PRC Economy and Industry: News and Discussions

zlin · Post by **zlin** » 20 May 2011 07:26

3 years after 8 magnitude Wenchuan earthquake

http://cn.wsj.com/gb/20110513/PHO093125.asp

http://news.xinhuanet.com/english2010/s ... 864797.htm
http://news.xinhuanet.com/english2010/p ... 868985.htm

ArmenT · Post by **ArmenT** » 20 May 2011 09:13

China acknowledges Three Gorges dam 'problems'

Top leaders say the project has led to environmental problems and issues involving relocating 1.3m people.

The Three Gorges is the world's largest dam and could have cost up to $40bn. This appears to be the first time that central government leaders have admitted to problems with the project.

The admission came in a statement from top government body, the State Council.

The statement initially praised the scheme's achievements, saying it had helped alleviate flooding, improve navigation and generate electricity.

But it went on: "There are urgent problems that need to be addressed, such as stabilising and improving living conditions for relocated people, protecting the environment, and preventing geological disasters.
...
...
...
Perhaps in a tacit acknowledgement of the problems, there were no major celebrations when the reservoir reached its full height last year.

abhischekcc · Post by **abhischekcc** » 20 May 2011 10:49

Marten wrote:
Acharya wrote:Guess again. Last try
Your current host and the current puppet master of China?

Britain includes the occupied territory of USA

kumarn · Post by **kumarn** » 21 May 2011 01:14

This is China's modern ghost town

RamaT · Post by **RamaT** » 25 May 2011 12:53

http://www.nytimes.com/2011/05/25/busin ... .html?_r=1

It is a power struggle that is causing a power shortage — one that has begun to slow China’s mighty economic growth engine.

Balking at the high price of coal that fuels much of China’s electricity grid, the nation’s state-owned utility companies are defying government economic planners by deliberately reducing the amount of electricity they produce.

Raghavendra · Post by **Raghavendra** » 25 May 2011 17:18

China's power shortage may be worse than 2004: State Grid http://news.xinhuanet.com/english2010/b ... 889875.htm

BEIJING, May 23 (Xinhua) -- China witnessed the worst power shortage in decades in 2004, but the country's leading power distributor said Monday that this year might prove worse.

Some 26 provincial regions under the management of State Grid Corp. of China would suffer combined power shortages of 30 million kilowatts this year, said Shuai Junqing, the company's executive vice president.

As least 10 provincial grids, covering regions such as Beijing, Tianjin, Shanghai and industrial provinces of Hebei, Jiangsu and Zhejiang, would be hit by power shortages, Shuai said.

Shuai attributed this year's power woes to various factors, including a shortage of thermal coal, insufficient power generating facilities in some areas and grid transmission problems. "All these issues cannot be solved in the short term," he said.

The company vowed to prioritize ensuring power supplies for residents, hospitals and schools as well as those facilities in the public interest to keep running, including ones relating to national security.

In 2004, China suffered the worst power shortage since the beginning of the 1990s, with power cuts or limits imposed in 27 out of its 31 provinces, municipalities and autonomous regions.

kmkraoind · Post by **kmkraoind** » 26 May 2011 12:21

Three blasts hit govt buildings in east China: Xinhua

The first was a car explosion in the parking garage of the city prosecutor's office, the second occurred on the first floor of a district government office, and the last was a car blast next to the city's food and drug agency, he said.

He said authorities were investigating the causes of the explosions and had no immediate information on casualties.

However, Xinhua quoted witnesses saying at least five people were injured.

The incident is likely to add to official fears over possible public unrest stemming from a range of grievances, with soaring inflation topping the list.

China sees thousands of protests and other public disturbances each year, often linked to anger over official corruption, government abuses and the illegal seizure of land for development. But bomb attacks are extremely rare.

My two observations -
- With growing unrest in Chinese people over inflation, low wages, etc, any future spook given by US by imposing additional levy on Chinese imports or a in trade war like situation China will loose badly, probably igniting old wound of south-north divide.

What we have seen in free USSR (particularly Russia) of mafia mentality, we are seeing now in China, alas in a lesser degree in 100% controlled country. Once the iron grip is loosened, it will lead to bloody Chinese mafias, which surpasses Russian and Mexican in infamous.

devesh · Post by **devesh** » 26 May 2011 12:37

http://blogs.wsj.com/deals/2011/05/25/c ... dgie-says/

China Is an Investment Bubble, Hedgie Says

The CEO of Corriente Advisors suggested a bet on the depreciation of the currency, on the theory that China is a credit-fueled bubble.

“With China’s size and the duration of the boom, I expect the bust will be larger than the Asian financial crisis,” he said at the Ira Sohn Investment Conference.

Hart said the catalyst that may burst the China bubble is inflation. While the country’s banks look healthy on the surface, Hart said China is delaying the reckoning of non-performing loans by allowing credit to grow at accelerated rate in “a path that is impossible to maintain while simultaneously trying to contain inflation.”

Hart says China’s headline inflation rate of 5.4% understates true costs of items like food and education — both heavily subsidized by the state. Hart just started a China fund, looking to take advantage of China’s slowdown.

Hart said he is long puts on the Chinese currency, which he argues are cheaply priced and offer far more upside than downside. The ”assymetry in this trade is enormous and not crowded,” Hart said.

krisna · Post by **krisna** » 28 May 2011 05:10

The Saudi Arabia of Coal

Last year, something important happened in the coal markets. China actually imported coal for the first time. As recently as 2001, China exported 90 million tonnes. But in 2009, China imported around 86 million tonnes. That’s a huge shift in less than a decade.

Coal usage by China’s power industry has nearly tripled in the last decade. That’s an average growth rate of about 11%. The International Energy Agency estimates that China and India will account for 80% of the increase in demand for coal over the next two decades.

