PRC Economy and Industry: News and Discussions

[vina]

Boeing 737 => Comac
Soy/corn => Buying African & South American farmland
Intel Xeon => Godson
Petroleum => RMB Reserve Currency Status

Dude. Don't make this into a humor thread, there is one called BENIS, just browse it if you want, but lets stick to more serious things here. Beyond wild eyed nationalist rhetoric, it makes no sense. And frankly import substitution as a strategy is a dead end.

[wong]

^^^^
Dude, nobody in US/UK used the PVBP. That's an academic term.

Hot money is leaving Asia. So what?? China hardly needs it. What's the worst performing market in Asia YTD.

Import substitution is a reality. All I see is nationalist jingos here.

[Sri]

Wong there is no doubt that Chinese Government is good at managing it's money. And there is no doubt Chinese People have worked hard and gotten to an enviable position economically / militarily and strategically. Beijing today calls shots in matter of globalization. I believe China has a lot to offer. No doubt.

But obviously there are great anomalies. For starters whether it's $1.3 BN OF $3BN, there is not doubt that China today is holding maximum amount of US treasury bonds. Failure of western monetary order will create ruffles in the Chinese economy. Even your own Government agrees to it. Sure India is piddly in these matters right now, but there is a definite feeling that macro factors are now turning in India's favor. Ironically CPC is the knight in shining armor for western imperialists and capitalists.... funny ain't it?

Also your answer concerning Iranian oil is wrong. Please don't feel happy that you get the oil for free where in I think you also know thats not true. China then itself has been taken for suckers by US by printing papers and getting fuzzy toys in return. There is nothing strategic in US China trade. Oil is strategic. Iran probably excepts RMB because international agencies won't transfer dollars to them. So if Iran exchanges it's oil with Chinese RNB which ultimately is used to buy chinese products than it's win win for both. Iranians aren't suckers to except RMB or are they?

Now CPC does have some really shrewd managers in planning division and I am sure China will ensure that the 20 year plan will work out with the efficiency Chinese always do stuff.

Alas for us in India it's a long shot. Generally these gaps here will be filled by private sector. Therefore you may think Indians aren't doing anything about these challenges but in general Indians at business level are hard at work to solve these problems. See Boeing makes good aircraft, right now our industry believes it cannot make Aircraft competitive to Boeing, so they won't touch it. Soy / Corn, well we don't eat it that much but if the market is created pvt sector will respond. Moreover 76% of Indian land mass is Ariable. Intel Xeon? Well I need not say much because you know, we know that stuff at the back of our hands again Pvt sector which wants returns will not touch it. Petroleum with RMB as reserve? Hmmmm I hope to see that day, but I don't buy it just as yet.

Basically Wong, we are products of two different systems. You take refuge in fact that CPC will take care of it, we here shiver in our Dhoti (http://en.wikipedia.org/wiki/Dhoti) when our Government says it will take care of anything. So on a grand level China does seem to be omnipotent and omni present, we look like a ragtag group of SDREs (Short dark and rice eating) trying to shave with dad's shaving kit. But in both cases need is to scratch and look beneath the surface. China's rise and fame is inevitable and will reach greatness with design. We will huff and puff but believe me we will be out there with you, humble and nondescript.

[gakakkad]

@ Wong

Godson is nowhere near intel or amd (forget these its nowhere near Samsung , qualcomm or NVIDIA). No one (except perhaps South Korea) has gotten any where close to American companies in Microchip.

As far as commercial airliner is concerned India and China are in the same stage. We are nowhere close to Boeing or Airbus or Tupolev. HAL has a 70-100 seater under development. So does your Chinese company.

Indian companies too have acquired farms in Africa.

Just about everything that is manufactured in China is manufactured in India. But in a lesser quantity.

Both countries are at developing stage. We cannot afford to sit back on our laurels. Both countries face incredible challenges before we come anywhere near US. Both India and China have pathetic government systems. While your gov't has made an over investment mess Indian govt's corruption and socialist policies have made it difficult for companies to thrive.
For instance L&T BHEL AND OTHER Companies makes high quality electrical equipment. But Indian government has exempted the Chinese competitors from any tax making it difficult for indigenous companies to win government contracts.
Both Indian and Chinese governments are corrupt and messy. Only trouble is that people will pay the price.Though it seems that Chinese people have a greater chance for being in the mess.
US is still the superpower even though it is weakened. Remember that a lot of Chinese/ Indians work for the US.

[abhischekcc]

^^^^
vina, falling commodities only helps India but not China? Does that even make sense?
Notice their $30B paper gain yesterday? No practitioner in US/UK calls it PVBP.

China spent a lot of money tying up commodity supplies for a high price, because it was a seller's market in the past.

Now India will buy commodities because it is a buyer's market now.

[vera_k]

^^^^
Because you guys don't make Boeing 737/747, soy/corn, Intel Xeon and petroleum doesn't trade in rupees.

And how is that different from the situation with the US$ reserves? Whether China chooses to pay through a devaluation of the reserves, by not pirating, or through inflation of commodity prices is China's internal problem ain't it?

