Archive for January, 2015

26/01/2015

Govt sells off premium cars- Chinadaily.com.cn

The first group of premium government automobiles to be auctioned off amid the ongoing frugality campaign have gone under the hammer in Beijing.

Govt sells off premium cars

According to Zonto Auction, the 106 vehicles it sold on Sunday were from six central government departments including the China Insurance Regulatory Commission, China Securities Regulatory Commission and State Bureau for Letters and Calls.

The cars were without plates, which would have to be supplied by the purchasers.

A total of 505 bidders from around the country joined the auction, which brought in proceeds of 6.6 million yuan ($980,000).

The highest bid went to a Toyota cross country vehicle for 200,000 yuan.

Li Guanwen, 40, of Hebei province, bought a Skoda bus for 160,000 yuan.

“The market value of this bus is around 500,000 yuan,” said Li.

“I think the reform of official vehicles is a very good thing and is a very good approach to remind civil servants to cut costs and to serve the public well.”

In November 2013, public agencies were told to cut their vehicle fleets, as well as reduce receptions and overseas trips. The use of all vehicles, except those required for law enforcement, emergency duties and essential public services, were scrapped or severely reduced.

via Govt sells off premium cars[1]- Chinadaily.com.cn.

26/01/2015

Urbanisation: The great sprawl of China | The Economist

IN ANCIENT times, Beijing built towering city walls that helped to prevent undefendable sprawl. These days it builds ring roads, stretching built-up areas ever outwards. Near Langfang, a city halfway between the capital and its giant neighbour Tianjin, diggers dip their heads and cement mixers churn, paving the next circular expressway. When complete, the 900km (560-mile) Seventh Ring Road will surround Beijing at such a distance that most of it will run through the neighbouring province of Hebei, to which Langfang belongs, rather than the capital itself. Parts of it are 175km from Beijing’s centre (see map).

The Seventh Ring Road (really the sixth, but for obscure reasons there is no First Ring Road) is emblematic of modern Chinese cities: giant, sprawling and dominated by cars. Even before it is completed in a year or two (and its use assessed), another, even longer, orbital is being plotted. Like many of China’s infrastructure projects, the new road displays engineering prowess. The country’s successes in urban planning are less evident.

Breakneck urban growth has propelled China’s rise in the past three decades. Migration from the countryside has helped expand the urban population by 500m—the biggest movement of humanity the planet has seen in such a short time. Over half the population is now urban. Some live in the basements of apartment blocks, or in shacks built in courtyards. But Chinese cities have mostly avoided the squalor of many developing-world ones.

The result of this urban growth is not just that China has many large cities—more than 100 of them have more than a million people—but that some are supersized. At the end of last year the government at last acknowledged the special nature of these, introducing the term “megacity” to describe those whose populations, including that of their satellite towns, exceed 10m. Of the 30 cities worldwide that match this definition, six are in China: Shanghai (23m), Beijing (19.5m), Chongqing (13m), Guangzhou (12m), Shenzhen (11m) and Tianjin (11m). A further ten Chinese cities contain 5m-10m people. At least one of these, Wuhan, will pass 10m within a decade.

China depends on its cities for economic growth and innovation. But it is failing to make the most of its largest conurbations. Medium-sized agglomerations of 1.5m-6.5m are outperforming bigger ones in terms of environmental protection, economic development, efficient use of resources and the provision of welfare, says McKinsey, a consultancy. Residents are beginning to question whether their quality of life, which for many has improved by leaps and bounds, will continue to do so. The giant cities are polluted, pricey and congested. Average travel speed in Beijing is half that in New York or Singapore.

Most of China’s cities share the legacy of a central-planning mindset in which all life and work was centred on a single “work unit”. Cities were “built as producer centres rather than consumer ones”, says Tom Miller, author of “China’s Urban Billion”. Their planning focus was on industry; not commerce, services or even community. The work units are gone but the tradition of dehumanising architecture persists. Most new developments are built on giant blocks 400-800 metres long.

