s rise to economic super power: it is built upon an unresolved land struggle with hundreds of millions of lives in the balance. Anything that negatively alters the quality of life of China’s rural majority has the potential to impact the already fragile global economy, sending ripples across the world.

As I have seen first-hand during nearly 30 years of research in rural China, land grabs have been central to China’s economic “miracle.” Local governments take over land for real estate development, industrial expansion, roads, dams and power plants.

Having government and party connections to get a hold of prime real estate in urban cores and suburban fringes has enabled massive fortunes in property development. Eight out of China’s top 10 billionaires made their fortunes through land grabs.

Similar land grabs have occurred in China’s rural hinterlands where there is little oversight by the central government. Of the 1.1 million hectares taken away in 2011, according to China’s State Council, 700,000 were transferred illegally. The result is the complete loss of land for approximately 75 million peasants, who join the over 200 million rural residents migrating around China daily in search of work.
Land grabs are part and parcel of growing social inequality in China. Despite increasingly strong populist rhetoric from the government, along with significant rural investment to counter rising discontent, China today rivals the most unequal countries in the world. The 400 million Chinese at the bottom face continual threats to their livelihoods through land loss.

Beijing’s success in quelling daily unrest around the country, mainly through the use of local officials as scapegoats, fails to address the fundamental problem: a development path built on an eroding foundation of unjust land grabs, environmental destruction, social polarization and the resulting vulnerability of the country’s poorest and most marginal people. Until these structural issues are addressed, the Wukan incident will only be a harbinger of things to come.

zlin
BRFite
Posts: 178
Joined: 07 Aug 2003 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby zlin » 31 Dec 2011 09:58

Beijing's subway – a victim of its success?
By Brian Salter (chinadaily.com.cn)

By any measure, Beijing’s Subway system is an impressive feat of engineering, with its 14 lines, 172 stations and 336 kms of track in operation. It first opened in 1969 and is the oldest subway on the Chinese mainland, and the second in length after the Shanghai Metro.

Small wonder, though, that with 1.8 billion rides recorded in 2010, and with a single-day record of 7.57 million rides in September this year, you'll be very lucky to find a seat at almost any time of day, while in rush hours you regularly have to fight just to get into a carriage.

...
t particularly makes Beijing's system stand out from the crowd, though, is the cheapness of its fares. At only two yuan for any journey, regardless of the distance covered, surely no one can really complain about the level of overcrowding. A distance that I regularly travel in Beijing for that measly two quai would cost the equivalent of RMB40 in London, RMB30 in Hong Kong and RMB25 in Paris.

So despite its rapid expansion, accelerated by the Chinese government's ¥4 trillion economic stimulus package, the existing network is hard pressed to adequately meet the city's mass transit needs. Already there are plans to have 19 lines and over 660 km of track in operation by 2015 which will surely go a long way to improving the lot of the everyday commuter.

zlin
BRFite
Posts: 178
Joined: 07 Aug 2003 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby zlin » 31 Dec 2011 10:02

China shifts FDI focus to hi-tech areas

30 December 2011


China has reshuffled a list of key sectors where it wants to attract foreign investment, as FDI inflows showed signs of a decline for the first time last month.

China's National Development and Reform Commission and ministry of commerce issued a joint statement on Thursday downgrading traditional industries and putting more emphasis in emerging fields such as new energy sources.

The commission, China's top economic planning agency, publishes a "foreign investment catalogue" every few years that divides investment into broad categories: encouraged, allowed, and restricted.

The latest guidelines seek to promote foreign investment in energy-saving and environment-friendly technologies, new-generation information technology, biotechnology, high-end equipment manufacturing, alternative energy, advanced materials and alternative fuel cars.

The guidelines will come into effect on 30 January 2012.
China will cut down restrictions on foreign investment by allowing overseas players to invest in more sectors while lifting caps on the proportion of foreign capital in some sectors.

The new guidelines said the government would continue to welcome foreign investors in high-end manufacturing and modern service industries. It also encourages them to invest in recycling industries.

However, the government will withdraw support for foreign capital in auto manufacturing in order to encourage local manufacturing.

It will also not support foreign investment in the polycrystalline silicon and coal chemical sectors over concerns of industrial overcapacity and overheated construction activity, according to the guidelines.

In the light of regional development gaps, the government will roll out a fine-tuned policy for the central and western regions in the future, the report said.

zlin
BRFite
Posts: 178
Joined: 07 Aug 2003 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby zlin » 31 Dec 2011 10:14

Real sound artical by Roach: Why India is riskier than China

By Stephen S. Roach, Project Syndicate

Today, fears are growing that China and India are about to be the next victims of the ongoing global economic carnage. This would have enormous consequences. Asia’s developing and newly industrialized economies grew at an 8.5% average annual rate over 2010-11 – nearly triple the 3% growth elsewhere in the world. If China and India are next to fall, Asia would be at risk, and it would be hard to avoid a global recession.