Mongolia, though, is rich in resources – iron, tin, copper, gold and silver…and coal. Lots and lots of coal. Mongolia has 10% of the world’s coal. Indonesia is currently the largest exporter of coal. Mongolia has double the amount of coal Indonesia has.Already, about 64% of all of Mongolia’s exports go to China. For China, this is like having the Saudi Arabia of coal right across the border. For Mongolia, China is a meal ticket. Trade with China has created an influx of cash in the country. There are new cafes and bars and hotels in Ulan Bator today. Mining, it seems, is Mongolia’s economic future

Chinmayanand · Post by **Chinmayanand** » 29 May 2011 18:52

Think Again On China: It's Really A Debt-Burdened Builder Of Bridges To Nowhere

China : The mother of all gray swans.

svinayak · Post by **svinayak** » 30 May 2011 00:45

Here Are The 10 Chinese Brands Set To Take Over US Households by 2020

Read more: http://www.businessinsider.com/10-chine ... z1NlyLiYq7

1. Lenovo - What Apple was to MSFT in the 90's? in the Bought IBM's PC units since the joker at Legend can peddle counterfeit Windows PC to his connections in the CCP.

2. Haier - Say how about their miserable FAILURES in US like comical treatment of US workers in their factory located in the south?

3. Geely - Even Chinese look down on tiny cheap cars they "copy". As for their purchase of Volvo - truly LOL as these idiots will trash the company due to incompetencies.

4. Air China - Worse safety record than Taiwan's China Air.

5. Huawei - Ripped off galore with copying Cisco's products and joke JV with 3Com to steal IP.

Read more: http://www.businessinsider.com/10-chine ... z1Nlxu59HT

6. Baidu - Google copycat with cozy relationship and protection from CCP thugs.

7. Li Ning - Nike copycat who is also facing its own counterfeits in where else but copycat country China?

8. Suning - Each province has its own appliance makers all pretty much copying each other's design with no shame.

PS - It has taken over 30 years for Taiwan to create a lone world brand like HTC.

Read more: http://www.businessinsider.com/10-chine ... z1Nly0yiR0

jamwal · Post by **jamwal** » 31 May 2011 16:06

Somewhere in China

ashi · Post by **ashi** » 31 May 2011 18:01

Ten reasons why China is different

The China doubters are back in force. They seem to come in waves – every few years, or so. Yet, year in and year out, China has defied the naysayers and stayed the course, perpetuating the most spectacular development miracle of modern times. That seems likely to continue.

Today’s feverish hand-wringing reflects a confluence of worries – especially concerns about inflation, excess investment, soaring wages, and bad bank loans. Prominent academics warn that China could fall victim to the dreaded “middle-income trap,” which has derailed many a developing nation.

There is a kernel of truth to many of the concerns cited above, especially with respect to the current inflation problem. But they stem largely from misplaced generalizations. Here are ten reasons why it doesn’t pay to diagnose the Chinese economy by drawing inferences from the experiences of others:

Strategy. Since 1953, China has framed its macro objectives in the context of five-year plans, with clearly defined targets and policy initiatives designed to hit those targets. The recently enacted 12th Five-Year Plan could well be a strategic turning point – ushering in a shift from the highly successful producer model of the past 30 years to a flourishing consumer society.

Commitment. Seared by memories of turmoil, reinforced by the Cultural Revolution of the 1970’s, China’s leadership places the highest priority on stability. Such a commitment served China extremely well in avoiding collateral damage from the crisis of 2008-2009. It stands to play an equally important role in driving the fight against inflation, asset bubbles, and deteriorating loan quality.

Wherewithal to deliver. China’s commitment to stability has teeth. More than 30 years of reform have unlocked its economic dynamism. Enterprise and financial-market reforms have been key, and many more reforms are coming. Moreover, China has shown itself to be a good learner from past crises, and shifts course when necessary.

Saving. A domestic saving rate in excess of 50% has served China well. It funded the investment imperatives of economic development and boosted the cushion of foreign-exchange reserves that has shielded China from external shocks. China now stands ready to absorb some of that surplus saving to promote a shift toward internal demand.

Rural-urban migration. Over the past 30 years, the urban share of the Chinese population has risen from 20% to 46%. According to OECD estimates, another 316 million people should move from the countryside to China’s cities over the next 20 years. Such an unprecedented wave of urbanization provides solid support for infrastructure investment and commercial and residential construction activity. Fears of excess investment and “ghost cities” fixate on the supply side, without giving due weight to burgeoning demand.

Low-hanging fruit – Consumption. Private consumption accounts for only about 37% of China’s GDP – the smallest share of any major economy. By focusing on job creation, wage increases, and the social safety net, the 12th Five-Year Plan could spark a major increase in discretionary consumer purchasing power. That could lead to as much as a five-percentage-point increase in China’s consumption share by 2015.

Low-hanging fruit – Services. Services account for just 43% of Chinese GDP – well below global norms. Services are an important piece of China’s pro-consumption strategy – especially large-scale transactions-based industries such as distribution (wholesale and retail), domestic transportation, supply-chain logistics, and hospitality and leisure. Over the next five years, the services share of Chinese GDP could rise above the currently targeted four-percentage-point increase. This is a labor-intensive, resource-efficient, environmentally-friendly growth recipe – precisely what China needs in the next phase of its development.

Foreign direct investment. Modern China has long been a magnet for global multinational corporations seeking both efficiency and a toehold in the world’s most populous market. Such investments provide China with access to modern technologies and management systems – a catalyst to economic development. China’s upcoming pro-consumption rebalancing implies a potential shift in FDI – away from manufacturing toward services – that could propel growth further.

Education. China has taken enormous strides in building human capital. The adult literacy rate is now almost 95%, and secondary school enrollment rates are up to 80%. Shanghai’s 15-year-old students were recently ranked first globally in math and reading as per the standardized PISA metric. Chinese universities now graduate more than 1.5 million engineers and scientists annually. The country is well on its way to a knowledge-based economy.

