PRC Economy and Industry: News and Discussions

[shynee]

China Cuts Purchases of Treasuries and Foreign Bonds

Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.

China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.

The main effect of slower bond purchases may be a weakening of Beijing’s influence in Washington as the Treasury becomes less reliant on purchases by the Chinese central bank....

There have also been some signs that Americans may consume less and save more money in response to hard economic times. This would further decrease the American dependence on Chinese savings.

The abrupt slowdown in China’s accumulation of foreign reserves instead seems to suggest that investors were sending large sums of money out of mainland China early this year in response to worries about the country’s economic future and possibly its social stability in the face of rising unemployment.

Evidence of such capital flight included a flood of cash into the Hong Kong dollar. Mainland tourists were even buying gold and diamonds during Chinese new year holidays here in late January....

Some economists contend that slower growth in Chinese foreign currency reserves is not important to the economic health of the United States, even though it may be politically important. In the first quarter, instead of the Chinese government sending money out of the country to buy foreign bonds, Chinese individuals and companies were buying many of the same bonds.

“The outflow would mostly end up in the U.S. anyway,” even if China is no longer controlling the destination of the money, said Michael Pettis, a finance professor at Peking University, in an interview on Thursday..

[rsingh]

Expolts is nose-dive-mode again............because so many Chinese are consuming the things made for expolts.
As you may remember expolts were less in
Jan 2009 because of new year holidays
Feb 2009 because there were 28 days in the month onree.

[amit]

There have also been some signs that Americans may consume less and save more money in response to hard economic times. This would further decrease the American dependence on Chinese savings.

While the bolded portions is a logical short term measure that was bound to happen in response to the economic crisis, on the longer term if this becomes a trend then China is in very deep trouble.

In fact, I personally think that this crisis came about 5-10 years too early for China. Why? That's because it's become financially too strong not to try and take advantage to challenge US domination - which has been the single minded objective all along.

However, it is not strong enough to carry this out smoothly either by persuasion of by brute force - note all those confused noises about SDRs as a new global holding currency, more say in IMF and then the ridiculous self-goal of denying the ADB loan for India citing Arunachal.

One thing's for sure. As the US and the rest of the West recovers from this it's not going to be business as usual - the world economic model is going to get tweaking.

The idea that China will remain the factory of the world with cheap exports thanks to an artificially suppressed yuan/remnimbi is not going to work anymore. China will not be allowed to rake in those trillions in surpluses.

The question is, what will happen to all the production capacity built in? For how long is the government going to dole out money to the rural poor to buy washing machines and cars? As one of the recent articles posted showed, China's 40 per cent of GDP savings rate is due to government savings and not due to it's citizens having extra cash in hand which they could use to buy what the factories produce.

And even a couple of years of less than 7 per cent growth can spell trouble for the Middle Kingdom.

Interesting but troubling times ahead. As things worsen the PLA will turn its eyes to what it perceives as a soft target - Arunachal Pradesh.

[vsudhir]

Some interesting PRC conomy links:

Hard Landing and the China Paradox

Aside from that, let me just make one brief observation: This week I’ve been reading scores of articles on the financial crisis from a wide array of Chinese media, some written in English and others translated into English. One thing I suddenly realized today: Nearly every single one of them begins by stating matter-of-factly, in more or less these words, “The global recession, which was caused by America’s financial irresponsibility….” At a point later on in each article, with uncanny regularity, appears another matter-of-fact reference, this time to the certainty that China’s situation is now improving, the worst is over and it’s now just a matter of putting the finishing touches on a successful stimulus plan.
Now, I am the first to admit this disaster was to a very large extent caused by American fiscal irresponsibility. However, I also know that the exact same message planted in the opening sentences of one article after another after another after another is no coincidence and is part of a propaganda campaign that has two clear intentions:
1. To make it clear that it was America’s malfeasance that spoiled the party, and
2. To make it clear that China is bouncing back rapidly and was better prepared for catastrophe (through its savings) and better prepared for the arrival of new world order to come.

PRC propagandu at work. So much for phree media onlee.

Roubini's PRC outlook

Note: Above is not accessible directly from PRC apparently, will need proxy to get to it.

[Vipul]

China, the Brahmaputra and India.

China’s attempt to divert the Brahmaputra has reared its head again. The Chinese are apparently eyeing about 40 billion cubic metres, out of the annual average inflow of 71.4 billion, of the Brahmaputra’s waters. The river skirts China’s borders before dipping into India and Bangladesh. China has a serious need to feed water to its north-west territory, the Gobi Desert, which contains almost half the country’s total landmass, but only seven per ce nt of its freshwater. The Gobi occupies an area of 13,00,000 sq.km making it one of the largest deserts in the world. Desertification of Gobi since 1950s has expanded it by 52,000 sq.km and it is now just 160 km from Beijing. It is said to expand by 3 km per year.