China has swapped its socialist dream for an American-style one of cars and sprawling suburbs. The number of cars has increased more than tenfold in the past decade, to 64m. The combination of superblocks and car-lust often adds up to a giant jam. Large blocks mean fewer roads to disperse traffic. Guidelines require a main urban road every 500 metres and an eight-lane road every kilometre. In the case of Beijing, a ring and radial system was also created, with the aim of providing speedy road access in and out of town, bypassing city traffic and linking satellite towns. Not a bad idea, except that workplaces have remained concentrated in the centre. The expressways funnel traffic into gridlock.

The ill-defined ownership rights of farmers have encouraged the sprawl. Officials can expropriate rural land easily and at little cost. Doing so is far cheaper than redeveloping existing urban areas. Industrial land is heavily subsidised, so factories have remained in urban areas rather than move to cheaper sites on city outskirts. The amount of land classified as urban has more than doubled since 2000—40% of new urbanites became so when cities engulfed their villages.

Sprawl has resulted in populations becoming more thinly spread. China’s megacities are less dense than equivalents elsewhere in the world (see chart). Guangzhou could contain another 4m people if it was as packed as Seoul in South Korea; Shenzhen could be larger by 5m. Extending outward takes a toll: slow commutes from far-flung suburbs increase fuel consumption and cut productivity.

Massive spending on infrastructure has hugely improved connections within and between cities. Since 1992 China has spent 8.5% of its national income on infrastructure each year, far more than Europe and America (2.6%) or India (3.9%). Yet city residents still complain. Subways are often built as engineering projects, with stops at set distances, rather than where people want them to be, says Sean Chiao of Aecom, an infrastructure firm. Buses, metros and rail networks are poorly integrated because separate agencies manage them.

via Urbanisation: The great sprawl of China | The Economist.

26/01/2015

Narendra Modi’s Suit and Its Message to Obama – India Real Time – WSJ

Even the pinstripes on Indian Prime Minister Narendra Modi’s suit cannot escape scrutiny.

The yellow, almost-gold, stripes that appear against the navy blue wool fitted Indian jacket and pants he wore on Sunday were not simple stitching. They were Mr. Modi’s name embroidered into the fabric, said a person familiar with Mr. Modi’s wardrobe.

Over and over again the lines repeated the words: “Narendra Damodardas Modi.” His middle name is his father’s first name: Damodardas Mulchand, a tea seller.

Mr. Modi, wore the pinstriped suit to receive U.S. President Barack Obama at the Indian presidential palace on Sunday. Mr. Obama is on an official three-day visit to India.

He landed in the capital New Delhi on Sunday morning where he was greeted by Mr. Modi in a break with protocol. The pair also hugged.

Mr. Modi, who changed his outfit three times on Sunday, started with a cream colored shirt paired with a saffron shawl for the airport visit. He then changed into that pinstriped fitted Indian jacket with his name all over it for a luncheon he hosted in Mr. Obama’s honor at Hyderabad house. After lunch the pair walked in the garden and were photographed drinking tea together.

Later that evening, Mr. Modi donned a dove-grey fitted Indian jacket for a state banquet at Rashtrapati Bhavan, the president’s palace.

For the Republic Day parade on Monday Mr. Modi paired a black fitted jacket with an elaborate turban, a nod to his Gujarati heritage. The red, green and orange hand-tied turban, speckled with white dots, is a a tie-dye technique called Bandhani that is practiced mostly in the western Indian states of Rajasthan and Gujarat. Mr. Modi was the chief minister of Gujarat for more than a decade.

But the Obama visit’s wardrobe will probably be best-remembered for those stripes on Mr. Modi’s second outfit. They started a social media outrage especially on Twitter where some users described Mr. Modi as a narcissist for choosing to wear his name all over his jacket.

via Narendra Modi’s Suit and Its Message to Obama – India Real Time – WSJ.

26/01/2015

China’s Xi Builds Support for Big Move: Putting Politics Ahead of the Economy – China Real Time Report – WSJ

Many observers—including U.S. President Barack Obama – claim that Chinese leader Xi Jinping has already consolidated his political power and now commands more authority at a far earlier point than his predecessors did when they ruled China.

On the surface, there seems to be ample evidence for this conclusion. In his first two years at the helm, Xi has taken out powerful political rivals, become a ubiquitous presence in the party media and put himself in a position to dominate policy making.

