Archive for ‘China alert’

08/01/2016

Three political questions looming over China’s leadership in 2016 – WSJ China Real Time

From: http://blogs.wsj.com/chinarealtime/2016/01/08/three-political-questions-looming-over-chinas-leadership-in-2016/?mod=djemChinaRTR_h

Last year saw more attention to Chinese President Xi Jinping as China’s paramount leader, including what many observers have seen as a cult of personality. The economy may eclipse politics as a concern for Beijing in 2016, but in China the two are always closely intertwined. Here are the three major political questions that will loom over the Xi leadership in the months to come.

  1. Is it time for thelong-running anticorruption campaignto shift its focus?

In laying out a vision for his anti-corruption drive in 2013, Xi Jinping vowed to go after both high-ranking “tigers” and low-level “flies.” So far the campaign has been fueled by the takedowns of a procession of big cats – but there are signs that a change is in the offing.

There’s upside to an increased focus on local cadres and others at the insect level. For one, it would send a signal to doubters that the anti-graft campaign is genuine, not just a way to purge Xi’s political enemies. It would also help Xi score points with regular citizens and reform-minded officials outraged at the pervasiveness of corruption in China.

But there’s also a political risk. Already, the current crusade has compelled many officials to hunker down and sit on their hands to avoid attracting attention – a phenomenon that has slowed policymaking. Likewise, many developers remain wary of starting new projects that might aid an ailing economy because they’re still not sure what’s permissible in the new environment.

Broadening the anti-graft campaign could handcuff policymaking even further, because cadres will spend time looking over their shoulders, and entrepreneurs, wondering about political support, will wait until the dust settles before embarking on new commercial initiatives.

  1. What sort of politics does China want to practice?

Xi Jinping and Chinese Premier Li Keqiang agree on a great deal, but they have distinctive notions about how to build a better China.

Xi believes that China’s political future rests on a reassertion of the party’s rule, preventing potential challenges from social groups, and convincing citizens and cadres alike that the government stands for something more than just nationalism — that socialism is still relevant but needs to be recast in ways that appeal to society.

Li appears to see his political mission differently. In his eyes, ideological renovation is far less crucial to the country than administrative restructuring and being a more efficient and approachable government. It’s innovation, not rectification, Li argues, that will secure the Party’s legitimacy. From experimenting with new ways to measure China’s actual economic performance to making bureaucratic requirements easier for citizens to meet, Li has created a profile for himself that challenges the prevailing political course being set by Xi.

While Xi wants more control over society, Li argues for less oversight and regulation in China’s economy and bureaucracy–making it easier for businesses to start up and succeed as a way of preventing social pressure from becoming a political threat.

Thus far, the policy divide between Xi and Li hasn’t resulted in political warfare. But some lower-level cadres are increasingly perplexed about which template to follow: They’ve been quietly pressing for clarification about whether they should be focusing on being better Communists, or on building a more efficient and responsive government. It’s not clear how they can accomplish both, especially when they’re under the anticorruption microscope.

The economy could catalyze conflict here. If slower growth turns into a tailspin, Li and his allies will surely press to have their agenda for change adopted more widely, and argue that the current strategy of “politics before economics” championed by Xi isn’t working. Xi and his comrades won’t concede the political high-ground they currently occupy without a fight.

Xi and Li have been doing a fine job of sharing responsibility up to now, but the divide in their approaches is getting wider, and the challenges China faces will very likely compel one model to be adopted at the expense of the other.

  1. What happens if resistance to Xi’s reforms becomes active political opposition?

Xi’s efforts to centralize party control over the economy and society have been ruthless. Even the hint of organized opposition to party policies has brought out the truncheon swingers, with censorship or jail awaiting those who propose an alternative political path for China.

Observers who see Xi’s main opposition as coming from the Chinese street are looking down a now-empty avenue. They should be paying attention to disquiet within the ranks of officialdom.