[Theo_Fidel]

http://www.google.com/hostednews/afp/ar ... 59481d.2a1

China has suspended all new railway construction projects, as controversy swirls over the nation's high-speed network nearly three weeks after a fatal crash sparked safety concerns.

Rail authorities have also cut the speed of trains running on newly-built high-speed lines and will conduct safety checks on all existing fast links as well as those under construction.

The railways ministry announced on Thursday that trains designed to run at a maximum speed of 250 kilometres (155 miles) per hour would instead be limited to 200 kph, impacting ticket prices and the timetable for the network.

The Shanghai railway station said in its official Twitter-like Weibo account that ticket sales for high-speed trains leaving from the city after Monday had been temporarily suspended, pending adjustment of the timetable.

[Singha]

for a network built using $90b annual capex for a few years, to teach a lesson to japan itself, this is a massive loss of face and a PITA to rearrange timetables, upkeep slots and pricing.

[abhischekcc]

"Big man make big mistake"
--- Confucius says

[Sri]

$90 bn capex???

Will it ever payback???

[abhischekcc]

Sri, Chinese economists, like Chinese diplomats, think in centuries, not years, like us boor SDREs.

[Christopher Sidor]

The only thing which causes a railway track to be remunerative or break even is freight transport. Human/passenger transport will not be able to do it. The Capital investment and depreciation just kill it. For high speed railway, especially dedicated passenger services, it just does not make sense.

The example of Japan is there for everybody to examine. Especially for the neighbors of Japan. I can understand why Japan did what it did, with regard to high speed railway. It has a very high population density. India and Bangladesh are also in the same category. But China does not have the same population density.

[ashi]

China's critics don't represent the voice of the Chinese people

Yet again, reality is intervening.

The Beijing-Shanghai high-speed rail line finished its first month of operation having carried five and a quarter million passengers – a number not in dispute. The percentage of capacity number is very much in dispute because of differing statistical models, but even the most conservative interpretations would have the trains half full. This is not shabby for such a large-scale project in its first month, during which a much publicized fatal accident occurred. In the rest of the regular rail system, where the accident actually happened, even the fiercest critics of the railway project are admitting that the trains are nearly full as usual.

[Shankas]

China's critics don't represent the voice of the Chinese people

Yet again, reality is intervening.

The Beijing-Shanghai high-speed rail line finished its first month of operation having carried five and a quarter million passengers – a number not in dispute. The percentage of capacity number is very much in dispute because of differing statistical models, but even the most conservative interpretations would have the trains half full. This is not shabby for such a large-scale project in its first month, during which a much publicized fatal accident occurred. In the rest of the regular rail system, where the accident actually happened, even the fiercest critics of the railway project are admitting that the trains are nearly full as usual.

Total Passengers 5,250,000
Beijing - Shanghai 2,625,000
Shanghai - Beijing 2,625,000

Monthly Passengers 2,625,000
Daily Passengers 87,500
Daily H-speed Trains 45
Passengers Per Train 1,944

Source - http://www.beijingchina.net.cn/transpor ... nghai.html

[Theo_Fidel]

Lets not forget this is Beijing Shanghai running 1300 kms. It will probably run full no matter. Even then it will lose money.

Also the the way did this is by cutting regular rail services. So essentially forcing people to upgrade to first class. HSR makes sense 500 kms or less. Any longer Air travel is becomes seriously cheaper, both in terms of time and just operating costs. Doubling a rail length often more than doubles maintenance and operating costs while for air travel it becomes cheaper the further you fly. Nothing Panda is doing will change this.

When one includes the cost of maintenance, track repair, salaries, electricity, etc the very conservative estimate for Panda right now is a cost of 11 cents per km per passenger on a 1000 passenger train at 300 kmph. So lets do the numbers. 1300 km trip with 1000 passengers will cost 0.11x1000x1300 per trip = $143,000. So every single trip costs $143,000 every single time it leaves the station. This is not including depreciation or capital costs or interest. Every single passenger owes $143 for the trip every time he gets on. This number will increase as the cost of salaries and maintenance increase over time. An cheap airline ticket Beijing to Shanghai costs $110 right now. There are discounted tickets for $80-$90 at uncomfortable times and dates.

Now lets do the numbers for a 300 km trip, say Chennai Bangalore. 0.11x1000x300 = $33,000. Every passenger now owes $33 for the trip. So you can charge him/her say $60 and leave enough to pay back capital and even maybe a small profit. This is probably slightly lower than the Airline ticket can ever be. This is why HSR works in Europe and Japan. Relatively short hops. Panda is going to learn this lesson the hard way, not that anyone has accused them of learning their lessons.

[ArmenT]

The example of Japan is there for everybody to examine. Especially for the neighbors of Japan. I can understand why Japan did what it did, with regard to high speed railway. It has a very high population density. India and Bangladesh are also in the same category. But China does not have the same population density.

Actually the Chinese have high population density too. The numbers look lower only because China has vast desert areas where no one lives. But if one looks at the inhabited areas alone (which are mostly on the east coast), they have very high population density. Heck, Hong Kong and Macau have some of the highest population density in the world.