There’s also been unusual attention in the press to Xi’s experiences as an adolescence and his early days as a Communist party member, which praise Xi’s stamina as a sent-down youth (in Chinese) and his problem-solving talents as a cadre (in Chinese). Chinese media refer to China’s president colloquially as “Big Daddy Xi” and extol his visits and musings as major events. And last week, a series of oil paintings were unveiled on the website of the Ministry of Defense depicting Xi in his role as China’s paramount leader.

This hagiography seems to suggest Xi’s unassailable status.But there’s a better explanation for this relentless publicity: Because Xi’s embarking on a very different path for China, he needs all the positive promotion he can get.

Xi knows as well as anyone that governance in China has shifted. The move away from a Maoist-style dictatorship to a collective leadership means that only by enacting and implementing reforms can a Chinese leader stay upright and ahead politically. It’s authority over policy decisions–not power for its own sake–that drives China’s leaders.

For much of the last half-century, changing China through economic reform seemed to make far better sense than transforming the country through political revolution.

Deng Xiaoping, the chief architect of China’s economic transformation, changed the national focus to getting rich and kept conservative critics at bay; his successor, Jiang Zemin, extended Deng’s achievements by bringing businessmen into the Communist Party and ushering China further into the international economic order. Hu Jintao, who followed Jiang, concentrated on the parts of China’s population left behind by a booming economy—and worked to underwrite those officials who agreed with that approach.

Then along came Xi, looking to invert this equation—to put politics back in command of economics.

In Xi’s view, China’s economic boom hasn’t always enhanced the party’s image, because it’s also offered opportunities for government officials to engage in graft. The Communist Party’s previous emphasis on economics wasn’t the cure so much as part of a larger disease that made too many officials more concerned with growing their bank accounts instead of developing the country. The state of China’s GDP may be a major concern for some, but Xi’s focus on getting the party rectified first indicates that he disagrees. For Xi, only by pushing economics aside and focusing on politics—specifically, ideology–can party rule be protected.

In recent days, Xi and his supporters have been advertising ideology to supplant economics more ardently.

For example, instead of asking China’s universities to become engines of innovation that might invigorate economic growth, Xi and his comrades are seeking to enforce the Party’s control over the classroom.

Xinhua summarized a recent proposal to tighten ideological oversight, quoting a document instructing administrators, that “higher education is a forward battlefield in ideological work, and shoulders the important tasks of studying, researching and spreading Marxism, along with nurturing and carrying forward socialist values.”

The party main theoretical journal, Qiushi, jumped in with a widely-reprinted essay (in Chinese) that slammed those professors who “as part of some new fashion, use their positions of authority to discredit China.” These instructors, the commentary contended, “present views that are not part of the social mainstream.”

Others are also under pressure to bend to politics.

The China Law Society was told last week, according to one report, to “improve its decision-making advisory service to establish itself as a key think tank [by placing] more emphasis on collective thoughts rather than individual thinking.”

That’s a signal to institutions that are largely under party oversight to forego suggestions that hint at dissent and get back in line.

And a few days earlier, People’s Daily, the party’s flagship newspaper, sounded the same refrain of increasing ideological oversight of officials who might be still skeptical of Xi’s changes, devoting an entire page of its Tuesday edition to the need for “political discipline,” with one essay stating emphatically (in Chinese) that “without rules, there are no standards; without standards, a political party cannot exist.”

That sort of talk inspires politically conservative cadres who enjoy their reform in the shape of smackdowns. And building a high public profile is Xi’s way of saying to cadres and citizens alike that he’s the best man to prove that China needs politics to push economics.

via China’s Xi Builds Support for Big Move: Putting Politics Ahead of the Economy – China Real Time Report – WSJ.

26/01/2015

Rain on India’s parade, but Obama visit keeps spirits high | Reuters

U.S. President Barack Obama watched a dazzling parade of India’s military might and cultural diversity on Monday, the second day of a visit trumpeted as a chance to establish a robust strategic partnership between the world’s two largest democracies.

Photo

It rained on the parade through the heart of New Delhi, but excitement nevertheless ran high over Obama’s landmark visit, which began on Sunday with a clutch of deals and ‘bromance’ bonding with Prime Minister Narendra Modi.

