Archive for ‘China alert’

« Older Entries  |   Newer Entries »
19/05/2013

* Chinese shoppers bringing bags of cash

Manila Bulletin: “Lin Lu remembers the day last December when a Chinese businessman showed up at the car dealership he works for in north China and paid for a new BMW 5 Series Gran Turismo -in cash.

“One of his friends carried about $60,000 in a big white bag,“ Mr. Lin recalled, “and the buyer had the rest in a heavy black backpack.“

Lugging nearly $130,000 in cash into a dealership might sound bizarre, but it’s not exactly uncommon in China.

This is a country, after all, where home buyers make down payments with trunks filled with thick wads of renminbi, China’s currency. And big-city law firms hire armored cars to deliver the cash needed to pay monthly salaries.

For all China’s modern trappings -the high-speed rail networks and soaring skyscrapers -analysts say this country still prefers to pay for things the old-fashioned way, with cash.

Doing business in China takes a lot of cash because Chinese authorities refuse to print any bill larger than the 100-renminbi note. That’s equivalent to $16. Since 1988, the 100-renminbi note, graced by Mao Zedong‘s face, has been the largest note in circulation, even though the economy has grown fiftyfold. No major economy has limited itself to such a low denominated bill as China.

By making the 100-renminbi note the largest bill, the nation’s citizens need more of it to buy a television, never mind a car, home or a yacht.

Chinese economists and govern ment officials often suggest that printing larger denomination notes might fuel inflation. But there is another reason.

“I’m convinced the government doesn’t want a larger bill because of corruption,“ said Nicholas R. Lardy, a leading authority on the Chinese economy at the Peterson Institute for International Economics in Washington, noting that it would help facilitate corrupt payments to officials. “Instead of trunks filled with cash bribes you’d have people using envelopes. And there’d be more cash leaving the country.“

All the buying, bribing and hoarding forces China to print a lot of paper money. China, which a millennium ago was the first government to print paper money, accounts for about 40 percent of all global paper currency output.

Although China’s coastal cities have flourished during the 30 years of economic prosperity, economists say the country’s interior remains poor and disconnected from the more modern aspects of the financial grid. As a result, the poor prefer to do business in cash. The rich also like to deal in cash, and they typically hide their money in the underground economy to avoid government scrutiny.

“The average Chinese trusts neither the Chinese banks nor the Communist Party,“ said Friedrich Schneider, an authority on shadow economies and a professor of economics at the Johannes Kepler University of Linz in Austria.

That lack of trust fosters a game between the government and its subjects, analysts say. Executives make secret cash deals to earn outside consulting fees while working at state-run companies. The government responds by trying to penetrate a vast underground economy, where transactions are conducted almost entirely in cash.

Often, the culprits are the very government officials who are supposed to be upholding the laws.

Take the case of Wen Qiang, the former police chief in the city of Chongqing. He was caught in 2009 with nearly a million dollars in renminbi, carefully wrapped in plastic bags and hidden in a water tank at a relative’s home.

To keep a lid on the illegal cash transfers, China restricts cross-border money transfers and places limits on foreign currency exchange.

And then there’s the issue of rodents. In March, a migrant worker in Shanghai discovered that mice had chewed into tiny pieces the $1,200 his wife stored in a closet. A local bank agreed to exchange the money if the man could reassemble at least three-quarters of a bill.

“But the bills are now in small pieces and it’s almost impossible to fix them,“ said Zhao Zhiyong, the 37-year-old worker. “Who could know that the money would be chewed by mice?“ Xu Yan contributed research in Shanghai.

via : http://mb.pressmart.com/manilabulletin/publications/ManilaBulletin/MB/2013/05/18/articlehtmls/Chinese-shoppers-Bring-Bags-of-Cash-18052013648009.shtml

Related articles

Posted in cash, China alert, Economics | Leave a Comment »

Tags: , , , ,
19/05/2013

* China owner smashes up his Maserati in service protest

News Asia: “A wealthy Chinese Maserati owner hired four sledgehammer-wielding men to smash up his $420,000 supercar in protest at poor customer service, reports said on Wednesday.

four-sledgehammer-wielding-men-destroy-a-maserati-outside-the-qingdao-convention-center-in-china-on-may-14-2013-4

BEIJING – A wealthy Chinese Maserati owner hired four sledgehammer-wielding men to smash up his $420,000 supercar in protest at poor customer service, reports said Wednesday.

The car owner, identified only by his surname Wang, had the group attack the Maserati Quattroporte at the opening of an auto show in the eastern city of Qingdao in Shandong province, the Qingdao Morning Post said.

Video images showed the men going about their task with gusto, leaving the vehicle with a shattered windscreen and mirrors, the grille broken and dents to the bodywork. It was draped in a banner accusing the Italian manufacturer of poor decision-making.

Wang bought the luxury car in 2011 for 2.6 million yuan, the report said — around 100 times the average income of Chinese urban residents last year.

But problems first arose when he took it back to the dealer for an unspecified repair, with staff charging him for new spare parts despite using used ones, the paper quoted Wang as saying. It later failed to fix a problem with a door and scratched the vehicle, he added.

“I hope foreign luxury car producers acknowledge clearly that Chinese consumers are entitled to get the service that is commensurate with the brand,” Wang said.

Maserati’s China arm said the company and its dealer in Qingdao had responded to the customer’s complaint and it regretted his decision.

“We deeply regret that the customer decided to terminate bilateral talks in such a sudden manner,” it said in a statement read to AFP by an employee.

Qingdao’s authorised Maserati dealer said on China’s Twitter-like Sina Weibo: “We deeply regret that before the two sides could reach a result via negotiation, the vehicle owner… smashed the world famous car in public… to cause a sensation.”