Earthlights at night gives a very good idea of where the Chinese population lives.

[vina]

Contrary to the spin of the Drone Acharayas here that the "cloned" products in china are in many instances better than the original, however in this case, the cloned trains are not better. Chinese Manufacturer recalls 54 bullet trains

[Vasu]

China's critics don't represent the voice of the Chinese people

Yet again, reality is intervening.

The Beijing-Shanghai high-speed rail line finished its first month of operation having carried five and a quarter million passengers – a number not in dispute. The percentage of capacity number is very much in dispute because of differing statistical models, but even the most conservative interpretations would have the trains half full. This is not shabby for such a large-scale project in its first month, during which a much publicized fatal accident occurred. In the rest of the regular rail system, where the accident actually happened, even the fiercest critics of the railway project are admitting that the trains are nearly full as usual.

I'm confused here. What is the real point here? Do the "real" Chinese people who travel on the trains have a choice? In that case, if they have to travel from point A to point B and do not have the money to buy an air ticket, then they will have to take the train, in whichever way it is - dangerous or not.

So basically the 'real' Chinese people aren't demanding a safer railway system?

[Singha]

per a earlier post on this thread the japanese were willing to certify their trains only upto design speed of 250kmph and obtained a written assurance of no-blame if the trains were operated above that. these mother trains were "cloned" and operated @ 350kmph (though the accident train was going much slower).

I guess the recall will look at the issue of whether these originals and "clones" can be operated safely above 250kmph...

[Vipul]

China costs worry US multinationals.

The cost factor that drove the developed world to set up shop in China seems to be unravelling.

For years, low prices on China-sourced goods helped dampen inflation in the United States. Now China's efforts to boost domestic consumer spending, reducing reliance on exports, are leading to higher costs for multinationals that manufacture goods there.

Eventually, China could export its inflation.

Conglomerates ranging from Emerson Electric to Honeywell International feel pressure on margins from double-digit wage increases in China. So have toymaker Mattel, fast-food chain Yum! Brands and computer maker Dell, analysts and investors say.

* China manufacturing costs spark search for alternatives

* Wage increases erode China's low-cost advantage

* Higher wages aimed at boosting domestic consumption

They have plenty of options besides raising prices, such as embracing automation or moving to China's less-developed interior. Some companies relegate China costs to the category of minor headache; others point to long-term benefits from richer Chinese consumers. But the topic has became a talking point during the earnings season now winding down.

Input cost increases have been a steady headwind to margins for some time now, Fairchild Semiconductor International Chief Financial Officer Mark Frey said last month. Metals and energy pricing, forex and China wage inflation are more difficult to forecast.

Yum, the No. 1 Western restaurant brand in the world's fastest-growing major economy, generates a third of its profit from China. It said its full-year margins will dip this year, citing labor inflation in the mid-to-high teens.

I do believe that labor inflation will continue high for quite a while, Yum CFO Rick Carucci said on the company's earnings conference call. He called commodity prices another wild card for the company.

Nearly a third of Emerson Electric's total workforce is in China, where it employs more than 40,000 people. Amid 20 percent wage increases, the company has said it could move some production to China's interior, and it might move 20 percent of its capacity to other Asian countries.

The economy is going into a more costly mode, CEO David Farr said on Emerson's second-quarter conference call. We are going to have to refix where we're manufacturing.

Emerson's network power business was the only of its five units to show lower operating profits in the latest quarter. The company cited labor inflation among the causes.

A lot of the wage increase is to keep civil unrest at a minimum, said William Blair analyst Nick Heymann, who said suicides at an Apple supplier and the Arab Spring protests have alarmed Beijing. These guys have watched North Africa and the Middle East with a lot of trepidation.

A related, complicating factor is that local competitors, many state-owned and not too worried about margins, are challenging companies like Emerson on price, Heymann said.

Multinationals have figured out they cannot compete on cost: they must differentiate their products, making them smaller, faster or more energy-efficient. Then, depending on the product, they might be able to ask for higher prices.

Others, such as makers of labor-intensive shoes and toys, have to take into account a cost-conscious consumer now potentially facing a new recession. Still, Hasbro and Mattel have pushed through price increases this year, and Hasbro's CEO has said China remains its preferred manufacturing hub.

China this year adopted a five-year plan that calls for 7 percent growth in per-capita income, ahead of earlier targets, and fresh investment in research and development, to boost domestic consumption and modernize its economy.

Manufacturing wages are a fraction of those in the United States but are narrowing the gap, both fueling and responding to China's inflation, now at three-year highs. Between 1978 and 2009, wages jumped almost 13 percent a year, six times the pace of US wage rises, according to BernsteinResearch. Since 2006, that growth has accelerated.

By 2015, wages around Shanghai, adjusted for productivity, will be 61 percent of those in low-cost US states like Alabama, according to the Boston Consulting Group (BCG). Transport and other considerations further shrink that gap.

