PRC Economy and Industry: News and Discussions

[vina]

Yawnn. Our tarrer than mountain friend at it again. One of my colleagues walked into work with a dual sim phone, with touch screen, full function PDA and a camera and asked me to guess the price. It was a Chinese phone (called Orange or something) I said Rs 7000 he said Rs 2750 , bought in Richie Street, Chennai.

I was shocked at that price. That is one heck of a killer "China Plice"

Detailed article on that in NY Times.

In China, Knockoff Cellphones are a hit

[Nayak]

Not a smart move by your friend vina-saar. They are planning to remove the connectivity of all Chinese cellphones, because of the 10 digit IMEI number.

[vsudhir]

x-post

China Faces a Grad Glut After Boom at Colleges (wsj)

Unemployed university graduates used to be rare in China. But now their ranks are ballooning to critical levels just as the country suffers its worst economic slump in two decades. Up to one-third of last year's 5.6 million university graduates are still looking for work, and this year will see another 6.1 million hit the labor market. {OMG!} Finding jobs for graduates is suddenly a national priority: Earlier this month, the central government ordered local governments and state enterprises to hire more graduates to maintain China's "general stability." {Hmmm, loan melas for college grads}

China is suffering from a higher-education equivalent of the global credit bubble.

So is the US, btw. Particularly the B-school sector where, thx to the disappearance of the finance sector (which used to hire upto 40% of the class at the top 30-40 B-schools) from job mkt entirely, ROI calculations are hard hit. How can US B-schools continue to charge the fees they currently do (rule of thumb is that total tuition == about 9-10 months of the mean gross pay after placements at that school) when placements and average pay will both drop like a stone?

Wonder where India's edu sector is these days. Heard from folks in India that second rung schools like ICFAI etc are still doiong OK and able to place people. Thats a relief to know!

On government orders, China's universities -- most of which are state-controlled -- boosted enrollment by up to 30% a year, year after year for most of this decade, and built vast new campuses. {GoI forced IIMs similarly, didn't they?} Financing was considered a cinch: New students would mean more tuition to pay off the loans that funded the expansion. But those plans were wildly optimistic, leaving hundreds of universities across China crippled by debt.

More serious for China's long-term prospects is that the expansion was so fast, and the pressures to pay off the debts so intense, that many of the schools turned into diploma mills, churning out poorly qualified students. Mr. Zhang got his degree from a school of traditional Chinese medicine with no history of teaching computer sciences. He looks back ruefully, recalling overcrowded classrooms and a lack of materials: "I wonder if this education was of any value?"

Read it all.

[ravit]

Not a smart move by your friend vina-saar. They are planning to remove the connectivity of all Chinese cellphones, because of the 10 digit IMEI number.

Well, it is just a plan for now. It might take another year or two before they implement it. Or just like 3G in India, it might take 4year+ and wait for another election. /sarc

[Singha]

TSP executed the same move a few months ago, leaving a lot of people

its going to happen imo, the govt gets money from legitimate phone makers and their plants/imports/sales. the shanzai phones come in via grey channels and I doubt their distributors care to keep the books honest.

[ArmenT]

^^^^^
IIRC, in the Paki case, one guy lost his cell phone and reported it to Pak Telecom. Pak Telecom dutifully disabled the phone by its unique IMEI ID. Immediately, bunch of Abduls started complaining that their cell phones stopped working. Reason: They all had the same unique IMEI ID. Seems that the Chinese did such a good job of cloning the phone (IIRC, the original was a Nokia) that they even cloned the unique serial number
http://www.asiamedia.ucla.edu/article.a ... ntid=94421

In the Indian case, it is motivated by security concerns. Without an unique IMEI code, the authorities can't trace when/where a phone call was placed.
http://www.itp.net/news/552349-india-di ... l-handsets for more details.

[ashi]

The Color of China

http://www.nationalinterest.org/Article.aspx?id=20952

[rundstedt]

It's stupid to trace terrorists by IMEI, right way is tracing by SIM.
Another foolish rumor is the Chinese cellphone have 10 or 14 digit IMEI, in fact they have 15 digit same as Nokia.

It's unavailing to ban duplicated IMEI, those shanzhais' IMEI would be changed by software and datalink, most of them are changeable.

[pgbhat]

It's stupid to trace terrorists by IMEI, right way is tracing by SIM.
Another foolish rumor is the Chinese cellphone have 10 or 14 digit IMEI, in fact they have 15 digit same as Nokia.

It's unavailing to ban duplicated IMEI, those shanzhais' IMEI would be changed by software and datalink, most of them are changeable.