China has the will and the necessary resources — manpower, technology and, above all, large foreign currency reserves in excess of a trillion dollars — to take the Brahmaputra diversion project forward; the country’s economic stimulus in infrastructure could create employment potential for more than a few million people.

What does this diversion mean for India? The move by the Chinese Government will put almost 40 per cent of India’s hydel potential in trouble. India has hydro potential of 1,50,000 MW, of which 50,000 MW is in the North-East. Arunachal Pradesh, mainly fed by Brahmaputra’s tributaries — Siang, Subansiri and Lohit — supports development of 28,500 MW hydro projects. Of this, 2,000 MW is under development by NHPC and almost 23,500 MW has been awarded to Reliance Power, Jaiprakash Power, Athena Energy and Mountain Falls Ltd, besides NHPC.

Most of the awarded projects are awaiting environmental clearances, which may take two-three years, before work can begin on the ground. Since Brahmaputra is fed mainly by melted water from the Himalayan glaciers, the hydrological flow is expected to be affected during the lean flow season (winters), affecting generation from the planned plants. A move by China to divert the water will force private developers to be wary of investing in projects with the hydrological risk of not having adequate water even during normal times.

With this in mind, the Ministry of Water Resources (MoWR) is reported to have recently held a joint meeting with the Home Ministry, the Planning Commission and the State Governments of Assam and Arunachal Pradesh to work out a suitable funding and compensation mechanism for storage projects on the Siang, Subansiri and Lohit Rivers.

It was suggested at the meeting that 90 per cent of the funding of the flood moderation cost component of storage projects could be released to Arunachal Pradesh, which could then be passed on to the project authorities and, second, the amount equivalent to flood protection benefits accruing to Assam, as a result of the storage projects could be monetised and released to Arunachal Pradesh by the Planning Commission.

Hopefully, this should speed up the process of the project development so that the country can claim its first user right over the waters in terms of the MoU entered into between India and China in 2002.

The Brahmaputra flows 2,900 km from its source in the Kailash range of the Himalayas to its massive delta and the Bay of Bengal in Bangladesh. The river drains a vast area of nearly 9,36,800 sq. km. This river system forms the largest river delta and the third largest free water fall out into the Ocean in the world — next only to the Amazon and the Congo rivers. More people live in the Ganges-Brahmaputra river basin than Western Europe and the entire North American continent.

This river system is of critical interest to all the four countries, including Nepal. China is an upper riparian state and, therefore, has the freedom and capacity to divert the river. Should that happen, the irreparable loss will result in destruction of a large part of the North-East and Bangladesh. This step will also drive millions of refugees from Bangladesh into India for their livelihood.(this is enough motivation for the chinese to want to go ahead with the project) There is thus an urgent need to address this issue trilaterally.

Water sustains life, environment and our culture. With global demand for water on the rise, we cannot be surprised if one country responds to its needs unilaterally; it is for us to take adequate steps before such disaster strikes.

[vsudhir]

MaoA biladers....

China Faces a Water Crisis

After decades of massive economic growth and the migration of villagers to cities, the scarcity of water in China is more dire than ever

I'm shocked. sh0cked, i tell ya... whuddathunkit onlee???

/snalk

[Sanjay M]

BBC:


China's GDP growth falls to 6.1%

China's annual gross domestic product growth slowed in the first quarter of 2009 to 6.1%, the National Bureau of Statistics has announced.

Growth was 6.8% in the last quarter of 2008 and this is the weakest growth since quarterly records began in 1992.

Economists had forecast growth of about 6.3% amid the global collapse in trade.

China's government has said it is determined to achieve annual growth of 8%, seen as necessary to maintain employment and forestall unrest.

[LokeshP]

6.1%

this is going to hurt PRC much. the Coastal vs Interior confrontation will start in earnest as the Coast wallahs are squeezed and they are are reluctant to part money for interior...

[Liu]

6.1%

this is going to hurt PRC much. the Coastal vs Interior confrontation will start in earnest as the Coast wallahs are squeezed and they are are reluctant to part money for interior...

now ,the crisis has reached to the city where I live.

here, one hongkongese-investing textile enterprise now wants to fire some workers,but worker now go to strike against such a fire.

[Dilbu]

here, one hongkongese-investing textile enterprise now wants to fire some workers,but worker now go to strike against such a fire.

I wonder what Mao might have done. He wont disapprove strikes for sure. Armed uprisings would be even better. Time for revolution I say.

[Suraj]

Liu: Do you reside in Tianjin ?

I've heard anecdotal stories from acquaintances with business interests in the region, about significant job losses in the Shanghai-Suzhou area as well.

[Liu]

here, one hongkongese-investing textile enterprise now wants to fire some workers,but worker now go to strike against such a fire.