The boldness and breadth of Xi’s reforms have led some in the party ranks to wonder privately about—and even openly question—whether his handling of China’s challenges has always been correct. For example, there are some who contend that the anticorruption campaign has placed too much power in the hands of discipline inspectors and unnecessarily disrupted the status quo (in Chinese).

Some of that scrutiny concerns Xi’s efforts to reinsert the Party more fully into economic and social life, a move that risks stoking discontent in a populace that has grown used to a certain level of leeway in recent decades. There are also those within the political apparatus who see Xi’s recent restructuring of China’s military as courageous but more aimed at quelling dissent from the armed forces than rejuvenating strategy and doctrine. Even Xi himself has noted in a recently released collection of internal speeches (in Chinese) that not everything he has been doing has been met with universal acclaim within the Communist party. Murmurs of discord have reached a level in recent months where a number of officials have been punished for “improper discussion” of Party policies.

Thus far, the angst, anxiety and antagonism within the government to Xi’s reforms remain unorganized. That’s because no one has proposed an alternative strategy for dealing with the nation’s many challenges that would unify the disaffected to act against Beijing. Social activists have little political support from above; annoyed cadres are afraid that any move to form a coalition could plunge the country into civil unrest.

Xi and his allies have been as determined as they’ve been daring in following their own reform path—and their success in getting their way politically has been remarkable thus far. The most pressing question for this new year is whether what has worked thus far will continue to do so—or whether the disaffected in China start believing that their leadership may have begun to run out of answers.

 

06/01/2016

What might happen in China in 2016? – McKinsey

Abbreviated from McKinsey: http://www.mckinsey.com/Insights/Strategy/What_might_happen_in_China_in_2016?cid=other-eml-alt-mip-mck-oth-1601

What’s in store for China in 2016?

The reality is that China’s economy is today made up of multiple subeconomies, each more than a trillion dollars in size. Some are booming, some declining. Some are globally competitive, others fit for the scrap heap. How you feel about China depends more than ever on the parts of the economy where you compete. In 2015, selling kit to movie theaters has been great business, selling kit to steel mills less so. In your China, are you dealing with a tiger or a tortoise? Your performance in 2016 will depend on knowing the answer to this question and shaping your plans accordingly.

Many well-established secular trends in China will continue in 2016. The service economy’s expansion is perhaps most prominent among them. In this piece, as usual, I won’t spend much time on the most familiar things. Instead, I will highlight what I believe will become the more important and more visible trends in 2016, either because they are now accelerating to scale or a discontinuity may become a tipping point. (For a quick summary, see sidebar, “The China Orr-acle: Gordon’s predictions for 2016.”) I hope you find my ideas valuable.

The 13th five-year plan—few surprises

Much of China’s 13th five-year plan will seem pretty familiar, as it has been flagged in advance at the Fifth Plenum and elsewhere. Perhaps the only challenge will be to interpret the plan’s intent clearly through the new “party speak” now coming to dominate government pronouncements.

The GDP growth target will still be 6 percent–plus, which will be softened a bit but not eliminated by parallel quality-of-life goals: the environment, health, income, and the like. Achieving the growth target will remain the core objective of fiscal and monetary policies, so expect lower interest rates and pressure on the exchange rate versus the US dollar in 2016. Financial reforms aimed at moving more of the economy toward a market-based allocation of capital will continue.

Meanwhile, there will be more progress on interest-rate deregulation, on the IPO process (registration rather than approval), on permitting new entrants (especially from the tech sector and from abroad) into financial services, and on reimplementing laws suspended in the summer of 2015. The plan will promote decentralization, but the reality is likely to be greater centralization. More infrastructure will be built, mainly to enhance intraregional development—for example, around Greater Beijing.