No Sir it is not,
SIMs can be changed pretty easily AND cheaply compared to even chinese cellphones..... In India anybody with a fake ID can furnish enough details to buy a SIM card pretty easily. Ability to trace using BOTH has its advantages. I am sure you are aware of that..... just defending Chinese products blindly doesn't do anybody (both the end user and manufacturer) good in the long term ;

JMT

[rundstedt]

cellphones are used to get connection with others, so they must have relative fixed phone number, if one changed SIM randomly, how can others call him?

terrorists can change IMEI randomly, only IMEI of Nokia is unchangable. SAMSUNG or Sony-Ericsson are changable by software such as SETOOL2. It's very easy and taking within 10 seconds.

[pgbhat]

cellphones are used to get connection with others, so they must have relative fixed phone number, if one changed SIM randomly, how can others call him? terrorists can change IMEI randomly, only IMEI of Nokia is unchangable. SAMSUNG or Sony-Ericsson are changable by software such as SETOOL2. It's very easy and taking within 10 seconds.

10 seconds I get it but if only terrorists knew so much about such software .... ofcourse...... Somebody higher up the food chain usually do this for them. Having said that why would somebody go through the trouble of looking at these softwares when chinese phones do it for free??

We just want to make things harder for pigs whats the harm in doing that I say ??

[Nayak]

Going by that han logic consumption of lead is good also.

[Singha]

terrorists have shopkeeper contacts who fake the paperwork and supply dozens of SIMs in a "JEM starter pack".
they seldom use one SIM for too long and never make direct calls to their handlers, instead it goes to PABXs
of small front cos in Gulf who dialout back to pakistan, nepal and BD.
and they have thuraya but lately we are able to track such calls also..

[Tanaji]

cellphones are used to get connection with others, so they must have relative fixed phone number, if one changed SIM randomly, how can others call him?

terrorists can change IMEI randomly, only IMEI of Nokia is unchangable. SAMSUNG or Sony-Ericsson are changable by software such as SETOOL2. It's very easy and taking within 10 seconds.

Again you are confusing stuff. Its not as if IMEI can be changed to a random number, it has to be something acceptable to the network. So you need a valid IMEI to change it to, which means effectively another phone itself. As someone said, you need a combination of IMEI + IMSI to track a mobile. The latter gives you data on who purchased the damned SIM, the former allows you to track the mobile as it moves through the network.

[rundstedt]

for example, a IMEI of 448901********C, the 448901 means Nokia 8850, the last number C is the checksum which is easy to caculate, i can fill the asterisks with any number, it could accepted by network without hesitation. Network operator could not distinguish the real nokia or fake one. Probability of duplicated number is very small, if there are duplicated IMEI, maybe it's on other network.

http://en.wikipedia.org/wiki/Internatio ... t_Identity

[pgbhat]

^^^^
ok whatever ......

We still would like to believe terrorists are IDIOTS with cheap cell phones and we will take all precautions to contain them even if it means banning chinese cell phones.
I would still like to believe that spoofing (for a terrorist) is far more difficult on a nokia/samsung than a chinese cellphone. IOW they are NOT equal equal.

[Tanaji]

*sigh*

rundstedt, Why not read the posts before?

Probability of duplicated number is very small, if there are duplicated IMEI, maybe it's on other network.

^^^^^
IIRC, in the Paki case, one guy lost his cell phone and reported it to Pak Telecom. Pak Telecom dutifully disabled the phone by its unique IMEI ID. Immediately, bunch of Abduls started complaining that their cell phones stopped working. Reason: They all had the same unique IMEI ID. Seems that the Chinese did such a good job of cloning the phone (IIRC, the original was a Nokia) that they even cloned the unique serial number
http://www.asiamedia.ucla.edu/article.a ... ntid=94421

In the Indian case, it is motivated by security concerns. Without an unique IMEI code, the authorities can't trace when/where a phone call was placed.
http://www.itp.net/news/552349-india-di ... l-handsets for more details.

[rundstedt]

*sigh*

rundstedt, Why not read the posts before?

Probability of duplicated number is very small, if there are duplicated IMEI, maybe it's on other network.

^^^^^
IIRC, in the Paki case, one guy lost his cell phone and reported it to Pak Telecom. Pak Telecom dutifully disabled the phone by its unique IMEI ID. Immediately, bunch of Abduls started complaining that their cell phones stopped working. Reason: They all had the same unique IMEI ID. Seems that the Chinese did such a good job of cloning the phone (IIRC, the original was a Nokia) that they even cloned the unique serial number
http://www.asiamedia.ucla.edu/article.a ... ntid=94421

In the Indian case, it is motivated by security concerns. Without an unique IMEI code, the authorities can't trace when/where a phone call was placed.
http://www.itp.net/news/552349-india-di ... l-handsets for more details.

I think the news from paki is true, reasonable interpretation is a lazy chinese phone manufacturer who did not bear risks of duplicated IMEI did it.

15-digit IMEI, except 1 digit checksum, it has 14 available digits, 6 digits are phone model and 8 digits serial numer which could accomodate 100000000 cellphones for one model!

If you could not understand the massive number, washing your head in kindergarten.

