Archive for July, 2013

21/07/2013

Hauling New Treasure Along the Silk Road

NY Times: “AZAMAT KULYENOV, a 26-year-old train driver, slid the black-knobbed throttle forward, and the 1,800-ton express freight train, nearly a half-mile long, began rolling west across the vast, deserted grasslands of eastern Kazakhstan, leaving the Chinese border behind.

Dispatchers in the Kazakh border town of Dostyk gave this train priority over all other traffic, including passenger trains. Specially trained guards rode on board. Later in the trip, as the train traveled across desolate Eurasian steppes, guards toting AK-47 military assault rifles boarded the locomotive to keep watch for bandits who might try to drive alongside and rob the train. Sometimes, the guards would even sit on top of the steel shipping containers.

The train roughly follows the fabled Silk Road, the ancient route linking China and Europe that was used to transport spices, gems and, of course, silks before falling into disuse six centuries ago. Now the overland route is being resurrected for a new precious cargo: several million laptop computers and accessories made each year in China and bound for customers in European cities like London, Paris, Berlin and Rome.

Hewlett-Packard, the Silicon Valley electronics company, has pioneered the revival of a route famous in the West since the Roman Empire. For the last two years, the company has shipped laptops and accessories to stores in Europe with increasing frequency aboard express trains that cross Central Asia at a clip of 50 miles an hour. Initially an experiment run in summer months, H.P. is now dispatching trains on the nearly 7,000-mile route at least once a week, and up to three times a week when demand warrants. H.P. plans to ship by rail throughout the coming winter, having taken elaborate measures to protect the cargo from temperatures that can drop to 40 degrees below zero.

Though the route still accounts for just a small fraction of manufacturers’ overall shipments from China to Europe, other companies are starting to follow H.P.’s example. Chinese authorities announced on Wednesday the first of six long freight trains this year from Zhengzhou, a manufacturing center in central China, to Hamburg, Germany, following much the same route across western China, Kazakhstan, Russia, Belarus and Poland as the H.P. trains. The authorities said they planned 50 trains on the route next year, hauling $1 billion worth of goods; the first train this month is carrying $1.5 million worth of tires, shoes and clothes, while the trains are to bring back German electronics, construction machinery, vehicles, auto parts and medical equipment.

DHL announced on June 20 that it had begun weekly express freight train service from Chengdu in western China across Kazakhstan and ultimately to Poland. Some of H.P.’s rivals in the electronics industry are in various stages of starting to use the route for exports from China, freight executives said.

The Silk Road was never a single route, but a web of paths taken by caravans of camels and horses that began around 120 B.C., when Xi’an in west-central China — best known for its terra cotta warriors — was China’s capital. The caravans started across the deserts of western China, traveled through the mountain ranges along China’s western borders with what are now Kazakhstan and Kyrgyzstan and then journeyed across the sparsely populated steppes of Central Asia to the Caspian Sea and beyond.

These routes flourished through the Dark Ages and the early medieval period in Europe. But as maritime navigation expanded in the 1300s and 1400s, and as China’s political center shifted east to Beijing, China’s economic activity also moved toward the coast.

Today, the economic geography is changing again. Labor costs in China’s eastern cities have surged in the last decade, so manufacturers are trying to reduce costs by moving production west to the nation’s interior. Trucking products from the new inland factories to coastal ports is costly and slow. High oil prices have made airfreight exorbitantly expensive and prompted the world’s container shipping lines to reduce sharply the speed of their vessels.

Slow steaming cuts oil consumption, but the resulting delays have infuriated shippers of high-value electronics goods like H.P’s. Such delays drive up their costs and make it harder to respond quickly to changes in consumer demand in distant markets.”

via Hauling New Treasure Along the Silk Road – NYTimes.com.

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20/07/2013

Joe Biden’s India Itinerary

WSJ: “U.S. Vice President Joe Biden arrives in New Delhi Monday for a visit focused on improving business ties between the two nations.

