22/01/2015

India wants to reduce subsidies to cut expenditure – Jaitley | Reuters

India wants to reduce its subsidy bill, estimated at near two percent of its gross domestic product, to cut down state expenditure and transfer funds to other sectors, the finance minister said.

“Subsidies for the poor will remain, but we intend to rationalise it,” Arun Jaitley said at an event in Davos on Thursday.

“Elimination of subsidies in India, where one-third of the people are still living in poverty conditions, is not possible, is not desirable.”

Jaitley will present his first full-year budget for 2015/16 fiscal year on Feb. 28.

via India wants to reduce subsidies to cut expenditure – Jaitley | Reuters.

21/01/2015

China’s “new normal” of investment brings new opportunity for win-win – Xinhua | English.news.cn

For the first time in its history, China has become a net capital exporter with outbound direct investment outnumbering foreign direct investment in 2014, presenting new opportunities for win-win cooperation with the rest of the world.

China's "new normal" of investment brings new opportunity for win-win

At the Annual Meeting of the World Economic Forum (WEF) scheduled for Jan. 21-24 in Davos, Switzerland, Chinese Premier Li Keqiang will expound on the Chinese economy‘s “new normal.”

Chinese investors channeled capital into 6,128 overseas firms in 156 countries and regions in 2014, with outbound investment reaching 102.89 billion U.S. dollars, up 14.1 percent from a year earlier, according to a press conference by the Ministry of Commerce (MOC) on Wednesday.

Growth was much faster than the 1.7 percent gain recorded in foreign direct investment, which was 119.6 billion dollars. This is the first time the two-way nominal capital flows have been near a balance.

“If the Chinese firms’ investment through third parties were included, the total ODI volume would reach about 140 billion dollars, which means China is already a net outbound investor,” said Shen Danyang, spokesman with MOC.

Chinese investors are investing in real estate, businesses and other assets overseas while growth at home is slowing. The country registered the slowest expansion pace in 2014 in 24 years, according to the GDP data released Tuesday.

The slowdown comes at a vulnerable time for the world economy — the eurozone is still at risk of another recession, the Abenomics has failed to drag Japan out of the mire, and investors are pulling out of emerging market funds.

Policymakers and investors were not prepared for a reality that after more than three decades on steroids, the world’s second-largest economy has been transitioned to a “new normal” of slower growth.

The market, crazy about speed and figures, seems to have missed the reality that the Chinese economy is healthier under the “new normal” featuring positive trends of stable growth, an optimized structure, enhanced quality and improved social welfare.

China’s sound economic fundamentals have not changed and the government will maintain macro-policies appropriate, Premier Li said during a meeting with Klaus Schwab, founder and executive chairman of the WEF on Tuesday.

The improvement of the quality and efficiency of the Chinese economy and its upgrading will make important contributions to maintaining the stability and healthy development of the world economy and finance, Li said.

The Chinese economy, shifting focus to consumption and investment from polluting heavy industry and manufacturing via complex reforms, will continue to function as a vital ballast for the world economy.

Besides, Beijing aims to create an open capital market by pushing ahead with a broad range of financial reforms to allow more foreign investment and encourage Chinese players to invest abroad. The more transparent and efficient allocation of the Chinese capital will have a positive effect on the global market.

In the process, China has proposed or promoted a host of initiatives and plans, such as the initiatives on the Silk Road Economic Zone, the 21st Century Maritime Silk Road, the BRICS Development Bank and the Asian Infrastructure Investment Bank.

It is fair to say that China’s capital export is creating life blood for the global economy to avoid the risk of declining.

In light of financial difficulty faced by Asia in realizing inter-connectivity and mutual access, China has pledged to contribute 40 billion U.S. dollars to setting up a Silk Road Fund to provide financial support for infrastructure construction, resources exploration and industrial cooperation for countries along the “One Belt and One Road.”

It is estimated that in the next decade, China’s outbound investment will total 1,250 billion dollars, giving more impetus to the worlds’ economic growth.

via Spotlight: China’s “new normal” of investment brings new opportunity for win-win – Xinhua | English.news.cn.

21/01/2015

India’s Poor Are More Upwardly Mobile Than You Think – India Real Time – WSJ

Despite India’s reputation as a country where millions of families are stuck in grinding poverty, a new World Bank report shows that a surpassingly large portion of the South Asian nation’s poor population has been finding its way out of poverty.