[Ameet]

China's Hi-Phone

http://www.nytimes.com/2009/04/28/techn ... technology

Technological advances have allowed hundreds of small Chinese companies, some with as few as 10 employees, to churn out what are known here as shanzhai, or black market, cellphones, often for as little as $20 apiece.

And just as Chinese companies are trying to move up the value chain of manufacturing, from producing toys and garments to making computers and electric cars, so too are counterfeiters. After years of making fake luxury bags and cheap DVDs, they are capturing market share from the world’s biggest mobile phone makers.

Although shanzhai phones have only been around a few years, they already account for more than 20 percent of sales in China, which is the world’s biggest mobile phone market, according to the research firm Gartner.

They are also being illegally exported to Russia, India, the Middle East, Europe, even the United States. “The shanzhai phone market is expanding crazily,” says Wang Jiping, a senior analyst at IDC, which tracks technology trends. “They copy Apple, Nokia, whatever they like, and they respond to the market swiftly.”

[rundstedt]

a railway station u/c

finished

[jamwal]

Yawnn. Our tarrer than mountain friend at it again. One of my colleagues walked into work with a dual sim phone, with touch screen, full function PDA and a camera and asked me to guess the price. It was a Chinese phone (called Orange or something) I said Rs 7000 he said Rs 2750 , bought in Richie Street, Chennai.

I was shocked at that price. That is one heck of a killer "China Plice"

Vina saar, heard about Sigma Tel ? I saw a few phones with Arabic font printed on keypad instead of normal english. Almost same prices and specifications. I thought Sigma Tel was a software company.

[Liu]

a railway station u/c
http://img525.imageshack.us/img525/7679 ... 419ln8.jpg[/img]
finished
http://t.dfnres.com/p/cnr/i/200808/Beij ... outh01.jpg[/img]

cool!where is the station?

This is probably the 7th or 8th time I had to edit a post of yours for quoting inline images.
3rd warning served. banned for a month.
Rahul.

[vina]

If you think our "tarrel than mountains' friends dont feel 'envy' at India , think again. They are very clued into anything the west dishes out and crave recognition and attention. While Slum Dawg might have been a massive box office failure and a total non event in India, it seems like the Chinese have stood up and taken note!.

The New York Times

May 4, 2009
U.S. Media See a Path to India in China’s Snub
By TIM ARANGO

After many years of fervent lobbying and deal-making in China, American media companies have little to show for their efforts there and are increasingly shifting their attention instead to India.

Media executives still believe that Chinese audiences are receptive to Western culture — “SpongeBob SquarePants” is a big hit in China — but many companies have been pulling back out of frustration over censorship, piracy, strict restrictions on foreign investment and the glacial pace of its bureaucracy.

In recent weeks, America Online shut its operations in China, for the second time. Warner Brothers, the movie studio that shares a corporate parent with AOL in Time Warner, had plans as recently as 2006 to open more than 200 retail stores throughout China, with a local partner. Today there are no such plans.

“No one really has a decent-size presence there, and no one seems to know how to get one,” said Michael Del Nin, senior vice president for international and corporate strategy at Time Warner. “In terms of priorities, the focus is elsewhere.”

Increasingly, that focus is India, a country with a fast-growing economy and fewer government impediments for foreign media companies. In March, the Motion Picture Association of America opened an office in India for the first time, in Mumbai. A little over four years ago, Dan Glickman became the head of the association, and he has visited China several times.

“The feeling was that there were greater opportunities then than there are now,” he said.

This is a stark reversal. For many years, American media executives have extolled the potential of China, wooing executives and promoting the potential goldmine of reaching its one billion-plus population. Sumner M. Redstone, who controls Viacom and CBS, entertained Chinese officials in his Beverly Hills mansion over meals prepared by Wolfgang Puck.

But for media companies, frustrations have been growing. For several years, China has capped the number of foreign films that can be shown in theaters at 20.

Sometimes studios back away from even seeking the approval of Chinese authorities, as Warner Brothers did last year with “The Dark Knight,” because of a belief that the movie would not pass muster with government censors. “The Dark Knight” is the second-highest grossing movie of all time, with more than $1 billion at the worldwide box office, after “Titanic” (in dollars not adjusted for inflation).

In November, Warner became the first studio to announce it would make new movies available in China over a video-on-demand at prices low enough — about 60 cents to $1 — to compete with pirated versions. The service still is not under way.

Even with access, it is possible to reach only a tiny portion of the Chinese. In China, for example, CNN International is available only in hotels that cater to foreign business travelers and in embassies. Viacom has an MTV China, but it reaches only about 14 million homes in the Guangdong Province.

“It seemed like China captured everyone’s imagination,” said William H. Roedy, chairman of MTV International. “I think everyone expected too much, too soon. You have to be patient.”

Rupert Murdoch engaged in a decade-long odyssey — some say obsession — to entertain China’s vast populace. Mr. Murdoch found a wife, but very little revenue. His wife, Wendi Murdoch is paid $100,000 a year to “provide strategic advice” on the development of MySpace China, a joint venture operated by the News Corporation, according to regulatory filings.

