PRC Economy and Industry: News and Discussions

[abhischekcc]

I would rather compare China with Nazi Germany, in that there is a mix of private and public enterprise, and there is an entrenched economic elite which has the ear of the government.

Both suffer from misallocation of resources. Nazi Germany suffered high inflation in later years - just like China is going through now.

[ArmenT]

Move Over China: Beijing Sells Whopping $34.2 Billion Treasuries In December As Japan Becomes Largest Official Holder Of US Debt

[Dilbu]

Pardon my ignorance but I have a question about the theory that Cheen is putting money from one pocket to another since both NPAs and banks are owned by the one and onlee CCP. May be they can forgive all the institutional debt with stroke of pen but what about mango TFPEs on the street who would have inevitably invested or deposited at least a fair portion of their money in these NPAs because of the trickle down effect? Wont there be another levorution or tianenmen square if aam abduls get their fingers burnt in the process and lose their means to eat fliedlice?

May be I am missing something here. But even if an economic crisis can be averted by the 'pocket to pocket' policy how can they avert the political crisis? Can they get away with printing fiat currency and doling out govt grants?

[Chinmayanand]

Hugh Hendry: Here Are Four Reasons China Will Start Sucking Wind

>China, now the world's biggest creditor, is also running persistent trade surpluses. That's only happened twice before: with the US economy in the 1920s and with the Japanese economy in the 1980s.

>Unlike in most countries, China's share of consumption within its economy has fallen relentlessly, reaching 35% of GDP in 2008.

>Foreign demand for its exports dropped. Now China relies on a massive surge in domestic bank lending to fuel its growth rate.

>China's state planners have favored investment over consumption. China's investment spending has tripled since 2001. Domestic consumption never grows fast enough to absorb the supply, and Chinese profitability is already low.

[wrdos]

Winter Olympic: China Grooms Team to Become a Powerhouse

http://www.nytimes.com/2010/02/15/sport ... &st=Search

VANCOUVER, British Columbia — As Wang Meng, China’s champion short-track speedskater, breezed through her first heat of the 500 meters Saturday night, she stayed well ahead of a crash that wiped out a competitor, set an Olympic record, then walked dismissively past waiting Chinese reporters.

Three potential gold medals await her. There was no time to stop and chat. Anyway, before leaving Beijing, Wang, who won the 500 at the 2006 Winter Olympics, had said all she needed to say: “Unless I make mistakes, no one else will have any chance to win.”

No one expects China to dominate the 2010 Winter Olympics the way it ruled the 2008 Summer Games in Beijing. But its Olympic officials are hoping for a breakthrough that could bring perhaps 5or more gold medals and about 15 over all — a significant number given that China has won only 4 previous golds and 33 cumulative medals since it began participating in the Winter Games in 1980 in Lake Placid, N.Y.

[amit]

Pray Wrdos Ji, can you clarify how the above news item is linked to PRC Economy and Industry?

Unless you want to say that the success of this pretty lady Wang Meng is due to China's "industrial power"?

I know we all could do with a bit of cheer me up news after all the doom and gloom that's been uncovered on this thread.

[wrdos]

Hmmm, Sports is an important industry, right.

This forum is "Technology & Economic Forum" and I am sure you can find a thread below, called "Indian Sports and Entertainment Industry".

Pray Wrdos Ji, can you clarify how the above news item is linked to PRC Economy and Industry?

Unless you want to say that the success of this pretty lady Wang Meng is due to China's "industrial power"?

I know we all could do with a bit of cheer me up news after all the doom and gloom that's been uncovered on this thread.

[harbans]

^Good point Wrdos.

[Raghav K]

I was speaking to one of my chini friend and this is what he had to say about Chinese Sport Industry..

Poor Kids are picked up from homes at a very young age of 6 or 7 either forcibly from Parents or with the promise of fame one day when they win medals. Parents have no money and sell their kids at throw away prices. hundreds are trained in "Le education sports camps" and treated like poultry to perform or perish.

[Suraj]

Nothing wrong with wrdos' post. The pursuit of accomplishment in Olympics *is* an industry in China - they have an entire dedicated system in place to take kids and drill them into Olympians, continuing and honing the process used by USSR and East Germany in the past. As much as any other sector, it provides us interesting lessons to learn.

Before folks jump up with the "India democracy, can't take little kids from families" argument, it must be realized that the level of sports at that stage is so enormously high that nothing less than a concerted broad-based effort will provide a continuous level of success across a range of disciplines. In the process, many incapable athletes will be weeded out, but those who are good will be nurtured all the way. I don't see this as any different from something like Kota approach to JEE in India - it's ruthless and drilled, not necessarily natural but accomplishes a specific goal.