Green initiatives, reinforced by December 2015 commitments made in Paris and the “red alert” in Beijing that same month, will take center stage. The central government will make such big and visible commitments to its citizens that local authorities will have to mount a serious effort to deliver. There will be tougher emissions standards and more spending to support the development of nonfossil fuels. Green finance will be available. Both private-sector and state-owned companies will rebrand their ongoing initiatives as green. China will explicitly build new export engines from its emerging global leadership in green products; for example, expect to see lots of Chinese-made air-filtration products in Delhi and the rest of India in 2016. Beyond green initiatives, going global will remain a key theme, as detailed in the One Belt, One Road program.1

 

Finally, the plan will recognize China’s success in raising labor productivity over the past decade and prioritize the acceleration of productivity growth, for both capital and labor, from 2016 to 2020. The plan will raise the implications of higher productivity for workers: the disappearance of many traditional well-paying jobs and the need for increased labor mobility and for the lifetime renewal and development of skills. But I am concerned that implementation will be left to local administrators and that the regions requiring the most help will have the lowest amounts of money to invest in reskilling the workforce and the least impressive actual skills to deliver.

Fewer jobs, flatter incomes—and, potentially, less confidence

The workplace in China is already changing dramatically in ways that will create many individual losers—for example, workers in industry sectors in secular decline (such as steel or textiles) or in industries where technology is rapidly displacing people even as output grows (like financial services or retailing). The government must help these workers reskill themselves to deliver on its commitment that all parts of society will benefit from economic growth and to keep people actively engaged in the economy. It will not be enough for officials to visit major local employers, as they did during the global financial crisis, and press them to retain all their current workers.

The maturing of investing: More options for Chinese investors and foreign investment managers

Chinese investors today remain dependent on bank deposits and property. Yet after the volatility of the property and stock markets in 2015, investors want to diversify into more stable vehicles. The number of wealth managers seeking to address this need has increased massively. Often, their main challenge is not finding clients but rather credible products to sell. The main challenge for investors is to find advisers they can trust; most simply push the products that give them the largest commission.

Manufacturing in China is changing, not disappearing

The closely watched manufacturing purchasing manager’s index (PMI) remains below 50, which indicates deterioration, leading to talk that the country may be nearing the end of its time as a manufacturer for the world. Let’s be clear: manufacturing is not about to become irrelevant in China. However, the country is evolving toward extremes of performance: the truly awful and the genuinely competitive.

 

Agricultural imports are rising and rising

In 2016, China’s growing food needs will drive agricultural imports to record highs in both volume and value. A wider range of countries than ever before will find agricultural-export opportunities there.

More centralization

The Chinese media, especially during President Xi’s increasingly frequent trips abroad, made it clear that economic decision making has been centralized over the past two years. China will become still more centralized in 2016, rolling back decentralization where it had unintended outcomes. For example, after local governments received authority to approve new power plants, more than 150 new coal-fired ones were green-lit in the first nine months of 2015—more than three times the number approved in 2013, under the old centralized decision-making process. Unsurprisingly, coal-producing areas granted the largest number of approvals for plants that weren’t required under any realistic demand projection, even setting aside the question of whether any new plants at all should be coal fired. State-owned enterprises are behind most of these projects and would expect to be bailed out if they fail. Thus, for multiple reasons, such decisions will be recentralized.

Moving people at scale—the middle class, not peasants

Despite prodigious investment, many Chinese cities cannot build enough quality infrastructure to avoid massive day-to-day congestion. Even though the new five-year plan will commit the country to build more of it, that will not solve these problems; growth has simply outstripped potential solutions. For example, Beijing’s population officially grew by 60 percent, to 21 million, in just the past 14 years—and unofficially by significantly more.

Movies in China: $$$

A Chinese movie will gross $500 million domestically in 2016. As a benchmark, the highest-grossing movie of all time on US domestic screens is Avatar, at $760 million. This year’s leading domestic productions in China were Monster Hunt (which has grossed $380 million as of September) and Lost in Hong Kong (more than $200 million). The leading international movie, Furious 7, grossed almost $400 million in China. The country’s box office has been set to grow by almost 50 percent in 2015, and new screen additions alone should deliver 20 percent–plus growth in 2016. More than half of the top-ten movies for 2015 (as of late November) are domestic productions, and 60 percent of the box office comes from Chinese movies. The country’s producers and directors have clearly tapped into what excites local moviegoers (and what censors permit).