The report titled “Addressing Inequality in South Asia,”– which looked at the gaps between the haves and have-nots in India and its neighbors– looked at different income groups and how they changed over the five year period up to March 31, 2010.

Over that period close to 40% of the people that had been classified as poor had clawed their way above the poverty line. Of course, the income mobility went both ways, but was not as bad on the down side. Around 15% of the people that had been previously classified as middle class or just above the poverty line fell into poverty over the five years.

via India’s Poor Are More Upwardly Mobile Than You Think – India Real Time – WSJ.

21/01/2015

India’s Tiger Population: Reading Between the Lines – India Real Time – WSJ

India this week cheered figures that showed it now has the largest tiger population in the world.

A 30.5% jump in the big cat headcount since the last census in 2011 means there are now 2,226 tigers in India – that’s 70% of all the tigers in the world.

“That is a huge success story,” Environment and Forests Minister Prakash Javadekar said. “We must be proud of our legacy and we must be proud of our efforts.”

But what the minister didn’t say was that the rate of tiger poaching has been increasing over the same time, according to figures from the Wildlife Protection Society of India.

The government says that between 2011 and 2014, there were 274 tiger deaths. Most of them –192 — lost to poaching or unexplained causes.   Authorities said poaching caused 83 of the total number of tiger deaths and acknowledged that they have not identified causes for 109 other deaths.

The WPSI says that those figures are an underestimate. According to data it has compiled, 110 tigers were killed by poachers between 2011 and 2014. Even that may be understating the actual number, says Tito Joseph, program manager at WPSI. “Because of demand for tiger products from other countries, we can only assume that some cases go undetected,” Mr. Joseph said. Those deaths that are unexplained could be as a result of poaching, he added.

via India’s Tiger Population: Reading Between the Lines – India Real Time – WSJ.

21/01/2015

As Obama visits, signs that India is pushing back against China | Reuters

When Sri Lanka unexpectedly turfed out President Mahinda Rajapaksa in an election this month, it was the biggest setback in decades for China’s expansion into South Asia – and a remarkable diplomatic victory for India.

Prime Minister Narendra Modi addresses a campaign rally ahead of state assembly elections, at Ramlila ground in New Delhi January 10, 2015. REUTERS/Anindito Mukherjee

Despite New Delhi’s protestations, diplomats and politicians in the region say India played a role in organizing the opposition against pro-China Rajapaksa.

His successor, President Maithripala Sirisena, has said India is the “first, main concern” of his foreign policy and that he will review all projects awarded to Chinese firms, including a sea reclamation development in Colombo that would give Beijing a strategic toehold on India’s doorstep.

India has pushed back against China elsewhere in the region since Prime Minister Narendra Modi took office in May, improving ties with Japan and Vietnam, both locked in territorial disputes with Beijing, and contesting a port project in Bangladesh that could otherwise have been a cakewalk for China.

The new robust diplomacy, which Modi calls “Act East”, has delighted Washington, which has been nudging India for years to dovetail with the U.S. strategic pivot toward the region.

When President Barack Obama makes a landmark visit to India starting Sunday, he will be the chief guest at New Delhi’s showpiece Republic Day military parade, and rarely for a presidential trip, is not scheduled to visit any other country before returning to Washington.

“What is appealing to me and my colleagues is the fact that Prime Minister Modi has undertaken to build from what has been a ‘Look East’ policy to an ‘Act East’ policy,” U.S. Assistant Secretary of State for East Asia and the Pacific Daniel Russel said in Washington last month.

“He has shown in word and deed his interest in involving India in the thinking and the affairs of the broader region. That’s very much to be welcomed.”

Washington made no bones about its distaste for Rajapaksa, who critics accuse of war crimes, corrruption and nepotism. But until last year India was indecisive, perhaps afraid of pushing the hero of the war against Tamil separatists even closer to China.

That changed in September, when Rajapaksa allowed a Chinese submarine to dock in Colombo, without informing India, as it was bound to under an existing agreement.

“That was the last straw,” a senior Indian diplomat told Reuters.

“He told Modi: “the next time I will keep you informed,”” the diplomat said, a promise that was broken when the submarine visited again in November.

In the build up to the Jan 8 election, India played a role in uniting Sri Lanka’s usually fractious opposition, for which the station chief of India’s spy agency was expelled, diplomatic and political sources say.

