China is no 2 to US in economic terms. Soon (if not already) it will be no 2 in military terms as well.
04/01/2014
Guangdong drug villagers wary days after big police raid | South China Morning Post
Five days after a huge pre-dawn raid in which police seized three tonnes of crystal meth, an uneasy quiet has descended on Boshe, a Guangdong village of 14,000.
Evidence of the crackdown can be seen throughout the community – empty houses with smashed windows, a police car at the entrance of the village and suspicious locals.
The few residents who will speak say many people vanished in the darkness when helicopters and 3,000 paramilitary troops and police officers raided the village, arresting 182 suspects.
More than a fifth of the households were suspected to be involved in or linked to the production and trafficking of drugs.
via Guangdong drug villagers wary days after big police raid | South China Morning Post.
04/01/2014
AAP to contest Lok Sabha polls – The Hindu
The Aam Aadmi Party (Common Man Party) announced on Saturday that it will contest most seats in the upcoming Lok Sabha election.
AAP leader Prashant Bhushan said the decision was taken at the start of a two-day national executive meeting following the popular response across the country after the AAP took power in Delhi.
“AAP will fight the Lok Sabha election, contest in the maximum number of states, and in as many seats as possible,” he told the media in New Delhi.
He said the AAP will field candidates wherever “we have a reasonable (party) structure and we get good candidates”.
Another AAP leader, Sanjay Singh, added that the decision to enter the Lok Sabha battle had nothing to do with other political parties.
“We have made it clear that we have no alliance with the Congress in Delhi.
“We are not fighting elections to harm or benefit anyone,” he said, adding it made no difference whether the AAP decision harmed or benefited BJP’s prime ministerial candidate Narendra Modi or Congress vice-president Rahul Gandhi.
04/01/2014
Gandhi Rises in India Ruling Party as Singh Says He’ll Step Down – Businessweek
Rahul Gandhi is poised to lead India if the ruling Congress party wins the next election after Prime Minister Manmohan Singh signaled his support for the next member of the country’s famed political dynasty.
Singh, who yesterday announced he would step down after a general election that must be held before May, said Gandhi has “outstanding credentials” to run the world’s largest democracy. His immediate task is reviving a party that has seen its popularity fall under Singh on corruption scandals, Asia’s fastest inflation and an economy struggling to expand.
“If they had gone into the election with Singh as the prime minister, the party would have been dead on arrival,” said Brahma Chellaney, a professor at the Centre for Policy Research in New Delhi who worked on an economic task force led by Singh. “Removing the dead wood was essential if there’s any hope of winning some degree of credibility with the voters.”
via Gandhi Rises in India Ruling Party as Singh Says He’ll Step Down – Businessweek.
04/01/2014
Tiny Loans for Tiny Homes – India Real Time – WSJ
From what began as a small experiment helping slum dwellers buy homes in Mumbai, Micro Housing Finance Corporation Ltd. has grown into a multi-million dollar business making loans across the country.
The Mumbai-based company, which gives low-income households loans to buy homes, now operates in more than 15 cities, with Coimbatore, in the southern state of Tamil Nadu, being the most recent addition just last month.
“Housing finance companies focus on serving the top 3% to 5% of the population because it’s easier and cheaper,” to give big loans to rich people, said Madhusudhan Menon, chairman of Micro Housing Finance. “No one wants [low income] customers who don’t have documentation of their income.”
The lack of home loans to those most in need of them is one of the main reasons more than 90% of India’s acute housing shortage of around 19 million units falls on the urban poor, according to a report released by real-estate consultancy Jones Lang LaSalle.
For most of the urban poor, owning an apartment with reliable electricity or even a water connection is out of reach even if they have a regular income because banks refuse to give the poor housing loans.
More than 41% of the population of the megacity of Mumbai lives in slums, defined as residential areas unfit for human habitation due to dilapidation, over-crowding, poor ventilation and lack of sanitation facilities, according to government estimates. That figure could be brought down sharply if builders constructed affordable housing for the city’s hardworking poor and housing finance companies gave them long-term home loans.
via Tiny Loans for Tiny Homes – India Real Time – WSJ.
04/01/2014
Chinese warship in Cyprus to aid Syrian chemical weapons removal | Reuters
A Chinese frigate which will help escort Syria\’s stockpile of chemical weapons out of the country docked in Cyprus on Saturday as part of a delayed international mission.