I wonder what Mao might have done. He wont disapprove strikes for sure. Armed uprisings would be even better. Time for revolution I say.

the "arm uprisings" so called is just some imagination of some guys who don't know about CHina at all.

CHina is a country where there all people have no "arms' ,except armymen and police.

[Liu]

Liu: Do you reside in Tianjin ?

I've heard anecdotal stories from acquaintances with business interests in the region, about significant job losses in the Shanghai-Suzhou area as well.

I do not live in Tianjian,but a small inland city 500 KM away from Guangzhou.

I am a bank manager. the enterprise in trouble of strike is one of my clients.

if the enterpise bankrupts, I would be in trouble ...because the enterpise has borrowed my bank millions of dollars....

[ashi]

Economist is kissing up some a$$ here ...

Bamboo shoots of recovery
http://www.economist.com/finance/displa ... tures_box2

[amit]

Economist is kissing up some a$$ here ...

Bamboo shoots of recovery
http://www.economist.com/finance/displa ... tures_box2

A$$ kissing is getting nauseating and the high and mighty British rags are always in the forefront.

Just consider this:

If a collapse in domestic demand led China’s economy down, it can also help lead it up again. Not only is China’s fiscal stimulus one of the biggest in the world this year, but the government’s ability to “ask” state-owned firms to spend and state banks to lend means that the government’s measures are being implemented more rapidly than elsewhere. To take one example, railway investment has tripled over the past year.

Only about 30% of the government’s 4 trillion yuan ($585 billion) infrastructure package is being funded by the government. Most of the rest will be financed by bank lending, which had already soared by 30% in the 12 months to March, twice its pace last summer. JPMorgan thinks that this credit and investment boom could lift GDP growth to an annualised pace of over 10% in each of the next three quarters.

Now if the Indian government asked SBI and other state-owned banks to lend as if there's no tomorrow, the Conomist would have thundered about fiscal irresponsibility.

But see it mewing when it comes to China:

Also, about half of the increase in investment is on public infrastructure. This will inevitably include some white elephants, but in a poor country, the return on infrastructure investment is generally high. There is no need to build “bridges to nowhere”, when two-fifths of villages lack a paved road to the nearest market town.

Generally high my foot. Perhaps the Conomist's great colomnist should go and visit all the "productive" infra put up in Beijing for the Olympics games?

The biggest task for China is to find a new engine for future growth. It cannot rely on exports, nor can the investment stimulus be sustained for long. Without stronger consumer spending, China’s growth will be much slower than in recent years. Reforms to improve health care and the social safety net will take many years to encourage people to save less.

This is the only sane paragraph in the article. And this is something I've been saying for some time now. China needs a future engine of growth because the factory of the world stuff is going to be a thing of the past once this crisis is over.

The only engine that's going to work is domestic consumption. But how is the Govt going to get the Chinese to spend? Just look at the suggestion the Conomist puts forth without even a comment - everyone and everything in China looks at a top down authoritarian process.

Andy Xie, an independent economist based in Shanghai, suggests that the quickest way to boost consumption would be for the government to distribute the shares that it holds in state-owned enterprises to households, and to force those firms to pay larger dividends. But the authorities in Beijing are unlikely to take his advice. How else would it lean on big firms to support the economy in times like these?

And this is the same Conomist which lectures India for not opening up the banking sector and privatizing all public sector companies. [Note: I personally favour privatization but am just commenting on Conomists hypocracy]

You know I somehow think the picture of the Panda having its bamboo shoots is very apt. But in way the Conomist editors didn't realise. The helpless looking Panda is the Conomist and the shoots are the crumbs thrown at it by the Chinese Communist Party.

Leftists of the world unite (under CCP of course)!

[rundstedt]

Liu: Do you reside in Tianjin ?

I've heard anecdotal stories from acquaintances with business interests in the region, about significant job losses in the Shanghai-Suzhou area as well.

She reside in Changsha, capital of Hunan province.

[rundstedt]

dog meat is common in Korea too. Many amirkhans who generally mock yindians for not eating beef are themselves shell shocked when they hear about man's best friend being on dinner table in east asian restaurants.
They have a saying in chinese: Any animal that has the back pointing towards the sky can be eaten.
That only leaves man out

You are wrong.
Chinese are talking about Cantonese:"They eat all four-legs except bench, they eat all two-wings except plane".
Most of Chinese abhor Cantonese because of they eat cats.

[sivabala]

I always wondered at the replies of Liu to fellow commentators.

She reside in Changsha, capital of Hunan province.

Now, I can understand.

[sanjaykumar]

Sorry folks but this is the last generation of white privelige.

http://www.atimes.com/atimes/China/KD18Ad01.html

[amit]

Some time ago there was a discussion in one of the China related threads in which it was postulated that as economic growth gets hit there's likely to be a counter move by the conservatives, supported by the PLA, to take power from the market oriented liberals who run the show.