In one important sense, these concerns are understandable: both economies depend heavily on the broader global climate. China is sensitive to downside risks to external demand – more relevant than ever since crisis-torn Europe and the United States collectively accounted for 38% of total exports in 2010. But India, with its large current-account deficit and external funding needs, is more exposed to tough conditions in global financial markets.

Yet fears of hard landings for both economies are overblown, especially regarding China. Yes, China is paying a price for aggressive economic stimulus undertaken in the depths of the subprime crisis. The banking system funded the bulk of the additional spending, and thus is exposed to any deterioration in credit quality that may have arisen from such efforts. There are also concerns about frothy property markets and mounting inflation.

While none of these problems should be minimized, they are unlikely to trigger a hard landing. Long fixated on stability, Chinese policymakers have been quick to take preemptive action.

That is particularly evident in Chinese officials’ successful campaign against inflation.
Administrative measures in the agricultural sector, aimed at alleviating supply bottlenecks for pork, cooking oil, fresh vegetables, and fertilizer, have pushed food-price inflation lower. This is the main reason why the headline consumer inflation rate receded from 6.5% in July 2011 to 4.2% in November.

Meanwhile, the People’s Bank of China, which hiked benchmark one-year lending rates five times in the 12 months ending this October, to 6.5%, now has plenty of scope for monetary easing should economic conditions deteriorate. The same is true with mandatory reserves in the banking sector, where the government has already pruned 50 basis points off the record 21.5% required-reserve ratio. Relatively small fiscal deficits – only around 2% of GDP in 2010 – leave China with an added dimension of policy flexibility should circumstances dictate.

Nor has China been passive with respect to mounting speculative excesses in residential property. In April 2010, it implemented tough new regulations, raising down-payments from 20% to 30% for a first home, to 50% for a second residence, and to 100% for purchases of three or more units. This strategy appears to be working. In November, house prices declined in 49 of the 70 cities that China monitors monthly.

Moreover, it is a serious exaggeration to claim, as many do today, that the Chinese economy is one massive real-estate bubble. Yes, total fixed investment is approaching an unprecedented 50% of GDP, but residential and nonresidential real estate, combined, accounts for only 15-20% of that – no more than 10% of the overall economy. In terms of floor space, residential construction accounts for half of China’s real-estate investment. Identifying the share of residential real estate that goes to private developers in the dozen or so first-tier cities (which account for most of the Chinese property market’s fizz) suggests that less than 1% of GDP would be at risk in the event of a housing-market collapse – not exactly a recipe for a hard landing.

As for Chinese banks, the main problem appears to be exposure to ballooning local-government debt, which, according to the government, totaled $1.7 trillion (roughly 30% of GDP) at the end of 2010. Approximately half of this debt was on their books prior to the crisis.

Some of the new debt that resulted from the stimulus could well end up being impaired, but ongoing urbanization – around 15-20 million people per year move to cities – provides enormous support on the demand side for investment in infrastructure development and residential and commercial construction. That tempers the risks to credit quality and, along with relatively low loan-to-deposit ratios of around 65%, should cushion the Chinese banking system.

India is more problematic. As the only economy in Asia with a current-account deficit, its external funding problems can hardly be taken lightly. Like China, India’s economic-growth momentum is ebbing. But unlike China, the downshift is more pronounced – GDP growth fell through the 7% threshold in the third calendar-year quarter of 2011, and annual industrial output actually fell by 5.1% in October.

But the real problem is that, in contrast to China, Indian authorities have far less policy leeway. For starters, the rupee is in near free-fall. That means that the Reserve Bank of India – which has hiked its benchmark policy rate 13 times since the start of 2010 to deal with a still-serious inflation problem – can ill afford to ease monetary policy. Moreover, an outsize consolidated government budget deficit of around 9% of GDP limits India’s fiscal-policy discretion.

While China is in better shape than India, neither economy is likely to implode on its own. It would take another shock to trigger a hard landing in Asia.

One obvious possibility today would be a disruptive breakup of the European Monetary Union. In that case, both China and India, like most of the world’s economies, could find themselves in serious difficulty – with an outright contraction of Chinese exports, as in late 2008 and early 2009, and heightened external funding pressures for India.

While I remain a euro-skeptic, I believe that the political will to advance European integration will prevail. Consequently, I attach a low probability to the currency union’s disintegration. Barring such a worst-case outcome for Europe, the odds of a hard landing in either India or China should remain low.

Seduced by the political economy of false prosperity, the West has squandered its might. Driven by strategy and stability, Asia has built on its newfound strength. But now it must reinvent itself. Japanese-like stagnation in the developed world is challenging externally dependent Asia to shift its focus to internal demand. Downside pressures currently squeezing China and India underscore that challenge. Asia’s defining moment could be hand.