Other than that, Mr. Murdoch’s activities in China are minimal. His Star TV, a pan-Asian satellite service, has channels in Chinese, but reaches only a small presence on mainland China. The company has significantly cut its staff in China in recent years.

Troubles with Chinese investments have even reached back to American shores. Yahoo and Google have been criticized in the United States for cooperating with Chinese censors.

When Jack Cafferty, the CNN commentator, insulted China last year by saying its products were “junk” and its leaders “goons,” Time Warner quickly apologized. But the episode has lingered in the minds of executives.

Their gradual disenchantment puts media companies at odds with many industries, like consumer products, that still look for large-scale growth in China. Nike recently said China was its primary area of growth in Asia, as revenues there increased 29 percent through the first nine months of its fiscal year. Coca-Cola is planning to increase its business there, despite a recent ruling by Chinese regulators that shut down the takeover of a juice company. And despite its problems elsewhere, General Motors remains a force in China.

In India, American-owned networks can reach far bigger audiences than in China, because of fewer government restrictions. Recently, Turner Broadcasting and its movie studio, Warner Brothers, which are part of Time Warner, established a new English-language channel called WB in India. Turner Broadcasting Systems, another unit of Time Warner, has started a Hindi-language pay-TV channel, REAL.

“We’re certainly focusing on India,” said Louise Sams, executive vice president for and general counsel of Turner networks. “There’s been a huge amount of growth in the number of networks in India over the last couple of years.”

Viacom, meanwhile, made a significant investment in India last year with Colors, which has become the top-rated entertainment network there in recent weeks. Its top show, “Balika Vadhu,” is a drama about a girl who marries at age 8. Another popular show is a locally based reality show with a premise like that of “Fear Factor.” MTV India of Viacom reaches 30 million homes, more than twice that of the network’s China outpost.

But executives remain alert to any signs of a thaw in China. When “Slumdog Millionaire,” which was filmed in India, won an Academy Award for best film this year, it caused a stir in China’s film community and raised hopes that China, out of regional rivalry and envy, might become more open to American studios.

“Now that they’ve seen ‘Slumdog,’ they want more movies produced in China,” said Jeanette Chan, a lawyer who represents United States film studios in Asia. “There’s this undercurrent, this competition, between China and India. Particularly when they see Bollywood do well.”

[Nihat]

http://www.dailytimes.com.pk/default.as ... 2009_pg3_3

hina’s long-dreaded nightmare could come true: all its US dollar denominated assets, earned by “blood and sweat”, would plummet in value. The People’s Republic has become the T-bills Republic, as Nobel Prize winning economist Paul Krugman put it

With the global economy continuing to shrink and the outlook for a US recovery still gloomy, world attention has turned to China. Its projected 6.5 percent growth rate and $2 trillion foreign reserve make it appear as the likely saviour of the global economy. But the Chinese government is preoccupied with a different agenda: how to protect its hard-earned savings from depreciation.

While the world seems to think of China’s huge currency reserve as a magic wand that can stimulate the global economy, Beijing sees it more like the Sword of Damocles hanging over its head. The Chinese seem to have concluded that the international financial meltdown is threatening the security of their foreign reserve, seen by many as earned by the “blood and sweat” of hundreds of millions of low-paid Chinese workers.

Debate is intensifying in China on how to enhance its financial position in a US and Western dominated international system. And there are clear signals that the Chinese leadership has begun to take measure to address the problem.

For most of the past three decades, Beijing has pursued a modernisation programme largely built on traditional economic development models: heavy industrialisation, labour- and capital-intensive manufacturing industries, export-led growth, low labour cost and high environmental damage.

This programme has ensured mass employment, albeit at a low wage, and dictated China’s currency value remain low for most of the past 30 years. Rather than let the RMB’s exchange rate be decided by the market, the government set a fixed exchange rate by pegging the RMB to the dollar and periodically intervening to keep it low.

China’s trade and capital “twin surpluses” led to the accumulation of more foreign reserves over the years. Seeking safe investment returns for these reserves, Beijing began to purchase more and more US treasury bills, financing the US trade and budget “twin deficits”, and in the process, becoming the largest creditor of the US.

Partly under US pressure to increase the value of RMB and partly due to its own concern over the danger of putting all its eggs in one basket, Beijing implemented a major reform in 2005 that halted the yuan’s peg with the dollar and instead adopted a floating exchange rate mechanism, pegging the Chinese currency to a number of currencies — a move away from the US dollar. Although the yuan’s value has gone up by 20 percent versus the dollar, the fundamentals of US-China economic relations have not changed.

But the current US economic crisis and the Obama administration’s large spending approach to combating it leave China worrying about the value of its US dollar holdings. That is, the current huge US foreign debt, the likely huge budget deficit in the future, and the large infusion of printed dollars are a recipe for inflation and thus the eventual depreciation of the US dollar.