I don't know if retired athletes are uniformly treated well. Quite a few of them seem to do well even after retirement, receiving well-paying jobs, though I don't know if this is always the case. They did commemorate a bunch of their past champions during the Beijing 2008 ceremonies.

[amit]

Hmmm, Sports is an important industry, right.

This forum is "Technology & Economic Forum" and I am sure you can find a thread below, called "Indian Sports and Entertainment Industry".

Sure Wrdos sports is an important industry. It's just that the story you posted did not show any connection to the industry aspect, neither did you give an explanation regarding this connection. There's a China news thread in the Strategic Affairs Forum where, IMHO this post would have been more appropriate as a simple news story.

If you look at the General Discussion Forum you'll notice that there's a Cricket thread. And Cricket is the pre-eminent sports industry in India. Now there's some YouTube clips of the current Indian and probably the world's top cricketer Sachin Tendulkar in his early years posted on that thread. He has played a major role in making cricket the money spinning industry that it is now. So do you think those clips should be in the Indian Economy Thread? Do note that the annual Indian Premier League Cricket Tournament is a US$1 billion dollar plus event and he's one of the top stars there.

Anyway my post was made in jest. No need to read more to it than necessary.

And yes I admire how the Chinese sportsmen and women have climbed the world class ranks in an increasing number of sporting events, the latest being the two wonderful ladies at the Australian Open. I was rooting for them all the way.

I don't particularly like the political system in China but that doesn't mean I don't like/admire the ordinary Chinese and their achievements.

Even though this post is OT, I hope it puts my previous post in the proper perspective for you and others.

JMT

[harbans]

Amit ji, obviously your point is valid for exactly the reasons you have stated. I remarked in jest too, sort of like the way wrdos spun that one. Full marks to him. Meanwhile i do agree this should relate more to the economics of sports infrastructure and the 'industry' aspect of of sports/ gaming rather than some medal tally in some tournaments or olympics etc.

[wrdos]

Hi, amit! Thank you for all your replies, hehe.

I am originally from Northeast China where most of the Chinese winter game players are from (>95%). Just personal interest, hehe. In fact I don't have so much interest on other kinds of sports games, no matter Chinese winning or losing them.

Take it easy, pls.

[derkonig]

Hi, amit! Thank you for all your replies, hehe.

I am originally from Northeast China where most of the Chinese winter game players are from (>95%). Just personal interest, hehe. In fact I don't have so much interest on other kinds of sports games, no matter Chinese winning or losing them.

Take it easy, pls.

Whatz your take on this article?
Chinese doping
Does China encourage its sportspersons to win by cheating and doping? More importantly, is this a part of the communist doctrine in China?

[harbans]

Does China encourage its sportspersons to win by cheating and doping? More importantly, is this a part of the communist doctrine in China?

Derko ji, i don't know why you put that question to wrdos. But in most states including East Germany, USSR and China too it was a pretty organized thing. We all know that it was done for H&D a quest for medals etc. However lets not grudge China institutionalizing their sporting industry to extremely high levels. There are plenty medals they've won on blood and sweat and not dope. Like us, i doubt most ordinary Chinese would appreciate their hero's winning because of doping and cheating. Coming to think of it, we've had our own doping scandals too.

[derkonig]

Derko ji, i don't know why you put that question to wrdos. But in most states including East Germany, USSR and China too it was a pretty organized thing. We all know that it was done for H&D a quest for medals etc. However lets not grudge China institutionalizing their sporting industry to extremely high levels. There are plenty medals they've won on blood and sweat and not dope. Like us, i doubt most ordinary Chinese would appreciate their hero's winning because of doping and cheating. Coming to think of it, we've had our own doping scandals too.

Harbansji, I am truly looking forward to the glorious pearls of wisdom that wrdos will spout to justify the omnipresent doping in Chinese sports. While we have had a few instances of alleged doping, the suspected sportpersons have faced severe action. In China, a similar cheat will prolly be glorified and egged on.

Besides, lets not be too sure that China has won anything fairly until a thorough investigation of the extent of doping in China is done by international agencies. Until then, the world must assume that all of Chinas medals are ill deserved. More importantly, given the stories of pervasive doping coming out of China, there must be some societal acceptance to it. Afterall facesaving seems to be a societal trait in PRC even if it means cheating and stooping to new lows each time. I dont think that any other country can ever stoop as lows as China especially in dirty tricks in sports be it doping or using underage athletes. Heck, even the Pakis cheat lesser.

[shynee]

Thinking the Unthinkable: What if China Devalues the Renminbi?

China's runaway growth train on a dangerous course

[Rishirishi]

I was speaking to one of my chini friend and this is what he had to say about Chinese Sport Industry..