The views expressed in this article are solely those of Stephen Roach.

Klaus
BRF Oldie
Posts: 2168
Joined: 13 Dec 2009 12:28
Location: Cicero Avenue

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Klaus » 31 Dec 2011 13:06

satya wrote:Two issues regarding PRC's RE sector : one is debt payment on this Lalaji says no problem PRC can manage with able Shanghai accountants doing what they do best with directives from Beijing . :mrgreen:


Could you please elaborate on Lalaji?

Singha
BRF Oldie
Posts: 66601
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Singha » 31 Dec 2011 14:28

http://online.wsj.com/article/SB1000142 ... SecondNews

it seems they are trying to shift to building lots of low cost housing, owned by the local Govt but rented to migrant workers to tide over the slowdown in high end housing starts.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 31 Dec 2011 14:53

Singha wrote:http://online.wsj.com/article/SB10001424052970203430404577094233524538406.html?mod=WSJINDIA_hpp_MIDDLESecondNews

it seems they are trying to shift to building lots of low cost housing, owned by the local Govt but rented to migrant workers to tide over the slowdown in high end housing starts.

From the above article
One of the biggest public-housing projects in history will help determine whether China can remake its real-estate sector fast enough to prevent its economy from flaming out.

China is in the midst of a crash program to build 36 million subsidized apartments by the end of 2015—enough units to house the entire population of Germany. The goal is twofold: to head off social unrest by ensuring decent places to live for low-wage workers, but also to cushion an expected fall in high-end construction—the result of policies to tame property speculation—by ramping up construction at the low end: so-called social housing.

But critics argue that Beijing is mismanaging the social-housing effort. While the central government set the housing goal, it has largely left the implementation and financing to local governments, which get much of their revenue by selling land to developers for luxury apartments, not low-profit housing.

There is widespread suspicion that Chinese municipalities are inflating the number of apartments they are building, or relabeling projects already under construction as social housing. In November, for instance, the Ministry of Housing said work on foundations was sufficient to qualify as "housing starts," prompting derision that it was counting holes in the ground. Of 30 developers surveyed by Standard Chartered Bank, 21 said that less than 30% of the social housing being built was actually new construction.

The social-housing project may also lead to bad loans a few year's down the road. "The lion's share of the funding comes from the [state-owned] banking system," said He Fan, an economist at the Chinese Academy of Social Sciences. While apartment sales may turn a profit, rental properties probably won't, which "will be a heavy burden for banks," he said. He compares the program to "highways in the desert," which he claims some local governments have built to meet highway-construction targets.
Rosealea Yao, a real-estate specialist at Dragonomics Research in Beijing, is skeptical that projects in the deep suburbs will generate enough revenue to cover the interest on the loans taken out to build them, producing a drain on the city's budget for years to come. Many of the apartments are too small, she adds, to convince migrants to bring their families to live with them, making them little more than nicer versions of migrant dormitories.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 31 Dec 2011 15:18

zlin wrote:Real sound artical by Roach: Why India is riskier than China

By Stephen S. Roach, Project Syndicate
One obvious possibility today would be a disruptive breakup of the European Monetary Union. In that case, both China and India, like most of the world’s economies, could find themselves in serious difficulty– with an outright contraction of Chinese exports, as in late 2008 and early 2009, and heightened external funding pressures for India.

The above to me is the gist of the whole article. Indeed, if EMU where to breakup, almost the whole of the globe would suffer. To the specific question raised in the article about the risk inherent in Indian vs Chinese economy based on exports (Market) and external funding (Investment/Capital), I would only ask myself a simple question.

If the tomorrow all exchange between economies of the world where to cease who would be better off between India and China? The answer I believe is whoever is less dependent on the outside for both Market and Investment/Capital would come out better though both would suffer tremendously.

On both counts, given the data available, India would be better off. It depends less on exports and it needs much less FDI to generate growth.

I am no economist and these are just my ramblings.

VikramS
BRFite
Posts: 1879
Joined: 21 Apr 2002 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 31 Dec 2011 15:32

Stephen Roach needs to be taken with a pinch of salt. He is as "Wall St Establishment", the 1%, as it gets. These guys have made big bets on China while they have essentially been kept out of India.

With the current impasse about keeping US retailers out, you will see a lot more of such articles critical of India from the establishment. And if the retail bill passes the few billions of FDI which it brings in will be seen as the panacea for the Indian economy, with the same fat cats all gung-ho about India vs China.

And was not too long ago labelled as the "Alan Greenspan of China" due to his faith in debt fueled economic growth in China and the CPCs ability to manage the economy.
http://blogs.wsj.com/economics/2010/07/ ... -of-china/


A current-account or a "funding crisis" is primarily a liquidity issue. When India faced a funding crisis in 1998 after PK-II, she was able to mop up billions in weeks from overseas Indians. And if and when there is a fallout in Europe, trust the Central Bankers all over the world to open the liquidity spigots like there is no tomorrow.