The two leaders announced plans to unlock billions of dollars in nuclear trade and to deepen defence ties.

Most significant was an agreement on two issues that, despite a groundbreaking 2006 pact, had stopped U.S. companies from setting up nuclear reactors in India and had become one of the major irritants in bilateral relations.

“Mobama breaks N-deadlock,” the Mail Today newspaper said on its front page, which carried a photograph of Modi and Obama hugging each other warmly.

The bonhomie was a remarkable spectacle, given that a year ago Modi was persona non grata in Washington and was banned from visiting the United States for nearly a decade after deadly Hindu-Muslim riots in a state he governed.

Obama is the first U.S. president to attend India’s Republic Day parade, an annual show of military prowess that was long associated with the anti-Americanism of the Cold War.

via Rain on India’s parade, but Obama visit keeps spirits high | Reuters.

24/01/2015

China’s Risks in Shedding Debt-Fueled, Investment-Led Growth – Businessweek

Few Chinese leaders are as revered as Deng Xiaoping. His late-1970s modernization drive led to an unrivaled run of high-speed growth. Chinese President Xi Jinping, who has big reform ambitions of his own, often evokes the memory of the paramount leader, who died in 1997. In 2012, shortly before he assumed the top government job, Xi signaled his own liberalization agenda by retracing Deng’s famous tour in 1992 of southern Guangdong province to promote economic reform. Last August, in a speech marking the 110th anniversary of the revolutionary leader’s birth, Xi, like his predecessors, recycled Deng-era slogans such as “socialism with Chinese characteristics.”

Is China Coming Down to Earth?

Deng’s legacy as the architect of Chinese modernity rides on a record of 10 percent average annual growth from 1980 through 2012. Xi oversees an economy that’s decelerating and that grew 7.4 percent in 2014, the weakest performance since 1990, when it grew 3.8 percent. The International Monetary Fund predicts that Chinese expansion will steadily decline to 6.8 percent this year and 6.3 percent in 2016, when archrival India is expected to eclipse China at 6.5 percent. All of which raises a question unthinkable a few years ago: Is the China growth miracle winding down for good?

China’s transformation from an agrarian backwater to a $9.2 trillion economy with globally competitive companies, including Xiaomi, Huawei, Baosteel, and Alibaba, has been remarkable. And plenty of countries would be thrilled with 6 percent growth. Yet China is also home to income inequality on par with that of Nigeria and Mexico, a rapidly aging populace, and a world-class environmental crisis. Years of politically driven investment with diminishing returns have led to too much debt and industrial overcapacity, as well as ghost cities with unfinished hotels and absurd ambitions. (You can soon visit Tianjin’s replica of Manhattan, provided you like your replica cities free of actual humans.) Loose credit conditions contributed to an unsustainable six-month, 63 percent stock price increase, prompting regulatory authorities on Jan. 19 to order the nation’s three biggest brokerages to stop adding new margin-trading accounts. The Shanghai Composite index tumbled 7.7 percent on Jan. 19, the biggest one-day drop since the financial crisis in 2008.

The total debt of the world’s No. 2 economy is roughly $18 trillion, or about 200 percent of GDP

China’s investment spending binge is packing less of a punch than it used to, according to the World Bank. From 1991 to 2011, it took $3.60 of investment to generate $1 of GDP growth. At the end of 2012 it required $5.40. Meanwhile, the country’s total debt—government, corporate, and household—is now roughly $18 trillion, or about 200 percent of total gross domestic product. “We’ve got the biggest debt bubble that the world has ever seen, and credit is continuing to grow [about] twice as fast” as the Chinese economy, says credit analyst Charlene Chu, a partner with Autonomous Research Asia in Hong Kong. Chinese officialdom is keenly aware of the problem. The growth model that delivered productivity spurts in the late 1990s—powered by reforms of state-owned enterprises and new technology brought in by foreign investors after the country’s admission into the World Trade Organization in the early 2000s—has lost its edge. As early as 2007, China’s then-Premier Wen Jiabao described his economy to the National People’s Congress as “unstable, unbalanced, uncoordinated, and unsustainable.”