Wages are getting large enough that you start to feel the difference, said Hal Sirkin, a BCG senior partner, who said US companies are looking at alternative manufacturing sites. One of the answers is to start moving back to the US

The next few years will bring a wave of reinvestment by US multinational manufacturers in their home base, as rising wages and a strong yuan currency make China a less attractive production center, BCG predicts. Its July BCG paper names 14 companies rethinking where they produce goods, including NCR, Ford, Flextronics, Ashland, and Jarden's Coleman unit.

Where China once had ample labor, and supply was well balanced with demand, that equilibrium has broken down, BCG argues. The change does not mean shutting Chinese factories and firing workers; it means selectively scaling back future expansion or investment. China's size will ensure it remains a major global player.

China's well-developed infrastructure is an advantage over other countries such as the Philippines, Indonesia and Vietnam. And any short-term hit to margins has to be balanced against the long-term opportunity in a richer China. For many producers, costs such as oil and metals are a bigger headache than the soaring cost of labor.

I'm not that worried about it, Honeywell CEO Dave Cote said, referring to wage inflation. I don't put it up there in one of these economic perils kind of categories.

Manufacturers including Honeywell are looking inland, where wages are lower, Cote said, or they are automating production. You'd look at it in the past and say, instead of a machine, it's worth having 10 people do it, Cote said. Well, that may not be true anymore.

Cote's comment points to a crucial silver lining for some US companies. If factories invest in machines, that helps Emerson and Rockwell Automation. If China expands its consumer middle class, the Yums of the world benefit as families eat out more or adopt a protein-rich diet.

Ultimately, the success of that drive to shore up China's consumer base may determine how US companies perceive the risks and rewards of operating in China.

The customer base in China is just so immense, said Tim Hanley, Deloitte LLP US Process & Industrial Products Leader. Companies that were in China as a low-cost exporting base recognize they need to be there. That's where demand is.

[VikramS]

What India get for 0.0% for six months and then has to pay with Euros, China gets for "free" by starting the RMB printing press.

You seem to get immense pleasure from the fact that China too can print money. It would be relevant if China did not have a trade surplus. When it has a trade surplus, printing undervalued Yuan means selling yourself short. By paying Iran in an undervalued currency you are giving them MORE buying power.

The RMB is considered about 20-25% undervalued versus the USD. So you are essentially allowing them a 20-25% bonus on what they truly deserve to get. And they can then use the RMB to buy a lot of stuff from China and the people who get screwed are the Chinese workers who get less for what they deliver.

Get it?? Let the RMB rise to its true purchasing power AND then print it. No point printing something which is undervalued.

Seriously, Do you ever think of the cost of the CCP policies, before blindly parroting whatever the memo says.

Suckers.

Here's a nice recent example of someone who's tasted your so-called 'freedom', but decided to return to China. I can give you many more examples.
http://www.businessweek.com/printer/mag ... 42011.html

I did a quick search and did not find a single instance of India here. So what is the point??

The guy is a multi-gazillionaire and can live and work in Space if he wants to. It is the Chinese who go to relatively underdeveloped but free countries, and then want to stay there who tell the real story. These folks are ordinary folks not some head-honcho. After you have lived in fear, and then tasted life without fear, they prefer life without fear.

Let me give you an example of what I mean. I live in a area with a LOT of Chinese people. My 5year son visits a Chinese girl to learn piano. That girl who is close to 20s and has a 2 year brother, and another on the way. Wonder why? You see her parents emigrated to the US about 6 years ago. The first thing they did once they came here was try to have another child. But age had caught up with them and it take a few years of trying followed by fertility treatment before they succeeded.

That sir, is the difference between fear and freedom. And the fact that China executes about 10,000 people every year for legal offences with god knows what kind of due process.

At the core of your heart you too know it. Otherwise you would not be defending the short-changing of the Chinese worker by the CCP so vehemently.

Most people here have a lot of respect for the Chinese people. They have very little for the CCP/PLA. Most here also have very little respect for the Indian government and politicians. We can whine about them and vote them out. What can you do about the mafia which rules you?

[Christopher Sidor]

If the reports are to be believed, then the train speeds will be restricted to 250 kmph on most of the high speed stretches in China. For Bejing-Shanghai the journey distance is approximately 1400 kms.

Now there is a difference between max speed and the average speed. For example, one of our fastest rajdhani, apart from seeladah-delhi rajdhani is the Delhi-Bombay rajdhani. It covers a distance of 1400kms in some 16 odd hours. Its average speed is approximately 87 kmph. Its max rated speed is obviously higher, i.e. 110-120 kmph. But it cannot run at this speed constantly over the entire 1400 kms.

Even if assume that 250 kmph speed will be sustained for the entire 1400 kms journey, without any stops in the middle, then the journey time will still be 5.6 hours. Let us assume that a passenger plane does the same journey in say 2 hours. Even if we assume that the flight is delayed by 50%, i.e journey time is 3 hours, everyday then also the time spent in air is half the time spent on the railways.

Does a 250 kmph high speed railway track dedicated to passenger service between these cities make sense? It might make sense over a distance of say 500-600 kms but not for 1000 kms plus.