China continues to go global, with the United Kingdom as a new focal point

China’s outbound investment will accelerate in 2016, with One Belt, One Road–related initiatives driving much of it. A second driver will be distressed-asset acquisitions in basic materials and related sectors: Chinese acquirers may plan not to extract the assets in the near term but simply to stockpile them as long-term insurance. Finally, a growing share of the acquisitions will come from private-sector companies that aspire to global leadership. These companies are increasingly sophisticated buyers, conducting quality due diligence, working with traditional advisers, and focusing on countries where they think that warm political relations will make it easier to do deals.

And finally . . .

My enduring prediction that big business would embrace soccer in China has finally been realized, even if that happened more slowly than I expected. Footballer Sergio Agüero, of Manchester City Football Club, took what became one of the world’s most shared selfies, with President Xi and British Prime Minister David Cameron. It seemed only a matter of time before Chinese capital (specifically, China Media Capital and CITIC Capital Holdings) invested in Manchester City and its global network of teams, which includes the New York City Football Club. Other leading teams are exploring how to participate in China. Arsenal Football Club has a multiyear grassroots program in place, as does Real Madrid. And outbound investment in soccer is growing, highlighted when Wanda Group bought into Atlético de Madrid in 2015.

As always, don’t overfocus on short-term noise about Chinese GDP growth. Try to identify the medium-term direction of the parts of the economy relevant to your business. Enjoy China in 2016!

Gordon Orr is a director emeritus of McKinsey and senior external adviser.

01/01/2016

‘The Miraculous History of China’s Two Palace Museums’ – China Real Time Report – WSJ

In late 1948 and early 1949, toward the end of the Chinese civil war, Nationalist leader Chiang Kai-shek transported across the Taiwan Strait hundreds of thousands of valuable Chinese artifacts which are now stored in Taipei’s National Palace Museum. Along with its Palace Museum counterpart in Beijing – more famous as the Forbidden City – the museums serve as one of the most poignant reminders of the division of China.

Beijing’s Palace Museum, which celebrated its 90th anniversary in October, was established shortly after the last Chinese emperor, Pu Yi, was forced from his palace, where he had been allowed to stay even after the Chinese republic was founded in 1911.

Intellectuals at the time wanted to set up a Chinese museum along the lines of the great museums in Europe.

Today, millions visit both museums each year, crowding around artifacts such as the Jadeite Cabbage and the Meat-Shaped Stone in Taipei.

Among the visitors are huge tour groups of mainland Chinese tourists, as the Taipei government continues to liberalize travel policies for its neighbor amid a broader detente.

This week, a branch of the National Palace Museum housing exhibits from around Asia was inaugurated in the southern Taiwanese city of Chiayi.

In his book “The Miraculous History of China’s Two Palace Museums,” Hong Kong-based writer Mark O’Neill details the treacherous history of how some of China’s most precious artifacts were rescued from the invading Japanese imperial army in the 1930s and later transported to Taiwan, and the powerful symbolism of the museums.

Source: Writing China: Mark O’Neill, ‘The Miraculous History of China’s Two Palace Museums’ – China Real Time Report – WSJ

31/12/2015

2015 Chinese diplomacy: Reaching farther and wider – Xinhua | English.news.cn

2015 has been a productive year not only for China, but for its partners all over the world. The world’s second largest economy reached out farther and wider, through initiatives such as the “Belt and Road” and the “AIIB“. And President Xi Jinping led the way.

 

President Xi Jinping’s official state visit to the UK was full of pomp and pageantry and the occasional imbibing. Footage of President Xi and Prime Minister David Cameron enjoying a pint and some banter in an English pub went viral in China. And the rest is history. The consumer power of the world’s second largest economy has been felt fully by the British beer company. Just this time, it started with President Xi himself.