Well here seems to be the first proof of something like that happening:

For China's New Left, Old Values

Longish article but full of interesting factoids.

Excerpts:

The crowd of about 220 people, who had come to hear Zuo and other authors and academics speak on the topic of "Unhappy China," cheered.

For a growing number of Chinese, the solutions to the problems of the country's present -- including the income gap between rich and poor and the manipulation of the court system by state officials and company executives -- lie in its past, with the teachings of Mao Zedong.

The most influential critics, known collectively as the New Left, are not like the dissidents or political exiles of a previous generation. They are not calling for an overthrow of the Communist regime. Their recommendations and criticisms are, instead, based on a belief that state power can redress the injustices created by free markets, privatization and globalization. Their views are also characterized by a fierce nationalism and criticism of the West.

Their rise comes as the Communist Party, which has held absolute power since 1949, faces growing discontent over unemployment, contaminated infant formula that has sickened more than 300,000 babies, shoddy construction that led to the collapse of thousands of school buildings during last year's Sichuan earthquake and corruption among public officials at all levels.

So much for the propaganda that we here and some of us lap up from our Chinese guests.

Wang, a professor of humanities who is considered the leading New Leftist, has said that China is caught between two extremes: "misguided socialism" and "crony capitalism."

Now this is one helluva quotable quote!

Zuo has been critical of the robber barons who took advantage of the privatization of state enterprises. He has argued that because they did not have to pay back government-run banks and did not adequately compensate workers, they essentially looted the state's coffers.

So we have robber barons in China too. Comrade Karat please note.

"Today in China, those elite are lazy and do nothing. They failed to generate any innovations even after spending all that money from taxpayers," he said. "China's current achievements are more a product of efforts by industry workers, rural workers."

Blogger Yang Songlin, a 60-year-old who used to run his own business in Henan province, said he began to attend the meetings because of his concern that China had veered from its founding principle of helping the ordinary man. "Bureaucrats, big bosses and intellectual elite formed a joint, strong interest group while Chinese laobaixing, like workers and rural farmers, were marginalized and benefited little from the reform process," he said.

He has been fighting government officials and developers in his home town who have, in his view, illegally seized land from farmers. In the Mao era, he said, there was little corruption because there was a powerful system of checks and balances.

Note the trail balloon regarding the nostalgia of the good old days under Comrade Mao. May be there's a pining for another Great Leap Forward?

During 30 years of capitalist-style economic reforms pioneered under Deng Xiaoping, Fan said, "we had been sticking to one goal: America's today is China's tomorrow, and we should work for that." Now, with the United States in crisis, Fan said, "Chinese people are beginning to reflect on this phenomenon -- whether the financial crisis is not only purely economic or financial but something that arose because of a development-path issue, that there might be a problem for us to pursue such a path."

Folks, one point to note in this article is that not one of the people quoted were worried about their names being splashed on a paper like the Washington Post. Knowing how China operates, isn't it reasonable to guess that these folks have the backing/blessing of some powerful groups within the Chinese Communist Party?

Are they being used as pawns in a game of shadow boxing going on between the Liberals and the Traditionalist?

All interesting questions? And something that's been speculated on BRF for sometime ago.

[wrdos]

A Chinese farmer on his homemade helicopter.

Chen Zhaorong, a farmer from Guangdong Province with only 9years of education, spent 2 years to DIY a helicopter and finally succeded.

http://www.youtube.com/watch?v=O9SGUHU1s9E

[ashi]

Can this be real?
Goldman Sachs Raises China Economic Growth Forecasts: 8.3% for 2009 and 10.9% for 2010
http://www.bloomberg.com/apps/news?pid= ... nSHaqsTGx0

[rundstedt]

Deals Help China Expand Sway in Latin America

CARACAS, Venezuela — As Washington tries to rebuild its strained relationships in Latin America, China is stepping in vigorously, offering countries across the region large amounts of money while they struggle with sharply slowing economies, a plunge in commodity prices and restricted access to credit.

In recent weeks, China has been negotiating deals to double a development fund in Venezuela to $12 billion, lend Ecuador at least $1 billion to build a hydroelectric plant, provide Argentina with access to more than $10 billion in Chinese currency and lend Brazil’s national oil company $10 billion. The deals largely focus on China locking in natural resources like oil for years to come.

China’s trade with Latin America has grown quickly this decade, making it the region’s second largest trading partner after the United States. But the size and scope of these loans point to a deeper engagement with Latin America at a time when the Obama administration is starting to address the erosion of Washington’s influence in the hemisphere.