Innovation. In 2009, about 280,000 domestic patent applications were filed in China, placing it third globally, behind Japan and the United States. China is fourth and rising in terms of international patent applications. At the same time, China is targeting a research-and-development share of GDP of 2.2% by 2015 – double the ratio in 2002. This fits with the 12th Five-Year Plan’s new focus on innovation-based “strategic emerging industries” – energy conservation, new-generation information technology, biotechnology, high-end equipment manufacturing, renewable energy, alternative materials, and autos running on alternative fuels. Currently, these seven industries account for 3% of Chinese GDP; the government is targeting a 15% share by 2020, a significant move up the value chain.

Yale historian Jonathan Spence has long cautioned that the West tends to view China through the same lens as it sees itself. Today’s cottage industry of China doubters is a case in point. Yes, by our standards, China’s imbalances are unstable and unsustainable. Chinese Premier Wen Jiabao has, in fact, gone public with a similar critique.

But that’s why China is so different. It actually takes these concerns seriously. Unlike the West, where the very concept of strategy has become an oxymoron, China has embraced a transitional framework aimed at resolving its sustainability constraints. Moreover, unlike the West, which is trapped in a dysfunctional political quagmire, China has both the commitment and the wherewithal to deliver on that strategy. This is not a time to bet against China.

Stephen S. Roach, a member of the faculty at Yale University, is Non-Executive Chairman of Morgan Stanley Asia and author of The Next Asia.

vera_k · Post by **vera_k** » 01 Jun 2011 10:14

The Audacity of Chinese Frauds

The fraud at Longtop Financial Technologies, a Chinese financial software company, was exposed this week in an amazing letter from its auditors, Deloitte Touche Tohmatsu.

Deloitte seems to have acted properly. It got bank confirmations, and it got them directly from the banks rather than relying on the company to provide them, as PricewaterhouseCoopers had done when it failed to notice a huge fraud at Satyam, an Indian technology company.

But the confirmations were lies.

“This means the Chinese banks were in on the fraud, at least at branch level,”

kancha · Post by **kancha** » 01 Jun 2011 14:12

Acharya wrote:Here Are The 10 Chinese Brands Set To Take Over US Households by 2020

Read more: http://www.businessinsider.com/10-chine ... z1NlyLiYq7

...

2. Haier - Say how about their miserable FAILURES in US like comical treatment of US workers in their factory located in the south?
...

Got anymore details on this? Google turned out to be of no help.

rsingh · Post by **rsingh** » 02 Jun 2011 01:44

ashi wrote:Ten reasons why China is different

The China doubters are back in force. They seem to come in waves – every few years, or so. Yet, year in and year out, China has defied the naysayers and stayed the course, perpetuating the most spectacular development miracle of modern times. That seems likely to continue.

Today’s feverish hand-wringing reflects a confluence of worries – especially concerns about inflation, excess investment, soaring wages, and bad bank loans. Prominent academics warn that China could fall victim to the dreaded “middle-income trap,” which has derailed many a developing nation.

There is a kernel of truth to many of the concerns cited above, especially with respect to the current inflation problem. But they stem largely from misplaced generalizations. Here are ten reasons why it doesn’t pay to diagnose the Chinese economy by drawing inferences from the experiences of others:

Strategy. Since 1953, China has framed its macro objectives in the context of five-year plans, with clearly defined targets and policy initiatives designed to hit those targets. The recently enacted 12th Five-Year Plan could well be a strategic turning point – ushering in a shift from the highly successful producer model of the past 30 years to a flourishing consumer society.

Commitment. Seared by memories of turmoil, reinforced by the Cultural Revolution of the 1970’s, China’s leadership places the highest priority on stability. Such a commitment served China extremely well in avoiding collateral damage from the crisis of 2008-2009. It stands to play an equally important role in driving the fight against inflation, asset bubbles, and deteriorating loan quality.

Wherewithal to deliver. China’s commitment to stability has teeth. More than 30 years of reform have unlocked its economic dynamism. Enterprise and financial-market reforms have been key, and many more reforms are coming. Moreover, China has shown itself to be a good learner from past crises, and shifts course when necessary.

Saving. A domestic saving rate in excess of 50% has served China well. It funded the investment imperatives of economic development and boosted the cushion of foreign-exchange reserves that has shielded China from external shocks. China now stands ready to absorb some of that surplus saving to promote a shift toward internal demand.

Rural-urban migration. Over the past 30 years, the urban share of the Chinese population has risen from 20% to 46%. According to OECD estimates, another 316 million people should move from the countryside to China’s cities over the next 20 years. Such an unprecedented wave of urbanization provides solid support for infrastructure investment and commercial and residential construction activity. Fears of excess investment and “ghost cities” fixate on the supply side, without giving due weight to burgeoning demand.

Low-hanging fruit – Consumption. Private consumption accounts for only about 37% of China’s GDP – the smallest share of any major economy. By focusing on job creation, wage increases, and the social safety net, the 12th Five-Year Plan could spark a major increase in discretionary consumer purchasing power. That could lead to as much as a five-percentage-point increase in China’s consumption share by 2015.

Low-hanging fruit – Services. Services account for just 43% of Chinese GDP – well below global norms. Services are an important piece of China’s pro-consumption strategy – especially large-scale transactions-based industries such as distribution (wholesale and retail), domestic transportation, supply-chain logistics, and hospitality and leisure. Over the next five years, the services share of Chinese GDP could rise above the currently targeted four-percentage-point increase. This is a labor-intensive, resource-efficient, environmentally-friendly growth recipe – precisely what China needs in the next phase of its development.

