PRC Economy - New Reflections : Dec 15 2011

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svinayak
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Re: PRC Economy - New Reflections : Dec 15 2011

Postby svinayak » 14 Feb 2012 23:32

They will have to manage till 2017-2018 when the big population will start retiring.
Then the govt will not be able to manage the growth by its direct intervention.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 15 Feb 2012 00:48

Acharya,

In which case there is a cash gap. Roubini is clear that Panda has eaten through all the low hanging fruit. 2-3 years tops of the existing inflationary boom. And only if Panda throws money like no tomorrow.

They darkly hint that every sector they have seen from construction to investment to consumption is now in negative growth but the GDP miraculously stays at 9%, just ahead of India. That should tell you which economy they fear long term.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Prem » 15 Feb 2012 05:48

Theo_Fidel wrote:Acharya,

In which case there is a cash gap. Roubini is clear that Panda has eaten through all the low hanging fruit. 2-3 years tops of the existing inflationary boom. And only if Panda throws money like no tomorrow.
They darkly hint that every sector they have seen from construction to investment to consumption is now in negative growth but the GDP miraculously stays at 9%, just ahead of India. That should tell you which economy they fear long term.


Indians must keep the growth trajectory below China for at least next 15 years .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 15 Feb 2012 05:53

^^^^

Just curious. Can you elaborate as to why India needs to do that?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby shyam » 15 Feb 2012 13:41

Massage the ego.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 15 Feb 2012 14:12

shyam wrote:Massage the ego.


OH that I can understand. I'm familiar with the idea of "Saving Face" and how important it is to the CPC. However, doing that by deliberately ensuring that we grow at a slower pace or in other words leting China set our pace of growth is IMO a bit of overkill.

We can message the ego by appearing to always quake in our dhotis and doing oo la la! everytime China announces some new mega project etc. :twisted:

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Pratyush » 15 Feb 2012 14:24

^^^

Why grow slow, just under report growth. no? :P

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Abhijeet » 15 Feb 2012 14:53

Amit, thanks for your thoughtful response. Clearly, child labor and worker suicides are not desirable things. However, not having global-scale manufacturing in India does not make the problem go away -- it only moves it to other places. Child labor still exists in many industries in India. It doesn't need a Foxconn to bring it in, and keeping similar companies out doesn't mean it won't take place. There are children selling things and cleaning your windshield at traffic signals in every city in India. Whether manufacturing happens in India or not is orthogonal to their situation.

Wrt suicides -- there are hundreds of thousands of farmers committing suicide every year in India. Should we then say that we don't want agriculture at all in India -- let those Chinese have it because we're clearly too good for it?

Focusing on the bad aspects of everything will mean we never get anything new. Historically, all countries have had to move through the dirty sweatshop phase of the industrial revolution to grow rich. We can't say that we're too good for that sort of thing at a per-capita income of $1000.

As you yourself said -- the Foxconn Chennai plant is as productive as any of their global plants, and with better worker rights. Great -- Indian workers are cheaper, as productive, and better treated, than the Chinese. Wonderful news.

So what's stopping Foxconn from opening 20 more plants, other than the fact that the infrastructure doesn't exist to support them?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Pratyush » 15 Feb 2012 15:06

I just don't understand the BRF predilection to get into endless debates regarding the problems faced in India.

Whether it concerns the TSP, or the PRC. We just cant help compare ourselves with others. Even when we are here to discuss the economic miracle of the PRC and the success it has had in lifting millions out of poverty. Is the economic development of PRC complete. The answer to that is a resounding no.

When discussing the development of PRC, India should not be brought in the picture. Unless BRF wants to create an India-PRC socioeconomic contrast thread.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 15 Feb 2012 15:35

Abhijeet wrote:Amit, thanks for your thoughtful response. Clearly, child labor and worker suicides are not desirable things. However, not having global-scale manufacturing in India does not make the problem go away -- it only moves it to other places. Child labor still exists in many industries in India. It doesn't need a Foxconn to bring it in, and keeping similar companies out doesn't mean it won't take place. There are children selling things and cleaning your windshield at traffic signals in every city in India. Whether manufacturing happens in India or not is orthogonal to their situation.

Wrt suicides -- there are hundreds of thousands of farmers committing suicide every year in India. Should we then say that we don't want agriculture at all in India -- let those Chinese have it because we're clearly too good for it?

Focusing on the bad aspects of everything will mean we never get anything new. Historically, all countries have had to move through the dirty sweatshop phase of the industrial revolution to grow rich. We can't say that we're too good for that sort of thing at a per-capita income of $1000.