“This is how the balance of power shifts quietly during times of crisis,” said David Rothkopf, a former Commerce Department official in the Clinton administration. “The loans are an example of the checkbook power in the world moving to new places, with the Chinese becoming more active.”

Mr. Obama will meet with leaders from the region this weekend. They will discuss the economic crisis, including a plan to replenish the Inter-American Development Bank, a Washington-based pillar of clout that has suffered losses from the financial crisis. Leaders at the summit meeting are also expected to push Mr. Obama to further loosen the United States policy toward Cuba.

Meanwhile, China is rapidly increasing its lending in Latin America as it pursues not only long-term access to commodities like soybeans and iron ore, but also an alternative to investing in United States Treasury notes.

One of China’s new deals in Latin America, the $10 billion arrangement with Argentina, would allow Argentina reliable access to Chinese currency to help pay for imports from China. It may also help lead the way to China’s currency to eventually be used as an alternate reserve currency. The deal follows similar ones China has struck with countries like South Korea, Indonesia and Belarus.

As the financial crisis began to whipsaw international markets last year, the Federal Reserve made its own currency arrangements with central banks around the world, allocating $30 billion each to Brazil and Mexico. (Brazil has opted not to tap it for now.) But smaller economies in the region, including Argentina, which has been trying to dispel doubts about its ability to meet its international debt payments, were left out of those agreements.

Details of the Chinese deal with Argentina are still being ironed out, but an official at Argentina’s central bank said it would allow Argentina to avoid using scarce dollars for all its international transactions. The takeover of billions of dollars in private pension funds, among other moves, led Argentines to pull the equivalent of nearly $23 billion, much of it in dollars, out of the country last year.

Dante Sica, the lead economist at Abeceb, a consulting firm in Buenos Aires, said the Chinese overtures in the region were made possible by the “lack of attention that the United States showed to Latin America during the entire Bush administration.”

China is also seizing opportunities in Latin America when traditional lenders over which the United States holds some sway, like the Inter-American Development Bank, are pushing up against their limits.

Just one of China’s planned loans, the $10 billion for Brazil’s national oil company, is almost as much as the $11.2 billion in all approved financing by the Inter-American Bank in 2008. Brazil is expected to use the loan for offshore exploration, while agreeing to export as much as 100,000 barrels of oil a day to China, according to the oil company.

The Inter-American bank, in which the United States has de facto veto power in some matters, is trying to triple its capital and increase lending to $18 billion this year. But the replenishment involves delicate negotiations among member nations, made all the more difficult after the bank lost almost $1 billion last year.

China will also have a role in these talks, having become a member of the bank this year.

China has also pushed into Latin American countries where the United States has negligible influence, like Venezuela.

In February, China’s vice president, Xi Jinping, traveled to Caracas to meet with President Hugo Chávez. The two men announced that a Chinese-backed development fund based here would grow to $12 billion from $6 billion, giving Venezuela access to hard currency while agreeing to increase oil shipments to China to one million barrels a day from a level of about 380,000 barrels.

Mr. Chávez’s government contends the Chinese aid differs from other multilateral loans because it comes without strings attached, like scrutiny of internal finances. But the Chinese fund has generated criticism among his opponents, who view it as an affront to Venezuela’s sovereignty.

“The fund is a swindle to the nation,” said Luis Díaz, a lawmaker who claims that China locked in low prices for the oil Venezuela is using as repayment.

Despite forging ties to Venezuela and extending loans to other nations that have chafed at Washington’s clout, Beijing has bolstered its presence without bombast, perhaps out of an awareness that its relationship with the United States is still of paramount importance. But this deference may not last.

“This is China playing the long game,” said Gregory Chin, a political scientist at York University in Toronto. “If this ultimately translates into political influence, then that is how the game is played.”

[Sanjay M]

BW:

China Overtakes Germany in Auto Output
New figures reveal that China overtook Germany and the U.S. last year to become the world's largest producer of automobiles

[Nayak]

A ??30,000 copycat Rolls-Royce? It must be made in China

By Ray Massey

Last updated at 11:04 AM on 23rd April 2009

* Comments (17)
* Add to My Stories

With a flying lady on the bonnet, its vast classical radiator and familiar contours, it looks for all the world like a Rolls-Royce.

Hop inside, and the massage seats, pure wool carpet, subdued lighting and wine cabinet add to the impression.

But the car in question could hardly be less British. It is actually a Geely GE, made in China.

Although Geely claims to be ‘re-inventing the classic’, it seems Rolls-Royce bosses disagree.

They are consulting lawyers after seeing this Chinese-made car audaciously displayed just feet from the classic brand’s Phantom at the Shanghai Motor Show.

‘Our colleagues in Shanghai are taking a serious look at it,’ a spokesman said. ‘Rolls-Royce Motor Cars is very protective of its brand image and takes seriously any attempt to imitate its products.

