Archive for February, 2013

13/02/2013

* Russia plans $25-$30 billion oil-for-loans deal with China

Reuters: “Rosneft is seeking to borrow up to $30 billion from China in exchange for possibly doubling oil supplies, making Beijing the largest consumer of Russian oil and further diverting supplies away from Europe.

A logo of Russian state oil firm Rosneft is seen at its office in St. Petersburg, October 18, 2012. REUTERS/Alexander Demianchuk

Four industry sources familiar with the situation told Reuters Rosneft was in talks with China’s state firm CNPC about the borrowing, which would echo a $25 billion deal the two companies clinched last decade.

Back then, Rosneft and Russian pipeline monopoly Transneft borrowed money to help Rosneft acquire the assets of nationalized oil producer YUKOS while agreeing to build a pipeline to supply China with 300,000 barrels per day for 15 years.

This time, Rosneft wants to borrow money as it is close to completing a $55 billion acquisition of rival TNK-BP to become the world’s largest oil producer among publicly traded firms.

Russia’s leading oil company, controlled by the Kremlin, is considering ultimately doubling supplies to China, sources said.

“It can be a combination of delivery options. The strategic line is to increase supplies to China,” one source familiar with the situation said.

“The reason why China is willing to lend is simple. They sit on over 3 trillion of dollars in reserves and are looking to diversify their investments,” he added referring to China’s forex reserves of $3.3 trillion.

Rosneft and CNPC declined comment.”

via Exclusive: Russia plans $25-$30 billion oil-for-loans deal with China | Reuters.

13/02/2013

Rule of Law over personal edicts starts to hold sway. About time too.

13/02/2013

* The Economic Impact of a War Between Japan & China

From: http://www.onlinemba.com/blog/economic-war-between-china-japan

“Global economists are keeping their eyes glued to the Asia-Pacific region, where a bitter feud is brewing between two of the world’s most powerful nations over a small collectivity of islands in the East China Sea. The Chinese government argues that a treaty signed during the first Sino-Japanese War (1894-95) conferred ownership of the islands to China. Japan has long disputed these claims, and today argues that the islands are integral to its national identity.

English: Japan_China_Peace_Treaty_17_April_1895.

English: Japan_China_Peace_Treaty_17_April_1895. (Photo credit: Wikipedia)

http://www.youtube.com/watch?v=V7SA3p8ys-s&feature=youtu.be 

The argument came to a head last September, when a boycott of Japanese products led Chinese demonstrators to target fellow citizens who owned Japanese cars. Three months later, the situation escalated when when Japanese jets confronted a Chinese plane flying over the islands; no shots were fired, but the act of antagonism has set a troubling precedent between the military forces of both nations.

The conflict between China and Japan has put the United States in a precarious position: if a full-scale war were to erupt, the U.S. would be forced to choose between a long-time ally (Japan) and its largest economic lender (China). Last year, China’s holdings in U.S. securities reached $1.73 trillion and goods exported from the U.S. to China exceeded $100 billion. The two countries also share strong economic ties due to the large number of American companies that outsource jobs to China.

However, the U.S. government may be legally obligated to defend Japan. In November, the U.S. Senate added an amendment to the National Defense Authorization Act that officially recognizes Japan’s claims to the disputed islands; the U.S. and Japan are also committed to a mutual defense treaty that requires either country to step in and defend the other when international disputes occur. Not honoring this treaty could very easily tarnish America’s diplomatic image.

The countries of the Asia-Pacific region are collectively responsible for 55 percent of the global GDP and 44 percent of the world’s trade. A major conflict between the region’s two largest economies would not only impose a harsh dilemma on U.S. diplomats, but also have a significant impact on the entire global economy. It is in every nation’s best interest that the Chinese and Japanese settle their territorial dispute peacefully.”

See also: https://chindia-alert.org/2013/01/25/china-japan-move-to-cool-down-territorial-dispute/

12/02/2013

* China joins U.S., Japan in condemning North Korea nuclear test

China has a difficult choice: act firmly and materially by reducing aid and upset and possibly destabilise North Korea  that may lead to a reunified Korea facing the West. Or act softly and North Korea goes merrily on its own sweet way as it has done for decades; and may be the cause of an intentional or inadvertent nuclear war. The world and esp the US will be watching carefully.

Reuters: “North Korea conducted its third nuclear test on Tuesday in defiance of existing U.N. resolutions, drawing condemnation from around the world, including from its only major ally, China, which summoned the North Korean ambassador to protest.

