Posts tagged ‘Economic growth’

29/10/2014

China’s Jobs Picture Not As Rosy As It Looks – China Real Time Report – WSJ

China’s Premier, Li Keqiang, has said repeatedly how happy he is with the strength of the country’s job market, despite a slowing economy. That’s the main reason he sees little need to ease policy aggressively to spur growth, he says.

Officials attribute low unemployment to a drop in the working-age population, along with the development of the service sector, which is more labor-intensive than manufacturing.

But a deeper look into the government’s jobs data shows that the current employment situation is more worrisome than it appears. Across China’s cities, 10.82 million new jobs were created over the first nine months of the year, up 1.5% from the same period of 2013, according to official data released on Friday. That’s slowest rise in five years.

Migrant workers are normally the first to take the brunt of an economic slowdown, since more than one fifth of them work in the construction sector, which is highly sensitive to economic cycles. Employers also tend fire migrant workers first if business is bad rather than laying off urbanites with permanent resident status, economists have said.

“Over the past few years, especially after 2009, the government stepped up investment in infrastructure and property market. That has created many job opportunities for migrant workers,” said Li Shi, an economics professor at Beijing Normal University. “But now a sluggish property market has affected migrant workers.”

The global financial crisis cut China’s economic growth from double-digit rates to 6.6% in early 2009, and left some 200 million migrant laborers facing unemployment and a fraying safety net.

The government responded with a four trillion yuan ($650 billion) stimulus package that helped China rebound rapidly from the global downturn, but also resulted in a series of problems such as industrial overcapacity and environmental pollution.

This time around the economic situation is less dire, and the reaction has been more restrained. Since economic growth started to falter earlier this year, policy makers have contented themselves with a series of targeted easing measures like accelerated spending on infrastructure and special lending programs from the central bank. They have also brought in measures to spur mortgage lending and reduce financing costs and tax burdens for small firms.

via China’s Jobs Picture Not As Rosy As It Looks – China Real Time Report – WSJ.

26/10/2014

China GDP Growth of Just 4 percent is possible – Businessweek

China reported on Tuesday that its economic growth fell to a five-year low. But one forecaster says that’s just the beginning. This week the Conference Board issued a 75-page white paper predicting that China’s annual growth will dip below 4 percent in the next decade. Its title: The Long Soft Fall in Chinese Growth.

I met on Monday with the report’s authors, David Hoffman and Andrew Polk, and asked why they’re so pessimistic on China. They said it’s a straightforward projection of recent slowdowns in the growth of capital investment, labor productivity, and the quantity and quality of the labor force.

It’s the optimists who need to defend their case, according to Hoffman, because the only way to project continued 7 percent growth for China is to project major output-enhancing economic reforms. “We just don’t think that will happen,” says Hoffman, who manages the Conference Board China Center for Economics and Business in Beijing.

via China GDP Growth of Just 4 percent is possible – Businessweek.

19/10/2014

A pocket guide to doing business in China | McKinsey & Company

A pocket guide to doing business in China

McKinsey director Gordon Orr goes behind the trends shaping the world’s second-largest economy to explain what companies must do to operate effectively.

October 2014 | byGordon Orr

China, a $10 trillion economy growing at 7 percent annually, is a never-before-seen force reshaping our global economy. Over the past 30 years, the Chinese government has at times opened the door wide for foreign companies to participate in its domestic economic growth. At other times, it has kept the door firmly closed. While some global leaders, such as automotive original-equipment manufacturers, have turned China into their single largest source of profits, others, especially in the service sectors, have been challenged to capture a meaningful share of revenue or profits.

This article summarizes some of the trends shaping the next phase of China’s economic growth, which industries might benefit the most, and what could potentially go wrong. It also lays out what I believe it takes to build a successful, large-scale, and profitable business in China today as a foreign company.

via A pocket guide to doing business in China | McKinsey & Company.

18/09/2014

Chinese Well-Being Is Low, Global Survey Shows – Businessweek

Despite years of rapid economic growth and rising incomes, Chinese aren’t feeling so great about themselves. And Chinese from the countryside are feeling even worse. That’s revealed by a new survey focusing on global well-being, released yesterday for the first time by polling agency Gallup and Healthways (HWAY) in Franklin, Tenn.

The Global Well-Being Index is designed as an alternative to traditional objective measures, such as GDP, life expectancy, and population size, the report explains. Instead, the index, which canvassed 133,000 people in 135 countries and regions, serves as “a global barometer of individuals’ perceptions of their well-being.” It’s important because people with higher well-being are “healthier, more productive, and more resilient in the face of challenges such as unemployment,” the report notes.