[ashi]

Most people here have a lot of respect for the Chinese people. They have very little for the CCP/PLA. Most here also have very little respect for the Indian government and politicians. We can whine about them and vote them out. What can you do about the mafia which rules you?

So how come the "mafia" govern and manage the country far better than the government that you vote them in and out?

[DavidD]

If the reports are to be believed, then the train speeds will be restricted to 250 kmph on most of the high speed stretches in China. For Bejing-Shanghai the journey distance is approximately 1400 kms.

Now there is a difference between max speed and the average speed. For example, one of our fastest rajdhani, apart from seeladah-delhi rajdhani is the Delhi-Bombay rajdhani. It covers a distance of 1400kms in some 16 odd hours. Its average speed is approximately 87 kmph. Its max rated speed is obviously higher, i.e. 110-120 kmph. But it cannot run at this speed constantly over the entire 1400 kms.

Even if assume that 250 kmph speed will be sustained for the entire 1400 kms journey, without any stops in the middle, then the journey time will still be 5.6 hours. Let us assume that a passenger plane does the same journey in say 2 hours. Even if we assume that the flight is delayed by 50%, i.e journey time is 3 hours, everyday then also the time spent in air is half the time spent on the railways.

Does a 250 kmph high speed railway track dedicated to passenger service between these cities make sense? It might make sense over a distance of say 500-600 kms but not for 1000 kms plus.

How often do you get on a bus at its first station and then get off at the last one? The Beijing-Shanghai railway makes stops in numerous important cities all along the east coast of China. Also, getting on a train is easier than getting on a plane, and you can carry much more stuff.

[VikramS]

Most people here have a lot of respect for the Chinese people. They have very little for the CCP/PLA. Most here also have very little respect for the Indian government and politicians. We can whine about them and vote them out. What can you do about the mafia which rules you?

So how come the "mafia" govern and manage the country far better than the government that you vote them in and out?

Govern much better. By what metric?

Executing 10,000 people every where or "cleansing" out cultural differences by homogenization? Or killing near-term infants in the womb so their birth control quotas could be met?

A part of breath-taking advance in China is due to the carte-blanche which the CCP had. They could raze entire city, acquire land, and pretty much do whatever they want, where ever they want, for the "greater public good" as determined by the CCP.

In India a system like that will never work. The biggest challenge in India is acquiring land, because even the smallest of the land-owner will stand up and demand a good chunk of cash before they give up. Even the most prestigious projects are put on hold for a long time. In China no barrier like that exists.

However, as China advances and the people become wealthier, they will demand basic rights. There is no two ways about that. How the CCP reacts to that will be the key. Brute force can work for so long.

=============
DavidD:
Typical HSRails do not make too many stops on the way. Because if they do, they lose their value proposition of point to point travel in quick time. Every time a train stops at a station, it adds wait time to the train travel and the average speed as the train comes from high speed to rest and then back to high speed and so on. Further if people are going to carry a lot of stuff on the train, the time it takes to board and disembark will also go.


I think the HSR issue has been beaten down enough. It is clear to me that a lot of projects in China are done for image and H&D projection and not based on traditional ROI projections. China now has an excess of infrastructure which will meets her needs for generations to come. There is a question mark on how long the infrastructure will survive, since the speed at which it has built up typically results in massive corner cutting and maintenance/upgrade costs might prove burdensome if the ROI is poor.

A system where everything was government owned till a few decades ago, traditional accounting measures also do not make sense. So poking too many holes in that does not help since the market itself is rigged. As long as liquidity is not an issue, the show will go on.

OTOH, India suffers from the lack of adequate infrastructure which is slowing her growth. If anything, India should be investing heavily to ensure that infrastructure constraints do not remain a bottleneck. All the money spent in NREGS etc. could have been more effectively utilized with similar results (but without the political gains)

[Singha]

there was a huge riot over a trivial issue like a wrong parking. just shows the local people have some pent up rage and were awaiting any excuse to beat up police and party officials. in India such a matter would hardly attract a couple of people to watch the tamasha. thats why the CCP is shit scared of any "central" org that can control and channelize all this local anger behind any issue - crackdowns on any potential challenger incl falun gong have to seen through this prism.

http://www.bbc.co.uk/news/world-asia-pacific-14501795

China parking row sparks clashes in Qianxi, Guizhou

Residents in one of China's poorest provinces have clashed with police in a row about parking rules, reports say.

Crowds came out in Qianxi, Guizhou province, after local officials apparently shoved an elderly woman who had parked her motorbike illegally.

Reports say hundreds of people rioted, setting fire to cars belonging to the local government, blocking off streets and injuring several police officers.

Chinese towns regularly experience short-lived outbreaks of unrest.

The anger is often directed at local officials.

Last month, rumours that the death of a fruit seller was down to mistreatment by local officials sparked a mass riot in Anshun, about 60km (40 miles) from Qianxi.

News reports of the latest incident say crowds gathered outside the Qianxi local government building on Thursday afternoon after rumours of the parking row spread.

The crowds then began to wreck cars belonging to local officials and attacked police, the state-run Xinhua news agency reported.

Police arrested 10 people, and the rioting and been quelled by Friday morning, officials told Xinhua.