As you yourself said -- the Foxconn Chennai plant is as productive as any of their global plants, and with better worker rights. Great -- Indian workers are cheaper, as productive, and better treated, than the Chinese. Wonderful news.

So what's stopping Foxconn from opening 20 more plants, other than the fact that the infrastructure doesn't exist to support them?



Abhijeet,

I think you’re lumping a lot of different issues and trends.

For example you’re asking about why Foxconn is not opening 20 more plants in India? The simple reason is we do not have the ecosystem and supply chain network to support such an operation. One reason for that is the poor state of our infrastructure.

You talk about farmer suicides. That’s indeed a problem even though you’re figure of hundreds of thousands per year is overboard. However, the point to note is that such suicides are happening across the country and due to a variety of issues which need fixing and not due to one uniform issue. I don’t think anybody here is making the claim that there’s nothing wrong in India and that nothing needs fixing. This is one of the those things that certainly needs fixing and I have some ideas on this but since I don’t want to go OT, I’ll not elaborate here.

. Child labor still exists in many industries in India.


Yes child labor certainly exists in India due to the fact that a large portion of our economy is in the informal sector. However, I would assert that no child labor exists in the organized and unionized industrial sector of India more specially so in analogues of a multinational factory such as Foxconn. A young child laboring away in a tea stall or dhaba is certainly lamentable and wrong. But IMO it’s certainly better than a Foxconn like multinational using young children in its workforce because their small hands and nimble fingers are better for certain types of work.

Focusing on the bad aspects of everything will mean we never get anything new. Historically, all countries have had to move through the dirty sweatshop phase of the industrial revolution to grow rich. We can't say that we're too good for that sort of thing at a per-capita income of $1000.


If you look at history what you say certainly has merit. But you know what, trying to predict what will happen in the economic field on the basis of historical data is fraught with danger – a fact that the venerable Marx would have, I’m sure, acknowledged if he had been alive today.

The reason for this is one uncertain factor in all this is advancement in technology. One eminent economist once said that Marxism was defeated by the Ford assembly line because the mass scale production technique, for the first time reduced per unit cost to such a level that the workers who made the stuff could afford it. But I’m digressing.

What I meant to say is that it’s not a given that we need sweatshop like environments with no worker’s right in order for India to advance to the level where China is today. All you have to do is look at what the GDP was at the turn of the millennium and see by what factor it has increased to today. And this was achieved without the sweatshops of China which used to produce cheap toys and textiles and today produces cheap electronics.

I know we still have a long way to go and many mountains to conquer but there’s no conclusive evidence IMO to show that the path we are threading today is fundamentally wrong and we should change tack and follow the China model.

I would also like to add that I don’t necessarily focus only on the “so-called” bad aspects of China growth. I fully acknowledge that there are many things China has done which is worth emulating. Things like how to execute large and complex projects on time and within budgets. How to mass produce workers with skill sets required by the industry such as wielders, fitters, construction specialists, construction project managers etc. We can also learn how they have really emphasized on education and have built quite a few centres of excellence.

However, there are equally others areas where I personally think they have been unmitigated disaster. I don’t want to elaborate on them, we’ve discussed them often enough.

Bottomline, while we should track China as there’s much to learn from them, there’s no reason to get enamored by the shock and awe propaganda by the CPC.

I’ll also maintain that much of the advantage which China holds over India today in the economic sphere is due to two major reasons:

1) They started economic liberalization one decade before us.
2) They have been able to ramrod through policy via their dictatorial form of governance – policy that we just can’t implement with the same alacrity as is required. And that’s the reason we’ll take more time to grow rich. But hey I’d take democracy over a dictatorship any day.

JMT.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 15 Feb 2012 15:43

Pratyush wrote:^^^

Why grow slow, just under report growth. no? :P



A mirror version of Shanghai stats!

:rotfl: :rotfl: :rotfl: :rotfl:

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 15 Feb 2012 17:01



Wrt suicides -- there are hundreds of thousands of farmers committing suicide every year in India. Should we then say that we don't want agriculture at all in India -- let those Chinese have it because we're clearly too good for it?




Farmer suicides is a leftist straw men argument. The suicide rates in India are amongst the lowest in the world . Since 40% of the country is employed in agriculture , farmers account 40 % of India's suicides .