‘Rolls-Royce is currently keeping its options open and is in consultation with its legal advisers.’

The grille, the Flying Lady mascot, also known as the Spirit of Ecstasy, and the Rolls-Royce name and initials are specifically protected.

With its ??250,000 price-tag, the original Rolls-Royce Phantom has always been the preserve of the privileged few.

But costing just ??30,000, the GE, which stands for Geely Excellence, appears to offer a ‘luxurious mobile palace’ on a much tighter budget.

For your money, you get an air purifier with separate air conditioning, described as an ‘oxygen bar’, cigar storage, a refrigerator and a ‘starlight’ interior roof lining – a signal feature of the original Phantom.

Chinese car companies have a reputation for copying foreign classics – sometimes leading to legal action.

Four years ago Shuang-Huan Auto created a lookalikeof Honda’s CR-V grass-and-gravel off-roader. So incensed were Honda that they sued Shuang-Huan, which counter-sued.

Geely already has links with British icons.

It builds taxis for London under licence.

And it is one of the companies said to be considering buying out Britain’s Vauxhall and Germany’s Opel from the ailing U.S. parent company General Motors, which is on the brink of bankruptcy.

ROLLS-ROYCE PHANTOM

BUILT: Goodwood, Sussex

PRICE: ??250,000

ENGINE: Mammoth 6.75litre V12

LENGTH: 19ft 2 inches

TOP SPEED: Artificially restricted to 150mph / 0-62mph: 5.7 seconds

FEATURES:

Original 'Grecian-style' large grille. Spirit of Ecstasy mascot, also dubbed 'The Flying Lady'. Romantic 'starlight Headliner' in roof to emulate night sky. Drip dry umbrellas hidden in rear doors. 9 standard wood veneers. 44,000 different exterior colours.
Cashmere blend headliner. Lambswool rugs Special soft leather interior

THE GEELY EXCELLENCE

BUILT: Zhejiang, China

PRICE: circa ??30,000

ENGINE: 3.5litre V6

LENGTH: 17ft 6 inches.

TOP SPEED: 110mph (estimated) 0-62mph: 10 seconds (estimate)

FEATURES:

Single rear 'throne'. Pastiche 'Grecian-style' large grille. Flying Lady-style mascot
Romantic 'starlight Headliner' in roof to emulate night sky. Glass interior divider
Pure wool carpet. 'Six star' safety. Cigar store. Refrigerator. Wine cabinet

Spot the difference: The original Spirit of Ecstasy on the Rolls Royce Phantom (right) and on the Geely GE (left)

[amit]

Nayak,

You haven't noticed the most vital difference in the Spirit of Ecstasy statutes.

The doughty old RR Sprit of Ecstasy is modestly holding back...err hmm ... her headlights (this is a phamily phorum).

Now see what the Geely Sprit of Ecstasy is doing? G(l)eefully strutting her stuff?

[Singha]

it shows han are more confident and stronger than british.

[Nayak]

Nayak,

You haven't noticed the most vital difference in the Spirit of Ecstasy statutes.

The doughty old RR Sprit of Ecstasy is modestly holding back...err hmm ... her headlights (this is a phamily phorum).

Now see what the Geely Sprit of Ecstasy is doing? G(l)eefully strutting her stuff?

More like a two dollar Cheeni wh0re throwing herself helplessly at a gora.

Da Nang Hooker: Well, baby, me so horny. Me so HORNY. Me love you long time. You party?

http://www.imdb.com/title/tt0093058/quotes

[Tanaji]

If I am not mistaken, the Geely has a single seat at the back, shaped in the form of a throne.

http://www.dailymail.co.uk/news/worldne ... China.html

[Ameet]

China gold reserves surge, now world's #5 largest holder, boosted reserves to 1,054 metric tons.

http://www.marketwatch.com/news/story/c ... dist=msr_3

Last year China ranked as the world's largest gold producer with 12.2% of world output, equivalent to 288 metric tons. The U.S. ranked second with a 9.9% share, or 234 metric tons.

[Purush]

Nayakuddin, sometimes, the copying does not work so well..
http://www.dailymail.co.uk/news/article ... ation.html














Some more examples at the link.

[rundstedt]

those bad quality imitation brands are poplular in rural markets of china, because they are cheap enough. But it's difficult to find them in urban. Sadly those fake goods are entering indian and african markets more and more by indian businessmen, in those areas, ppl could not pay for real chinese goods.

[Purush]

those bad quality imitation brands are poplular in rural markets of china, because they are cheap enough. But it's difficult to find them in urban. Sadly those fake goods are entering indian and african markets more and more by indian businessmen, in those areas, ppl could not pay for real chinese goods.

I could be wrong, but AFAIK, none of the above chinese made crap is available in India.