The Yancheng, a missile frigate, will accompany a Norwegian-Danish convoy which is in international waters off Syria, waiting for the go-ahead from international watchdogs overseeing the removal of the chemical arsenal.
The mission to ship chemicals from Syria has missed its December 31 target date and Chinese and Cypriot officials said it was unclear exactly when it would begin.
via Chinese warship in Cyprus to aid Syrian chemical weapons removal | Reuters.
03/01/2014
China is No. 1 risk for world economy: George Soros – The Tell – MarketWatch
Don’t worry too much about the U.S. or Europe, says George Soros.
The major uncertainty facing the world today is China, writes the billionaire investor in a column for the Project Syndicate website. He says: “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”
The People’s Bank of China moved to rein in debt in 2012, but then the world’s No. 2 economy experienced “real distress,” Soros writes. So China’s Communist Party reasserted its supremacy, ordering steelmakers to restart their furnaces and bankers to ease credit.
China’s economy turned around, and party leaders also announced major reforms in November. “These developments are largely responsible for the recent improvement in the global outlook,” Soros says.
What happens next? The 83-year-old Hungarian-American sees two possibilities:
“A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.”
Beyond China, Soros argues that a lack of proper global governance is the “other great unresolved problem.” That could continue indefinitely, while the Chinese conundrum will come to a head in the next few years, he says.
via China is No. 1 risk for world economy: George Soros – The Tell – MarketWatch.
03/01/2014
China’s Runaway Train Is Running Out of Track – Bloomberg
A financial drama is unfolding in China as the new year begins. Last week, for the second time in six months, interest rates in the critical interbank lending market spiked above 10 percent, prompting fears of a liquidity crisis that would trigger mass defaults and cripple the world’s second-largest economy.
Western investors largely ignored the cash crunch and failed to grasp its potential significance. Although the situation has largely eased after the People’s Bank of China hastily injected at least $55 billion into the market, that isn’t the end of the story. These repeated crises are a sign that the foundations of China’s investment-driven growth model are crumbling — with unsettling implications for the rest of the global economy.
To those who wrote off China’s first banking seizure in June as a fluke, this latest episode appeared to come out of nowhere. They cast about for explanations: Perhaps some seasonal surge in cash withdrawals was to blame, or the U.S. Federal Reserve’s decision to taper its bond-buying policy. Optimists assumed the PBOC was tightening credit on purpose, as a warning to banks to rein in unsafe lending practices. With inflation at manageable levels, they reasoned, the People’s Bank of China had plenty of room to loosen monetary policy again and ease the cash crunch.
In fact, loose monetary policy is the problem, not the solution. Two simple words — bad debt — are the key to understanding why China has too much money, yet not enough. In the years since the global financial crisis, China has racked up impressive growth in gross domestic product by engineering an investment boom, fueled by a surge in easy credit. Total debt has risen sharply, from 125 percent of GDP in 2008 to 215 percent in 2012. Credit has spiraled to $24 trillion from $9 trillion at the end of 2008. That’s an additional $15 trillion – – the size of the entire U.S. commercial banking sector — lent out in just five years.
A lot of that money has gone into projects whose purpose was to inflate the country’s economic statistics, not to generate a return. Officially, China’s banks report a nonperforming loan ratio of less than 1 percent. In reality, they are rolling over huge amounts of bad debt, both on their own books and by repackaging it into retail investment products — many of them extremely short-term — that promise ever higher rates of return.
China’s banks can hide bad debt by playing this shell game, yet that doesn’t change the fact that they’re not getting their money back. With their capital locked up in existing projects, the only way they can finance the next round of big investments — and keep China’s GDP growth rates from collapsing — is by expanding credit. More and more of that new credit is now eaten up paying imaginary returns on the growing pile of bad debt.
This year, total credit in China grew about 20 percent, from an extremely high base — hardly tight money. Yet the cash needs of China’s banks aren’t what they seem. In addition to its declared balance sheet, each bank is juggling a host of dubious assets and hidden cash obligations (in the form of quasi-deposits) on what amounts to a “shadow” balance sheet. Rein in credit growth, even modestly, and there isn’t enough to go around.