1 Lithuania 61.3 10.4 34.1 2009
2 South Korea[3] (more info) 41.4 21.0 31.2 2010
3 Guyana 39.0 13.4 26.4 2006
4 Kazakhstan 43.0 9.4 25.6 2008
5 Belarus[4][5] 25.3 2010
6 Hungary[6] 40.0 10.6 24.6 2009
7 Japan (more info)[7] 33.5 14.6 23.8 2011
8 Latvia 40.0 8.2 22.9 2009
9 People's Republic of China [8]
(more info) 22.23 2010
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11 Sri Lanka[9] 21.6 1996
12 Russia[10] 21.4 2011
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14 Serbia and Montenegro 28.4 11.1 19.5 2006
15 Finland 29.0 10.0 19.3 2009
16 Estonia 20.6 7.3 18.1 2008
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19 Belgium[note 1][6] 26.5 9.3 17.6 2009
20 Moldova 30.1 5.6 17.4 2008
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29 New Zealand[12] 20.3 6.5 13.2 2008
30 Sweden 18.7 6.8 12.7 2008
31 Cuba 19.0 5.5 12.3 2008
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40 Chile 18.2 4.2 11.1 2007
41 United States (more info) 19.0 4.9 11.8 2008
42 Trinidad and Tobago 17.9 3.8 10.7 2006
43 India (more info) 13.0 7.8 10.5 2009



However, not having global-scale manufacturing in India does not make the problem go away -- it only moves it to other places.




I am not sure what you mean by "global scale manufacturing. " Indias by manufacturing output is 8th highest in the world.And has been growing at close to 10% for quite sometime . (except the present fiscal year) .Now in other countries construction is classified as an industry . While in India it is classified as a service. So rank of manufacturing will go higher up if that is taken into account .

Indian pharmaceutical industry is the 3rd largest by volume (as measured in money , if they measure volume in quantity of drugs produced India will by far be the largest) . By 2015 India will overtake US in the field of new drug discovery .

The national manufacturing policy is going through cabinet. CON party is delaying it. But if it is implemented than our manufacturing output would double every 4-5 years or so.

Indian heavy engineering and chemical industry too are amongst the largest in the world .

Where we lag behind , we ll catch up .Like for instance the electronics industry ,

India eyes $400 bn in revenue from electronics by 2020

Now 400 billion was are total output a 3-4 years ago. By 2020 it ll merely be the size of Indian electronic industry .

I am not sure what you are crying about. These things take time . We don't have djinn technology unlike are western neighbour .


Bottom line- China is ahead , because it started earlier . Not because it did anything better .



Why grow slow, just under report growth. no?



It is already being under reported.

However no need to do so in fear of China. We have nothing to fear from China .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Abhijeet » 15 Feb 2012 23:28

gakakkad, I think you're being a bit coy when you say "all is vell" because India's manufacturing output is the 8th highest in the world. The gap between the 1st and 8th positions is several multiples, not a few percentage points, as we all know.

http://investing.curiouscatblog.net/201 ... n-germany/

amit wrote:Yes child labor certainly exists in India due to the fact that a large portion of our economy is in the informal sector. However, I would assert that no child labor exists in the organized and unionized industrial sector of India more specially so in analogues of a multinational factory such as Foxconn.


Exactly -- you are making the same point I am. The point is not to welcome child labor in organized industry -- but it is far easier to monitor and stamp out such abuses in the organized sector than outside it.

Anyway, my original point was to disagree with the claim that it's the special kindness of the Indian heart that has prevented manufacturing from taking off in India. I think even you agree with this general point?

amit wrote:For example you’re asking about why Foxconn is not opening 20 more plants in India? The simple reason is we do not have the ecosystem and supply chain network to support such an operation. One reason for that is the poor state of our infrastructure.


Hopefully I'm not quoting out of context.

---------------

In general, I think we underestimate the opportunity cost of the lack of infrastructure and large scale manufacturing in India. Yes, "eventually" we will grow rich -- eventually we are all dead too. It's the near term that's more interesting, not how great things will be in 2050.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Abhijeet » 15 Feb 2012 23:36

Amit, you're right that my farmer suicide number was way off. It is apparently 182K, total, between 1997 and 2007 -- still a large number, of course. I must have read the combined figure somewhere and remembered it as an annual number.

http://www.counterpunch.org/2009/02/12/ ... n-history/

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 15 Feb 2012 23:53

So what is the China Suicide rate? Any curious people?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby BijuShet » 16 Feb 2012 00:01

Abhijeet wrote:...
As you yourself said -- the Foxconn Chennai plant is as productive as any of their global plants, and with better worker rights. Great -- Indian workers are cheaper, as productive, and better treated, than the Chinese. Wonderful news.