[rundstedt]

those bad quality imitation brands are poplular in rural markets of china, because they are cheap enough. But it's difficult to find them in urban. Sadly those fake goods are entering indian and african markets more and more by indian businessmen, in those areas, ppl could not pay for real chinese goods.

I could be wrong, but AFAIK, none of the above chinese made crap is available in India.

I've seen too many indian businessmen in Guangzhou buying the craps called by chinese "tail goods" even produced 20 years ago to india.

Chinese goods sold to urban china and europe and usa are inexpensive for indian markets.

[Singha]

I think people are wise enough to seek durability and value even if they are rural folks. if any chinese product meets the yardstick they are buying it. there's enough of low quality local stuff also in rural markets including spurious drugs.

wrt food products the danger is not much in direct sales of finished goods but raw materials like base chemicals,
food colours and preservatives imported from shady sources and then sold to various product makers.

there's a lot of candy and toffees from ASEAN region in stores here - esp thailand. while thailand doesnt have
the reputation of china, yet I tend to avoid these colourful products.

[shynee]

China has been secretly stocking up on gold

China is really looking at a lot of other options to get away from the U.S. dollar. The latest report is that it has been building huge gold reserves. There is no doubt that China wants to get out and away from the U.S. dollar now. We have heard SDRs, copper and precious metals all mentioned as plays out of U.S. dollars. How this will play out on currency markets and in the U.S. government bond market is no at all clear.

ward. After all, China is the world’s largest dollar investor, and no one else would have less interest in seeing the value of the US currency plummet. The PBOC might be the promptest to support the dollar, not least because it would suffer a huge capital loss in the event of a dollar depreciation. In a recent New York Times column, Paul Krugman argues that China has “driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place.”

This situation might appear unprecedented. But in truth, all this is not brand-new.

French foreign reserves policy during the Great Depression

Economic history offers one striking example of a country being trapped by the huge volume of its foreign reserves. This country was France, the period was the early 1930s, and the currency at stake the pound sterling. The episode ended up dramatically. Sterling suffered a major currency crisis, French authorities lost a lot of money, and their subsequent policy largely contributed to the Great Depression.

The origin of the problem lay in the government’s decision of 1926 to peg the franc to the sterling and dollar, two years before re-establishing the gold standard. Since the trade balance was in surplus and capital was flowing into the country, this goal was achieved through public purchases of foreign exchange. The Bank of France therefore accumulated a bulging portfolio of foreign holdings. At the end of the 1920s, the country held more than half of the world’s volume of foreign reserves.

French policy over subsequent years has been heavily criticized for being destabilizing. British contemporaries, like Paul Einzig, accused France of using its reserves in order to weaken the pound before the sterling crisis of September 1931. Others have noted that French conversions of foreign assets into gold after 1931, by imposing constraints on their money supplies, put intense deflationary pressures on other countries on the gold standard.

France’s Sterling Trap in 1931

Why did France engage in a policy that had such dramatic consequences? In a recent work, I explore the motivations behind the French reserves policy of this period. Spending time in the archives, I was able first to reconstitute the evolution of the reserves currency composition, and second, to identify the reasons invoked for the allocation decisions. Last, I have combined this information with market indicators of the perceived risk of reserves currencies.

France’s problems were similar to those of China today. The Bank of France was a private institution and its primary objective was to avoid capital losses. Its reserves were allocated between sterling and dollar. From 1929 to 1931, there were fears that the pound might be devalued and the Bank started shifting to the dollar.

However, in implementing this policy, the Bank was also constrained by its position as a large player on the exchange market. So, as sterling’s weakness worsened at the end of 1930, the Bank was in a trap: it could not continue selling pounds without precipitating a sterling collapse and a huge exchange loss for itself. The only workable option left was to support the pound. French policy therefore suddenly turned cooperative. The Bank halted the sterling liquidations, and even intervened on the market in order to support the British currency.

When the pound eventually collapsed, the Bank of France was put into a state of technical bankruptcy. It was only able to survive thanks to a state’s rescue, obtained under tough conditions. Moreover, there were now rising fears over the dollar. The will to avoid further losses therefore led authorities to convert all their dollar assets into gold (figure 2), a policy that heavily contributed to the global monetary contraction of the 1930s.

Lessons for today?

What are the lessons for today? China’s objective function today certainly differs from those of France in the interwar years. But French experiences in the early 1930s are a reminder that when there is growing risk on reserves currencies, foreign reserves can be both a source of instability for the international monetary system, and a burden for large holders.

The Chinese want to weaken the U.S.'s power derived through its currency status. They have been setting the stage to do so for some time. However, they want to act in a way that benefits them in the short- and long-term. Cutting loose in an uncontrolled fashion now benefits no one with the world economy in dire straits. However, when the economy does right itself, you should see some major changes in the currency markets.