To find out just how people feel, the survey looked at five categories of perceived well-being, including financial and physical well-being, but also social well-being (“having supportive relationships and love in your life”), community well-being (“liking where you live, feeling safe, and having pride in your community”), and purpose well-being (“liking what you do each day and being motivated to achieve your goals”).

So where did the Chinese reveal themselves as particularly glum? On purpose, or feeling motivated every day, 35 percent of Chinese characterized their well-being as low, and 56 percent said it was moderate, while just 9 percent rated it as high. That compared with 13 percent of respondents in Asia who said they had high well-being, and twice as many, or 18 percent, globally.

On social and community well-being, the Chinese also lagged the rest of Asia and the world. And among rural Chinese, far fewer people expressed high satisfaction with their communities than urban Chinese— just 14 percent for those in the countryside, compared to 23 percent in cities. “With better access to education, entertainment, and employment opportunities, it’s not surprising that urban Chinese are more likely to be satisfied with their communities,” the reports says.

That split within China shows up when it comes to financial security, as well. Overall, the Chinese scored highly (Chinese overall also scored well in physical well-being), with 25 percent expressing high financial well-being, the same as the regional and global average. Yet the rate of those with low financial well-being among rural Chinese was twice that of those in Chinese cities, “speaking to China’s ongoing struggle with income inequality that has resulted from rapid growth,” according to the report.

via Chinese Well-Being Is Low, Global Survey Shows – Businessweek.

01/09/2014

India Outpacing China’s Oil Demand – India Real Time – WSJ

India’s oil demand has grown faster than China’s so far this year, highlighting slowing energy demand in the world’s most populous country and fueling expectations that India may pick up the slack over the medium-to-long term. The pace of India’s demand also reflects optimism about India’s economic growth under Prime Minister Narendra Modi.

In absolute terms China is Asia’s largest oil consumer, having burned 10.76 million barrels a day of oil and accounting for 12.1% of global oil consumption in 2013, according to BP PLC. The second-largest oil consumer in Asia is Japan, though its oil consumption has been declining as its economy has matured.

India ranks third at 3.7 million barrels a day and accounted for about 4.2% of global oil consumption in 2013.

India’s oil demand has shown steady growth through July at an average of 3%, or 101,000 barrels a day. China’s oil demand has declined at an average of 0.6%, or 62,000 barrel a day, in the same period, Barclays PLC analyst Miswin Mahesh said.

Indian oil demand growth has “organic, domestic, economic activity-linked factors still driving it,” he said. Mr. Mahesh expects the south Asian country’s oil demand to accelerate to 210,000 barrels a day next year, spurred by healthy construction activity, government-financed industrial projects and strong growth in car purchases.

China’s oil-demand growth, on the other hand, remains uncertain, with a large portion of its imports this year going into strategic stockpiling instead of consumption. Its oil demand fell into negative territory in July and its oil imports declined for the first time this year.

“This surprise drop in crude imports further supported our view that [China's] full-year oil demand could be weaker than current market expectations,” Thomas C. Hilboldt, head of Asia Pacific oil research at HSBC Holdings PLC said last week.

The disparity of the demand drivers in India and China is also telling.

The bulk of oil demand in both countries is for diesel, the most widely consumed liquid fuel in Asia. China’s diesel consumption has shown a sharp decline because of its industrial slowdown, while India’s diesel demand rose sharply in the last few months because of power shortages and delayed monsoon rains.

Despite this, the extent to which Indian energy demand can compensate for China’s decline remains doubtful.

Markets are looking for the next emerging-market economy to take over as China moves into its post-industrial phase. Yet India has a fundamentally different economic structure and growth model, Janet Kong, head of market analysis at BP Singapore’s trading division pointed out last week.

“It’s very much a service-oriented economy…not relying on a lot of infrastructure investments or manufacturing,” she said.

The manufacturing sector in India has underperformed for many years, contributing to about 15% of gross domestic product and 12% of employment, compared with 25% or more of GDP in countries like China, Malaysia, Thailand and Vietnam, according to the Asian Development Bank’s 2014 report. Meanwhile, China is transitioning from an industrial economy dependent on exports to focus more on domestic consumption.

via India Outpacing China’s Oil Demand – India Real Time – WSJ.

30/08/2014

India posts highest GDP growth figures in over two years

GDP up by 5.7 per cent in April-June quarter

India’s Gross Domestic Product increased by 5.7 per cent in the April-June quarter, up from 4.6% in the previous quarter. Growth in this quarter was the highest since March 2012, and it was sparked by a boost in the manufacturing and service sectors. However, economists said that this rebound could be temporary and stifled by poor monsoon rains and rising food inflation.

via Scroll.in – News. Politics. Culture..