Foreign direct investment. Modern China has long been a magnet for global multinational corporations seeking both efficiency and a toehold in the world’s most populous market. Such investments provide China with access to modern technologies and management systems – a catalyst to economic development. China’s upcoming pro-consumption rebalancing implies a potential shift in FDI – away from manufacturing toward services – that could propel growth further.

Education. China has taken enormous strides in building human capital. The adult literacy rate is now almost 95%, and secondary school enrollment rates are up to 80%. Shanghai’s 15-year-old students were recently ranked first globally in math and reading as per the standardized PISA metric. Chinese universities now graduate more than 1.5 million engineers and scientists annually. The country is well on its way to a knowledge-based economy.

Innovation. In 2009, about 280,000 domestic patent applications were filed in China, placing it third globally, behind Japan and the United States. China is fourth and rising in terms of international patent applications. At the same time, China is targeting a research-and-development share of GDP of 2.2% by 2015 – double the ratio in 2002. This fits with the 12th Five-Year Plan’s new focus on innovation-based “strategic emerging industries” – energy conservation, new-generation information technology, biotechnology, high-end equipment manufacturing, renewable energy, alternative materials, and autos running on alternative fuels. Currently, these seven industries account for 3% of Chinese GDP; the government is targeting a 15% share by 2020, a significant move up the value chain.

Yale historian Jonathan Spence has long cautioned that the West tends to view China through the same lens as it sees itself. Today’s cottage industry of China doubters is a case in point. Yes, by our standards, China’s imbalances are unstable and unsustainable. Chinese Premier Wen Jiabao has, in fact, gone public with a similar critique.

But that’s why China is so different. It actually takes these concerns seriously. Unlike the West, where the very concept of strategy has become an oxymoron, China has embraced a transitional framework aimed at resolving its sustainability constraints. Moreover, unlike the West, which is trapped in a dysfunctional political quagmire, China has both the commitment and the wherewithal to deliver on that strategy. This is not a time to bet against China.

Stephen S. Roach, a member of the faculty at Yale University, is Non-Executive Chairman of Morgan Stanley Asia and author of The Next Asia.

Where are other 9 reasons ?

Raghavendra · Post by **Raghavendra** » 02 Jun 2011 13:10

^

1 Strategy
2 Commitment
3 Wherewithal to deliver
4 Saving
5 Rural-urban migration
6 Low-hanging fruit – Consumption
7 Low-hanging fruit – Services logistics, and hospitality and leisure
8 Foreign direct investment
9 Education
10 Innovation

RamaT · Post by **RamaT** » 03 Jun 2011 09:10

I posted this in the India economy thread(India $9.6 trillion in 2020 & a 9.3% growth rate), posting here for the Chinese data. Standard Chartered claims that China will be a $24.6 trillion dollar economy by 2020 and sustain a 6.3% growth rate through 2030.

So, maybe I'm obviously biased but I can see the Indian numbers coming about as the infrastructure efficiency and growth in urbanization add on as economic accelerators.

I don't see the Chinese numbers happening though, especially through 2030... eventually they will have to pay the piper. In terms of the bad loans I see the chance of them growing their way out of the problem but that part of the economy building the infrastructure wasn't real so it won't serve as a long-term base to build upon.

Then there's the political and societal issues, to get to a high income producing service economy without some transition away from the communist hegemony seems highly improbable and even if they wanted to do so, doing that in an orderly fashion without any shocks seems doubly improbable.

http://www.standardchartered.com/media- ... -Cycle.pdf

kmkraoind · Post by **kmkraoind** » 03 Jun 2011 10:52

In China’s Inner Mongolia, a ‘Jasmine Revolution’ of sorts - Firstpost.com - B.Raman

PRC's soft underbelly is being exposed. Wondering when Han China will move its border to its historic level, i.e., to the China wall.

Hari Seldon · Post by **Hari Seldon** » 03 Jun 2011 12:37

Those 2030 GDP numbers for PRC from Stanchart are laughable. CLear extrapolation (wholly unwarranted) of current growth rates, looks like. Chalo, achcha hai.

Good to have hostiles over-estimate themselves and run us down in their minds over and over.

Manishw · Post by **Manishw** » 03 Jun 2011 12:56

^^ Even the US current and future GDP is just madrassa maths.The devil as usual is in the details.

ArmenT · Post by **ArmenT** » 06 Jun 2011 10:40

China has divested 97% of its holdings in US treasury bills

Chinmayanand · Post by **Chinmayanand** » 08 Jun 2011 16:16

China’s coming collapse

China's $463 billion bail-out of local governments last week gave a good indication of how big its coming financial crisis will be — about 1.5 times bigger than America's.

It became clear last week that China has probably not dodged the financial crisis at all, after Beijing quietly bailed out local government to the tune of $463 billion.

Adjusted for the size of its economy, that rescue package is one-and-a-half times bigger than the Tarp bailout. That is particularly worrying, according to Dylan Grice, a global strategist at Societe Generale. “If we calibrate the magnitude of the economic crisis with the size of the bail-out, one-and-a-half Tarps implies a financial crisis one-and-a-half times the order of magnitude of 2008.”

The bail-out is aimed at cleaning up the vast pile bad loans made to local government financing vehicles, which were responsible for stimulus spending on infrastructure and development programmes. Grice expects the government will deal with them in the same way it recapitalised its banking industry after 1998, which has led some to assume the problem has been solved.

That might be wishful thinking. To understand the possible effects of China’s actions, Grice draws on an article by Black Swan author Nassim Taleb and Mark Blythe in the recent issue of Foreign Affairs, in which the two authors draw comparisons between the global financial crisis and the uprisings in North Africa and the Middle East.

“The critical issue in both cases is the artificial suppression of volatility — the ups and downs of life — in the name of stability,” they wrote. “What the world is witnessing in Tunisia, Egypt, and Libya is simply what happens when highly constrained systems explode.”