A weaker INR is good for Indian exporters, and local industry and will also force more investment in energy efficient infrastructure. There are already murmers of devaluing the Yuan since being tied to the USD has meant that it has effectively appreciated against everyone. There is going to be short-term pain here for sure though.

A bad-debt cycle on the other hand is a secular change. While Roach acknowledges the effect of bubble collapse in the hot property market, he dismisses its consequences because its percentage of the total investment is low (10% of the overall economy, which he translates to 1% lower GDP). While he acknowledges that fixed investment at 50% of the GDP is unprecedented, he fails to talk about is whether the debt used to finance that investment ever be recovered, or whether that fixed investment too will go down.

There is massive over-investment in many aspects of the Chinese economy primarily related to the infrastructure; this is going to have a deflationary impact as all that excess capacity is bought into use. And this time around, the export engine, will have a significantly harder time filling up this gap.

Rapid urbanization is (15-20 million a year) is being touted as the redeeming factor but no one talks about the buying power of these new urban residents. The purchasing power of these new city-dwellers is often an order of magnitude lower than the neo-rich. OTOH, the cash-flow projections used to finance the projects is much higher, and unlikely to be sustained by the paying power of the new urbanites.

That mis-match between what has been spent to develop the infrastucture (cost increased due to a weaker Yuan) and what can be recovered is the crux of the matter.

The good thing for China, and the rest of the world is that the debt owned by quasi-state entities can be rolled over and glossed over for a long long time. The pain can be spread over decades. So I do agree with him that the risk of a "hard landing" is perhaps overblown. It is going to be a slow glide down.

The big challenge to India of course is political. She has a lame-duck central government which has lost its credibility with almost everybody and they are now desperate to pamper their core constituency with NAC inspired sops like NREGA/Food subsidy/Saffron Terror bills. The loyalties of the ruling clan is uncertain, and the amount of graft in the system is immense.

On the other hand, with the role of state being minimal, state governments can continue to follow policies which encourage growth, and drive development. Whether it is Bihar where the voters finally got sick of the vote-bank politics, or Gujarat where dynamic leadership is paving the way, there are clear pockets illustrating what is feasible if there is a will.

We clearly are living in interesting times. Hope the New Year is peaceful and lead to better lives for the billions living in China and India.
Last edited by VikramS on 31 Dec 2011 15:47, edited 2 times in total.

Abhijeet
BRFite
Posts: 805
Joined: 11 Nov 2001 12:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Abhijeet » 31 Dec 2011 15:40

The probability of all trading between economies ceasing tomorrow is pretty much zero, so thinking about what would happen in that case is not useful. The most isolated tribes in Africa might not be affected at all, but that doesn't mean that India should become as isolated as them.

A more useful question might be about what is the "expectation" (or expected value) of the effect of the changes in global trade on the economy.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 31 Dec 2011 15:56

Abhijeet wrote:A more useful question might be about what is the "expectation" (or expected value) of the effect of the changes in global trade on the economy.


My question is not really different from yours, it just pushes it to the extreme. A contraction in external market and external investment/capital flow will have a far negative impact on China than India given their dependencies. Of course, what will ultimately happen will depend on the internal policies followed in both the countries.

VikramS
BRFite
Posts: 1879
Joined: 21 Apr 2002 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 31 Dec 2011 16:02

pankajs wrote:
My question is not really different from yours, it just pushes it to the extreme. A contraction in external market and external investment/capital flow will have a far negative impact on China than India given their dependencies. Of course, what will ultimately happen will depend on the internal policies followed in both the countries.


I think the internal policies aspect is very important in the short term. The CPC has a lot more buttons to play with than the RBI. I think India will be better off with a new election soon. The MMS govt. has lost all credibility.

However short term policy issues can alter the path but not the ultimate destination of the economies. When the second largest economy in the world gets 50% of the GDP from fixed investment it is not a good sign. More than likely the debt used to finance that will never be recovered. What is relevant though is how the bad-debt affects the rest of the system and how the pain is spread out.

VikramS
BRFite
Posts: 1879
Joined: 21 Apr 2002 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 31 Dec 2011 16:23

I think the world will be a lot more safer if the CPC allows dissent within its ranks.

http://www.usatoday.com/news/world/stor ... 52260592/1

chola
BRF Oldie
Posts: 5065
Joined: 16 Dec 2002 12:31
Location: USA

Re: PRC Economy - New Reflections : Dec 15 2011

Postby chola » 31 Dec 2011 20:49

Our world would be safer if the PRC stays the way it is. The last thing we want is an efficient China built along the line of Japan or Taiwan with full US and Western support because it is a damn democracy. We wish them better governance why? So we can feel good about them being free?

In the long run, the contest is between civilizations not political systems. I've said this time and again. Wishing that rivals be better ruled does us absolutely no good.