Poor Kids are picked up from homes at a very young age of 6 or 7 either forcibly from Parents or with the promise of fame one day when they win medals. Parents have no money and sell their kids at throw away prices. hundreds are trained in "Le education sports camps" and treated like poultry to perform or perish.

I think you are being unfair here. same can be said about Indian kids "forced" to become Narayna Murthy.

I salute the effort and sucess of China, in grooming the sports talents.

[Raghav K]

I was speaking to one of my chini friend and this is what he had to say about Chinese Sport Industry..

Poor Kids are picked up from homes at a very young age of 6 or 7 either forcibly from Parents or with the promise of fame one day when they win medals. Parents have no money and sell their kids at throw away prices. hundreds are trained in "Le education sports camps" and treated like poultry to perform or perish.

I think you are being unfair here. same can be said about Indian kids "forced" to become Narayna Murthy.

I salute the effort and sucess of China, in grooming the sports talents.

whats unfair..I just mentioned a fact..i am not comparing India vs china..not again mr.Rishi..

nice to know you appreciate and salute them

[harbans]

More importantly, given the stories of pervasive doping coming out of China, there must be some societal acceptance to it. Afterall facesaving seems to be a societal trait in PRC even if it means cheating and stooping to new lows each time. I dont think that any other country can ever stoop as lows as China especially in dirty tricks in sports be it doping or using underage athletes. Heck, even the Pakis cheat lesser.

Derko ji, i would separate ordinary Chinese folks from their totalitarian system. I've been to China and ordinary Chinese people are just as fair, fine and hospitable as their Indian counterparts. And i'd disagree they cheat more than the Paki's where they are demanding that cheating (ball tampering) be made legal. But Paki's are also demanding terrorism be made a legal activity for them.

I do though understand and agree with your take that there would have been a systemic approach to doping taken by the State for improving performance. However will remind that dope testing techniques are also extremely sophisticated these days, and testing is a randomized all year process for most athletes in top leagues.

[wig]

while doping might be all pervasive- so is testing. i seem to think that practically all top athletes are almost under some kind of testing all over the year as they participate in various sporting engagements.
on the other hand successful sports persons have IMVHO a very cohesive effect on the general public. they are seen as achievers in a positive way and engender a spirit of camraderie in the ideology of nations.
china as did the earlier generation of communist countries (notably; USSR and GDR) probably see high performing sportspersons in a similar light.
i for one do desire that we in India also take similar measures to develop (nurture) sporting talent.

[Masaru]

x - posting

Going back to PRC economic miracle here the PRC president is hoping that PRC GDP will quadruple to $4 T by 2020 while PRC crossed that number in 3 years. The article is dated 2005 and the GDP data for that year is ~2.2 T. So is the PRC president deliberately understating the GDP or are there some other riddles missing?

Similarly PRC nominal GDP is rated at 1.19 T in 2000 and is rated at 4.37 T is 2008, The current stats are at ~4.9T.
This works out to roughly 15-16% annual compounded GDP growth while in any given year the highest nominal year on year growth was in 2007 at 13.2% with the widely quoted official avg. for the whole period is at around 10%. What exactly is missing in this story?


Added later: AFAIK PRC did a GDP base revision in ~2004. What would the current GDP look like without that revision? Still that revision doesn't explain the impressive ~1T jump between 07 and 08 on a base of 3.3 T.

[Ameet]

Dubai times a thousand

http://www.bloomberg.com/apps/news?pid= ... 8cQ&pos=12

The township of Huaxi in the Yangtze River Delta is a proud symbol of how Chinese communists embraced capitalism to lift 300 million people out of poverty during the past three decades.

Its leaders took a farm community with bamboo huts and ox carts in the 1970s and transformed it into an industrial and commercial powerhouse where today many of its 30,000 residents live in mansions and most have a car. Per-capita income of 80,000 yuan ($11,700) -- almost four times the national average -- allows Huaxi to claim it’s China’s richest village.

Huaxi has an even more ambitious project coming up: a 6 billion yuan, 538-meter skyscraper that would today rank as the world’s second tallest. The only loftier building is the new Burj Khalifa in Dubai.

Marc Faber, publisher of the Gloom, Boom & Doom Report, says China is overdoing it. “It does not make sense for China to build more empty buildings and add to capacities in industries where you already have overcapacity,” Faber told Bloomberg Television on Feb. 11. “I think the Chinese economy will decelerate very substantially in 2010 and could even crash.”

Such undertakings figured in warnings hedge fund manager Jim Chanos delivered in January that China is Dubai times a thousand. The costs of wasteful investments in empty offices and shopping malls and in underutilized infrastructure will weigh on China, Chanos, president of New York-based Kynikos Associates Ltd., said in a speech at the London School of Economics. “We may find that that’s what pops the Chinese bubble sooner rather than later.”