Mr. Biden, 70, begins his four-day India tour with a trip to Gandhi Smriti in New Delhi, a museum dedicated to Mahatma Gandhi, who led India to independence from Britain in 1947. The Democratic Party politician, who is visiting India with his wife, is also expected to meet Prime Minister Manmohan Singh, President Pranab Mukherjee and Vice President Mohammad Hamid Ansari, among other leaders, before travelling to Mumbai. Mr. Biden last visited India in 2008, when he was a member of the American Senate.

Mr. Biden’s wife, Jill Biden, will visit the Taj Mahal in Agra and is expected to address school children in Mumbai.

Relations between Washington and New Delhi have been warming in recent years, with the U.S. viewing India as an emerging superpower that can serve as a counterbalance to China’s growing influence in South Asia.

In a speech at the George Washington University in the U.S. on Friday, Mr. Biden singled out civil-nuclear cooperation, trade and investment as key issues the U.S. sought to collaborate on with India in the coming years. “There’s a lot of work to do,” Mr. Biden said in his speech, referring to strengthening India-U.S. ties. He also welcomed India’s decision this week to ease overseas-investment rules for telecom, defense and insurance.”

via Joe Biden’s India Itinerary – India Real Time – WSJ.

20/07/2013

China frees up lending rates in major reform

Reuters: “China’s central bank removed controls on bank lending rates, effective Saturday, in a long-awaited move that signals the new leadership’s determination to carry out market-oriented reforms.

An employee counts money on the last workday of the week at a bank in Taiyuan, Shanxi province in this June 28, 2013 file picture. China's central bank announced long-awaited interest rate reforms on July 19, 2013, scrapping the previous floor on the rates that banks charge clients for loans. Picture taken June 28, 2013. REUTERS/Jon Woo

The move gives commercial banks the freedom to compete for borrowers, a reform the People’s Bank of China said on Friday will help lower financial costs for companies. Previously, the lending floor was 70 percent of the benchmark lending rate.

However, the PBOC, in a statement, left a ceiling on deposit rates unchanged at 110 percent of benchmark rates, avoiding for now what many economists see as the most important step Beijing needs to take to free up interest rates.

The latest step underscores Beijing’s resolve to start fixing distortions in its financial system and the economy more broadly as it tries to shift from export- and investment-led growth to more consumption-led activity.

Some analysts said cheaper credit could help support the economy, which has seen year-on-year growth fall in nine of the last 10 quarters.

“This is a big breakthrough in financial reforms,” said Wang Jun, senior economist at China Centre for International Economic Exchanges, a prominent government think-tank in Beijing.

“Previously, people had thought the central bank would only gradually lower the floor on lending rates. Now they scrapped the floor once and for all.”

The Australian dollar rose modestly on the news on hopes cheaper credit will lead to more demand from Australia’s biggest export market.

The announcement provided some support to weak stock markets in Europe .FTEU3 and a timely reminder to the world’s top financial leaders meeting in Moscow of China’s intention to rebalance its economy.

A Group of 20 draft communiqué will urge China to encourage more domestic demand-driven growth as part of wider efforts to rebalance the world economy, G20 sources said.

The United States welcomed the move, saying China promised to let markets play a bigger role in allocating credit during the U.S.-China Strategic and Economic Dialogue in Washington last week.

“This is a welcome further step in the reform and liberalization of China’s financial system,” Holly Shulman, a spokeswoman for the U.S. Treasury, said in an email.”

via China frees up lending rates in major reform | Reuters.

20/07/2013

China officials held over watermelon-seller death

BBC : “Six urban security personnel have been detained by police investigating the death of a fruit seller in southern China, state media say.

Local residents demonstrate with a banner saying "urban enforcers (chengguan) killed people" in Linwu county, central China's Hunan province, 17 July 2013

Deng Zhengjia, in his 50s, died on Wednesday in Chenzhou City, Hunan.

He was hit with a weight from a set of scales after a row erupted with the officials, known as “chengguan”, Xinhua reported, citing Mr Deng’s niece.

The six are being held on suspicion of intentionally harming others, added the news agency.