So what's stopping Foxconn from opening 20 more plants, other than the fact that the infrastructure doesn't exist to support them?

Gustaki maaf sirjee but Foxconn will open 20 plants only if there is a need for an increase in their production capacity i.e. if the market demand for their products exceeds their current capacity . Am i missing something here? One productive plant in a place is no reason to open another one in the same place correct?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Hari Seldon » 16 Feb 2012 05:35

^^^ Not to go OT too much but its no secret labor laws are a problem area in India. However, as usual, a tolerance for grey zones has sprung up a private solution to the problem. The temping industry is growing by leaps and bounds (25% CAGR) and is technically in legal limbo under Indian law. So jugaad rides to the rescue.

Temping's tolerated by the govt as the entire ecosystem seems to gain. Qualified youth without jobs are able to land something to start with, folks from the informal sector are able to move to some semi-formal status, firms looking for temporary staffing without the headaches of taking on full time payroll (US experience, where its very costly for firms to add to payroll on account of health insurance provisions is instructive) get a ready reservoir of tappable talent, govt can pretend nothing is happening and milk taxes out of the temping firms at the same time, etc. Hopefully with time, things will evolve and mature and the median wage and working conditions will show improvement. Trends do pint in that direction. Much of the temps are placed in service positions but manufacturing seems to be slowly rising in share as well.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 16 Feb 2012 06:01

There are couple of caveats to this organized/unorganized picture.

First the organized sector is 20% by labor count of manufacturing but is roughly 75% of manufacturing productivity. The 'Jugaad' with 80% of labor only provids 25% of productivity. A very small slice of India produces all its wealth.

Second this is true of Panda as well. It only has about 90-100 million people in manufacturing out of 800 million workers. Just over 10%. Even India has roughly 40-50 million people in organized/unorganized manufacturing once construction is rolled in as it is in the rest of the world. So a small slice of China produces its wealth.

This also means that even if India grows to China size in manufacturing, we will only gain about 50 million jobs. This is a function of how manufacturing has changed. The floors are highly automated and require limited labor. Manufacturing in itself is not enough to employ India. The demographic trend is that we will be adding about 600 million workers by 2035.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 16 Feb 2012 06:18

Theo_Fidel wrote:There are couple of caveats to this organized/unorganized picture.

First the organized sector is 20% by labor count of manufacturing but is roughly 75% of manufacturing productivity. The 'Jugaad' with 80% of labor only provids 25% of productivity. A very small slice of India produces all its wealth.

Second this is true of Panda as well. It only has about 90-100 million people in manufacturing out of 800 million workers. Just over 10%. Even India has roughly 40-50 million people in organized/unorganized manufacturing once construction is rolled in as it is in the rest of the world. So a small slice of China produces its wealth.

This also means that even if India grows to China size in manufacturing, we will only gain about 50 million jobs. This is a function of how manufacturing has changed. The floors are highly automated and require limited labor. Manufacturing in itself is not enough to employ India. The demographic trend is that we will be adding about 600 million workers by 2035.


Great post Theo.

Gives a proper perspective and in a way puts a quantitative analysis to the point I made in my last post that India does not necessarily need to go through the "ants working in a sweatshop in order that their children get a good life" path. Technology has changed things. A good example is the iPhone cost breakdown stats that we posted a few pages back. Despite having thousands of workers working at its factory to assemble the phones in Shenzhen, the contribution of Chinese labor (that is the guys working in Foxconn sweatshops) is just 2 per cent of the $171 production cost.

But the question remains where would the 600 million people work in? Services may be an option but I personally think that the fact that a significant section of the Indian workforce is self employed could be the way forward. However, this is something that needs some research to form a proper perspective.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 16 Feb 2012 06:47

Abhijeet wrote:Exactly -- you are making the same point I am. The point is not to welcome child labor in organized industry -- but it is far easier to monitor and stamp out such abuses in the organized sector than outside it.


Sorry I don't think we are on the same page here Abhijeet. There's no dispute that child labor is bad and immoral wherever it exists. And it should be eradicated but then that's a different subject.

My point is simple. I find it abhorrent that a multinational like Foxconn which makes such high profile products could even think of employing minors, much less do so and only be exposed when a foreign journalist visits the plants. I find it incredible that the all knowing CPC didn't know. And mind you even our Chinese friends state that Foxconn is one of the better employers in China. I hate to think what happens in the Chinese hinterland in small companies, many of whom produce a lot of hazardous stuff (ref: an article I posted about the various Foxconn subsidiaries which produce harmful materials that are used in the manufacture of the iPhone and iPads).