Last month, banks lent a further 1.39 trillion yuan -- almost one-fifth of the target amount for the whole of 2010.

[vina]

Well, our Chinese friends here on BR might not like 'ol vina singing like a Cassandra or a Canary in a coal mine warning of a shipwreck ahead. Sure.. But more Cassandras seem to be joining the chorus. First it it was a prominent hedge fund manager with a good record of reading the tea leaves and now it is Kenneth Rogoff , Prof at Harvard Madrassa and former Grand e-Con-O-Mix Poobah at the IMF singing.
Rogoff says China Crisis May Trigger a Regional Slump

eb. 24 (Bloomberg) -- China’s economic growth will plunge to as low as 2 percent following the collapse of a “debt- fueled bubble” within 10 years, sparking a regional recession, according to Harvard University Professor Kenneth Rogoff.

“You’re not going to go a decade without having a bump in the business cycle,” Rogoff, former chief economist at the International Monetary Fund, said in an interview in Tokyo yesterday. “We would learn just how important China is when that happens. It would cause a recession everywhere surrounding” the country, including Japan and South Korea, and be “horrible” for Latin American commodity exporters, he said.

China, set to surpass Japan as the second-largest economy this year, has helped pull the world out of its deepest postwar slump. Record lending, soaring property values and accelerating economic growth prompted the government to begin retracting stimulus measures implemented during the global recession.

“Their response to the latest financial crisis clearly raised the risk that they have a debt-fueled bubble in the economy,” said Rogoff, who in 2008 predicted the failure of big American banks.

In 2008, China cut interest rates, started rolling out a 4 trillion yuan ($586 billion) spending package and scrapped quotas limiting lending by banks to counter slumping exports.

‘Best Bet’

While Rogoff said he isn’t sure what will cause China’s bubble to pop, he said land is “the best bet” as it is “the most common source” of crises. Real estate values in Shanghai and Beijing have “taken a departure from reality,” said the economist, co-author of “This Time is Different,” a 2009 book that charts the history of financial calamities in 66 countries.

A collapse would depress output gains to 2 to 3 percent, a “very painful” period which would persist for about a year and a half, Rogoff said. The slowdown won’t lead to a Japan- like “lost decade,” he added. In a speech earlier yesterday, he said China will do “very well this century.”

China, the world’s fastest-growing major economy, expanded 10.7 percent from a year earlier last quarter. The World Bank forecasts a 9 percent expansion in 2010.

China may provide more than a third of global growth in this year, according to Nomura Holdings Inc., Japan’s biggest broker. The country’s policy makers aim for a minimum of 8 percent growth annually to create jobs and avoid social unrest.

Migrant Laborers

The global financial crisis left 20 million Chinese migrant laborers unemployed and more than 7 million college graduates seeking work by March last year. In February 2009, a clash between police and about 1,000 protesting workers from a textile factory in Sichuan province injured six demonstrators, rights group Chinese Human Rights Defenders reported.

World exporters are increasingly relying on China as consumers in the U.S. and Europe retrench.

Honda Motor Co. and Nissan Motor Co. are adding capacity in China, which last year overtook the U.S. as the biggest car market. Rio Tinto Group’s sales to China overtook those to North America and Europe in 2009, reaching 24.3 percent of the total from 18.8 percent a year earlier, the mining company said this month.

Chinese policy makers are trying to cool lending that helped property prices in 70 cities climb at the fastest pace in 21 months in January. The government aims to reduce new loans to 7.5 trillion yuan this year from a record 9.59 trillion yuan in 2009. The People’s Bank of China raised the proportion of deposits that lenders must set aside as reserves twice this year to cool the economy.

“If there’s a this-time-is-different story in the world right now, it’s China,” Rogoff said in the speech at a forum hosted by CLSA Asia-Pacific Markets, a unit of Credit Agricole SA, France’s largest retail bank.

People say China “won’t have a financial crisis because there’s central planning, because there’s a high savings rate, because there’s a large pool of labor, blah blah,” he added. “I say of course China will have a financial crisis one day.”

To contact the reporter on this story: Aki Ito in Tokyo at [email protected]; Patrick Rial in Tokyo at [email protected]
Last Updated: February 24, 2010 00:21 EST

Of course our Chinese friends trained on "Scientific Methods" just like "Scientific History" , "Scientific Literature" , "Scientific and Revolutionary Poetry" expounded by our own "Necropolis of Learning" in the Aravalli Ridge in New Delhi, the Jawaharlal Nehru University (scientific is a nice simile for Commie Red Underwear) will ask for "Scientific Proof" that China will have a road wreck with the next 10 years..

What can I say to that, except, wait and watch..You guys are sleep walking to a disaster. The old methods wont work and you cant export your way out of trouble like earlier. The job just got tougher.. Any surge of exports from China to US and Europe will be met with a wall of targeted protectionism this time. That is a game changer..