[shynee]

What did 5 Trillion RMB Buy?

Let's look at the latest figures. In conjunction with the stimulus program, the banks issued nearly 5 trillion RMB in new loans in the first quarter, a historically high level. Because there was basically no share issuance or new corporate bond issuance, the 5 trillion from the banks was really the main engine for 1Q 2009. The 5 trillion is almost the size of the US fiscal stimulus package and basically 1/6 of China's 2008 GDP. As far as I know, this is the largest monetary easing in this period of time as a share of a country's GDP (that didn't go into writing off bad debt, that is). Impressive indeed, but what did China get in return?

1. To be sure, fixed asset investment grew by 25+%, which was one of the intended effects of monetary easing of this magnitude.
2. Official PMI, which mainly reflects sentiment among SOEs or state corporation, went back into positive territory, but private sector PMI was still in negative territory at the end of March.
3. There has been a pretty impressive stock market rebound in the A share.
4. The housing market is showing some sign of life after a long winter. Sales in many major cities are going up significantly, even driving up prices in some cases.

So far so good, BUT...

When we look at figures for non-investment economic activities, things do not look good at all. In fact, it is down right disappointing after pumping 5 trillion into the economy.

1. First of all, export and FDI continue to fall at a pretty fast pace, which can't be helped.
2. More alarming, inventory for many industrial goods continue to build UP! According to a recent note by Stephen Green's team, refined oil inventory is up over 35% YoY as of the end of February.
3. Coal inventory seems to have gone down, but that's because many coal mines have ceased to operate. The 21st Century Business Herald reported that 50-70% of mines are "resting" for the moment. Iron ore mines are facing the same problem as international iron ore now costs less than domestic ore.
4. Electricity usage continues to be in negative territory.

There is then the widely cited figures of 12% increase in urban income at the end of 2008 and increase in car sales in first quarter. In the first instance, I have no idea how the income figures were produced, but they almost always miss migrant workers, who are also urban residents. On the car sales, China Economist already points to a recent FT article which questions whether sales of minivans will help car company profitability. Finally, employment, which supposedly was the main point of the stimulus, was only marginally improved by the 5 trillion. Most large projects haven't gotten going yet as land still needs to be procured. The biggest employment impact was that the 5 trillion prevented the mass bankruptcy of hundreds and perhaps thousands of firms. However, some firms are staying alive by laying off or furloughing workers, like the coal mines.

So, really, when it comes down to it, the 5 trillion bought:

1. some psychological relief
2. some more sales of real estate, thus delaying the bankruptcies of many developers
3. an upbeat stock market, for a while
4. prevented the bankruptcy of numerous state firms, especially in the airline, coal, electricity, and steel sector

The most alarming thing is that these "positive" effects of pumping money into the economy lasts only as long as the money keeps flowing. If for whatever reason, the central government decides to slow down the pace of lending (and there are signs they are thinking of doing so), ALL of the above benefits will collapse relatively quickly. Imagine; if the flow of funds slows significantly, the psychological relief will disappear quickly, as will short-term loans to developers; the upbeat market sentiment will follow as speculative funds withdraw suddenly from the market. SOEs, which are building UP their capacity and inventory as we speak, will face growing losses from depreciation and deflationary pressure on output. Without free flow of bank loans, they will begin to default on their previous loans. Speculative demand for real estate will also collapse, given that inventory is expected to reach over 1 billion sqmtr some time in 2009 (again citing SCB report by Green et al.).

What does this mean? The central government cannot stop or even significantly slow this pace of lending until export picks up in a significant way, else the bubble will burst. This is a race against time. At some point, this pace of lending will lead to a serious NPL problem or inflation, or both. If by that point, export and domestic household consumption remain anemic, I am not sure what options the central government will have.

[vina]

Yawnn.. Our Tarrel Than Mountains and Deepl Than Oceans friends at it again.

Isreali Oranges Faked in China

It seems that there was a huge uproar in Iran after the discover of Israeli grapefruit being sold in Iran . Politicos swung into action and there was the usual circus.

Problem is , the fruit wasn't Israeli at all, but a counterfeit Chinese one!

[jamwal]

^^^^
I was about to post that .
Ya allah..now we have pirated fruit too.

[Katare]

Can this be real?
Goldman Sachs Raises China Economic Growth Forecasts: 8.3% for 2009 and 10.9% for 2010
http://www.bloomberg.com/apps/news?pid= ... nSHaqsTGx0

Most American/western firms (including my own CEO)are betting that world economic recovery would start with China leading, followed by Asia (ex Japan) and than western world. If that doesn't happen western economies would see another round of contraction and layoffs before they can recover.

Time will tell how world economy would recover but 'as facts on paper' stands today, Chinese are best equipped to recover before anyone else.