Anyway, my original point was to disagree with the claim that it's the special kindness of the Indian heart that has prevented manufacturing from taking off in India. I think even you agree with this general point?


I'm not sure about others but the point I made about civilization ethos, as I've explained before, was not about any "special kindness" in the Indian heart. It's more to due with our psychology - who we are and what we are. We as a people are not the type who can function in a authoritarian set up and this has been affirmed throughout our history. Which is why a China-like model would never work in India.

In general, I think we underestimate the opportunity cost of the lack of infrastructure and large scale manufacturing in India. Yes, "eventually" we will grow rich -- eventually we are all dead too. It's the near term that's more interesting, not how great things will be in 2050.


Of course we suffer a massive opportunity cost! That is something that has made me tear my hair in frustration. I can post a litany of opportunity costs, for e.g. the Mumbai-Delhi industrial corridor should have been nearing completion by now. We should have had a GST regime up and running which could easily add two percentage points to our GDP growth and direct manufacturing to the poorest regions of India, instead of being concentrated in already (comparatively) well developed regions. And how about the backtracking in the FDI in multi-brand retail?

But once you've done the venting, one needs to ask the fundamental question. Why are we like that onlee? The reason again after all political haranguing boils down to, IMO, to what we are - again the point about civilization ethos. Just to reiterate, we simply cannot and would not be able to function in an environment where a "Big Brother" govt decides what is good for us and rams it down our throats, something which seems to work very well in China.

However, you know what makes me hopeful? It's the simple fact that despite so many things hobbling our economic development we've been only around 10-20 per cent behind China in GDP growth over the past decade or so. If we can get a few of our acts together with a countrywide consensus I think even that difference would disappear.

The reason for that, IMO, is that while the benefits of the Chinese system is very visible, the negatives is the proverbial 800 lb gorilla in the room that everybody knows exists but nobody wants to talk about. That is the negative effects of this development at all costs model.

I'm hopeful that, in my lifetime at least, I'll be able to know if I'm right or if my analysis is totally wrong.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby ArmenT » 16 Feb 2012 08:39

Hari Seldon wrote:^^^ Not to go OT too much but its no secret labor laws are a problem area in India. However, as usual, a tolerance for grey zones has sprung up a private solution to the problem. The temping industry is growing by leaps and bounds (25% CAGR) and is technically in legal limbo under Indian law. So jugaad rides to the rescue.

Speaking of temping, Chinese do an interesting variation of it.
Foxconn's Other Dirty Secret: The World's Largest 'Internship' Program
with the help of schools and government officials, the company runs a massive internship program built not on voluntary education but on “compelled” factory work for teenage students. According to Ross Perlin, author of Intern Nation, Foxconn may be running “the world’s single largest internship program – and one of the most exploitative.”

By Foxconn’s standards, Liu’s internship — which he landed through a labor placement firm in the nearby city of Guangzhou — would have included housing, food, and a small stipend estimated to be about half the salary of a typical factory worker, all in the name of hands-on education. But according to independent studies, and by Foxconn’s own admission, interning in a gadget factory is often less about job training and more of a lesson in the crude economics of globalization.

Foxconn says it relies on as many as 180,000 interns during the summer months to fulfill the needs of the voracious beast of Western gadget demand — and the requirements of companies like Apple, Amazon, HP and nearly every other major electronics brand.


and it is not just Foxconn doing this:
Even if Foxconn is the largest employer of interns, the system is far larger than Foxconn, and depends upon the collusion of local governments and schools. Observers like the Hong Kong-based China Labor Bulletin and SACOM say the system is abetted by a network of government officials, who are paid fees for recruiting students, work with an unruly system of public and private vocational schools that funnel students into internships and reap fees and other benefits in the process. Such schools have proliferated across the country in recent years, often targeting rural and low-income high school graduates not privileged or accomplished enough to make it through the testing gauntlet and enter China’s middle- and top-tier universities.
...
...
One student interviewed for the study said she and 30 other students were dispatched from from a vocational school in Guizhou Province to intern at an electronics factory in Changzhou, Jiangsu. There they were paid 500 yuan per month, half the pay of an average Foxconn worker, over the course of four months, with their internships tied to their eligibility for graduation.