The same goes for China’s bailouts, argues Grice. It has succeeded in stalling its own crisis for so long only because it is more effective than almost any other country at exerting control over its economy. China can keep dancing for a while longer, but at some point the music has to stop.

This is nothing new, of course. Grice argues that monetary policy committees worldwide played a huge role in the crisis by setting interest rates at artificially low rates instead of seeking to match the “natural” rate of interest — which is roughly the same level as economic growth, whereby the supply of risk capital matches demand.

A look at historic rates shows clearly that all of the countries worst-affected by the crisis maintained interest rates far below the natural rate for years. In Ireland, rates were more than 10% below the equilibrium point in the early part of the last decade, while in the US they bottomed out at about 3% below the natural rate in around 2005.

"Surely enough, their economies boomed as the demand for risk capital rose. Why would it do otherwise?” asked Grice in the report, titled China’s Great Suppression. “But since the price of capital was suppressed by these wise committees, rates weren’t allowed to rise to their natural levels, so there was no increase in the supply of capital. Who would supply the searing demand for risk capital these wise central bankers were unleashing? Why, the wizards in the financial system!”

We all know how that worked out. Governments did a good job of suppressing asset-price inflation by letting the banks create a massive round of credit inflation. None of them, however, did as good a job as China. By Grice’s reckoning, China’s natural rate of interest is roughly 11.6% higher than its actual rate today.

Suppressing rates is politically expedient in western economies, where governments tend to be judged on extremely short-term measures, but China has no such worries. Indeed, one of its great advantages has been its ability to pursue necessary but unpopular policies without having to worry about the next election cycle. But China is juggling knives.

It might not be accountable in the western, democratic sense, but China’s leaders know that an unhappy population will take to the streets and could even topple the government. The trick to avoiding that is to make sure the people are happy, which means rich. But China could be paying a huge cost for the sake of suppressing inflation.

“It has upped the ante,” said Grice. “While we can’t predict where complex systems will go, we know that the longer their volatility is artificially suppressed, the more emphatic will be its release when it does come. It is more likely that China has one-and-a-half times (and counting) the 2008 financial crisis ahead of it.”

Theo_Fidel · Post by **Theo_Fidel** » 08 Jun 2011 19:25

There have been reports of Beijing sending its 2 Million strong prison work force to Africa. Chinese practices of shipping labor, 36,000 in Libya

are doomed.

http://english.aljazeera.net/indepth/fe ... 51565.html

Africa - once considered the lab for Chinese companies' reach outside - is being relegated into a destination with too many risk factors. Safer political destinations and countries closer to home are likely to benefit from the shift.

The readjustment has been in the works for some time but the uprisings in Tunisia, Egypt and Libya have made those subtle shifts more pronounced.

"North Africa's unrest and Libya's situation in particular are testing China's 'go out' strategy," says Wang Jinyan, research fellow at the Beijing Foreign Studies University. "This will have a definite impact on the future direction of our overseas investment."

Last year China became Africa's largest trading partner, and its march into the continent seemed unstoppable. Not surprisingly, this has been met with criticisms by some that China is acting as a neo-coloniser, stripping Africa of its rich resources.

But the Arab spring has cast doubts over this relentless expansion. The figures of China's economic losses suffered during the civilian unrest in North Africa and Libyan conflict are beginning to emerge, giving officials cause to pause.

In Libya where China's involvement is quite recent, the losses suffered and the cost of repatriating some 36,000 Chinese employees is set to surpass $3bn. Since 2007 Libya had contracted some 50 engineering projects to Chinese companies, including several image projects to mark the 40th anniversary of the 1969 revolution.

At a working conference in Shanghai in May, Sinosure, China's official export credit insurance agency, revealed that in the first three months of 2011 its reported loss claims from North Africa and the Middle East have risen by 167 per cent over the same period of last year.

According to figures from the Ministry of Commerce, new Chinese contracts in North African countries in the first quarter have dropped dramatically, by 70.8 per cent in Algeria and by 46.9 per cent in Libya over the same period of last year.

The civil unrest and safety concerns have made the Chinese even more invisible in Africa, adding fuel to accusations that Chinese contractors are isolating themselves from the local population behind high walls, and remain aloof to local grievances.

anishns · Post by **anishns** » 08 Jun 2011 22:09

This is how you create world's biggest auto market

Car owners get up to $2,800 in China's ‘cash for clunkers’ deal

http://www.theglobeandmail.com/globe-dr ... le2051407/

Official figures for sales in May are due this week. Sales fell in April for the first time in two years as car buyers held back in response to traffic curbs, rising fuel prices and a lack of incentives.

So, basically people will buy only if given incentives...

Vasu · Post by **Vasu** » 10 Jun 2011 10:28

Muddy Waters Research Is a Thorn to Some Chinese Companies

Last week, the founder of the investment firm Muddy Waters Research issued a scathing report on a Chinese forestry company, calling it a “pump and dump” scheme that has been “aggressively committing fraud.”

The remarks set off a sharp sell-off in shares of the company, Sino-Forest, prompting Canadian authorities to temporarily halt trading.

“They overstated assets by billions of dollars and funneled money to an undisclosed subsidiary,” said Mr. Block."

Mr. Block is delivering a controversial message to investors enamored with Chinese companies: buyer beware.

He has set his sights on a specific group of stocks that access the public markets through a back-door method known as a reverse merger. In such deals, private companies acquire a public shell company in the United States or Canada. They can quickly raise capital while avoiding the scrutiny and the cost of the traditional listing process. Today, there are more than 500 such Chinese companies in the United States, collectively worth billions of dollars.

After the series of negative calls decimated the stocks of the Chinese companies, Mr. Block says he has received death threats and harassing phone calls and e-mails.

But he said he would continue to publish his research. He says he believes investors and auditors need to understand how businesses operate in China.

He explains by way of the firm’s name, Muddy Waters. It’s derived from a Chinese phrase that says the easiest way to catch fish is by muddying the water, forcing it to the surface.