 

The row in Linwu county, Chenzhou, erupted after Mr Deng, 56, and his wife tried to sell home-grown watermelons at a scenic riverside spot without a licence, the county government said in a statement.

Having asked the couple to leave, “the enforcers temporarily confiscated four of the watermelons, requesting that the couple sell their melons in an authorised location instead”.

The couple began “insulting” the officers when they encountered them again 50 minutes later, the statement said.

“The enforcers tried to reason with the couple, the dispute between the two sides became a physical conflict, and in the process Deng Zhengjia suddenly collapsed and died,” it added.

There were anti-chengguan protests in Linwu on Wednesday, and the fruit seller’s death has also sparked outrage on China’s microblogs.

In July 2011, the death of a disabled street vendor who was reportedly beaten by local law enforcers sparked a riot in Guizhou province.

Who are the chengguan?

Urban law enforcers tasked with enforcing ”non-criminal administrative regulations” such as traffic, environment and sanitation rules

Chengguan operate separately from the police

They are employed by the Urban Administrative and Law Enforcement Bureaux of their individual cities

Critics call them “violent government thugs”

Reports that a disabled street vendor was beaten to death by chengguan in 2011 sparked riots in China’s Guizhou province

There are thousands of chengguan in at least 656 cities across China, Human Rights Watch says

The chengguan, or Urban Management Law Enforcement force, support the police in tackling low-level crime in cities and have become unpopular with the Chinese public after a series of high-profile violent incidents.

“They are now synonymous for many Chinese citizens with physical violence, illegal detention and theft,” said Sophie Richardson, China director at Human Rights Watch (HRW), in a report last year.

via BBC News – China officials held over watermelon-seller death.

19/07/2013

Strike Force Would Allow ‘War on Two Fronts’

WSJ: “The Indian government this week reportedly paved the way for the creation of a new military corps of 50,000 troops near its border with China. If correct, analysts say this is a sign that New Delhi, which has been largely focused on its frontier with Pakistan, is now shifting its attention to the long, disputed Sino-Indian boundary.

Government sources were quoted by the Press Trust of India as saying a new mountain strike corps costing nearly $11 billion over seven years, was approved by India’s cabinet committee on security Wednesday. The committee is headed by India’s Prime Minister Manmohan Singh.

The force will be headquartered at Panagarh, in the eastern state of West Bengal, the news agency reported. Attempts to confirm these reports with India’s ministries of defense and external affairs were not successful.

The creation of a strike corps would give India thousands of war-ready soldiers, trained and equipped to respond rapidly to a military threat, stationed close to the border between India and China, known as the Line of Actual Control.

Analysts say it would take five to seven years for such a force to be formed fully, as large numbers of soldiers would need to be recruited and trained for combat at high altitudes and in mountainous terrains.

“The process will be incremental,” said Srikanth Kondapalli, a professor in Chinese studies at the New-Delhi based Jawaharlal Nehru University. “There won’t be large-scale training, because there is no immediate threat.”

For decades, relations between India and China have been characterized by mistrust. The tensions boiled over into a war between the two in 1962, which China won by gaining control over a large swathe of Indian territory known as Aksai China.

Beijing is still in control of the 38,000 square kilometers of land, but Indian maps show Aksai Chin as a part of Jammu and Kashmir, it’s northernmost state. China also claims 90,000 square kilometers of land in Arunachal Pradesh, a state in India’s northeast.

Neither nation has shown any inclination to return to armed conflict since, but India’s decision to create a strike corps – which analysts say has been in the offing for over two years – reflects New Delhi’s growing concern that Beijing is becoming increasingly assertive in its territorial claims.

via Strike Force Would Allow ‘War on Two Fronts’ – India Real Time – WSJ.

19/07/2013

Probe over China fruit-seller ‘beaten by enforcers’

BBC: “Police are investigating the death of a fruit seller in China, state media say, amid reports he was beaten by “chengguan” urban security personnel.

Local residents demonstrate with a banner saying "urban enforcers (chengguan) killed people" in Linwu county, central China's Hunan province, 17 July 2013

Deng Zhengjia, in his 50s, died on Wednesday in Chenzhou City, Hunan.