China’s long-dreaded nightmare could come true: all its US dollar denominated assets, earned by “blood and sweat”, would plummet in value. The People’s Republic has become the T-bills Republic, as Nobel Prize-winning economist Paul Krugman put it. Moreover, according to Krugman, China has now fallen into a “US dollar trap” and cannot get out of it, nor will anyone come to its rescue.

So the Chinese are trying to rescue themselves by experimenting with two major measures. The first is to take steps to change the rules of the game altogether. Only days prior to the London G-20 summit, the Governor of China’s central bank Zhou Xiaochuan blamed the US dollar’s position as a structural cause of the financial crisis and calling for the use of IMF Special Drawing Rights as a global super currency to replace the US Greenback. It stirred up some support and some controversy, with even the Chinese acknowledging that it’s a long shot.

But Beijing is not all talk and no action. Its first step in realising such a fundamental change in the global financial order is to strengthen the RMB’s position. At the G-20 summit, China indicated that it would inject $40 billion into the IMF, possibly in the form of purchasing the SDR bonds, thus pushing for IMF reform on its voting share. And since the second half of 2008, China has arranged and carried out currency swaps with many countries across the globe, worth over $120 billion, meaning China’s trading activities will be using the RMB as a settlement currency instead of the dollar.

Recently, Chinese Premier Wen Jiabao and other leaders called for closer cooperation among Asian countries through more currency swaps and new institutions. None of these are epoch making developments, but the RMB’s going-out strategy means that the US dollar’s domination of two-thirds of the world’s official currency reserves will begin to change.

Another effort by China to pull itself out of the dollar trap is to diversify its global investment from low-return T-bills and volatile securities to energy and resource assets around the world. There is no central government body in charge of such a strategy. But newly announced policy measures have encouraged and simplified procedures for overseas acquisitions by the Chinese enterprises.

But the current world economic crisis has also presented opportunities with falling commodity prices and declining stock prices of many energy and resource companies. While still somewhat hesitant, some major Chinese companies seem to be on the move to increase their worldwide foreign direct investment portfolios.

In the energy sector, China has entered a new wave of large deal-making with major global players like Russia, Kazakhstan and Brazil. As the Deputy Minister of China’s National Energy Administration Sun Qin stated, China must utilise its $2 trillion reserve to seize the opportunities brought by the current financial crisis for more loans-in-exchange-for-energy-and-resources deals.

Prominent Chinese economists have long called for moving away from US treasury bills and assets to investing more in tangible assets. It looks like Beijing is now more determined than ever to avoid the trap of a “T-bills republic” and becoming instead a hard asset republic. Its challenge is to take just enough steps to walk away from the dollar but not too fast or too dramatic that may hurt the value of China’s US dollar holdings. China may not be doing what the world expects it to do but its tentative steps away from dollar dependence could help rebalance the world economy. — YaleGlobal

Wenran Jiang is the Mactaggart Research Chair and Associate Professor of Political Science at the University of Alberta and a senior fellow at the Asia Pacific Foundation of Canada

[ArmenT]

China's ultimatum: smoke or be fined

<snip>
...
OFFICIALS in a county in central China have been told to smoke nearly a quarter million packs of locally made cigarettes annually or risk being fined, state media reports.

The Gong'an county government in Hubei province has ordered its staff to puff their way through 230,000 packs of Hubei-produced cigarette brands a year, the Global Times said.

Departments that fail to meet their targets will be fined, according to the report.

"The regulation will boost the local economy via the cigarette tax," said Chen Nianzu, a member of the Gong'an cigarette market supervision team, according to the paper.
....
<snip>

I know they're trying to stimulate the local economy, but this is taking things a wee bit too far.

[Gerard]

Chinese ordered to smoke more to boost economy

[shaardula]

when i look at those oversized structures, i imagine that the chinese are overcompensating for certain deficiencies. heaven knows i have zillion problems with freud, but still, it occurs to me that massive overcompensation is going on the minds of the china man. tallel, deepel ....

[Chinmayanand]

No butts: China orders officials to smoke 230,000 packets every year to boost economy or face being fined

[rundstedt]

a railway station u/c
http://img525.imageshack.us/img525/7679 ... 419ln8.jpg[/img]
finished
http://t.dfnres.com/p/cnr/i/200808/Beij ... outh01.jpg[/img]

cool!where is the station?

that's beijing south station.

China's ultimatum: smoke or be fined

The Gong'an county government in Hubei province has ordered its staff to puff their way through 230,000 packs of Hubei-produced cigarette brands a year, the Global Times said.

Departments that fail to meet their targets will be fined, according to the report.

I know they're trying to stimulate the local economy, but this is taking things a wee bit too far.