“At least that was the perception of Mahinda Rajapkasa,” said M.A. Sumanthiran, a prominent member of the Tamil National Alliance, a coalition of parties close to India. “He managed to get one of their top diplomats recalled.”

The Indian government denies any of its officers was expelled. But Sumanthiran said Modi had in a meeting encouraged the Tamil alliance to join forces with others in politics.

“The Indians realized that you can’t do business with this man and they were hoping for a change,” he said.

“FAMILY MATTER”

On Friday, Sri Lanka said it would review a $1.5 billion deal with China Communication Construction Co Ltd to build a 233 hectare patch of real estate on redeveloped land overlooking Colombo’s South Port.

In return, China was to get land on a freehold basis in the development. This is of particular concern for India, the destination for the majority of the trans shipment cargo through Colombo.

“The message is clear, that you do not ignore Indian security concerns,” said the Indian diplomatic source.

Modi is looking for similar good news elsewhere in South Asia. He has already visited Nepal twice, becoming the first Indian prime minister to travel to the Himalayan buffer state with China in 17 years, and signing long delayed power projects.

India has muscled into an $8 billion deep water port project that Bangladesh wants to develop in Sonadia in the Bay of Bengal, with the Adani Group, a company close to Modi, submitting a proposal in October. China Harbour Engineering Company, an early bidder, was previously the front-runner.

“Modi is willing to engage on long-term issues that stretch beyond India’s border, including maritime security in the South China Sea, as well as North Korea and Islamic State militants in Iraq and Syria,” said Richard Rossow at policy think tank CSIS.

“That’s when we start to think about India as a regional global provider – or as a global provider of security.”

However, the bonhomie has limits – India and the United States do not see eye-to-eye on Pakistan, New Delhi’s traditional foe that enjoys substantial funding from Washington.

Tricky conflicts over trade and intellectual property hold back business, and India has limits to its ability to project force outside its immediate neighborhood.

But Modi’s policies mark a departure from India’s traditional non-aligned approach to foreign power blocs.

“Having the U.S. president at the Republic Day celebration is a good thing, he is blessing Modi,” said Mohan Guruswamy, of the Centre for Policy Alternatives, a think-tank.

“And that is a lesson to the Chinese that you have to mend your fences with us.”

via As Obama visits, signs that India is pushing back against China | Reuters.

20/01/2015

Tapping China’s ‘Silver Hair Industry’ – China Real Time Report – WSJ

Researchers at Abbott Laboratories in Shanghai are busy testing flavors of nutritional drinks for China’s senior citizens. Kimberly-Clark Corp. has launched television ads for its Depend adult diapers and expanded distribution online. Local e-commerce companies like Alibaba Group Holding Ltd. and JD.com Inc. are rolling out senior-focused marketing pushes.

The companies are after the growing ranks of people born during a Mao Zedong-inspired baby boom that took the country’s population to nearly one billion people in 1980 from 542,000 in 1949. China’s birthrate dropped sharply during the 1970s and 1980s as the government reversed course and implemented a one-child policy.

The boomers are now hitting old age: China’s over-65 population is projected to soar to 210 million in 2030 from 110 million, and by 2050 will account for a quarter of China’s total population, according to United Nations data. By then, the U.N. says, China’s elderly population may exceed the entire U.S. population.

“What has us interested…is that half a billion people over the age of 60 will be living in China over the next 35 years,” said Scott White, president of Abbott’s international nutrition division.

via Tapping China’s ‘Silver Hair Industry’ – China Real Time Report – WSJ.

20/01/2015

5 Takeaways From China’s GDP – WSJ

1 THE SLOWEST PACE IN MORE THAN 20 YEARS

For much of the last two decades, China has been working overtime to drive the growth of the world economy. Now, it’s slowing to suborbital speeds. Last year’s growth of 7.4% was the slowest since 1990, a year when China was reeling from out-of-control inflation and the sanctions that followed the Tiananmen Square massacre.

2 IT’S ONLY GOING TO GET WORSE

The slowdown of 2014 is unlikely to be a blip, and probably presages an extended deceleration of growth. The often bullish International Monetary Fund has penciled in 6.8% growth for 2015, as has investment bank UBS. Others are even more downbeat. Oxford Economics predicts 6.5%–and says this will be the last time China’s growth exceeds 6%.