“You kick up the silt, and they rush to the top of the water,” he said of the Chinese proverb.

“This explains a lot about how things work in China,” Mr. Block added. “Business deals are rife with value subtraction layers. The more opaque they make it, the easier it is for them to siphon off money.”

Christopher Sidor · Post by **Christopher Sidor** » 11 Jun 2011 00:06

Chinas property market may slowdown

What a China Slowdown Means for the World

From the first article

China is a "housing-led economy," says UBS economist Jonathan Anderson, who estimates that property construction alone accounted for 13% of gross domestic product in 2010, twice the share of the 1990s.
....
....
Standard Chartered Bank estimates that China's so-called tier-two cities, such as Dalian and Tianjin, may have 20 months of housing inventory by year end, putting "substantial" pressure on prices. Standard Chartered forecasts price cuts of 10% to 20% "in many cities."
....
....
The cost of apartments in big cities is well beyond young couples' means. Beijing has one of the most expensive real-estate markets in the world relative to the income of its citizens. Calculations based on Soufun data show that in the opening months of 2006 an average-price new apartment in China's capital would cost around $100,000—the equivalent of 32 years' disposable income for the average resident. By 2011, the average price had more than doubled to $250,000, but relatively modest increases in income mean it would now take 57 years of saving for the average resident to cover the cost.

This is similar to what is happening in certain pockets of NCR. Continuing with the article

Many apartment owners don't want to sell, he said, because they are waiting for prices to turn around.
....
The housing slowdown comes at a time when there is evidence China's growth is slowing.
....
UBS economist Tao Wang says she thinks the price decline will be short-lived as Chinese investors, with few other options, will again pour money into real estate and as local governments push up the price of land they sell to developers. Real-estate prices will rise for another three to five years, she estimates. A sharp fall then would batter investors, banks, construction firms and other sectors.

Well .... well we live in interesting times indeed. Even after the 2008 fiasco, when some 400 Billion USD homes were getting constructed in US purely for investment purposes, Chinese have still not learnt the lesson. The insularity of the Chinks is amazing.

Prem · Post by **Prem** » 11 Jun 2011 00:43

Duper

Prem · Post by **Prem** » 11 Jun 2011 00:51

http://www.marketwatch.com/story/china- ... 2011-06-10
China exports slow, but surplus widens

HONG KONG (MarketWatch) — China’s trade surplus for May expanded from April, though the pace of growth was slower than analysts’ expectations, as export growth cooled and imports accelerated.The trade surplus for the month totaled $13.05 billion, compared to April’s $11.4 billion, the General Administration of Customs reported. The result was well below the average projection for an $18.6 billion surplus, according to a Dow Jones Newswires survey. Exports for the month were up 19.4% from a year earlier, easing from a 29.9% rise in April, and less than a 20.4% rise suggested by the Dow Jones survey. imports climbed 28.4%, faster than April’s 21.8% and above .Goldman Sachs analysts in Hong Kong viewed the underlying conditions as weak, saying the relative strength in May imports were skewed by base effects from last year’s numbers, and that conditions within China reflect slower domestic-demand growth. Last year’s trade data showed a big turning point in April, when China swung back to a trade surplus after running a deficit in March.

ashashi · Post by **ashashi** » 11 Jun 2011 18:47

http://www.bloomberg.com/news/2011-06-1 ... -says.html

China at Risk of Hard Landing on Bad Loans, Excess Capacity, Roubini Says

“China is now relying increasingly not just on net exports but on fixed investment” which has climbed to about 50 percent of gross domestic product, Roubini said in Singapore today. “Down the line, you are going to have two problems: a massive non-performing loan problem in the banking system and a massive amount of overcapacity is going to lead to a hard landing.”

The nation faces a 60 percent chance of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices, according to Fitch Ratings. A record $2.7 trillion of loans extended over two years has pushed property prices in China to all-time highs even as authorities set price ceilings, demanded higher deposits and limited second-home purchases.

Roubini in July 2006 predicted a “catastrophic” global financial meltdown that central bankers would be unable to prevent. The collapse of Lehman Brothers Holdings Inc. in 2008 sparked turmoil that led to the worst financial crisis since the 1930s.

Prem · Post by **Prem** » 13 Jun 2011 09:09

http://www.businessweek.com/news/2011-0 ... ncern.html
Short Sales Climb to 8-Month High in Hong Kong on China Concern

June 13 (Bloomberg) -- Short selling in Hong Kong has risen to the highest level since September 2010 as concerns of slowing Chinese economic growth and further monetary-policy tightening intensify, according to report from Data Explorers.
Borrowed shares have risen to 12.2 percent of stock available for lending as of June 7, compared with 8.8 percent in January, Data Explorers, a New York-based research provider, wrote in a report June 9. The increase comes as Chinese companies listed in Hong Kong, Canada and the U.S. face pressure from short sellers amid allegations of lax corporate governance and fraud.“The Hong Kong equities market has become progressively more short,” wrote Will Duff Gordon, a senior research analyst at Data Explorers. The increase in short sales “has been driven by a sell-off of holdings by institutional investors coupled with strong demand to borrow equities.”The Hang Seng Index has slumped 2.7 percent this year as Chinese policymakers raised interest rates four times since October. Consumer prices in the world’s second-largest economy may climb 4.7 percent in 2011, based on economists’ estimates compiled by Bloomberg. That exceeds the Beijing government’s target of 4 percent.“A lot of people are of the view that property is in a massive bubble in China and perhaps they’re betting on a collapse in that area,” said Puru Saxena, who oversees about $350 million as chief executive officer of Puru Saxena Wealth Management in Hong