What will we get out of it if the CCP fell? Nothing except more competition unhindered by an US cordon as it is now. The chini nationalists who will undoubtedly follow will give us nothing. Taiwan claims bigger territory on its map than even the PRC. East Asians kiss the feet of the gora but treat the rest of the world worse than whites treat us.

The chinkis have progressively gotten freer since Mao and have lapped us three times over during the period. They've taken in more FDI, more trade, more of everything since. It would have been far better for India if they remained Maoist. They would be like North Korea now. Why on earth do we want them to unleash their population even more? The longer their leaders treat them like dogs the better it is for us.

The best scenario is for Panda to remain the way it is hemmed in every direction by states that view it as a danger.

JE Menon
Forum Moderator
Posts: 7052
Joined: 01 Jan 1970 05:30

Re: PRC Economy - New Reflections : Dec 15 2011

Postby JE Menon » 31 Dec 2011 21:18

While yelping about democracy this and that, as almost every chankiyan baniya yindoo seems to be doing on here, not one snake is taking chola to task for the view he holds :twisted:

gakakkad
BRF Oldie
Posts: 4475
Joined: 24 May 2011 08:16

Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 31 Dec 2011 21:43

JE Menon wrote:While yelping about democracy this and that, as almost every chankiyan baniya yindoo seems to be doing on here, not one snake is taking chola to task for the view he holds :twisted:



Honestly speaking , I agree with Chola. A few months ago , I posted an article of the Chinese selling their kidney to by ipad. I later came to know through a patient that it is easy to get organs in China . I surmised that its high execution rates may well have ushered an organ harvest business. From the human rights point of view , I should have been deeply pained. But the Yindoo nationalist I am , I actually feel more sad for the cats that are eaten by Chinese than the chinese who died eating them , or the ones who were butchered for organs .

I seriously hope this continues for decades . I hope that wens successor is even more authoritarian and egoistic nut case than mao , or any other ding dong ever was . The current state of economics will be unsustainable once they no longer have a trade surplus . Then aoa , every day will be tian an mein square day .
Last edited by gakakkad on 31 Dec 2011 21:48, edited 1 time in total.

Mahendra
BRF Oldie
Posts: 4414
Joined: 11 Aug 2007 17:20
Location: Chronicling Bakistan's Tryst with Dysentery

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Mahendra » 31 Dec 2011 21:47

JEM lets hope democracy brings in NAC kind of bodies which will effectively kill growth while pretending to safeguard the interests of the rural poor. People like Dotty, Amartya, Horse Manure, Setalvad etc can only thrive in a democratic set up. In a totalitarian set up Dotty would gobble up Setalvad or vice versa

Prem
BRF Oldie
Posts: 21195
Joined: 01 Jul 1999 11:31
Location: Weighing and Waiting 8T Yconomy

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Prem » 01 Jan 2012 04:17

China to Balance ‘Quick’ Growth With Inflation in 2012, Hu Sayshttp://www.businessweek.com/news/2011-12-31/china-to-balance-quick-growth-with-inflation-in-2012-hu-says.html
Jan. 1 (Bloomberg) -- China will balance “relatively quick” economic growth with inflation control in 2012, amid rising uncertainty about the world economic recovery, President Hu Jintao said in a speech yesterday.The government will speed up economic structural adjustment and give priority to improving people’s well-being, Hu said in the five-minute New Year’s Eve speech carried on state television and radio.“We will continue to manage well the relationship between stable and relatively quick economic growth, structural adjustment and inflation,” Hu said. “Global interdependence is deepening while instability and uncertainty in the world economy’s revival is increasing.”Hu gave no detail about how his government, which is set to start transferring power to China’s next generation of leaders in the coming months, plans to manage an economy that Nomura Holdings estimates will expand at 7.9 percent in 2012, the slowest pace in 13 years. Inflation is moderating after reaching a three-year high of 6.5 percent in July.The government is wrestling with the aftermath of past stimulus, including the debt burdens of local-government investment vehicles. Companies also face rising labor costs, and Communist Party leaders have recently sought to defuse protests over illegal land use and environmental pollution.The Shanghai Composite Index tumbled 22 percent in 2011, the most since 2008 and extending 2010’s 14 percent plunge, on concerns over Europe’s debt crisis and risks of a future wave of bank bad loans at home.
Manufacturing Contracts
China’s manufacturing contracted for a second month in December as Europe’s debt crisis cut export demand, fueling speculation that the central bank may cut lenders’ reserve requirements within days.
Earlier yesterday, the head of China’s central bank, Zhou Xiaochuan, said the country would maintain a “prudent” monetary stance and ensure that policy remains stable in 2012.The nation’s economic growth cooled to 9.1 percent in the third quarter, the least in more than two years, and export growth in November was the weakest since 2009 excluding seasonal distortions.