They are not trying to stimulate the local economy, they are trying to balance financial revenue and expenditure.
China central govt. is very rich, they got financial revenue of USD 902 billion, close to GDP of India.
But the local govt.s in interior agriculture area, are very poor. Thousands of public teachers get paid from county govt..
So the local govt. must get money through strange ways, this time they extorted from officials and public teachers, I think it's better than extorted from peasants.

[Dilbu]

So the local govt. must get money through strange ways, this time they extorted from officials and public teachers, I think it's better than extorted from peasants.

So extortion is the main business of chineses govt?

[vina]

Our tarrer than mountain fliend is screwed long term if such trends persist, but pretends everything is good onree.

Exports crashing and fixed investments aka stimulus going up.. Sounds like Ben Johnson running a 100 m dash on Anabolic steroids and then come down long term with enlarged breasts and other hormonal imbalances and serious health problems.

The New York Times
Printer Friendly Format Sponsored By

May 12, 2009
China's Exports Sink, but Factory Investment Rises
By THE ASSOCIATED PRESS

Filed at 4:09 a.m. ET

SHANGHAI (AP) -- China's exports fell more than expected in April, dropping 22.6 percent from a year ago in the sixth straight monthly decline, as the government vowed to redouble efforts to help boost trade.

On the positive side, Beijing reported that investment in factories and property development jumped 30.5 percent during the first four months of the year to 3.71 trillion yuan ($543.2 billion), thanks to a slew of bank loans for government stimulus projects.

April's decline in exports, to $91.9 billion, was bigger than March's 17 percent drop and suggests China's trade sector has yet to see much relief from the prolonged drought in demand brought on by the global downturn.

''These figures show we cannot be optimistic about the future trends for exports,'' the Commerce Ministry said in a statement posted on its Web site that amounted to a lament over the lack of overseas demand for Chinese products.

''We will have to view the problems and risks more seriously, expect that the crisis will persist a bit longer and take more complete measures ... to help stabilize foreign trade,'' it said.

There were some glimmers of hope even in the trade figures. While exports of heavy machinery and other industrial equipment continue to fall, recent increases from the previous month in exports of clothing, shoes, plastics and other labor-intensive consumer goods suggest some recovery in demand, economists say.

American retailers have begun ordering to restock low inventories, amid signs that consumer spending may be stabilizing, Jing Ulrich, chairwoman for China equities at J.P.Morgan said in a note to clients.

''Nevertheless, operating conditions for Chinese exporters will remain challenging for some time,'' Ulrich said, noting that orders at the recent spring trade show in southern China's Guangdong fell 17 percent compared with the autumn show.

China's imports also remained anemic, falling 23 percent to $78.8 billion, the Customs Administration reported, putting China's trade surplus for April at $13.1 billion. That compared with an $18.6 billion surplus in March.

The surplus with the United States -- or the amount exports exceed imports -- edged higher to $10.6 billion in April from $10.2 billion in March, as exports dropped 15.7 percent from a year earlier to $17.2 billion while imports fell 17.4 percent to $6.6 billion.

China's surplus with the EU, its biggest trading partner, fell to $7.4 billion in April from $8 billion in March, while its deficit with Japan was $2.75 billion.

While China is channeling hundreds of billions of dollars into construction of roads, ports and other infrastructure, seeking to boost demand and create jobs, Beijing appears frustrated with the lack of a turnaround for the export sector.

Exports contributed only 0.8 percentage points to China's growth last year, down from 2.6 percentage points in 2007, the Commerce Ministry said. And the drag on consumer spending and investment from the weaker trade sector is causing further harm, it said.

''Weakening overseas demand, now and in the near future is affecting the overall economy,'' it said, adding that government will do whatever needed to facilitate trade, fight protectionism and encourage a more favorable environment for exports. It gave no details.

Given the protracted weakness in overseas demand for China's exports, massive spending on construction and factory equipment is seen as crucial for a recovery.

''Although much of the new bank lending has not yet turned into faster growth in economic activity, because of the time lag between lending and actual demand, we do expect fixed investment to accelerate in the coming months,'' Tao Wang, an economist with UBS, said in a report Monday.

''As a result, we expect orders to rise and industrial production to rebound,'' she said.

[vsudhir]

Mish on a roll.

Chinese Deflation Picks Up Steam; Recovery a Mirage

In contrast to what Keynesian clowns believe, there is no recovery, only another artificial boom, and a mini-boom at that. Printing money can "stimulate" (using the word incorrectly), only as long as the spending continues.

Easy money and unwarranted stimulus created the global housing bubble. Now Keynesian clowns think it will do something productive. It can't, therefore it wont.

In regards with China, there is massive overcapacity already. US consumers are still retrenching. Adding to China's productive capacity is exactly the wrong thing to do at this stage. The export model is dead. The Shopping Center Economic Model Is History as well. Thus "stimulus" (here and in China) is guaranteed to fail, leaving still more overcapacity when it does.

Green shoots are a Keynesian mirage.