3 COMMODITY EXPORTERS WILL BE THE BIGGEST LOSERS

China is a huge importer of raw materials, from oil to soybeans. Much of last decade’s commodity boom was premised on the idea of insatiable Chinese demand. As the extent of the slowdown crystallizes, prices for key goods are tumbling, and commodity-dependent economies like Russia, Brazil, Venezuela and Angola are already in trouble. Expect more of the same.

4 HOUSING IS THE WILDCARD

The only thing that could lift the fortunes of commodity producers would be a revival of China’s housing market. House prices were down 4.5% on year as of December, according to the National Bureau of Statistics. Construction has ground to a halt on many sites as developers wait to see if the market will turn around. Prices could stabilize this year, said Haibin Zhu, an economist at J.P. Morgan, but that is far from certain. If moves to introduce a property tax end up killing confidence in the market, prices could keep falling.

5 THESE FIGURES NEED TO BE TAKEN WITH A PINCH OF SALT

Economists say it is daft to get hung up on changes of a few tenths of a percentage point in the official growth rate. The statistics bureau’s methodology is “not so scientific,” as Harry Wu, a skeptic at Hitotsubashi University in Japan, puts it. And even if statisticians at the central government level are immune to political pressure, few doubt that the local bureaus underneath them are capable of fudging the numbers to produce a more flattering picture.

Still, the general trend seems to be clear. If the government says the economy is slowing down, you can bet the slowdown is real.

via 5 Takeaways From China’s GDP – WSJ.

20/01/2015

Obama’s Seven Habits for a Highly Successful India Visit – India Real Time – WSJ

U.S. President Barack Obama’s upcoming visit to India won’t be his first trip to the country.

Mr. Obama and the First Lady last swept through Delhi and Mumbai in November 2010 in a carefully- choreographed charm offensive, addressing sensitive issues such as Pakistan and the U.N. Security Council, while finding time to dance at a high school and speak a bit of Hindi.

Much has changed in India since Mr. Obama last arrived on its shores: the government, the prime minister, the number of international coffee and burger chains. Many things haven’t altered however and by the time he leaves next week, the president will be something of an old hand in the world’s largest democracy. By visiting a second time, he becomes the only serving U.S. president to have made two official trips to India.

1. Back a Bid

India has for years coveted a permanent seat on the United Nations Security Council. In Mr. Obama’s 2010 visit, he used a speech to the Indian Parliament  to back the country’s inclusion “in the years to come” as a permanent member of the council with power of veto.

2. Tread Carefully on Pakistan

Any world leader visiting India must choose their words on the country’s rival Pakistan carefully.  In the same speech to the Indian Parliament, Mr Obama said the U.S. insisted Pakistan limit terrorist-safe havens within its borders, adding: “We must also recognize that all of us have an interest in both an Afghanistan and a Pakistan that is stable, prosperous and democratic—and none more so than India.”

3. Make a Trade Announcement…

Mr. Obama was in Mumbai when he announced a loosening of restrictions on U.S. exports to India. The move was aimed at making it easier for U.S. companies to export technology for military and non-military use after the U.S. imposed controls on trade with India in dual-use technologies — items that have both military and peaceful purposes – after India’s nuclear-weapons tests in 1998.

The president said: “We’re taking the necessary steps to strengthen this relationship.”

4. …And Ask for Something Back

Mr. Obama asked India to reduce barriers in sectors such as agriculture, retail and telecommunications to promote trade. “In a global economy, new growth and jobs flow to countries that lower barriers to trade and investment,” he said.

U.S. President Barack Obama and Indian Prime Minister Manmohan Singh, embrace following a joint statement and press conference at Hyderabad House in New Delhi, India, Nov. 8, 2010. Associated Press

5. Work on Chemistry

Ahead of the 2010 meeting, both Mr. Obama and then-Indian Prime Minister Manmohan Singh echoed each other’s language on the relationship between their two countries. “I think the India-United States relationship has entered a new phase,” Mr. Singh said before Mr. Obama’s visit.

6. Pick Your Battles

There was much speculation that Mr. Obama would touch on the issue of the outsourcing of U.S. jobs to India during his 2010 visit. In the end, he deftly sidestepped the issue in the name of healthy competition:

“There are many Americans whose only experience with trade and globalization has been a shuttered factory or a job that was shipped overseas,” he said, adding that many Americans still had a “caricature” of India as a place with call centers where U.S. jobs have been outsourced.