All Peace , Progress and Prosperity. Jai Hu (Djinn Tao), Jai Mao (Ding Dong).

[Abhijeet]

He seems quite bullish to me, actually. He predicts a period of slow growth for just 1.5 years, no lost decade, and that China "will do very well this century". Seems pretty positive to me.

“You’re not going to go a decade without having a bump in the business cycle" - that's hardly the most pessimistic thing you could say about China.

[Ameet]

Hummer at dead end after sale to Chinese collapses

http://news.yahoo.com/s/ap/20100224/ap_ ... /gm_hummer

[heech]

x - posting

Going back to PRC economic miracle here the PRC president is hoping that PRC GDP will quadruple to $4 T by 2020 while PRC crossed that number in 3 years. The article is dated 2005 and the GDP data for that year is ~2.2 T. So is the PRC president deliberately understating the GDP or are there some other riddles missing?

Two reasons:

- first, the 20% GDP revision you're talking about was announced at the end of 2005, so *after* the article you linked above.

- second, currency conversion is the biggest reason. In 2005, Chinese RMB versus dollar was fixed at ~8.25 RMB to one dollar. Today, the conversion rate is 1 USD : 6.8305 RMB... so that's an additional ~20% boost to GDP.

Combined, that accounts for a 40% boost to Chinese GDP in USD terms. And if the West succeeds in pushing through another 20% appreciation of the RMB, that would also imply Chinese GDP (in dollar terms) grows overnight by a similar amount.

[svinayak]

Rising wages and uncompetitive business is finally showing

http://www.nytimes.com/2010/02/27/busin ... 7yuan.html

Defying Global Slump, China Has Labor Shortage

Joe Tan/Reuters
Employers sit with recruitment posters on a street in Guangzhou. China's coastal industrial heartland is facing a severe labor shortage as many migrant workers have not returned.
By KEITH BRADSHER
Published: February 26, 2010
GUANGZHOU, China — Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage.

As American workers struggle with near double-digit unemployment, unskilled factory workers here in China’s industrial heartland are being offered signing bonuses.

Factory wages have risen as much as 20 percent in recent months.

Telemarketers are turning away potential customers because recruiters have fully booked them to cold-call people and offer them jobs.

Some manufacturers, already weeks behind schedule because they can’t find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods.

Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest.

[Muppalla]

China insider sees revolution brewing

BEIJING: China's top expert on social unrest has warned that hardline security policies are taking the country to the brink of ''revolutionary turmoil''.

In contrast with the powerful, assertive and united China that is being projected to the outside world, Yu Jianrong said his prediction of looming internal disaster reflected on-the-ground surveys and also the views of Chinese government ministers.

Deepening social fractures were caused by the Communist Party's obsession with preserving its monopoly on power through ''state violence'' and ''ideology'', rather than justice, Professor Yu said.

Disaster could be averted only if ''interest groups'' - which he did not identify - were capable of making a rational compromise to subordinate themselves to the constitution, he said.

Some lawyers, economists and religious and civil society leaders have expressed similar views but it is unusual for someone with Professor Yu's official standing to make such direct and detailed criticisms of core Communist Party policies.

Professor Yu is known as an outspoken insider. As the director of social issues research at the Chinese Academy of Social Sciences' Institute of Rural Affairs he advises top leaders and conducts surveys on social unrest.

He previously has warned of the rising cost of imposing ''rigid stability'' by force but has not previously been reported as speaking about such immediate dangers.

''Some in the so-called democracy movement regard Yu as an agent for the party, because he advises senior leaders on how to maintain their control,'' said Feng Chongyi, associate professor in China Studies at the University of Technology, Sydney.

''I believe Yu is an independent scholar. This speech is very significant because it is the first time Yu has directly confronted the Hu-Wen leadership [President Hu Jintao and Premier Wen Jiabao] and said their policies have failed and will not work.''

Pointedly, Professor Yu took aim at the policy substance behind two of Mr Hu's trademark phrases, ''bu zheteng'' [''stability'', or ''don't rock the boat''] and ''harmonious society''.

His speech was delivered on December 26, the day after the rights activist Liu Xiaobo was sentenced to 11 years in jail for helping to draft a manifesto for constitutional and democratic government in China, called Charter '08.

The sentence, which shocked liberal intellectuals and international observers, followed a tumultuous year during which the party tightened controls over almost all spheres of China's burgeoning civil society, including the internet, media, legal profession, non-government organisations and business.

Professor Yu's speech has not been previously reported but has recently emerged on Chinese websites.

He cited statistics showing the number of recorded incidents of ''mass unrest'' grew from 8709 in 1993 to more than 90,000 in each of the past three years.