[vsudhir]

When even the chinese admit the possibility of asset bubbles, then ya have to know something's seriously on onlee....

China cuts lending amid asset bubble fears

In the first quarter, Chinese lenders answered the government’s call to open the credit taps and get the economy moving again, extending more than Rmb4,600bn in new loans – more than the entire amount of new lending in 2007.

That led to fears among regulators that money was being funnelled illegally into the stock market and handed out to state-sponsored stimulus projects of dubious commercial value that could become non-performing assets.

[vina]

Nice.. Toldja that the Chinese model is not sustainable. Now the West is going to go after them in the name of Environment protection and global warming. WWCP (what will ChiPanda do ?) .

Notice how they are hoisted on their own petard! Producing for Western Consumers cant be held into account for Global Warming.. Okay then Western Consumers will be taxed on imports from China (the Global Warming tax!). Now chew on that !. In any case Chipanda is shafted.

Yup , the global economic imbalance "China becoming the Factory of the World" is just not sustainable. It reached the breaking point with this economic crisis. China wont be able to export it's way out of trouble this time. Now try growing by selling to Chinese customers and you crash to less than Yindoo level growth rates onree! ..

And pssst.. You cannot be on a perpetual "stimulus" (it wears off, just like a booster shot). And heck, one power plant a week is simply unsustainable.

The New York Times
Printer Friendly Format Sponsored By

May 15, 2009
Op-Ed Columnist
Empire of Carbon
By PAUL KRUGMAN

TAIPEI, Taiwan

I have seen the future, and it won’t work.

These should be hopeful times for environmentalists. Junk science no longer rules in Washington. President Obama has spoken forcefully about the need to take action on climate change; the people I talk to are increasingly optimistic that Congress will soon establish a cap-and-trade system that limits emissions of greenhouse gases, with the limits growing steadily tighter over time. And once America acts, we can expect much of the world to follow our lead.

But that still leaves the problem of China, where I have been for most of the last week.

Like every visitor to China, I was awed by the scale of the country’s development. Even the annoying aspects — much of my time was spent viewing the Great Wall of Traffic — are byproducts of the nation’s economic success.

But China cannot continue along its current path because the planet can’t handle the strain.

The scientific consensus on prospects for global warming has become much more pessimistic over the last few years. Indeed, the latest projections from reputable climate scientists border on the apocalyptic. Why? Because the rate at which greenhouse gas emissions are rising is matching or exceeding the worst-case scenarios.

And the growth of emissions from China — already the world’s largest producer of carbon dioxide — is one main reason for this new pessimism.

China’s emissions, which come largely from its coal-burning electricity plants, doubled between 1996 and 2006. That was a much faster pace of growth than in the previous decade. And the trend seems set to continue: In January, China announced that it plans to continue its reliance on coal as its main energy source and that to feed its economic growth it will increase coal production 30 percent by 2015. That’s a decision that, all by itself, will swamp any emission reductions elsewhere.

So what is to be done about the China problem?

Nothing, say the Chinese. Each time I raised the issue during my visit, I was met with outraged declarations that it was unfair to expect China to limit its use of fossil fuels. After all, they declared, the West faced no similar constraints during its development; while China may be the world’s largest source of carbon-dioxide emissions, its per-capita emissions are still far below American levels; and anyway, the great bulk of the global warming that has already happened is due not to China but to the past carbon emissions of today’s wealthy nations.

And they’re right. It is unfair to expect China to live within constraints that we didn’t have to face when our own economy was on its way up. But that unfairness doesn’t change the fact that letting China match the West’s past profligacy would doom the Earth as we know it.

Historical injustice aside, the Chinese also insisted that they should not be held responsible for the greenhouse gases they emit when producing goods for foreign consumers. But they refused to accept the logical implication of this view — that the burden should fall on those foreign consumers instead, that shoppers who buy Chinese products should pay a “carbon tariff” that reflects the emissions associated with those goods’ production. That, said the Chinese, would violate the principles of free trade.

Sorry, but the climate-change consequences of Chinese production have to be taken into account somewhere. And anyway, the problem with China is not so much what it produces as how it produces it. Remember, China now emits more carbon dioxide than the United States, even though its G.D.P. is only about half as large (and the United States, in turn, is an emissions hog compared with Europe or Japan).

The good news is that the very inefficiency of China’s energy use offers huge scope for improvement. Given the right policies, China could continue to grow rapidly without increasing its carbon emissions. But first it has to realize that policy changes are necessary.

There are hints, in statements emanating from China, that the country’s policy makers are starting to realize that their current position is unsustainable. But I suspect that they don’t realize how quickly the whole game is about to change.

As the United States and other advanced countries finally move to confront climate change, they will also be morally empowered to confront those nations that refuse to act. Sooner than most people think, countries that refuse to limit their greenhouse gas emissions will face sanctions, probably in the form of taxes on their exports. They will complain bitterly that this is protectionism, but so what? Globalization doesn’t do much good if the globe itself becomes unlivable.