And in the year 2015, it’s been a recurring story. Wherever the Chinese president travels, Chinese investment and consumer power are his companions. From projects worth in the billions. There’s Chinese investment in the UK infrastructure and energy sector.

Chinese financing of Russian and Central Asian natural gas projects and China’s pledge of 60 billion dollars of development funds to African nations.

To a more personal touch, a visit, in the case of Boeing, by the President of the world’s largest airplane market, means shored up confidence for some 160-thousand employees, against the backdrop of a wobbly global economy, The president also brought Ping Pong diplomacy to a high school in Washington State while students there returned the favor by showing the well-known football fan, a different kind of football. And this viral photo of President Xi brought forward cutting edge research at the Imperial College London.

2015 has been a year when Chinese initiatives were taking root and taking shape on a global scale from the Belt and road initiative. To the AIIB, and the south-south cooperation fund. Economies reshaped and lives transformed or in the case of Greene King, a centuries old British beer finding a new Chinese following.

Source: 2015 Chinese diplomacy: Reaching farther and wider – Xinhua | English.news.cn

31/12/2015

It’s official: China building second aircraft carrier as concern mounts over claims to South China Sea | South China Morning Post

China on Thursday confirmed it is building a second aircraft carrier, as its neighbours worry about Beijing’s new assertiveness to claims in the South China Sea.

Chinese aircraft carrier Liaoning cruises for a test on the sea. Photo: AP

Defence Ministry spokesman Yang Yujun said the carrier had been designed in China and was being built in the port of Dalian in Liaoning province. The construction drew on experiences from the country’s first aircraft carrier, the Liaoning, bought from Ukraine in 1998 and refitted in China.

Source: It’s official: China building second aircraft carrier as concern mounts over claims to South China Sea | South China Morning Post

30/12/2015

Historian praises China’s global infrastructure building, criticizes West’s destructive methods – Xinhua | English.news.cn

China, with its impressive international infrastructure initiatives, has injected impetus into global growth, a U.S.-German historian has said, while criticizing Washington’s hawkish attitude, as reported by Sputnik.

China is “leading an economic renaissance of a scale not seen in more than a century,” said F. William Engdahl, a historian and economic researcher, in his recent article for New Eastern Outlook. “Beijing is, with customary Chinese speed, linking its economy by land and by sea lanes to all Eurasia,” the historian wrote, previously saying that China is “moving forward with an impressive array of major international infrastructure projects” in various regions. “For my side, I infinitely prefer the peaceful building projects to the destroying ones,” Engdahl said.

During the Johannesburg Summit of the Forum on China-Africa Cooperation (FOCAC) in early December in South Africa, Chinese President Xi Jinping unveiled the 60-billion-U.S.-dollar aid package for Africa in the next three years. The package seeks to help Africa to industrialize, modernize its agricultural production, boost the skills of its workers, build infrastructure and improve its health care.

“Unlike NATO’s endless wars, construction of infrastructure — railways, water navigation, electric power grids, lifts people up and enhances peace and stability,” Engdahl said, pointing out that Xi’s offer benefits both Africa and China.

China is also establishing a more amicable, vibrant neighborhood and is deepening economic ties with European countries through its Belt and Road initiative. The Belt and Road initiative, comprising the Silk Road Economic Belt and the 21st Century Maritime Silk Road, was brought up by Xi in 2013, with the aim of building a trade and infrastructure network connecting Asia with Europe and Africa along the ancient Silk Road routes.

The initiative creates a “golden opportunity” for the countries of Central and Eastern Europe that are facing economic difficulties, linking the East and the West of the Eurasian continent through a vast network of high-speed railways and maritime routes, Engdahl said.