Prem · Post by **Prem** » 13 Jun 2011 09:12

The great property bubble of China may be popping

World Bank economists warned at a Beijing press briefing that a real-estate bubble was among the biggest economic risks China faces.Already, in nine major cities tracked by Rosealea Yao, an analyst at market-research firm Dragonomics, real-estate prices fell 4.9 per cent in April from a year earlier.
Last year, prices in those nine cities rose 21.5 per cent; in 2009, the increase was about 10 per cent, as China started to recover from the global economic crisis, with much steeper increases toward the end of that year.A downturn in property and apartment prices would harm Chinese industry and investment, and crimp consumer spending.China is a "housing-led economy", says UBS economist Jonathan Anderson, who estimates that property construction alone accounted for 13 per cent of gross domestic product in 2010, twice the share of the 1990s.While China's anticipated growth is still well above that of other large economies, any reduction could have deep consequences.The global economy is now even more dependent on China for demand for anything from commodities to luxury goods, given the tepid recovery in the US and Europe's continuing sovereign-debt problems.If the Chinese housing market slows faster than people had expected, the impact would be felt in a number of markets that export heavily to China.

http://www.theaustralian.com.au/busines ... 6072284347

wig · Post by **wig** » 14 Jun 2011 08:17

for the chinese this is dangerous and just might signal the problems up ahead

China's inflation rate may accelerate to more than 6 percent year-on-year in June, which could bring the full-year consumer price index for 2011 to as high as 5 percent, a government researcher said in remarks reported on Sunday

http://www.reuters.com/article/2011/06/ ... E020110612

RamaT · Post by **RamaT** » 14 Jun 2011 10:03

http://www.bloomberg.com/news/2011-06-1 ... emand.html

China steel production rose to the highest on record last month, boosted by construction demand.

Crude-steel production from the world’s biggest steel producer rose 7.8 percent to 60.25 million metric tons in May from a year earlier, according to data released today by the Beijing-based National Bureau Statistics.

Construction of new properties in China, the world’s second-largest economy, climbed 24 percent in the first five months, even as the government tried to slow the economy. China wants to cool the real-estate market and rein in bank lending to counter inflation.

Christopher Sidor · Post by **Christopher Sidor** » 16 Jun 2011 01:16

The Chinese central bank recently raised, what in India is called as SLR. This was done with the aim of combating inflation. Since the wages of Chinese workers have been kept ruthlessly down, so as to sustain the wage-advantage of chinese manufacturing, Inflation is one thing that hurts the chinese poor the most. In fact inflation is universally recognized as the cruelest tax which is levied on the poorest and the economically weakest section of the society.

So why is inflation heating up in China, when the Chinese central bank is trying to tie up liquidity as fast as humanly possible? Inflation, in its most basic definition, is caused by too much money chasing too few goods and services. While the central bank of China can limit the amount of lending that the chinese banks do, it has no control on the other money printing machine, FDI.

In classical economics the central banks prints the money and controls its circulation or its velocity, so as to keep growth and inflation in balance. But the problem with this theory is that it fails to recognize the role played by FDI/export-oriented-companies.

As foreign money enters China, the central bank of China, i.e. PBC, buys the dollars and gives Yuan in return. This creates a parallel money supply to the economy, thus pushing up the liquidity in the system, which the PBC is trying its utmost to control. While the Chinese central bank has control over the banks, it has zero or nil control over other companies paying dollars and buying yuan in return. These other companies are free to do what they want with their money. These companies need not maintain SLR. They are free to slosh around this money in the economy, thus increasing the money supply.

Another important factiod in China the exchange rate is not set by the central bank, i.e. PBC.

What this means is that China has to balance two things. One to maintain the peg which its currency has with dollar so as to sustain the export-led economy that it has built up. Second to make sure that inflation does not go too high, as the salary of the workers has been kept ruthlessly low. One of these will have to give. Wonder what will give in first ?

Offcourse there are work around. Capital control is one. But the problem with Capital Control is this, the earning of all of its export-led companies has to come back to China to pay the wages/taxes/materials/etc, i.e. operating cost of the chinese-export-oriented companies. Capital control might work for equity markets or bond markets.
Second option is instead of paying yuan for dollars, bonds (zero-coupon or extremely low interest bonds) be given. This does not solve the problem, rather it pushes it down the road to a later date. This is because these bonds will have to be redeemed at some point.

If China allows the peg to be broken, then it will see a serious erosion of its export-led competitiveness but it will get a handle on the inflation very quickly. On the other hand if it allows inflation to rise, it will lead to massive social unrest.

kmkraoind · Post by **kmkraoind** » 16 Jun 2011 13:38

Lead Poisoning in China: The Hidden Scourge

News had spread that workers and villagers had been poisoned by lead emissions from the factory, which had operated for six years despite flagrant environmental violations. But the truth was even worse: 233 adults and 99 children were ultimately found to have concentrations of lead in their blood, up to seven times the level deemed safe by the Chinese government.

One of them was 3-year-old Han Tiantian, who lived just across the road from the plant. Her father, Han Zongyuan, a factory worker, said he learned in March that she had absorbed enough lead to irreversibly diminish her intellectual capacity and harm her nervous system.

Really sad indeed. When corrupt generals loot the country, ordinary Chinese lifes are miserable. The one child policy will aggravate the agony of this poor father.