''More and more evidence shows that the situation is getting more and more tense, more and more serious,'' Professor Yu said.

He cited a growing range and severity of urban worker disputes and said Mafia groups were increasingly involved in state-sponsored thuggery while disgruntled peasants were directing blame at provincial and even central government.

''For seeking 'bu zheteng' we sacrifice reform and people's rights endowed by law … Such stability will definitely bring great social disaster,'' he said.

Professor Yu's speech reflects deep disillusionment among liberal thinkers in China who had hoped Mr Hu and Mr Wen would implement political reforms.

Dr Feng said he still hoped the two would ''do something'' to leave more than a ''dark stain'' on China's political development before stepping down in 2012.

''The conservative forces are currently very strong,'' he said. China's security-tightening and potential for future loosening were linked to a leadership succession struggle between Mr Hu and the Vice-Premier, Li Keqiang, on the one hand, and the former president, Jiang Zemin, and the current Vice-President, Xi Jinping, on the other.

''I haven't given up the hope that the Hu-Li camp may make some positive political changes to mobilise public support.'' .

The latest edition of the newspaper Southern Weekend broke a two-decade taboo by publishing a photo of a youthful Mr Hu with his early mentor, former party chief Hu Yaobang, who was purged in 1987 for his liberal and reformist leanings. But Chinese internet search results for the names of both leaders were yesterday blocked for ''non-compliance with relevant laws''.

A Beijing political watcher said such crackdowns were being led by officials who had the most to hide, which did not include Mr Hu or his allies.

''Corrupt officials have such a high and urgent interest in controlling the media and especially the internet,'' he said. ''The more they feel that their days are numbered due to the internet and free information, the more ferocious and corrupt they become, in a really vicious circle leading to final collapse.''

[VikramS]

http://en.ce.cn/Business/topnews/201003 ... 6607.shtml

Urban-rural income gap widest since opening-up

"The urban per capita net income stood at 17,175 yuan ($2,525) last year, in contrast to 5,153 yuan in the countryside, with the urban-to-rural income ratio being 3.33:1, according to the latest figures from the National Bureau of Statistics."

[Sudip]

China to Launch Space Station Module in 2011

THE GIST:

* China plans to launch its Tiangong-1 space module in 2011.
* The plan was delayed a year due to "technical reasons."
* After being placed in orbit, the Tiangong-1 would dock with the unmanned Shenzhou-8 spacecraft.

[Hari Seldon]

x-post

Could PRC's true fiscal deficit be 15% of GDP??

When China publishes its budget report on March 5, Beijing may congratulate itself for achieving 8.7 per cent GDP growth with a fiscal deficit that is just 3 per cent of GDP. But the real cost of stimulating the economy has been much bigger - thanks to frantic borrowing by local governments.

State media reported that China’s local governments borrowed 3.8 trillion yuan ($556 billion) from banks last year, to keep the economy humming. They also raised 450 billion yuan ($65.9 billion) indirectly via the bond market. Add those debts to Beijing's own, and the real 2009 fiscal deficit could be 15 per cent of 2009's GDP.

That sounds scary,{You betcha!} especially as local governments may not have spent their borrowed funds wisely. {You can say that again!}
But a sovereign debt crisis is unlikely. Even if Beijing absorbed all the local debts, total public borrowing would remain safely below 60 per cent of GDP.{Sure, it would when the major component of chini gdp is investments and the borrowings directly feed investments only. Jai hu, jai hu! maoA, maoA!}

Beijing is unlikely to acknowledge the debts as its own. That means future defaults could be left for banks to mop up. UBS expects 2009’s credit expansion to create up to 3 trillion yuan ($439 billion) of non-performing loans over the next few years, mainly because of lending to local governments.

That 3 trillion yuan is equal to 10 times the 2008 earnings of the three largest listed banks and would be enough to bring the non-performing loan ratio in the banking system up from less than 2 percent to 9 percent, based on current asset levels.{NPAs in PRC at <10% of total assets?? what're these oisoles smoking? Or is it some fancy mark-to-myth tricks goldman taught the cheenis, eh?}

If bonds too default, any foreign investors could find their situation really bleak - based on the few previous defaults, they could end up with mere cents on the dollar. For now, Beijing may be happy to take a hands-off approach. After all, banks may be able to grow out of the problem.
{Of course. And Pak may grow enough to repay its sponsors' debts..LOL}

But if banks do take big losses, and private investors are scared away, it is to Beijing that the lenders will turn for new capital. In that case, the game of "pass the parcel" could end up back in the central government's hands after all.