Granted that Foxconn pays higher than an average factory in China, which may explain the lower pay. Still it is interesting that the internship is tied to their graduating from school, so they are forced to work at the factory.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gakakkad » 16 Feb 2012 08:55

Abhijeet wrote:Amit, you're right that my farmer suicide number was way off. It is apparently 182K, total, between 1997 and 2007 -- still a large number, of course. I must have read the combined figure somewhere and remembered it as an annual number.

http://www.counterpunch.org/2009/02/12/ ... n-history/


The total number of suicides for 20 years in the US would be much higher . Look at the data I have pasted above. The suicide rate in China is twice ours . Suicides happen everywhere in the world. Farmer suicide in India is a greatly over hyped issue .




gakakkad, I think you're being a bit coy when you say "all is vell" because India's manufacturing output is the 8th highest in the world. The gap between the 1st and 8th positions is several multiples, not a few percentage points, as we all know.



I never said , that all is well . Its only post 91 that we got in business . The problem is with the outdated and evil laws. It has nothing to do with kindness of heart. The labour laws in India are bad , because it enables the trade union Mafia to extort a lot of money from the poor industrialist .

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby gunjur » 16 Feb 2012 17:44

Apologies if already posted. Also if not the right forum, admins please move this to appropriate place.

China's timeless tussle with nature

Is there something similar research done on india?

With Regards
Gunjur

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby krisna » 17 Feb 2012 01:19

World on the Edge by the Numbers – Growing Goat Herds Signal Global Grassland Decline
wrt pandas only. Also look at baki stats cross posted in TSP dhaaga.
One indicator that helps us assess grassland health is changes in the goat population relative to those of sheep and cattle. As grasslands deteriorate, grass is typically replaced by desert shrubs. In such a degraded environment, cattle and sheep do not fare well. But goats—being particularly hardy ruminants—forage on the shrubs. Goats are especially hard on the soil because their sharp hoofs pulverize the protective crust of soil that is formed by rainfall and that naturally checks wind erosion. Between 1970 and 2009, the world’s cattle population increased by 28 percent and the number of sheep stayed relatively static. Meanwhile, goat herds more than doubled.

A second giant dustbowl is developing in northern and western China, western Mongolia, and central Asia. After economic reforms in 1978 shifted the responsibility for farming from large, state-organized production teams to individual farm families, China’s livestock populations spiraled upward. The number of goats continues to grow as the land is stripped of vegetation and winds help remove the soil to convert rangelands into desert.

Image
We can contrast the situation in China with that in the United States, which has a comparable grazing capacity. While the two countries have similar numbers of cattle, the United States’ combined sheep and goat population of 9 million is minute compared with China’s 281 million.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Singha » 17 Feb 2012 08:22

goats are a creature developed from the ground up to destroy the ecosystem. they will stand on hind legs and strip young trees totally nanga and be undeterred by thorns as well.
truly a resilient little beast.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Vasu » 17 Feb 2012 10:31

China pips India as gold importer in Dec qtr

Wild price swings caused by a volatile rupee sapped buying interest in gold in the fourth quarter of 2011, with imports well short of expectations and no pick up expected this year, dropping it behind China for the first time.

But the country's fourth-quarter imports figure came short of a previous forecast of more than 281 tonnes.

China's gold consumption stood at a higher 190.9 tonne between October and December, compared to 173 tonne in India during the same period.

"The rapid rise and fall in the rupee, and resulting domestic gold price swings had a strong impact on gold buying with both jewellery and investment demand in H2 lower by around 33%," the WGC said in a quarterly research report.

CHINA TO BECOME WORLD'S NO.1 GOLD CONSUMER IN 2012

India's imports are likely to stay flat this year and China may eclipse India as the world's biggest gold consumer on an annual basis as well, the WGC said.


So China's hoarding gold now? I certainly doubt its for Chinese families saving up to buy jewellry for their childrens' weddings.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Pratyush » 17 Feb 2012 10:42

^^^
Now I, get it why the bakis love goats.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Suraj » 17 Feb 2012 11:14

Indian households hold an estimated 20K tons of gold out of the approx 160K tons mined in all history so far. It is by far the largest gold holding entity in the world, far above even GOTUS holdings. More on it here. China benefits though, from the fact that it is now the largest Gold producer, exceeding South Africa. They therefore don't need forex to purchase it - local purchases can be denominated in their currency.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby krisna » 17 Feb 2012 20:21


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Re: PRC Economy - New Reflections : Dec 15 2011

Postby ArmenT » 20 Feb 2012 06:45

China cuts bank reserve ratio to boost lending
China's central bank has cut the amount of money banks must keep in reserve, in an effort to boost lending and sustain economic growth.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Singha » 20 Feb 2012 14:49

I thought they had raised the reserve ratio a few months ago to cool lending!

from march,2011
http://online.wsj.com/article/SB1000142 ... 18354.html

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby member_20617 » 20 Feb 2012 21:09

Theo_Fidel wrote:There are couple of caveats to this organized/unorganized picture.