It’s time to save the planet. And like it or not, China will have to do its part.

[shyam]

I have said this more than a year back in BRF. The global warming campaign, and its derivatives such as "carbon credit", "carbon footprint" etc. are new tools to subvert currently industrializing countries.

[John_H]

Thirst of the cities drives the giant drills to water China's parched north

Staring up from the bottom of the deepest pipe in the world's most ambitious plumbing operation, the view is that of a frog in a well: a small distant disc of sky. Look again two years from now, and you would see a torrent of water apparently defying gravity as it surges up the 130ft (39m) shaft first towards the heavens, then to Beijing and other thirsty cities.

The Guardian was the first foreign news organisation to enter the pits and tunnels at Jiaozuo in Henan province, which are at the centre of China's latest, greatest engineering project, the South-North Water Diversion Scheme. In the spirit of President Hu Jintao's drive for "scientific development", the aim is to engineer a solution to the most pressing environmental problem – the alarming depletion of water resources in the arid, heavily populated north.

More than twice as expensive as the Three Gorges Dam and three times longer than the railway to Tibet, the 50-year, $62bn (£40.67bn) project aims to channel a greater volume than the Thames along three channels – each more than 600 miles long – from the moist Yangtze basin up to the dry lands above the Yellow river.


International environmental groups say the focus should be on reducing demand rather than boosting supply. "Transferring water from the Yangtze tributaries to the thirsty plains of northern China may well lead to environmental collapse of the Han river, the Three Gorges reservoir, and the Yangtze delta," said Peter Bosshard of International Rivers. "To resolve its water crisis, China needs to phase out thirsty industries and agricultural crops in the drought-prone north and replace them with more environmentally sound practices."

[Vipul]

China loses low-cost manufacturing crown to India, Mexico.

SHANGHAI: China has lost its position as the world's lowest-cost components manufacturer to India and Mexico, a study indicated on Wednesday, in a blow for the Asian giant as it fights the financial crisis.

The United States has also significantly closed the gap to the degree that China's total manufacturing costs are now only six percent below those of American factories, the study by AlixPartners business consultants indicated.

"Gone are the days when companies could see cost savings of 30 percent or more by making 'no-brainer' manufacturing-footprint and outsourcing decisions, to China in particular," said Stephen Maurer, a managing director at the firm.

The company, which specialises in helping distressed businesses, compiled its Manufacturing-Outsourcing Cost Index by analysing a basket of manufactured components and assembled parts, ranging from small motors to die castings.

It compared the cost of making the items in China, India, Brazil and Mexico versus the US, tracking changes over three years in factors such as labour, overheads, exchange rates, transportation, and raw material costs.

The index showed major shifts in costs over the past six months that pushed China down the rankings and Mexico now on top, the firm said in a statement.

It predicted China's costs would improve in the second half of 2009, as more moderate oil prices and the economic slowdown reduced sea shipping costs, but added the country was unlikely to catch up with India and Mexico this year.

Meanwhile, US plants have become much more competitive, but their costs are still much higher than most of the countries studied, the firm said.

Manufacturing accounts for more than 40 percent of the economy in China, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.

But Chinese manufacturer activity has shown signs of expanding over the past two months after nine months of contraction.

[John_H]

Morgan Stanley on India trumps Goldman on China

India also proved it can confound expectations about the trajectory of its $US1.2 trillion economy. Anyone betting last week that China was way ahead in the race to be Asia's next economic superpower now has reason for pause.

A key difference, though, is that India isn't the slave to exports that China has become. And William Nobrega, the co- author of Riding the Indian Tiger, isn't exaggerating when he calls India's election "an absolute game changer".

[John_H]

Becoming Asia's 'swing state'

Surrounded by unstable states in Pakistan, Afghanistan, Nepal and Myanmar, India stands tall as a beacon of democratic stability. As long as India was willing, such a combination eventually would be irresistible to the Americans.

If current trends continue, the Indian economy will be larger than the American one (in absolute terms) in three or four decades. Unlike China's aging population, the Indian ratio of the working-age population compared to the nonworking one will continue to improve well into the 2040s.

India is as important as China to the future of Asia and Australia. In foreign-policy matters, the U.S.-India partnership is a critical pillar for the region's hedging strategy against the unknown consequences of a rising Chinese power and arguably a declining American one.

The talk in Asia is all about autocratic China and what it means for the region. But with limited fuss and bother, democratic India is fast becoming the "swing state" in Asia.

John Lee is the visiting foreign-policy fellow at the Center for Independent Studies in Sydney, Australia, and at the Hudson Institute in Washington. A fully updated second edition his book "Will China Fail?" will be released shortly.

[Sanjay M]

Some pretty amazing Chinese bridges under construction:

http://www.darkroastedblend.com/2009/05 ... art-3.html

I don't know what they'll do in an earthquake, though.