Prem · Post by **Prem** » 17 Jun 2011 05:26

http://www.businessinsider.com/robert-j ... ina-2011-6
How Corrupt Communist Party Officials Smuggled $124 Billion Out Of China

More than 15,000 corrupt Chinese officials smuggled an estimated $123.6 billion out of China from the mid-1990s to 2008.According to the Financial Times, Communist party members, judicial members, police, and state-owned corporation executives fled the country with varying amounts of cash.Well positioned officials with large amounts of money chose the U.S., Canada, Australia, and the Netherlands as their top destinations -- while lower ranking officials did their best to get to countries on China's borders.The report identified several ways officials were able to make off with so much money.
Using overseas casinos to launder money out of the country
Disguising money transfers to mistresses and relatives abroad
Obtaining fake trade documents and overseas investments
Using credit cards to buy high-priced items overseas and using illicit funds to pay back the fees to China .The report suggests more Chinese officials are stealing away with fraudulent funds as the leadership transition approaches

next year. T

Singha · Post by **Singha** » 18 Jun 2011 05:52

http://edition.cnn.com/2011/WORLD/asiap ... ?hpt=hp_c1

China's riot town: 'No one else is listening'
By Eunice Yoon, CNN
June 17, 2011 -- Updated 2220 GMT (0620 HKT)

CNN crew questioned by police in Xintang, scene of riots by angry workers
Unusually for China, people in Xintang willing to be interviewed on camera
Economic uncertainty is behind wave of discontent

Xintang, China (CNN) -- The authorities here are obviously nervous. My crew and I are sitting in a local government building being questioned by six propaganda officials.

One of them is scribbling down our credentials in a worn pocket-sized notebook. My producer, Steven Jiang, is talking non-stop to one officer who looks especially nonplussed.

We traveled to the manufacturing town of Xintang to investigate why thousands of migrant workers suddenly took to the streets just a week ago.

We knew the unrest was triggered by what appeared to be a minor event -- a pregnant migrant worker and her husband got in a scuffle with city officials and she ended up falling on the ground.

However, the ferocity by which this dispute exploded in a massive conflagration, pitting thousands of enraged workers against hundreds of riot police, took many by surprise.

The unrest seems to belie the image of China as a bustling economy going from strength to strength, enriching the lives of millions across the country, especially in the industrial south. But the problem is many people feel they are not getting their fair share of the rapid growth.

Since we arrived, the streets look relatively calm here. People are out shopping. Cars are on the roads.

However, the frustrations the workers feel is palpable.

We visited a job center and, for the first time since I started reporting in China years ago, workers approached us unfazed by our cameras. They were unafraid to vent their grievances to foreign TV journalists even as the police looked on.

The workers complained of the lack of jobs, unscrupulous bosses hoarding back pay, and corrupt local officials.

In China, with its one-party government, getting people to speak openly about the authorities is challenging and extremely rare, especially with the cameras rolling. It struck me these workers must feel no one else is listening.

Economic uncertainty is the root cause of China's wave of discontent. However, unlike in the Middle East, people here are not calling for a new government. What they want is a way to right wrongs and not to be forgotten.

We had been filming for several hours before the propaganda officials stopped us at a jeans factory. We need more video footage of the town so we negotiate a few more minutes of filming -- but we have to be escorted and are asked not to film the increasing security presence.

They told us Xintang had just been declared a special zone requiring additional permissions above and beyond our press credentials to report here.

We apply for new permits but, not surprisingly, they aren't granted and we are told we have to leave.

Migrant workers had told us more police patrol the town at night. Unfortunately, we won't be able to see that for ourselves.

RamaT · Post by **RamaT** » 24 Jun 2011 22:56

http://finance.yahoo.com/blogs/breakout ... 20643.html

"In the past it was tulips, then we had dot-coms, now it's China. Everyone wants a piece of it."

These are the rather concerning words of Gordon Chang, author of The Coming Collapse of China. Yes, the man is literally talking his book. That doesn't make him wrong. Hear him out as we all try to piece together the riddle that is China's grand foray into capitalism.

Chang's observation on that front connects the dots between the disconnect of China's stated growth of some 9 percent and the roughly 2 percent growth of Chinese imports of copper and other raw materials. Chang also notes that Chinese inflation is almost certainly larger that the Chinese admit. While China itself has announced concerns about inflation of late, the broad money supply (M2) has risen by some 20 percent. Indeed, in 2010, Chinese M2 had increased 26 percent year over year.

To me the situation in China resembles investors' recent experiences in Russia as much as it does tulips or 'net stocks. The Russian Stock Exchange quintupled from the start of '05 to May 2008 and took it all back in a spectacular 75 percent plunge over the last seven months of that year, when accounting scandals and government malfeasance reared their ugly heads.

Prem · Post by **Prem** » 27 Jun 2011 00:00

http://www.economist.com/node/18832070
The consequences of an ageing population

Over the next few years China will undergo a huge demographic shift. The share of people over 60 in the total population will increase from 12.5% in 2010 to 20% in 2020. By 2030 their number will double from today’s 178m. The dependency ratio—the number of people of non-working age, both young and old, as a proportion of those of working age—will bottom out between 2012 and 2015 at an exceptionally low level before rebounding, says a report by the Chinese Academy of Social Sciences. Put another way, China’s “demographic dividend”—the availability of lots of young workers—which helped fuel its growth will soon begin to disappear. The overall population will start to grow faster than that of working age. One trigger for this could be a sharp economic slowdown. Many Chinese have recently become familiar with the “Lewis turning point”, named after a 20th-century economist from St Lucia, Arthur Lewis, who said that industrial wages start to rise quickly when a country’s rural labour surplus dries up.
Wage rises are beginning to accelerate. According to Stephen Green of Standard Chartered, they have risen by 9-15% this year in the Pearl River Delta around Dongguan. Part of the increase is government-driven. Local authorities have been raising minimum wages, and the new five-year plan calls for increases averaging 13% annually, nearly twice as fast as the target for GDP growth. But the main reason is a diminishing labour supply, helped in the delta by an uptick in labour activism. A local academic says that a strike at a Honda car-parts factory last year provoked more than 200 copycat strikes and protests. Manufacturing is beginning to move inland to areas where labour is more plentiful and cheaper. Chongqing has been a big beneficiary. Morgan Stanley says the city is turning into the largest laptop manufacturing base in Asia. Its electronics industry is expected to create hundreds of thousands of jobs. Foreigners invested $6.3 billion in Chongqing in 2010, up by 58% on the year before