JwalaMukhi
BRFite
Posts: 1635
Joined: 28 Mar 2007 18:27

Re: PRC Economy - New Reflections : Dec 15 2011

Postby JwalaMukhi » 01 Jan 2012 04:31

Our world will be safer to continue the way it currently is if china continues to be red, unless there is a desire to change for the better from India side. China has made better use of their existing system, to the point where it is irrelevant whether it is democratic from its standpoint. If china switches to democracy, there is good possibility that they could make the worst use of a democratic setup. Evidently, there is higher possibility that the better/best use of their existing system would be far better than the democracy used in worse format. However, given their track record of making the best possible out of a bad deal, given a better deal they might even come out better.

China needs to be china. India needs to make it irrelevant what choice china opts. IOW, whether china is communist or democracy should have very little bearing on how India grows by design. However, India has currently not made the best use of our existing system, to the point where the advantages showered by a democratic setup is squandered. In such a scenario, the problem for India is not (going to arise) from what china opts. The problem for India is India itself and the solution for that also has to be India itself.

Pranav
BRF Oldie
Posts: 5280
Joined: 06 Apr 2009 13:23

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Pranav » 01 Jan 2012 07:49

chola wrote:What will we get out of it if the CCP fell? Nothing except more competition unhindered by an US cordon as it is now.

I disagree.

The more prosperous China becomes, the harder will it be for Indian elites to justify their continued loot, which keeps the bulk of our population malnourished and stunted.

If China can inspire us to improve, I am all for it.

Hari Seldon
BRF Oldie
Posts: 9288
Joined: 27 Jul 2009 12:47
Location: University of Trantor

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 01 Jan 2012 08:13

^^^Our polity'd rather be expired than be inspired by China. Ask yourself if for the voting classes, governance in China is an issue? Heck, even when it comes to the details part of governance in India, our public loses the caapcity and comprehension to stay agitated, as poor team anna is now discovering.

So yes, garv se kaho, jai Hu -Jai Mao for China.

gakakkad
BRF Oldie
Posts: 4475
Joined: 24 May 2011 08:16

Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 01 Jan 2012 08:21

Pranav wrote:I disagree.

The more prosperous China becomes, the harder will it be for Indian elites to justify their continued loot, which keeps the bulk of our population malnourished and stunted.

If China can inspire us to improve, I am all for it.


You are in 3 delusions here .

1) Majority of India is not malnourished. It is cell phone owning. The problem is that it is not getting rich enough to have a decent lifestyle beyond that. That is its full potential is not getting unlocked.Food ,clothes and shelter is no longer a real issue.

2) That our government has the capacity to take positive inspiration from anyone. Well we have had SoKo , taiwan and singapore not very far away . But I am yet to see any positive inspiration from them.Doubt they ll take anything positive from Panda. Except for in Gujarat no other state bothers to learn from good things abroad.

3) That a 'democratic China' will benefit India . Chola is correct in the assumption that it will not.

So Jai mao , jai wen , Jai ding Jai dong .

Pranav
BRF Oldie
Posts: 5280
Joined: 06 Apr 2009 13:23

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Pranav » 01 Jan 2012 11:12

gakakkad wrote:You are in 3 delusions here .

1) Majority of India is not malnourished. It is cell phone owning. The problem is that it is not getting rich enough to have a decent lifestyle beyond that. That is its full potential is not getting unlocked.Food ,clothes and shelter is no longer a real issue.

2) That our government has the capacity to take positive inspiration from anyone. Well we have had SoKo , taiwan and singapore not very far away . But I am yet to see any positive inspiration from them.Doubt they ll take anything positive from Panda. Except for in Gujarat no other state bothers to learn from good things abroad.

3) That a 'democratic China' will benefit India . Chola is correct in the assumption that it will not.

So Jai mao , jai wen , Jai ding Jai dong .


World Bank report on Malnutrition in India - http://web.worldbank.org/WBSITE/EXTERNA ... 47,00.html

"The prevalence of underweight children in India is among the highest in the world, and is nearly double that of Sub-Saharan Africa with dire consequences for mobility, mortality, productivity and economic growth." http://en.wikipedia.org/wiki/Malnutrition_in_India

As regards learning from China ... one tends to compare oneself to rivals. Elites can either enforce a closed society like North Korea or lose credibility before their people.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 01 Jan 2012 11:17

China's quest for energy from Russia exposes history of distrust
MOSCOW — At exactly 48 minutes past midnight a year ago Jan. 1, Russia did something it had never done before: It began pumping oil to China across a 2,600-mile border that once bristled with tanks, troops and nerve-shredding tension.

The oil flowed from eastern Siberia through a newly completed pipeline, the first such link between the world's largest petroleum producer and its biggest energy consumer — and a symbol of what the two giant neighbors hail as a perfect symmetry of interests.