Analysts say such incidents are on the rise in China, and provide one of the most pressing challenges to the rule of the Communist Party.

[ashashi]

The RMB is considered about 20-25% undervalued versus the USD. So you are essentially allowing them a 20-25% bonus on what they truly deserve to get. And they can then use the RMB to buy a lot of stuff from China and the people who get screwed are the Chinese workers who get less for what they deliver.

Get it?? Let the RMB rise to its true purchasing power AND then print it. No point printing something which is undervalued.

China's main goal is to accumulate wealth. Dumping products below cost worldwide is an easy of wealth accumulation. Undervalued RMB is a great way to achieve it. Once they have accumulated enough percentage of global wealth, they will flex their muscles. They are trying to become the next USoA contributing to the global society like USofA.

[VikramS]

ashashi:

The post was in the context of the pride being displayed by Wong on China being able to print its undervalued currency.

China so far has been taking from the global society; the global society is now realizing that they have been had. Protectionism is the next big wave. Let us see how China deals with it.

[ashi]

China's main goal is to accumulate wealth. Dumping products below cost worldwide is an easy of wealth accumulation. Undervalued RMB is a great way to achieve it. Once they have accumulated enough percentage of global wealth, they will flex their muscles. They are trying to become the next USoA contributing to the global society like USofA.

How could China afford to dump products below cost for the last thirty years without bankcrupting herself and still transforming herself to the second largest economy in the world?

The end of cheap goods?

For the next 30 years manufacturers in China helped to keep global inflation in check. But that era is now over, says Mr Rockowitz. Chinese wages are rising fast. A wave of new demand, especially from China itself, is feeding a surge in commodity prices. Manufacturers can find some relief by moving production to new areas, such as western China, Vietnam, Bangladesh, Malaysia, India and Indonesia. But none of these new places will curb inflation the way southern China once did, he predicts. All rely on the same increasingly expensive pool of commodities. Many have rising wages or poor logistics. None can provide the scale and efficiency that was created when manufacturers converged on southern China.

Nothing can replace the Chinese miracle. “There is no next,” says Mr Rockowitz.

[ashashi]

China's main goal is to accumulate wealth. Dumping products below cost worldwide is an easy of wealth accumulation. Undervalued RMB is a great way to achieve it. Once they have accumulated enough percentage of global wealth, they will flex their muscles. They are trying to become the next USoA contributing to the global society like USofA.

How could China afford to dump products below cost for the last thirty years without bankcrupting herself and still transforming herself to the second largest economy in the world?

1. By manipulating the currency valuation.
2. By artificially keeping the wages low

China's currency manipulation is a known fact. Since GW Bush's times, US has been raising the issue with China every year. China's answer was, it cannot afford to float the currency during the growth stages of its economy. Donald Trump has already called for taxing the Chinese imports. His call will become a major debating issue in the '12 elections.

Unfortunately until now, US political machinery is so dependent upon the "cheap" products to control the inflation, it could not take any strong measures. Now that the US economy itself is in trouble, you can bet the next president (if its not Obama) to take decisive action.

By dumping the products worldwide in massive quantities, China is accumulating the wealth. Sure, profit margins are very low, but still it is accumulating the wealth. Another effect of the dumping strategy is, it is killing the industry worldwide, there by increasing the demand for chinese products.

[ashashi]

Paul Krugman: US needs to tax Chinese imports that depress jobs

Some background: If discussion of Chinese currency policy seems confusing, it's only because many people don't want to face up to the stark, simple reality - namely, that China is deliberately keeping its currency artificially weak.

The consequences of this policy are also stark and simple: In effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus.

In a depressed world economy, any country running an artificial trade surplus is depriving other nations of much-needed sales and jobs.

...

Time and again, U.S. officials have announced progress on the currency issue; each time, it turns out that they've been had. Back in June, Treasury Secretary Timothy Geithner praised China's announcement that it would move to a more flexible exchange rate. Since then, the renminbi has risen a grand total of 1 percent against the dollar. And since the dollar has fallen against other major currencies, China's artificial cost advantage has actually increased.

[suryag]

....
They are trying to become the next USoA contributing to the global society like USofA.

YEs that is true and by the time they succeed Donkeys would have grown wings

[DavidD]

1. By manipulating the currency valuation.
2. By artificially keeping the wages low

China's currency manipulation is a known fact. Since GW Bush's times, US has been raising the issue with China every year. China's answer was, it cannot afford to float the currency during the growth stages of its economy. Donald Trump has already called for taxing the Chinese imports. His call will become a major debating issue in the '12 elections.

Unfortunately until now, US political machinery is so dependent upon the "cheap" products to control the inflation, it could not take any strong measures. Now that the US economy itself is in trouble, you can bet the next president (if its not Obama) to take decisive action.

By dumping the products worldwide in massive quantities, China is accumulating the wealth. Sure, profit margins are very low, but still it is accumulating the wealth. Another effect of the dumping strategy is, it is killing the industry worldwide, there by increasing the demand for chinese products.