On another touchy subject, Kashmir, Mr. Obama let Mr. Singh do the talking. Mr. Singh said he wanted to reduce tensions with Pakistan, including over Kashmir, but could not do so unless Islamabad cracked down on terrorism.

U.S. President Barack Obama bows as he arrives to deliver a speech at Parliament House in New Delhi Nov. 8, 2010. Agence France-Presse/Getty Images

7. Visit the Right Places, Wear the Right Things, Use the Local Lingo

Photogenic India provided Mr. and Mrs. Obama with ample visual material. Mrs. Obama gamely joined children dancing at a high school in Mumbai, eventually persuading the president to join her. She also took part in a game of hopscotch and urged students at a college in Mumbai to “keep dreaming big huge, gigantic dreams–for your community and for your world.”

Perhaps the most arduous part of the visit of any dignitary to another country is avoiding any faux pas, embarrassing photographs or poor sartorial choices.

Mr. Obama’s staff carefully chose Humayun’s tomb in New Delhi as an appropriate tourist destination for the president.

Meanwhile, Michelle Obama’s outfits were carefully scrutinized for any embarrassing mistakes – which she seemed to avoid.

Mr. Obama rounded off the whirlwind tour with the crowd-pleasing cry in Hindi of ‘jai hind!’, or ‘hail India!’ at the end of his speech to the Indian Parliament.

via Obama’s Seven Habits for a Highly Successful India Visit – India Real Time – WSJ.

20/01/2015

China raises wages for govt workers at least 31 percent – document | Reuters

(Reuters) – China has raised the wages of government workers by at least 31 percent, according to a document seen by Reuters on Tuesday, as part of efforts to combat corruption and lift the spending power of millions as the country seeks to increase consumption.

The basic salaries of some civil servants would be almost tripled, according to the document distributed to China’s cabinet and dated Jan. 12. It said the increases would be effective from Oct. 1, 2014.

The change is part of a broad effort by Beijing to reform the compensation levels of government workers to improve efficiency, reduce graft and hold officials more accountable for their own performance.

Executives at some Chinese state-owned companies, notorious for their inefficiency, suffered pay cuts this month.

“The pay hike indicates Beijing’s goal of improving the quality of life for the average Chinese,” Nomura economists said in a note. They said it was the first wage rise in eight years for central government workers.

via China raises wages for govt workers at least 31 percent – document | Reuters.

20/01/2015

China’s rising Internet wave: Wired companies | McKinsey & Company

Until recently, China’s Internet economy was consumer driven. The country leads the world in the number of Internet users, and Chinese enterprises deploy sophisticated e-commerce strategies. The same companies, though, have lagged behind the United States and other developed nations in using the Internet to run key aspects of their businesses (Exhibit 1).

That’s changing. China’s companies are quickly climbing the adoption curve. Their increased digital engagement will not only give the economy a new burst of momentum but also change the nature of growth. China sorely needs a new leg of expansion because the industrial growth of recent years—driven by heavy capital expenditures in manufacturing—will be difficult to sustain. The Internet, by contrast, should foster new economic activity rooted in productivity, innovation, and higher consumption.

For global companies counting on China for continued growth, the new Internet wave will change the nature of competition: it will enable the most efficient Chinese companies to grow more quickly, shine more transparency on business and consumer markets, and create conditions for a better allocation of capital.

A new McKinsey Global Institute report looks broadly at the coming transformation.1 Our research shows that Chinese companies are investing heavily in the building blocks of the Internet economy: cloud computing, wireless communications, new digital platforms, big data analytics, and more. Across six sectors (Exhibit 2), which accounted for 25 percent of Chinese economic activity in 2013, we find that increased Internet adoption could add 60 billion to 1.2 trillion renminbi (about $10 billion to $190 billion) in GDP to individual sectors by 2025. About one-third of these gains will come from the creation of entirely new markets, the remainder from productivity gains across the value chain. When we scale up this level of growth across all sectors of the economy, we find that Internet adoption could add 4 trillion to 14 trillion renminbi to GDP by 2025. The Internet is also expected to contribute 7 to 22 percent of total GDP growth from 2013 to 2025.2

via China’s rising Internet wave: Wired companies | McKinsey & Company.

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