19/06/2014

Plotting the Shape of India’s Recovery – India Real Time – WSJ

Optimism abounds in India following Narendra Modi’s unexpectedly strong election victory. It’s still early days, but the new government’s priorities and coherence are a breath of fresh air.

As India’s economy gets back on its feet, one question is whether the  recovery will be shaped like a U, a V or a square root. In other words: Can growth rebound as quickly and strongly as it did after the global financial crisis?

Unfortunately, the answer is no: India’s recovery will be gradual and uneven, at least in the near term. Growth will accelerate sharply from fiscal 2016 onward.

It’s worth recalling the sting from the global financial crisis. Gross domestic product growth, as measured by production, plunged to 5.8% on-year in the final quarter of 2008, from 9.8% in the second quarter. Growth in expenditure GDP – a less reliable measure – dropped even more, to 1.5% on-year from 8.1%.

The main casualty was growth in gross fixed capital formation, which typically enhances an economy’s productive capacity. This fell from 13.9% in the second quarter to 2.1% in the fourth quarter – then declined by nearly 10% in early 2009.

Afterward, both capital formation and GDP recovered rapidly in a classic V-shaped pattern. Production GDP growth, which fell to 6.7% in fiscal 2009, averaged 8.8% a year in the next two fiscal years. Gross fixed capital formation averaged nearly 10% growth per year in fiscal 2010 and 2011, a swift recovery that hinted the economy was once again on an elevated trajectory — though policy paralysis later shortchanged it.

via Plotting the Shape of India’s Recovery – India Real Time – WSJ.

12/06/2014

China Minting Millionaires in Global Wealth Surge – Businessweek

Where do the world’s rich live? As has long been true, the U.S. has more millionaires (in U.S. dollars) than any other country, with 7.1 million. But China last year came in second with 2.4 million millionaire households, beating Japan with half as many. The number of millionaire families around the world reached 16.3 million last year, up from 13.7 million the year before.

Visitors crowd around a luxury yacht on display during the 19th China International Boat Show in Shanghai on April 10

All told, the total value of global private wealth grew far faster than global economic output, up 14.6 percent, to $152 trillion, compared with an 8.6 percent increase in 2012. Much of the new money originated in the Asia-Pacific region (excluding Japan), up by 30.5 percent, to $37 trillion. That put Asia in the No. 3 spot for riches, behind North America and Europe, according to the 14th annual survey on private wealth by Boston Consulting Group.

Driven by rapid GDP growth in China and India, Asia is expected to surpass North America and Europe as the leading source of global wealth in 2018. That year, the global pot of gold will total a bit less than $200 trillion, with the proportion from Asia projected to reach $61 trillion, slightly more than North America, with $59.1 trillion. “The Asia-Pacific region and its new wealth will account for about half of the total growth,” the report predicts.

via China Minting Millionaires in Global Wealth Surge – Businessweek.

21/05/2014

Is China’s Housing Bubble Beginning to Burst? – Businessweek

Earlier this month, financial analysts from Japan-based Nomura Group (NMR) issued a grim report on China’s housing market: “To us, it is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be,” the report read.

Residential apartment buildings under construction in Qingzhou city, in east China’s Shandong province

Nomura—which has historically been bearish on China, as the Wall Street Journal observes—predicted that a downturn in the housing market, caused by oversupply and shrinking developer financing, could sharply impact China’s economy, perhaps even driving GDP growth to less than 6 percent in 2014.

China’s economy is vulnerable because property investment accounts for anywhere from 16 percent to 20 percent of gross domestic product, according to varying analyses.

via Is China’s Housing Bubble Beginning to Burst? – Businessweek.

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06/05/2014

Why China Isn’t Worried About Slowing GDP: Jobs Strength – Businessweek

Even as China’s economy continues to show signs of a slowdown, Beijing has avoided rolling out any big new stimulus programs; that’s in direct contrast to its pump-priming response during the 2008 global financial crisis.

A tea plantation in Hangzhou, China

Why the apparent lack of worry? It’s got everything to do with jobs. In the first quarter, China created 3.44 million new urban jobs, 40,000 more than a year earlier. China has said for the full year it wants to create at least 10 million new positions—that target now looks easily reachable.

GDP growth has halved since peaking above 14 percent in 2007. But, with a greater share of output coming from more labor-intensive sectors, and the economy itself much larger, more new jobs are being created today,” wrote economists Mark Williams, Qinwei Wang, and Julian Evans-Pritchard, at London-based Capital Economics, in a May 2 note.

via Why China Isn’t Worried About Slowing GDP: Jobs Strength – Businessweek.

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