First the organized sector is 20% by labor count of manufacturing but is roughly 75% of manufacturing productivity. The 'Jugaad' with 80% of labor only provids 25% of productivity. A very small slice of India produces all its wealth.

Second this is true of Panda as well. It only has about 90-100 million people in manufacturing out of 800 million workers. Just over 10%. Even India has roughly 40-50 million people in organized/unorganized manufacturing once construction is rolled in as it is in the rest of the world. So a small slice of China produces its wealth.

This also means that even if India grows to China size in manufacturing, we will only gain about 50 million jobs. This is a function of how manufacturing has changed. The floors are highly automated and require limited labor. Manufacturing in itself is not enough to employ India. The demographic trend is that we will be adding about 600 million workers by 2035.


Developed countries have moved from labour intensive industry to automated industry for five main reasons:
(1) Fall in birth rate = less labour available
(2) Workers dislike repetitive work
(3) Automation guarantees quality work
(4) Automation means no human errors and/or union strikes
(5) Automation means pay or pay increases do not arise

Despite these advantages, very expensive cars like Ferrari and Porsche are still produced manually with only some processes which are automated.

However, we don't have to follow the Western Model of Automation as it does not suit us.

India has massive unemployment. Instead of automation, we can employ people, to say, produce cars. Quality standards can be implemented and pay can be increased in line with inflation. All these people will have money coming in form of their wages and that will improve their standard of living.

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 20 Feb 2012 23:39

M2 currency creation is surging again. The brakes are off as the economy essentially screeched to a halt without 20% of GDP type annual currency printing. Panda needs cheap money to stay alive.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 23 Feb 2012 07:30

http://www.bloomberg.com/news/2012-02-2 ... -rise.html

China to officially roll back growth targets.

The article has several interesting bits of info. The one about the Gini Index is interesting as the blurb about GDP growth in the mid-teens during the go-go days. Incidentally China has surpassed the US as the biggest consumer of energy. This means that the per-capita consumption of energy is now greater than 20% of per-capita consumption in the US.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby RamaT » 23 Feb 2012 09:39

http://www.geopoliticalmonitor.com/chin ... dary-4622/

The Chinese government, pundits argue, learned the lessons of 2008 when America’s economic freefall subsequent to the Great Financial Crisis and Europe’s persistent economic malaise robbed China of its biggest and most secure export markets. The ensuing global economic collapse precipitated a 10.7% decrease in world trade volume in 2009 and slashed China’s annual exports from 26% annual growth to 27% contraction. [2] Not surprisingly, the Chinese economy experienced its lowest period of growth in decades and only a huge fiscal stimulus package saved China from following the industrialized west into a profound slump.

Now, Beijing is looking inward – in accordance with the expert consensus on China’s economic imperatives. It has thus begun a massive program to reorient the Chinese economy away from its perilous over-dependence on foreign investment and exports. Most importantly, it has embarked on a program to energize China’s moribund domestic consumer demand by investing heavily in the domestic economy.

Thus, in late 2011 Chinese officials informed the U.S. that Beijing is investing more than $1.7 trillion dollars on the strategic domestic sector over the next five years. [3] While experts acknowledge that the Chinese economy is bound to slow down, most economists argue that such government policies will continue to spur consumption and investment – thereby ensuring that the Chinese economy sails smoothly through choppy waters. [4] Optimistic analysts cite the fact that, while the vast majority of developed countries are mired in a prolonged stagnation marked by adverse feedback loops between the real economy and the financial sector, debt crises, cripplingly high unemployment and political unrest, China has maintained close to double-digit growth since 2008.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby RamaT » 23 Feb 2012 09:45

http://english.caixin.com/2012-01-17/100349542.html

Liu Mingkang, former chairman of the China Banking Regulation Commission

Liu: I've said in the past that this economic crisis will spread from the United States to Europe and finally land in Asia. Now we can see that it's already begun influencing Asia.

For example, growth in China's auto industry has been cut in half. A stock of over 750,000 autos had accumulated in warehouses as of November, now up to nearly 800,000. Even though this is all part of a natural cycle, cars grow obsolete quickly. This kind of stock could spiral out of control, which indicates that this is quite a serious excess of capacity.


First, domestic and external demands have taken a sharp drop, especially in the second half of 2011 and first half of 2012. I think that the pressure to increase domestic demand is picking up. That is because domestic demand is driven by business productivity.