[shravan]

China to Nullify Financing Guarantees by Local Governments

March 8 (Bloomberg)

..
China’s local governments are raising funds through investment vehicles to circumvent regulations that prevent them from borrowing directly. A crackdown on local- government borrowing, estimated at about 24 trillion yuan ($3.5 trillion) by Northwestern University Professor Victor Shih, could trigger a “gigantic wave” of bad loans as projects are left without funding, Shih said this month.

“Beijing’s fiscal situation probably isn’t as good as it looks at first glance,” said Brian Jackson, an emerging markets strategist at Royal Bank of Canada in Hong Kong. “Perhaps at some stage the central government is going to have to bail out the banks or the regional governments and take it on its own balance sheet.”

Central bank governor Zhou Xiaochuan said March 6 during the National People’s Congress that while “many” local financing vehicles have the ability to repay, two types cause concern. One uses land as collateral, while the other can’t fully repay borrowing, meaning that the local governments may be liable, leading to “fiscal risks.”
....
A few cities and counties may face very large repayment pressure in coming years because of debt ratios already exceeding 400 percent, a person with knowledge of the matter said in January. The ratio is of year-end outstanding debt to annual disposable fiscal income.

[shynee]

China’s Bank Chief Says Currency Is Unlikely to Rise - nytimes

[svinayak]

Think again: It may not be China century
English.news.cn 2010-03-08 13:36:52
http://news.xinhuanet.com/english2010/i ... 201819.htm

BEIJING, March 8 -- China realized a V-shaped recovery in 2009 and maintained a GDP growth rate of 8.7 percent. The country's achievement has led many in the world to count on China for a way out and to place more international responsibilities, such as tackling climate change, on its shoulders that "come with its growing strength".

As 1.3 billion Chinese ushered in the Year of the Tiger - a symbol of power - last month, it seemed as if the prophecy that the 21st Century is the "century of China" had finally come true.

Or has it?

China is certainly a rising power but it is still a developing one. It has its own problems that needed to be addressed immediately, said Pan Rui, a professor of international relations at Fudan University in Shanghai.

Since the launch of its reform and opening up more than 30 years ago, China's GDP has been growing at an average annual rate of almost 10 percent, and 235 million people have been lifted out of poverty.

The country is the world's third largest economy behind the United States and Japan, and some experts predict it will overtake Japan this year and the US within two decades.

It has overtaken Germany to become the world's largest exporter. It holds the largest foreign currency reserves in the world, more than $2 trillion.

And, in spite of the global financial crisis, China contributed as much as 50 percent to global GDP growth in 2009.

However, though China's 33.5-trillion-yuan GDP was the world's third highest, its per capita GDP was far lower, at above $3,000, Foreign Minister Yang Jiechi said in early February during a trip to Munich, Germany. That figure ranked 104th in the world.

Uneven development remains a prominent problem. Big cities like Beijing and Shanghai do not represent the whole of China, and many rural and remote areas are still very poor.

About 135 million Chinese live on less than a dollar a day and 10 million have no access to electricity.

China managed to sustain a GDP growth rate of more than 8 percent in 2009 thanks to its 4-trillion-yuan stimulus package, but Professor Pan said heavy government investment was not a long-term strategy.

[svinayak]

SANDERS: China sitting on biggest of all economic bubbles?

By Sol Sanders
http://www.washingtontimes.com/news/201 ... c-bubbles/
ANALYSIS/OPINION:

When Prime Minister Wen Jiabao trotted out his litany of promised reforms to the annual rubber-stamp parliament this month, they reconfirmed growing suspicions of the Chinese economy's fragility. Now more veteran observers are joining that little band (including this writer) that has predicted an implosion of the jerry-built system.

Granted that some of us have been saying it for several years. But, like most human and economic events, neither the timing nor the precipitating event of such a crash is usually predictable (as was the case for the U.S. credit markets implosion).

Mr. Wen characteristically predicted the gross national product would grow by 8 percent. That is the magic number that the Chinese leadership — shorn of any other raison d'etre for the regime except rapid growth — has pulled out of the hat. Chinese and foreigners conventionally accept it as the minimum necessary to provide additional employment to ward off social instability. But like all GP figures — but especially in China where "creative accounting" is a highly developed art form — it has limited validity.

I remember accompanying Indian Prime Minister Jawaharlal Nehru many years ago to the old undivided Bihar, among his country's poorest states. Nehru, surrounded by thousands partaking of his darshan (spiritual enrichment) and often oblivious to his stream-of-consciousness monologue, made a startling admission.

He could not understand, he said, why he saw such poverty in Bihar while the per capita GNP statistics showed it one of India's richest states. Common sense gave you the answer: Bihar by then already had India's giant new steel mills — Nehru called them "our modern temples." Not only was their product exaggerating the local per capita income, but its workers were recruited elsewhere — nullifying any benefit for the local subsistence farmers and tribal hunter-gatherers.