Michael Pettis, a finance professor at the Guanghua School of Management at Peking University, says the Chinese experience has much in common with Brazil in the 1960s, the Soviet Union in the 1970s, and Japan in the 1980s. All resorted to what economists call the financial repression of households to accelerate development. Family savings were channeled primarily into bank accounts with regulated and below-market deposit rates. Banks then recycled the capital into low-interest loans for businesses to build factories at home and to export abroad.

When it works, and it did stupendously for China, the economy hits the fast lane and incomes grow so fast that consumers don’t mind getting low returns on their savings—or being ruled by an unaccountable one-party state. Unfortunately, research by Pettis shows, “every investment-led growth miracle in the last 100 years has broken down.”

Xi and Premier Li Keqiang are trying to avoid that fate by guiding China onto a more sustainable path that would bolster the role of consumer spending (about 34 percent of GDP, vs. 68 percent in the U.S. in 2013, the World Bank reports) and shift the economy to a more services-oriented model. They say they’ve mapped out more than 300 reforms that over time will reduce state intervention in the economy and energy price controls that favor manufacturers; the changes will also improve the social safety net and encourage market-driven deposit rates to get Chinese families saving less and spending more.

via China’s Risks in Shedding Debt-Fueled, Investment-Led Growth – Businessweek.

22/01/2015

Now Is the Time to Start a Company in India says Pulse Founder – India Real Time – WSJ

Ankit Gupta, the co-founder of Pulse a news aggregating app that was purchased by LinkedIn, has spent the past two weeks traveling across India meeting startup founders and trying to find out what is behind the recent surge in acquisitions of Indian companies by U.S.-based firms.

His conclusion? Now is the time to start a company in India, but if that sounds too risky, here are a few other ways he suggests you can contribute to the startup ecosystem.

Work for an Indian startup. There is a huge demand for good talent, especially at senior levels. Salaries over $200,000 aren’t unheard of.

Invest in startups. Your college network can be very effective in finding them. Angel list and termsheet.io are good resources as well.

Use Indian products and send them feedback. Help Indian products get distribution in your country.

Signup for this newsletter Mr. Gupta started to stay informed about new products launching in India.

via Now Is the Time to Start a Company in India says Pulse Founder – India Real Time – WSJ.

22/01/2015

China’s Communist Party Sounds Death Knell for Arrest, Conviction Quotas – China Real Time Report – WSJ

Former Chinese judge Jianwei Fang doesn’t mince words about the country’s practice of using arrest and conviction quotas to measure the performance of the country’s police, prosecutors and judges.

“It’s very stupid,” he says.

The Communist Party would appear to agree. This week, the party agency in charge of legal affairs, the Central Political and Legal Committee, called on the country’s legal institutions to “firmly abolish” the inclusion of goals for arrests, indictments, guilty verdicts and case conclusions in assessments of staff, the official Xinhua News Agency reported on Wednesday.

The demand from the committee appeared to reinforce a decision by the Supreme People’s Court in December to do away with court performance rankings based on quotas and lessen the importance of quotas in assessing performance.

Xinhua’s report drew a connection between performance standards in the Chinese legal system and a proliferation of wrongful convictions, including in death penalty cases. Some of those cases, it said, “were affected by the presumption of guilt, and were caused by an emphasis on confession over evidence, even torture.”

Mr. Fang, who worked as a junior judge in eastern China’s Zhejiang province in the mid-2000s, described the elimination of quotas as one of the most encouraging reforms to be announced following a major Communist Party meeting on rule of law in October.

“Different judges and different courts are competing based on these targets, which are highly unscientific and unreasonable,” he said. “They don’t mean anything.”

Conviction rates for criminal cases in China are well over 90%. It sometimes happens, according to Mr. Fang, that judges and prosecutors may suspect a defendant is innocent but still find him guilty and impose a suspended sentence in order to maintain good conviction numbers.

via China’s Communist Party Sounds Death Knell for Arrest, Conviction Quotas – China Real Time Report – WSJ.

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.

Law of Unintended Consequences

continuously updated blog about China & India

ChiaHou's Book Reviews

continuously updated blog about China & India

What's wrong with the world; and its economy

continuously updated blog about China & India