Right now, business costs are rising. The cost of raw materials rose to between 5 and 10 percent of costs in 2011, labor costs to 25 percent, and finance costs to 50 to 60 percent. Leverage rates vary from industry to industry, but are usually above 50 percent. They are at that level due to rising interest rates and exchange rates. The yuan's exchange rate was on the rise during ten months of 2011. Only in recent months has its value begun to drop slightly.

These three factors had three results in 2011: business profits were down, losses were up and per capita income was hurt. The government came up with many measures to protect the lowest income population, but the consumption capacity of low-income citizens is limited. Demand on the part of middle- and upper-classes is dropping, especially in middle-class families. Everybody's attitude is "let's wait and see."

Second, there will be even more pressure to change our development path in 2012. For example, there will be pressure on the steel, auto-manufacturing, ship-building, textiles, machinery and other industries. Industrial structures will be further adjusted in 2012. We urgently need to transform our business development models. It has become a choice between life and death.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby RamaT » 23 Feb 2012 10:06

http://seekingalpha.com/article/383571- ... bal-crisis

In 2008 and 2009 I argued that the crisis we were undergoing would affect every major economy in the world, but not necessarily at the same pace. I suggested that the US typically is quick to adjust and, given the pace of deleveraging that was already taking place, I expected that it would be the first major economy out of the crisis, probably in the next two to three years, as private debt levels continue to decline and public debt growth slows.

China had an even bigger adjustment to make, but I worried that there were institutional factors that would slow down the adjustment process, especially with the expected change in leadership this year. Although I did not expect to see a serious contraction in growth until after 2013, I said that China would be the last major economy to emerge from the crisis. Why? Because the huge increase in investment it engineered to postpone the domestic impact of the global crisis exacerbated the imbalances within the economy and increased its already-excessive reliance on debt and investment to generate growth.


Wang recommends that Beijing begin a privatization process to wean SOEs from their addiction to excessively cheap capital, monopoly power, and distorted governance. This, he says, will force the SOEs to address and resolve their role in wasting capital, stifling innovation, and concentrating wealth. It will also allow China to grow in a much healthier and balanced way.

I have always thought that the least painful way for China to rebalance its economy requires that it radically redistribute income and wealth away from the state sector and to the household sector. There are many ways this can happen, some better and some worse, but privatizing SOEs and using the proceeds to clean up the banks (whose NPLs are a future claim on households), to shore up the social safety net, and to permit SME’s more scope in which to compete is, in my opinion, the most efficient ways to do so. It would also weaken sectors that are able to restrain change in the economy.


Large-scale privatization, of course, is not the only, or even the main, “solution” to the problems that Guo identifies, but if done correctly it can be part of the solution by undermining entrenched power and adding flexibility to the country’s governance structure. What is especially interesting, at least to me, is that an increasing number of commentators within China are identifying the social and economic rigidities imposed by the state system as crucially important in constraining China’s future economic and political growth.

This is becoming a pretty contentious debate. Over the past several months, in fact, we have seen a noticeable surge in articles and reports like this one – often by very prominent academics and policy advisors – criticizing the power of special interests in China. Their main concern seems to be over the constraints these special interests impose on further Chinese development, with the entrenched interests that have benefitted over the last decade or two having become so powerful that they are making it increasingly difficult for China to adjust.

A lot of very smart people in China, in other words, seem to be worried that the country’s governance structure and its development model are no longer able to accommodate the needs of the economy and that it is vitally important to confront the entrenched interest that make change difficult. This is sometimes presented in the foreign press as the debate between the “Chongqing” model versus the “Guangdong” model.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby ArmenT » 23 Feb 2012 12:26


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Re: PRC Economy - New Reflections : Dec 15 2011

Postby RamaT » 25 Feb 2012 16:30

http://blogs.wsj.com/chinarealtime/2012 ... ina-bears/

For more more than two decades, prophets of China’s impending doom have warned that the greatest economic success story in recent history is about to come screeching to a halt. For more than two decades, they’ve been wrong.

Of course, China has problems: an unbalanced growth model, ballooning credit levels and aging work force among them. But does that mean the world’s second biggest economy is about to fall over?

As a public service for Panda-lovers, China Real Time has compiled a list of the naysayers’ main arguments, and counter arguments you can use to stop them in their tracks.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 27 Feb 2012 10:31

http://www.bloomberg.com/news/2012-02-2 ... upers.html
Chinese politicians accumulate more wealth in an year than the combined net worth of the entire US congress...
The American elite taught their Chinese counterparts well it seems...


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