He was hit with a weight from a set of scales after a row erupted with chengguan officials, Xinhua news agency said, citing Mr Deng’s niece.

Chengguan are unpopular with the Chinese public after a series of high-profile violent incidents.

The chengguan, or Urban Management Law Enforcement force, support the police in tackling low-level crime in cities.

But the force’s ”thuggish” behaviour had led to public anger and undermined stability, a report by Human Rights Watch said last year.

“They are now synonymous for many Chinese citizens with physical violence, illegal detention and theft,” said Sophie Richardson, China director at Human Rights Watch (HRW), when the report was released in May 2012.

via BBC News – Probe over China fruit-seller ‘beaten by enforcers’.

19/07/2013

China Seeks Australias Help Building Emissions Trading Scheme

Sydney Morning Herald: “Australia has been drafted in to help design an emissions trading scheme for China, the world’s biggest polluter.

A deal announced in Canberra on Thursday will see the Australian National University take leadership of a program that will analyse pollution data provided by China and allow Chinese university researchers to examine Australia’s experience of the carbon tax and transition to an emissions trading scheme.

China pollutionChina is aiming for a full national emissions trading scheme by 2015.

The program, known as the “Australia-China research program on market mechanisms for climate change policy”, will team Australian researchers with those from three provincial universities in China and the Beijing Institute of Technology.  The University of New South Wales and Melbourne University will also take part.

The deal comes less than a month after China launched the first of seven pilot emissions trading schemes.

The first, in the manufacturing city of Shenzhen, will cover 635 companies, responsible for 38 per cent of the city’s total emissions. Chinese authorities are under pressure to do something about the chronic air pollution affecting public health in Shenzen and across China.

China emits one-quarter of the worlds greenhouse gases – nearly 10 billion tonnes of carbon dioxide, more than the US and India combined.

The $305,000 program, announced by Trade Minister Richard Marles, will be run by the ANU Crawford School of Public Policy, and led by Associate Professor Frank Jotzo of the Schools Centre for Climate Economics and Policy. He said projects would include modelling the effects of emissions pricing on electricity sector investments in China; research on how energy markets can be reformed to make carbon pricing more effective and the design of China’s pilot emissions trading schemes.

Professor Jotzo said: In the future, China is expected to rely less on command-and-control economic management and more on market-based systems to help protect the environment and modernise its energy system.

The research under this program will help inform Chinese policymaker’s about innovative approaches and international experiences, he said.

Climate expert and economist Ross Garnaut, a professor at ANU, said the most recent climate science showed a two degree warming of the planet was now a minimum and Chinese leaders understand there is a huge potential impact from climate for that nation.

via China Seeks Australias Help Building Emissions Trading Scheme.

15/07/2013

Apple Investigates China iPhone Death Allegations

WSJ: “Apple Inc. AAPL -0.20% said Monday that it is investigating a case in which the family of a 23-year-old woman alleges that she was electrocuted by her iPhone.

Though details about the case remain sketchy, it has caught the imagination of social media users in China, who have been spreading word about the case and warning not to use devices while they are charging.

According to a report in China’s official state-run Xinhua news agency, relatives of the woman in China’s western Xinjiang Uighur Autonomous Region are alleging the woman died after trying to answer a call while her iPhone was charging. An officer with the local Public Security Bureau said Monday that an “elementary inspection” showed the woman, named Ma Ailun, was electrocuted.

“Her neck had an obvious electronic injury,” he told China Real Time.

Beyond that, though, the official said that the case was still under investigation, and there were no more details available about whether her smartphone, the charger, or something else killed the woman.

In its statement, Apple said: “We are deeply saddened to learn of this tragic incident and offer our condolences to the Ma family. We will fully investigate and cooperate with authorities in this matter.””

via Apple Investigates China iPhone Death Allegations – China Real Time Report – WSJ.