"We and the Chinese need each other," said Nikolai Tokarev, the head of Transneft, a state company responsible for the Russian portion of the pipeline. "They need oil, and we need a market."

When it came time to settle accounts for the first deliveries, however, Tokarev got an unpleasant surprise: China, Transneft says, underpaid by more than $100 million. "Naturally, this did not cause delight," Tokarev said. "We were surprised because there is a contract, and this contract has signatures. It should be respected."

The dispute hasn't shut down the pipeline, but it has put a spotlight on a curious malaise at the heart of a would-be energy axis between Moscow and Beijing. While the law of supply and demand — as well as a common desire to curb the United States — pushes the two countries together, a long history of mutual distrust, similarly hard-nosed business styles and gnawing fear of dependency keeps them apart

"They look like the perfect partners, but this is a marriage made in hell," said a Western energy executive who has worked with both. Russia and China, he added, are "so afraid of being outdone" by each other that negotiations tend toward all-or-nothing combat.

The economic imperatives for greater cooperation remain powerful and, predicted a report issued in November by the International Energy Agency, should prevail, with China's share of Russia's total earnings from fossil-fuel exports forecast to rise from the current 2 percent to 20 percent in 2035.

But economic logic has rarely run in a straight line between Beijing and Moscow.

China desperately needs what Russia has in abundance — oil, natural gas, coal, mighty rivers for hydropower, and nuclear know-how. And Russia, seeking to position itself as an "energy superpower," has increasingly looked to China to help boost its economic and political clout.

Between 2000 and 2010, China nearly doubled its consumption of oil, and it is on track to overtake the United States as the biggest petroleum importer by the end of the decade.

To feed this demand, and their own bottom line, state-owned energy behemoths such as China National Petroleum Corp., or CNPC, have scrambled for supplies across the Middle East and Africa and closer to home in the disputed waters of the South China Sea.

But perhaps no other country has offered quite as much promise — and frustration — as Russia, which produces more oil than even Saudi Arabia, sits just next door to China and, because of the retreat from democracy under Prime Minister Vladimir Putin, is often on much the same wavelength as Beijing's own authoritarian leaders.

Russia's proven oil reserves are five times as big as those of China, which last year consumed three times as much petroleum as its northern neighbor.

Russia also has the world's biggest supplies of natural gas, a resource that until recently China largely neglected but that is now at the center of its energy policy. China plans to double gas use over the next five years and boost its role much further after that.

"China looks very seductive," said Vladimir Milov, a former deputy energy minister who took part in early talks with Beijing on oil and gas. But, he added, energy cooperation doesn't depend on "just looking at the map. ... There is a deep lack of trust behind the facade."

In the first 10 months of this year, Saudi Arabia sent 2 1/2 times as much oil to China as Russia did, while Angola, even farther away, and Iran also supplied much more than Russia, according to Chinese trade statistics.

Because of the new Siberian pipeline, Russia has nudged ahead of Oman for fourth place but still accounts for just 7 percent of its voracious neighbor's total oil imports.

Meanwhile, Russia's Gazprom, the world's biggest gas company, has spent a decade haggling with CNPC over a proposed gas pipeline and a mammoth supply deal worth up to $1 trillion. Not only has construction not begun, but the two sides can't even agree within a thousand miles on where the pipeline would go.

Yang Cheng, a former Chinese diplomat in Moscow, said Russia and China keep talking past each other.

When Moscow first pushed for greater energy cooperation at the start of the 1990s, China "still thought it could supply itself," and when it later turned to Russia and sought to gain stakes in oil fields, Western companies already had the inside track, Yang said. He said he remains optimistic in the long run but that each side has to stop "talking about its own stand and neglecting the other."

The energy sectors in Russia and China are dominated by giant state-owned corporations that pursue profit but are also entangled with security and other government agencies. The former head of CNPC, petroleum engineer Zhou Yongkang, sits on the Communist Party's Politburo, combining a keen interest in energy with overall responsibility for China's security agencies.

Russia's energy firms are studded with former KGB men. Tokarev, the head of Transneft, used to work at the KGB with Putin, according to Milov and Russian energy experts. Tokarev declined to comment on that assertion.

Tokarev believes that the firm grip of state companies on Russo-Chinese energy deals "makes things much easier" because private companies "have different criteria and different approaches to business."

But it was a private Russian oil company, Yukos, that pioneered oil deliveries to China, by rail, and led an early push for a pipeline. Yukos' China efforts fizzled after the 2003 arrest of its boss, Mikhail Khodorkovsky, who — convicted of corruption and tax evasion — has since been in jail.

In a written reply to questions, Khodorkovsky described the Chinese as "very tough negotiators but scrupulous partners." In contrast, he said, Russian "state functionaries have demonstrated to China that internal ambitions and bickering are more important to the Russian bureaucracy than reliability in partnership."