“China is the world address in rail infrastructure today, while the West, led by the pathetic rail construction record of the USA, falls farther and farther behind,” Engdahl said, referring to China’s planned construction of a Hungary-Serbia high-speed railway. The railway linking the capitals of Hungary and Serbia, Budapest and Belgrade, has a total length of 350 km, with 184 km in Serbia. It is designed for electric passenger and cargo trains with a maximum speed of 200 km per hour. Once complete, it will help create a fast lane for importing and exporting products between China and Europe.

Besides recognizing the export of “Chinese rail technology” to Europe, the researcher also mentioned Beijing’s intentions to invest in constructing and upgrading port facilities in the Baltic, Adriatic, and Black Seas.

Source: Historian praises China’s global infrastructure building, criticizes West’s destructive methods – Xinhua | English.news.cn

30/12/2015

Top 10 policy changes in China in 2015

  1. Two children for all couples

China will allow all couples to have two children, abandoning its decades-long one-child policy, the Communist Party of China announced in late October. The change is intended to balance population development and address the challenge of an ageing population.

Under the new policy, couples who have two children can enjoy longer maternity leave and they could have more than two children if eligible. Current longer marriage and maternity leaves enjoyed by citizens who marry late and delay having children will be removed, and so will the rewards for couples who volunteer to have only one child.

The two-child policy will come into force on Jan 1.

2. Raising the retirement age

The 13th Five-Year Plan (2016-20) proposes progressively raising the retirement age to help address the country’s pension pressure and labor shortage.

On Nov 20, the Ministry of Human Resource and Social Security said raising the retirement age will be done progressively in small steps. The authority will raise the retirement age by several months every year, and the policy adjustment will be made public in advance. The Ministry of Human Resources and Social Security is drawing up the policy and will solicit public opinions on the completed draft.

In 2017, China should complete the integration of its two pension systems. From 2018, the retirement age for women should be raised one year every three years, and the retirement age for men should be raised one year every six years. This means in 2045, the retirement age for both men and women will be 65.

3. Household permits on the way for all

China will provide unregistered citizens with household registration permits, a crucial document entitling them to social welfare, according to a high–level reform meeting held in early December.

“It is a basic legal right for Chinese citizens to lawfully register for hukou. It’s also a premise for citizens to participate in social affairs, enjoy rights and fulfill duties,” said a statement released on Dec 9 after a meeting of the central leading group for comprehensively deepening reform.

The meeting was told that registration should take place regardless of family planning and other policy limits, and that those without hukou who face difficulties in applying should have their problems solved.

4. Unified pension system

The landmark pension reform plan, announced by the State Council on Jan 14, aims to eliminate the dual-track pension system in China.

New measures on old-age insurance were unveiled for the nearly 40 million workers in government agencies and public institutions, most of whom are civil servants, doctors, teachers and researchers. Insurance will now be paid by both workers and organizations, instead of just by organizations or central finance as in the past.

Before the measures were introduced, corporate employees had to pay for their own old-age insurance, while government staff enjoyed pensions without making any contribution at all. The reform helps to bring fairness and quench long-term public outcry.

5. Rural residents encouraged to buy properties in cities

China will roll out measures to reduce its property inventory and stabilize its ailing housing market, said a statement released on Dec 21 after a key policy meeting.

Rural residents relocating to urban areas should be allowed to register as city residents, which would enable them to buy or rent property, according to the conference.

In addition, a low-rent public housing program will cover those without household registration.

6. Harsher environmental protection law

China’s revised Environmental Protection Law came into effect on Jan 1, bringing with it heavier punishments.

According to the revised law, extra fines accumulating on a daily basis will be imposed on enterprises that fail to rectify violations.

Local officials may be demoted or sacked for misconduct, including the concealment of offenses, falsifying data, failing to publicize environmental data, and not giving closure orders to enterprises that illegally discharge pollutants.

7. Entrepreneurship encouraged among college students

The Ministry of Education announced in May that more than 30 measures would be introduced to support students starting their own businesses, and for innovation in scientific and academic research.

The measures are outlined in a series of guidelines released by the State Council, including developing and opening compulsory and selective courses for students, and awarding them credits for taking the courses.