15/07/2013

Hello 3D printing, goodbye China

If the following article’s predictions do come true, then the world economy as we know it will be destroyed as the unintended consequence. No trucks, freight trains, container ships, no major manufacturing facilities, no major hub warehouses. No truck and freight train drivers, no container ship crews, no depot warehousemen. No truck, freight train, container ship manufacturers; less construction workers and companies. And there will be further knock-on effects. I wonder …

Sunday Times: “A SPECTRE is haunting the great container ship ports of China, with their highways jammed by lorries and the vast factory estates stretching from the coast of the South China Sea to the mountainous inland provinces.

Cheap Chinese labour could be made redundant by 3D printers (Chu Yang)

It is the spectre of a revolution led by a quiet, software-driven 3D printer, a machine that can laser up layers of liquid or granular resin — or even cell tissue — into a finished product.

Some 3D printers are huge devices that make complete components such as aircraft parts. Others are small units that could stand next to a desk and create a small plastic prototype.

Maplin, the British electronics retailer, said last week it would start selling one for just £700. The Velleman K8200 will allow those who are so inclined to make simple objects — mobile phone covers, perhaps, or toys.

“The only restriction is your imagination. You can make whatever you want,” said Pieter Nartus, export manager at Velleman.

To visionaries in the West, the digital 3D printer promises to disrupt conventional manufacturing and supply chains so radically that advocates compare its impact to the advent of the production line, or the internet.

In China, whose big factories are thinking of using giant 3D printers for manufacturing, the technology does not seem to pose an immediate threat.

“It is on their horizon but it is not a factor right now,” says a British buying agent who sources plastics in China.

However, as Chinese leaders ought to know from their compulsory classes in Karl Marx, control of the means of production is everything. And if 3D printing takes off, production will come back to a place near you.

The implications, economists say, are limitless. No huge factories. No fleets of trucks. No ships. No supply chain. No tariffs. Few middlemen. Orders tailored exactly to demand, so no need for stock and warehouses. Just a printer, raw materials, software and a design.

The advantages do not end there. Because the item is “sintered” — created from a powdered material — to precise settings using a laser, there is no waste such as metal shavings. To customise a product, the user simply changes the software. An operator presses a button and the printer spits out the item.

“The first implication is that more goods will be manufactured at or closer to their point of purchase or consumption,” said Richard D’Aveni, a professor at Dartmouth College in America.

Writing in the Harvard Business Review, D’Aveni predicted the elimination of the long supply chain linked to a huge factory staffed by cheap workers and sited on the other side of the world.

It may be the most significant, if underplayed, article in that distinguished publication in decades.

via Hello 3D printing, goodbye China | The Sunday Times.

13/07/2013

Women and the property market: Married to the mortgage

The Economist: “CHINA’s communists attacked many bourgeois institutions after taking power in 1949. But marriage was not one of them. On the contrary, they enacted a marriage law in 1950, four years before they introduced a constitution. The pressure to marry remains heavy in today’s China, where almost 80% of adults have tied the knot at some point, compared with only 68% in America. But today, in contrast to the 1950s, marriage is bound up with another bourgeois institution: property.

In China mortgages often precede marriages. According to popular belief, if a man and his family cannot buy property he will struggle to find a bride. In choosing a husband, three-quarters of women consider his ability to provide a home, according to a recent survey of young people in China’s coastal cities by Horizon China, a Beijing-based market-research firm. Even if a woman herself dismisses this criterion, her family and friends, not to mention the country’s estate agents, will not let her forget it.

“Naked marriages”, as property-less ones are known, are endorsed by increasing numbers of young people. But as they get older, their attitudes may regress faster than society’s progress. One 28-year-old Beijing woman married her husband after falling in love with him at college. But “if you introduced a man to me now, and he couldn’t afford a home, I wouldn’t marry him,” she says. “I need to be more realistic. I’m not a 20-year-old girl.”

Some economists argue that competition for brides in China’s marriage “market” helps explain the punishingly high prices in its property market. Houses are least affordable in those parts of China where men most outnumber women, argue Shang-jin Wei of Columbia University, Xiaobo Zhang of the International Food Policy Research Institute and Yin Liu of Tsinghua University (see chart).

 

via Women and the property market: Married to the mortgage | The Economist.

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