Just wondering, why don't all other countries do it? I mean, you can't argue with the results, so why don't countries like say Vietnam, Indonesia, and the Philippines do it? Don't tell me they're held back by some sort of moral obligations.

Yes, China manipulates its currency, but so does the U.S.. Of course the Americans raise the issue with China every year, it's their MO. They have more nukes than almost anybody, but tries to make sure nobody else gets even one. They have 11 supercarriers, but rings the alarm bells when someone builds one and not even a supercarrier. They've operated stealth fighters for decades, but god forbids if you fly one prototype; it'll both be the gravest threat to American security AND be a piece of crap that tried to copy the Americans and failed. The U.S. dropped the gold standard just so they could manipulate its currency, and they've put it into great effect with the successive QE's. A little bit of pot calling the kettle black, don't you think?

[ashashi]

Just wondering, why don't all other countries do it? I mean, you can't argue with the results, so why don't countries like say Vietnam, Indonesia, and the Philippines do it? Don't tell me they're held back by some sort of moral obligations.

Political clout and power. And ofcourse, it helps if you are the innovator in the field.
During the early 90s, there was a huge push by the American business PACs to give preferential treatment to China. That was the time when there were lot of criticism of China for using prison labor to make cheap products for US and the genesis of "global market". Of course, the business community didnt care and the political community had to deed in giving China not only MFN status but also WTO membership. Few years later, Clinton championed NAFTA.

Later the situation became more complicated. If Chinese currency goes up in value, it would cause an instant inflation. US Fed was able to keep the interests rates near 0 due to the low inflation. So, there is an element of political expediency.

Yes, China manipulates its currency, but so does the U.S..

Can you substantiate your claim that US manipulates its currency?

[ashashi]

....
They are trying to become the next USoA contributing to the global society like USofA.

YEs that is true and by the time they succeed Donkeys would have grown wings

I meant to say, "They are trying to become the next USoA without contributing to the global society like USofA"

[VikramS]

DavidD:

US QE is a reaction to the mess. China has been effectively doing QE using capital controls, low internal interest rates with negative real interest rates (3% for 2 yr bonds when inflation is 6+%!!) etc to keep the Yuan in check. US is just responding. If Barkano Faso manipulates its currency it does not matter; but if the second largest economy in the world manipulates currency it makes the system unstable.

BTW, the people who suffer with negative real rates are the Chinese whose savings are being eroded via inflation. Till recently most Chinese had very limited avenues to invest and the CCP was stealing their life-savings by giving the vast masses negative real interest rates; not everyone can buy that apartment in Shangai which goes up 20-30% every year.

The ruling oligarchy in the West (the multinationals and the wealthy) found China as the most convenient place to do business. When it comes to dealing with the emerging markets, the West has invariably preferred authoritarian regimes; what is sometime called "single window approval". With the CCP being the supreme power, pesky issues like buying land, relocation of current population, environment etc. were quickly brushed aside. They follow CCP rules and the CCP takes care of their business needs.

You should spend some time studying what happened to projects like Tata Nano in Bengal, Posco etc. to understand the difference between China and India. Those pesky issues were not relevant in China but now I have heard that people have started complaining about losing their land.

China also provided the size to be the one-stop factory to the world. Why mess with ten different countries when China can give all?

It is true that China has benefited from this transfer of wealth. However the Chinese model has created a very unstable global system; the chasm between the rich and poor has magnified; it has resulted in a country where most of the masses will likely get old before they get rich; and the West of course has been screwed.

But as they say, all good things come to an end, and they are going to come an end soon. The question is how will CCP deal with it?

Many people compare India and China to the tortoise and hare story. The Indian system with its varied checks and balances (also known as roadblocks) has resulted in much slower but more balanced development. There is a lot which India can learn from China; not only what it should do but what it should not do.

[Christopher Sidor]

If the reports are to be believed, then the train speeds will be restricted to 250 kmph on most of the high speed stretches in China. For Bejing-Shanghai the journey distance is approximately 1400 kms.

Now there is a difference between max speed and the average speed. For example, one of our fastest rajdhani, apart from seeladah-delhi rajdhani is the Delhi-Bombay rajdhani. It covers a distance of 1400kms in some 16 odd hours. Its average speed is approximately 87 kmph. Its max rated speed is obviously higher, i.e. 110-120 kmph. But it cannot run at this speed constantly over the entire 1400 kms.

Even if assume that 250 kmph speed will be sustained for the entire 1400 kms journey, without any stops in the middle, then the journey time will still be 5.6 hours. Let us assume that a passenger plane does the same journey in say 2 hours. Even if we assume that the flight is delayed by 50%, i.e journey time is 3 hours, everyday then also the time spent in air is half the time spent on the railways.

Does a 250 kmph high speed railway track dedicated to passenger service between these cities make sense? It might make sense over a distance of say 500-600 kms but not for 1000 kms plus.

How often do you get on a bus at its first station and then get off at the last one? The Beijing-Shanghai railway makes stops in numerous important cities all along the east coast of China. Also, getting on a train is easier than getting on a plane, and you can carry much more stuff.