Establishing innovation and entrepreneurship records, with transcripts for students, encouraging teachers to guide students in innovation and starting up businesses, and providing them with funds and supporting them to take part in entrepreneurship contests are also on the list.

8. New plan targets water pollution

China released the Action Plan for Water Pollution Prevention and Control on April 16 to tackle serious water pollution, aiming to intensify government efforts to reduce emissions of pollutants and to protect supplies.

The plan calls for 70 percent of the water in the country’s seven major river basins, including the Yangtze and Yellow rivers, to be in good condition by 2020, and for a continued improvement to 75 percent by 2030.

The amount of “black and smelly water” in urban areas will be reduced to 10 percent by 2020 and will largely disappear by 2030.

9. Toughest smoking ban in Beijing

A new regulation on tobacco use took effect in Beijing on June 1. The regulation extends existing smoking bans to include all indoor public areas and workplaces, plus a number of outdoor areas, including schools, seating areas in sports stadiums and hospitals where women or children are treated.

Violators will face fines of up to 200 yuan ($32), a twentyfold increase from the previous 10-yuan penalty stipulated by the previous regulation adopted in 1996. Owners of buildings classified as public places, such as restaurants, that fail to stop smokers lighting up face fines of up to 10,000 yuan.

Members of the public can report violations to the authorities by dialing a health hotline (12320) or via social media.

10. Price control on most medicines lifted

China has lifted price controls on most medicines since June 1 with the intention of creating a more market-driven pricing system that will help keep medical costs in check.

Only narcotics and some listed psychotropic drugs continue to be controlled by the government, with ceiling retail prices.

Public health departments must boost supervision on medical institutions and check improper medicine and medical equipment use, as well as excessive checkups and treatment, according to a notice issued in May.

From: http://usa.chinadaily.com.cn/china/2015-12/28/content_22835045.htm

21/12/2015

Successor to Saab announces $12 billion China electric car deal | Reuters

If this initiative gathers momentum, China will do more for electric cars (and for climate change) than the rest of the world put together!

“The China-focussed consortium that bought bankrupt Swedish automaker Saab – and bet on going all electric – unveiled its first major deal on Thursday, a mammoth $12 billion (8 billion pounds) order for electric cars for a Chinese leasing company.

NEVS electric car

The single order for 250,000 electric vehicles, including 150,000 cars based on the Saab 9-3 sedan, appeared to be all but unprecedented. There were just 665,000 electric cars in the world and 83,000 in China as of the end of 2014, according to the International Energy Agency.

National Electric Vehicle Sweden (Nevs) said it would swiftly hire hundreds of workers in Sweden to start building cars for Panda New Energy, a Chinese firm it said leases zero-emission vehicles to chauffeur-driven fleets.

Those based on the Saab 9-3 compact sedan will have a new chassis for electric drive, with bodies built and painted in Sweden and sent to China for final assembly. No details were given about the other 100,000 but a company spokesman said they would primarily be built in China.

Nevs bought the assets of the bankrupt 70-year-old Swedish automaker in 2012 with the aim of transforming it into a leading global producer of electric cars. It exited corporate reorganisation procedures in April.

“This is a strategic collaboration for Nevs not only in terms of the numbers of vehicles, but it is also an important step to implement our vision and new business plan,” Nevs Vice Chairman Stefan Tilk said in a statement.

“Cooperating with many chauffeured car service platforms in China, Panda aims to become one of the biggest electric vehicle leasing companies in the world,” Nevs said of its customer.

Nevs, which was created in 2012, has so far sold only a limited number of gasoline-powered cars based on Saab’s latest model. The deal is the first it has signed in line with its plans to go electric.

“It will be a huge challenge to produce that many cars. Their around 800 suppliers will make up a substantial part of that challenge,” said Skovde University business administration professor Mikael Wickelgren.