Transneft eventually started work on a revised version of Yukos' pipeline plan after China came up with a $25 billion loan — and stipulated that the money be repaid with oil by Transneft and Rosneft.

The line to China branched off a much longer pipeline that Transneft was building all the way to the Pacific Coast to give Russia access to markets in Japan and elsewhere. Focusing on China alone, Tokarev said, would be "economically risky" because it would make Russia dependent on a single customer.

When Russian oil finally started flowing to China in January, both countries trumpeted a new era of cooperation, then promptly started feuding over who owed what.

When Russia finished building its portion of the China oil pipeline in August 2010, Putin traveled to Skovorodino, near the Chinese border in eastern Siberia, for a celebration. Also there was Zhang, the Chinese energy official who had been prodding Russia for years to get the pipeline built.

Putin thanked Russian workers for their "really tremendous achievement" and noted China had yet to finish construction of its much longer pipeline to the border with Russia. "Our Chinese friends need to do a little more work," Putin said.

pankajs
BRF Oldie
Posts: 14746
Joined: 13 Aug 2009 20:56

Re: PRC Economy - New Reflections : Dec 15 2011

Postby pankajs » 01 Jan 2012 11:51

Top economic planner calls for economic growth mode shift
BEIJING - China's top economic planner on Wednesday said the country will further accelerate the shift of the economic growth mode, as against inadequate consumption and high energy use.

Zhang Ping, head of the National Development and Reform Commission (NDRC), made the remarks when reporting to the Standing Committee of the National People Congress, the country's top legislature.

Zhang said the government will focus on raising people's incomes and improving their expectations in economic situations in a bid to expand domestic demands, especially household consumption.

Domestic consumption's contribution to economic growth is still limited. Although the China's retail sales jumped by 15.5 percent and 18.3 percent in 2009 and 2010, respectively, compared to the previous year, the final consumption expenditure as a percentage of GDP is in decline, according to Zhang.

China has achieved an economic take-off through extensive economic growth in the last three decades, however, it has cost a lot in environmental damage and resources. Shifting the growth mode can make the economy achieve sustainable development.

Industrial structure should be further optimized, and science and technology innovation should be accelerated, Zhang said in his report.

He has also called for enhanced environmental protection and further energy saving and emissions cuts, saying that the eco-system remains fragile and energy consumption high despite the positive achievements made in the 11th Five-Year Plan period from 2006 to 2010.

Can issues like savings, consumption, land usage, family planning, etc be dealt simply by issuing a directive?
On the land issue we have a clear picture, given the angst amongst the commoners against the policies of the communist in West Bengal and in China.

gakakkad
BRF Oldie
Posts: 4475
Joined: 24 May 2011 08:16

Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 01 Jan 2012 18:33

Pranav , the world bank report using data from 1990s. It has been publicised a lot these days because they want to pass the food security bill .

There is no truth in the stats . Just serves rhetoric purpose. Actual malnutrition rate is around 10-20 %. No decent survey has been done since 1999 on indian malnutrition. By decent I mean a large sample size (>100k households ,) , stratified sampling to reflect the demographics of the country and use of clear cut definitions of malnutrition.

Poverty in India has been so unquestionably accepted , that we tend to believe in these stats without unquestionably . That is the reason why the communist politicians get away passing these ridiculous bills .

Will dissect the topic in detail in the Indian economic thread after a week or two. There someone has posted the household incomes . Look at the income and think logically whether majority of Indians are starving or not. There are 650 million Independent cell phone connections in India . ie 60% of the population.This means that most households have cell phones . Now I don't think anyone will buy a phone if they don't have money to buy food.

kumarn
BRFite
Posts: 479
Joined: 30 Aug 2007 16:19

Re: PRC Economy - New Reflections : Dec 15 2011

Postby kumarn » 01 Jan 2012 18:39

Made in India, faked in China- $5bn loss

Chinese manufacturers are increasingly "faking" popular Indian products of consumer goods giants such as Dabur and ITC, undermining the legitimacy of brands and causing losses worth as much as $5 billion annually, officials said.


"China is a big problem everybody is facing," said S.K. Goel, chairman of the Central Board of Excise and Customs, told IANS.

PrasadZ
BRFite
Posts: 122
Joined: 11 Apr 2010 08:42

Re: PRC Economy - New Reflections : Dec 15 2011

Postby PrasadZ » 01 Jan 2012 20:34

CPC supporters point out the greater success in tackling poverty in China as compared to India to say that democracy is not useful. I typically ask them whether they would prefer to be fed in a zoo cage or risk hunger in an open space.

The answer is not as easy as it appears. A hungry man may answer differently than those fully fed and clothed. But even the hungry, I suspect, do realise that the option of living in a cage for a full meal is a valuable option to have. And, once fed, the option to leave the cage is, I suspect, of even greater value.


Return to “Trash Can Archive”

Who is online

Users browsing this forum: No registered users and 37 guests