If there are going to be numerous stops and not few then the journey time will increase substantially. So even the best case scenario of a 5.6 hours of journey will be increased to say 6 hours plus. Makes the whole journey useless. People who can afford the train journey, which by all accounts is more expensive than the normal train journey, will also be able to afford the flight ticket.

Let me take the example of Delhi-Bombay rajdhani train. It originally used to have only two stops. Even then the maximum number of passengers used to be between Delhi and Bombay and not between Bombay-Vadodara or Bombay-Kota or Delhi-Kota or Delhi-Vadodara.

We do tend to confuse high speed long-distance trains with a METRO train service or MRTS, as far as passenger load is considered. In case of Metro/MRTS services the last station and first station provide only a token amount of passengers. And if we count the number of passengers who will board at the first station and disembark on final station in a METRO/MRTS service, then it is even less. This is not the case with long-distance trains.

I hope that the chinese are able to runs faster trains. The alignment will offcourse support the speed of 250+ kmph. It is just the track layout and the signalling which the chinese have to work out.

I would really like to know is that with these reduced speeds, and logically reduced train ticket prices, when do the Chinese expect to break even?

[Theo_Fidel]

I hope that the chinese are able to runs faster trains. The alignment will offcourse support the speed of 250+ kmph. It is just the track layout and the signalling which the chinese have to work out.

This is not true at all. The quality of the infrastructure has been repeatedly called into question. Track shifting and bridge shifting has been a problem from day one. Sub-standard materials have been used and the quality of the concrete work and foundations, esp. compaction and design have been scary when details leak out. As far as we can see there is no train protection system in operation. This is not a simple thing to operationalize. The Japanese in particular have repeatedly pointed out that even the lines infrastructure is not suitable for even 250 kmph trains. The Germans have been very uncomfortable with Chinese practices.

The entire Panda enterprise is opaque and there is no over sight. There are limits to ordering things to 'be so' in complex systems. I think Panda is running into those limits. Further accidents are inevitable, with more bury of coaches in the countryside. The real take away for the Panda overlords is that they should not be open and do a better cover-up next time.

As has been repeatedly pointed any intermediate stop will increase operational costs for little gain. The system actually loses even more money.

[Theo_Fidel]

Meanwhile...

http://english.cri.cn/6909/2011/07/05/2021s646303.htm

Safety fears have been raised over the newly opened cross-sea bridge, the world's longest, that links Qingdao City in east China to the island of Huangdao.There is concern that the tight schedule ahead of the official opening left important work undone or incomplete.

Several gaps were found in the crash barriers on the 42.5 kilometer Jiaozhou Bay Bridge, while bolts inserted to fasten the barriers were found to be loose or uncovered, China Central Television reported Monday.CCTV said that workers were tightening bolts that could easily have been loosened by hand on the bridge, which has seen nearly 18,000 cars cross it every day since it was officially opened on June 30, on the eve of the 90th anniversary of the founding of the Communist Party of China.A worker said they didn't have enough time to install all the safety barriers and to fix the bolts before the bridge's opening.

and...

http://blogs.voanews.com/breaking-news/ ... ollapse-2/

Chinese authorities say two people have been confirmed dead after a bridge under renovation collapsed in China's southern island province of Hainan.

Chinese media reports say the Taiyanghe Bridge near the city of Wanning collapsed late Monday. A local official said two workers were checking the renovation progress on the bridge when it crumbled. He said one of the two died on the way to a hospital, and the other was found dead under the rubble.

[Christopher Sidor]

James town foundation is running an article about the chinese Ministry of Railways, its reforms and high speed train network.

From the article

As of mid-2011, the MOR sustained debts totaling 2 trillion yuan(approx 312 billion USD at exchange rate of 1 USD = 6.4 yuan or 14,38,000 corer rupees at exchange rate of 1 yuan=7.19 INR); the debts are expected to go up to at least 4.6 trillion yuan(approx 719 billion USD at exchange rate of 1USD = 6.4 yuan or 33,07,400 crore rupees at exchange rate of 1 yuan=7.19 INR) by 2015. Beijing Jiaotong University economist Zhao Jian, an expert on railway management, indicated that “the entire financial model of the super trains is unsustainable.” In a separate interview, Professor Zhao said “MOR may have difficulty even servicing the debt, let alone repaying them,” (Cable News Hong Kong, August 2, Financial Times, July 24; Yangcheng Evening Post [Guangzhou], July 20).

312 billion dollars of debt or approximately 1/3rd of the total amount usd treasuries held by china or 6.9% of GDP (GDP of china is assumed to be 4.5 trillion USD). And this debt is hopefully a very long range maturity one. Why oh god, why so much debt into railways

The ability of the railways to move freight at speeds of 250 kmph+, nil. The ability to enhance just in time manufacturing or keeping inventories low due to this high speed train, nil. Amount of trucks taken off the highways of China's road due to this high speed train, nil. Even if only half of the debt is due to the high speed trains then also the figures just dont add up.

A high speed train running over a distance of 1000 kms plus Where did these guys do their calculations and economics? Did they actually discuss this or get a second opinion?