[wrdos]

China's auto sales top 2.9m units in first two months

http://www.chinadaily.com.cn/bizchina/2 ... 566069.htm

The Chinese auto sales of the first 2 months in 2010 was almost twice of the American sales in the same period.

China's auto sales maintained steady growth in the first two months of 2010, buoyed by the nation's car purchase incentives and strong demand brought by the week-long Spring Festival holidays.

The combined auto sales in January and February surged 84 percent from a year earlier to 2.9 million units, with February's figures alone reaching 1.2 million units, up 46 percent year-on-year, according to the China Association of Auto Manufactures (CAAM) Tuesday.

China's auto sales top 2.9m units in first two months SAIC Feb auto sales up 45%
China, the world's largest auto market, adjusted the auto tax-cut policy and old-for-new program in January this year, to boost domestic consumption.

Ministry of Commerce said in February that the favorable policies for car purchasing had paid off, with a significant rise in the number of subsidy applications.

Dong Yang, the first deputy director of the CAAM, urged the nation's automobile industry to properly handle the relationship between improving product quality and maintaining fast development.

[Hitesh]

Then why hasn't the consumption of oil gone up? Naturally you would see a correlation of sales of car with consumption of oil which we aren't seeing in China.

[heech]

Then why hasn't the consumption of oil gone up? Naturally you would see a correlation of sales of car with consumption of oil which we aren't seeing in China.

http://in.reuters.com/article/oilRpt/id ... 7G20100310

BEIJING, March 10 (Reuters) - Copper and oil were in surprisingly strong demand in China in February, with imports rising despite a week-long Lunar New Year holiday and a crippling winter freeze that iced up many of the country's northern ports.

...
China's crude oil imports jumped to their second highest monthly level ever, rising to 4.83 million barrels per day from 4.03 million bpd in January.

[wrdos]

China February exports jump 45.7 percent

http://news.yahoo.com/s/ap/20100310/ap_ ... na_trade_6

BEIJING – China's exports rose in February in a new sign of growing global demand that could help persuade officials to let the Chinese currency rise.

Exports were up 45.7 percent over a year earlier, the Chinese customs agency reported Wednesday, beating analyst forecasts of 35 to 40 percent growth. Imports surged 44.7 percent, the agency said, reflecting growing demand in China as it emerges from the global crisis.

"China's trade is extending its recovery," said Zhu Jianfang, an economist for Citic Securities in Beijing. "Exporters are getting more orders these days."

February's growth rate was boosted by comparison with last year's weak trade amid the global downturn and came despite the weeklong Lunar New Year holiday, when many companies shut down.

Zhu said the data increase chances the government might allow China's currency, the yuan, to rise in value. Beijing has held the yuan steady against the dollar for 18 months to help Chinese exporters but is under pressure from Washington and other trading partners that say it is undervalued and is swelling China's trade surplus.

Combining data from January and February shows exports surged 31.4 percent during the period from a year earlier, the customs agency said. Analysts say looking at that two-month period compensates for the distortion of the Lunar New Year holiday and produces a more accurate picture of China's trade.

In a reflection of stronger global trade, China's total February imports and exports were up 45.2 percent from the same month last year. China overtook Germany in 2009 as the world's top exporter.

China's central bank governor, Zhou Xiaochuan, said Saturday that Beijing will be "very cautious" about easing exchange-rate controls because the global economic outlook is still uncertain.

China's global trade surplus for the January-February period narrowed by 50.3 percent from the same time last year, reflecting surging Chinese demand for imports spurred by its quick rebound from the crisis while the United States and other key export markets are still struggling.

Chinese economic growth accelerated to 10.9 percent in the final quarter of 2009 on the strength of massive stimulus spending and bank loans. That drove demand for imported iron ore and other materials used in stimulus-financed construction projects.

"Stronger domestic demand led to the good performance of imports," said Liu Qiyuan, an economist for China Merchant Securities. "We can see the domestic economic is on track for recovery."

China's global trade surplus was $7.6 billion in February and the combined January-February surplus was $21.8 billion.

Its trade surplus with the United States in the January-February period shrank by 27 percent to $20.9 billion. The gap with the 27-nation European Union, China's biggest trading partner, widened by 34 percent to $22.3 billion.

China's combined trade surpluses with its major export markets were larger than its global surplus because it also ran substantial deficits with Australia, Brazil, Taiwan and other suppliers of iron ore, industrial components and other materials needed by its booming export manufacturers.

The commerce minister, Chen Deming, cautioned Saturday that despite stronger recent trade, it will be two to three years before China's exports return to pre-crisis levels.

"With unemployment in the U.S. and EU remaining stubbornly high, and government subsidies to consumption winding down, that recovery will necessarily be a slow process," Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, said in a report.