That’s what Chinese authorities discovered in June, and again last week. In both instances, the People’s Bank of China didn’t take away the punch bowl by tightening credit, it merely tried to resist handing over an even bigger punch bowl. The result, both times, was a near-meltdown in the interbank lending market that threatened to unleash a cascade of defaults throughout the economy. Nor have the signs of financial stress been limited to the interbank market: Over the past few months, yields on Chinese government and corporate bonds have steadily risen, even as the economy slows.
The PBOC could, and did, halt the immediate liquidity crisis by injecting more cash. But in doing so, it effectively cedes control over monetary policy to the shadow banks. Runaway lending continues, bad debts mount even higher, and the need for more cash to paper over losses becomes that much more acute. Far from solving the problem, pumping in more cash just kicks the can farther down a dead-end street.
The implications of this brewing storm are bigger than many global investors realize. China’s credit-fueled investment boom has been a driver of metals prices and machinery exports. China has become the world’s largest automobile market, its largest oil importer, and its largest buyer of gold. Although foreign banks have relatively little direct exposure to Chinese financial markets, capital flows into and out of the mainland are potentially large enough to have a significant impact on asset classes not normally associated with China. A financial train wreck would send tremors through global markets.
The detailed blueprint for market reform published by the Communist Party in November encouraged many. China’s leaders clearly recognize that its economy needs to move in a new direction. But the first crucial step, weaning China away from its addiction to debt-fueled stimulus, is proving a lot harder than many imagined. China’s leaders are riding a runaway train that they don’t quite know how to stop. And they’re running out of track.
via China’s Runaway Train Is Running Out of Track – Bloomberg.
03/01/2014
Rubber Duck bounces back in Taiwan after exploding on New Year’s Eve | South China Morning Post
A giant yellow inflatable duck which exploded on New Year’s Eve returned to a Taiwan port on Friday after it was repaired and cleaned, organisers said.
Hundreds turned out in Keelung on the north of the island to welcome back the 18-metre-tall duck following two days of maintenance after it burst and deflated into a floating yellow disc on Tuesday.
It was the second time that a replica of the bath toy had burst while on show in Taiwan. The duck exploded just hours before crowds gathered to count down the New Year.
“The warmest welcome for the little yellow duck to come back to Keelung port. I am very excited and happy all over again,” fan Mandy Liu wrote on a Facebook page created for the Keelung exhibition.
Another fan, Wu Hsien-che, wrote: “We should pray to the gods and ghosts to ensure the exhibition can go on smoothly.”
The duck burst because of rising pressure caused by rapid temperature changes. Organisers had planned to stay open past midnight in anticipation of a large New Year’s crowd.
The Central News Agency cited an eyewitness as saying the rubber bird might have fallen victim to eagles which scratched it with their claws.
Devices have since been put inside the duck for 24-hour monitoring of temperature and pressure, organiser Huang Jing-tai told reporters.
Since 2007 the duck designed by Dutch artist Florentijn Hofman – which is 16.5 metres tall – has travelled to 13 cities in nine countries, including Brazil, Australia and Hong Kong, on its journey around the world.
via Rubber Duck bounces back in Taiwan after exploding on New Year’s Eve | South China Morning Post.
03/01/2014
Chinese helicopter saves 52 in Antarctica – Chinadaily.com.cn
All 52 passengers stranded on the Russian research ship Akademik Shokalskiy in Antarctica for nine days were rescued by a Chinese helicopter on Thursday.
The helicopter from the Chinese icebreaker Xuelong, or Snow Dragon, transferred the passengers to an ice floe close to Aurora Australis, an Australian Antarctic supply ship.
\”I think everyone is relieved and excited to be going on to the Australian icebreaker and then home,\” Chris Turney, leader of the Russian expedition, told the Associated Press by satellite phone from the Russian vessel, which has been stuck in the ice since Christmas Eve.
He posted on Twitter that the helicopter had arrived at the Akademik Shokalskiy, saying \”huge thanks to all\”.
The helicopter Xueying 12, or Snow Eagle 12, made six trips to pick up all the passengers and their luggage.
The passengers comprised scientists, tourists and journalists who were scheduled to follow in the footsteps of Australian Douglas Mawson and his 1911-14 expedition.
via Chinese helicopter saves 52 in Antarctica – Chinadaily.com.cn.
CHINDIA ALERT: You'll be living in their world, very soon 