An activist from an anti-North Korea civic group burns a portrait of North's leader Kim Jong-un during a rally against North Korea's nuclear test near the U.S. embassy in central Seoul February 12, 2013. REUTERS-Kim Hong-Ji

The reclusive North said the test was an act of self-defense against “U.S. hostility” and threatened further, stronger steps if necessary.

It said the test had “greater explosive force” than the 2006 and 2009 tests. Its KCNA news agency said it had used a “miniaturized” and lighter nuclear device, indicating that it had again used plutonium which is more suitable for use as a missile warhead.

North Korean leader Kim Jong-un, the third of his line to rule the country, has presided over two long-range rocket launches and a nuclear test during his first year in power, pursuing policies that have propelled his impoverished and malnourished country closer to becoming a nuclear weapons power.

China, which has shown signs of increasing exasperation with the recent bellicose tone of its neighbor, summoned the North Korean ambassador in Beijing and protested sternly, the Foreign Ministry said.

Foreign Minister Yang Jiechi said China was “strongly dissatisfied and resolutely opposed” to the test and urged North Korea to “stop any rhetoric or acts that could worsen situations and return to the right course of dialogue and consultation as soon as possible”.

China is a permanent member of the UN Security Council.”

via China joins U.S., Japan in condemning North Korea nuclear test | Reuters.

12/02/2013

Three years ago China became world’s biggest exporter, now the biggest trading nation. Next the RMB on a par with the USD, then …

11/02/2013

Was it Sun Tzu who said: “Always do the opposite of what your enemy is doing. Because copying him will always make you number 2”? Or did I make that up?

10/02/2013

* Zhejiang ‘Snake Village’ seeks New Year (of the Snake) boom

SCMP: “For Zisiqiao in eastern China, the arrival of the Year of the Snake on Sunday carries a special meaning, as the scaly reptile has given the tiny village its main industry and prosperity.

In the 1980s, villagers began raising snakes for food and traditional Chinese medicine, transforming the Zhejiang village economically.

Scores of households now raise serpents, earning the settlement of more than 800 people the nickname “Snake Village” in Chinese media.

A visitor holds a snake at the Snake Culture Museum in Zisiqiao village, Zhejiang Province. Photo: AP

They include Gao Shuihua, 50, who began breeding snakes three decades ago instead of the traditional farming and raising fish.

“We were poor before. We didn’t have anything else to do so we started raising snakes,” he said.

The snake is not considered to be among the most adorable of Chinese zodiac animals – which are based on the lunar year and not the calendar month – but Gao said they provide food and medicine as well as his livelihood.

“Some people don’t like to eat snake because they think it’s weird. But every kind of snake has its own method of preparation,” he said, adding he preferred his in soup, which makes the meat more tender.

“Business ought to be better this year because of the Year of the Snake,” he added, as he pulled out glasses for visitors to sample his homemade snake penis wine – the males have two such appendages – made from the venomous Chinese krait.

His nephew praised the drink’s benefits. “This is a tonic for building up health. It’s especially good for men.”

But Gao warned: “If this snake bites you, you will be dead in four hours.”

Upstairs in one of the bedrooms, the family keeps nine buckets of sharp-nosed vipers preserved in alcohol awaiting sale to traditional medicine factories, which pay 3 yuan (HK$3.70) apiece.

Snakes were worshipped by the earliest Chinese as a totem, with millennia-old stone carvings depicting Fuxi and Nuwa, the mythological ancestors of all Chinese, as half-human, half-snake.

And some historians also believe the dragon, regarded as China’s national symbol and typically depicted with a long serpentine body, was based on images of snakes.”

via Zhejiang ‘Snake Village’ seeks New Year boom | South China Morning Post.

10/02/2013

* China targets $287b resource recycling industry

China Daily: “China will boost the annual output value of its resource recycling industry to 1.8 trillion yuan (287 billion US dollars) by 2015 as part of the country’s bid to develop a circular economy.

The government will also increase the resource productivity, or economic output per unit of resource use, by 15 percent as of the end of 2015, according to the National Development and Reform Commission (NDRC), China’s top economic planner.

The goals were written in a national plan on spurring the development of a circular economy recently released by the State Council, or China’s cabinet, the NDRC said in a statement on its website.

Major tasks listed in the plan include building nationwide industrial and agricultural systems that are cleaner and allow more recycling of renewable resources and promoting green consumption.

It’s imperative for China to speed up developing the circular economy as the country sees continuously growing energy and resource demand, piling waste and rising pressure in tackling climate changes, the statement quoted an unnamed NDRC official as saying.