Nevs is co-owned by a holding company called National Modern Energy Holdings, as well as the Beijing State Research Information Technology Co. (SRIT) and Chinese industrial park Tianjin Binhai Hi-tech industrial Development Area (THT).

Nevs said at the time of the purchase of Saab’s assets that it would convert the Saab 9-3 to electric power, while simultaneously developing an all-new model to produce in Sweden for the European market and in China for the Chinese market.

($1 = 6.4822 Chinese yuan renminbi)”

Source: Successor to Saab announces $12 billion China electric car deal | Reuters

21/12/2015

Panda power | The Economist

THE feeding frenzy for the pandas comes at nightfall. People furtively approach them, pouring bags of old clothes down their gullets.

By day, the trucks arrive to clean the bears out, leaving them empty for the next big meal. The pandas are plastic. They are large, bear-shaped receptacles, designed to entice people to donate their unwanted garments to those in need.

First deployed in 2012, there are now hundreds around Shanghai, often placed by entrances to apartment buildings. They swallowed about a million items of clothing last year. The procession of donors feeding trousers to pandas is impressive. But they usually do so under cover of darkness. Charitable giving is not yet a middle-class habit. Many people still feel awkward about it, despite their growing prosperity. China’s GDP per person is about one-seventh of America’s.

But in 2014 Chinese gave 104 billion yuan ($16 billion) to charity, about one-hundredth of what Americans donated per person (see chart). This is partly a legacy of attitudes formed during Mao’s rule, when the party liked to present itself as the source of all succour for the poor (to suggest otherwise was deemed counter-revolutionary). Even until more recent years the party was reluctant to encourage charities, worried that they might show up its failings.

The middle classes have worries too—that giving large amounts to charity may draw unwanted attention to their wealth. They do not want to fuel the envy of the have-nots or encourage tax collectors to pay them closer attention.

The top 100 philanthropists in China gave $3.2 billion last year, according to Hurun Report, a wealth-research firm based in Shanghai. That was less than the amount given by the top three in America.

In 2008 when a powerful earthquake hit the south-western province of Sichuan—the deadliest in China in more than 30 years—it seemed that one positive outcome would be a boom in charitable giving. Volunteers poured into the devastated region and donations filled the coffers of aid organisations. Problems soon arose, however. Embarrassed that private relief efforts were proving more effective than official ones, the government reined in citizen-led organisations.

Source: Panda power | The Economist

21/12/2015

Shifting barriers | The Economist

THE pillars of social control are flaking at the edges.

First came the relaxation in October of draconian family-planning restrictions. Now it is the turn of the household-registration, or hukou, system, which determines whether a person may enjoy subsidised public services in urban areas—rural hukou holders are excluded. On December 12th the government announced what state media trumpeted as the biggest shake-up in decades of the hukou policy, which has aggravated a huge social divide in China’s cities and curbed the free flow of labour.

The pernicious impact of the system, however, will long persist. As with the adjustment to the decades-old family-planning policy (now all couples will be allowed to have two children), the latest changes to the hukou system follow years of half-hearted tinkering. They will allow migrant workers to apply for special residency permits which provide some of the benefits of an urban hukou (a booklet proving household registration is pictured above).

If an urban hukou is like an internal passport, the residency permit is like a green card. Under the arrangements, migrants will be able to apply for a permit if they have lived in a city for six months, and can show either an employment contract or a tenancy agreement. The document will allow access to state health care where the migrants live, and permit their children to go to local state schools up to the age of 15. It will also make other bureaucratic things easier, like buying a car. Such reforms have already been tried in some cities. They will now be rolled out nationwide.

For those who meet the requirements, the changes will bring two main benefits. They should allow some of the 70m children who have been left behind to attend school in their native villages to join their migrant parents. And it will allow migrants to use urban services without losing the main benefit of their rural hukou: the right to farm a plot of land. According to a survey in 2010 by the Chinese Academy of Social Sciences, 90% of migrants did not want to change their registration status because they feared losing this right.

Source: Shifting barriers | The Economist

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