China pins hopes on circular economy, an economy highly efficient and recyclable in resource use, to shift its growth pattern to a more sustainable and greener one.”

via China targets $287b resource recycling industry |Economy |chinadaily.com.cn.

10/02/2013

* As Graduates Rise in China, Office Jobs Fail to Keep Up

NY Times: “This city of 15 million on the Pearl River is the hub of a manufacturing region where factories make everything from T-shirts and shoes to auto parts, tablet computers and solar panels. Many factories are desperate for workers, despite offering double-digit annual pay increases and improved benefits.

Mr. Wang near his rented apartment in the Tianhe district of Guangzhou. He is thinking of quitting his job as a security guard to look for work that would allow him to use his degree.

Wang Zengsong is desperate for a steady job. He has been unemployed for most of the three years since he graduated from a community college here after growing up on a rice farm. Mr. Wang, 25, has worked only several months at a time in low-paying jobs, once as a shopping mall guard, another time as a restaurant waiter and most recently as an office building security guard.

But he will not consider applying for a full-time factory job because Mr. Wang, as a college graduate, thinks that is beneath him. Instead, he searches every day for an office job, which would initially pay as little as a third of factory wages.

“I have never and will never consider a factory job — what’s the point of sitting there hour after hour, doing repetitive work?” he asked.

Millions of recent college graduates in China like Mr. Wang are asking the same question. A result is an anomaly: Jobs go begging in factories while many educated young workers are unemployed or underemployed. A national survey of urban residents, released this winter by a Chinese university, showed that among people in their early 20s, those with a college degree were four times as likely to be unemployed as those with only an elementary school education.

It is a problem that Chinese officials are acutely aware of.

“There is a structural mismatch — on the one hand, the factories cannot find skilled labor, and, on the other hand, the universities produce students who do not want the jobs available,” said Ye Zhihong, a deputy secretary general of China’s Education Ministry.

China’s swift expansion in education over the last decade, including a quadrupling of the number of college graduates each year, has created millions of engineers and scientists. The best can have their pick of jobs at Chinese companies that are aiming to become even more competitive globally.

But China is also churning out millions of graduates with few marketable skills, coupled with a conviction that they are entitled to office jobs with respectable salaries.

Part of the problem seems to be a proliferation of fairly narrow majors — Mr. Wang has a three-year associate degree in the design of offices and trade show booths. At the same time, business and economics majors are rapidly gaining favor on Chinese campuses at the expense of majors like engineering, contributing to the glut of graduates with little interest in soiling their hands on factory floors.

“This also has to do with the banking sector — they offer high-paying jobs, so their parents want their children to go in this direction,” Ms. Ye said.

via As Graduates Rise in China, Office Jobs Fail to Keep Up – NYTimes.com.

10/02/2013

* China’s Focus on Aerospace Raises Security Questions

NY Times: “When Airbus executives arrived here seven years ago scouting for a location to assemble passenger jets, the broad, flat expanse next to Tianjin Binhai International Airport was a grassy field.

A worker in an Airbus facility in Tianjin, China, that completes four planes a month, mostly for state-run carriers.

Now, Airbus, the European aerospace giant, has 20 large buildings and is churning out four A320 jetliners a month for mostly Chinese state-controlled carriers. The company also has two new neighbors — a sprawling rocket factory and a helicopter manufacturing complex — both producing for the Chinese military.

The rapid expansion of civilian and military aerospace manufacturing in Tianjin reflects China’s broader ambitions.

As Beijing’s leaders try to find new ways to invest $3 trillion of foreign reserves, the country has been aggressively expanding in industries with strong economic potential. The Chinese government and state-owned companies have already made a major push into financial services and natural resources, acquiring stakes in Morgan Stanley and Blackstone and buying oil and gas fields around the world.

Aerospace represents the latest frontier for China, which is eyeing parts manufacturers, materials producers, leasing businesses, cargo airlines and airport operators. The country now rivals the United States as a market for civilian airliners, which China hopes to start supplying from domestic production. And the new leadership named at the Party Congress in November has publicly emphasized long-range missiles and other aerospace programs in its push for military modernization.

If Boeing’s difficulties with its recently grounded aircraft, the Dreamliner, weigh on the industry, it could create opportunity. Chinese companies, which have plenty of capital, have been welcomed by some American companies as a way to create jobs. Wall Street has been eager, too, at a time when other merger activity has been weak.”

via China’s Focus on Aerospace Raises Security Questions – NYTimes.com.

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