During the dispute “thugs” had disrupted its daily operations and intimidated staff and visitors, it added.

Chinese Internet users were divided over the incident, with some expressing scepticism about the car owner’s motives.

“Is it to defend his rights or just for show? I think it is more of a show — why do you smash your supercar if you just want to seek justice for the change of a 2,400-yuan part?” said one posting.

via China owner smashes up his Maserati in service protest – Channel NewsAsia.

Posted in China alert, Economics, show off, Social & cultural | Leave a Comment »

Tags: , , , , , ,
18/05/2013

* China’s protesters: winning battles?

FT: “Even in China, David sometimes beats Goliath – though it’s sometimes hard to be sure.

This week, residents of Songjiang – a suburb of Shanghai which has gained fame around the world for having over 10,000 dead pigs floating in its water supply – found that though they could not vanquish the porcine invader, they had scared away an intruder from the corporate world. Shanghai Guoxuan High-Tech Power Energy company said it was abandoning plans for a battery factory in Songjiang, after residents protested on the streets and on the internet against it.

In a statement broadcast on local TV, the company said it would return the land allocated by local government and “will not seek any compensation”. It said it was halting its existing operations and pulling out of the area completely.

Residents staged street protests against the plant regularly since late April and more than 10,000 signed a petition against the project with many others voicing their opposition to it on the internet. At least one protester was reported to have been injured by police.

But Chinese citizens know that plants vanquished in one location in China, by “not in my backyard” or “nimby” protests, often pop up in someone else’s backyard. Residents of neighbouring Jinshan, another industrial area on the outskirts of Shanghai, now fear that the plant will end up on their doorstep.

“We already have so many chemical plants. We really cannot tolerate one more battery plant. Shall we protest together?” asks one user on a Jinshan property owner’s online forum.

Ordinary Chinese are less and less ready to pay the environmental price for economic development – or rather, more and more ready to see someone else pay it. This week, up to a thousand people protested in Kunming, in southwest China, the second large demonstration this month against plans to produce paraxylene (PX), a chemical used in making fabrics and plastic bottles, at a plant in the town.

Protestors complained that the environmental impact assessment for the project was suspect, because it was done by one subsidiary of China National Petroleum Corp, the country’s largest oil and gas producer and supplier, while the plant would be operated by another. That is the equivalent of “grandson assessing Grandpa,” said one Weibo user.

Last November, the eastern city of Ningbo suspended a petrochemical project after days of street protests. The year before, big protests against a PX plant in the northeastern city of Dalian forced the city government to suspend it.”

via China’s protesters: winning battles? | beyondbrics.

Related articles

Posted in China alert, Economics, Petition, Politics, public protest | Leave a Comment »

Tags: , , , , , , , ,
18/05/2013

* China gives environmental approval to country’s biggest hydro dam

Reuters: “China’s environment ministry has given the go-ahead for the construction of what will become the country’s tallest hydroelectric dam despite acknowledging it will have an impact on plants and rare fish.

Dadu River, China

The dam, with a height of 314 meters (1,030 feet), will serve the Shuangjiangkou hydropower project on the Dadu River in southwestern Sichuan province.

To be built over 10 years by a subsidiary of state power firm Guodian Group, it is expected to cost 24.68 billion yuan ($4.02 billion) in investment.

The ministry, in a statement issued late on Tuesday, said an environmental impact assessment had acknowledged that the project would have a negative impact on rare fish and flora and affect protected local nature reserves.

Developers, it said, had pledged to take “counter-measures” to mitigate the effects. The project still requires the formal go-ahead from the State Council, China’s cabinet.

China aims to raise the share of non-fossil fuels in its energy mix to 15 percent by 2020, up from 9.4 percent in 2011. Hydropower is expected to make the biggest contribution.

It has vowed to speed up construction of dams in the 2011-2015 period after slowing it down following the completion of the controversial Three Gorges project in 2006.

The Three Gorges Dam, which serves the world’s biggest hydropower station on the Yangtze river, measures 185 meters.

The 300-m Nurek dam in Tajikistan in Central Asia is the world’s highest, though other taller dams are now under construction. China’s tallest dam now, at 292 meters, is the Xiaowan Dam on the Lancang River, also known as the Mekong.

On completion, the Sichuan project will have a total installed capacity of 20 gigawatts (GW), with annual power generation to exceed 7 billion kilowatt-hours (kWh).

The government said this year that hydropower capacity was expected to reach 290 GW by 2015, up from 220 GW at the end of 2010. It also said it would begin building a controversial project on the undeveloped Nu River in Yunnan province.

Guodian was one of a number of state-owned firms criticized by China’s national audit office last week for starting work on projects not yet been approved by the central government. The office said by the end of 2011, the company had invested nearly 30 billion yuan in 21 unapproved projects.

The Huaneng Group, China’s biggest power company, was also criticized for launching construction of the Huangdeng hydropower plant before receiving the government’s go-ahead.”

via China gives environmental approval to country’s biggest hydro dam | Reuters.

Posted in carbon emission, China alert, Economics, Electricity | 1 Comment »

Tags: , , ,
16/05/2013

* China in innovation challenge to Europe

FT: “Europe’s business leaders fear its industry will fall behind China in technological innovation within a decade as the economic crisis undermines one of the continent’s competitive advantages.

More than two-thirds of business leaders surveyed by Accenture, the consultancy, on behalf of BusinessEurope, the business lobby group, said China would reach or pull ahead of Europe in innovation by 2023.

Weak demand caused by Europe’s economic crisis has sent industrial production into decline, while corporate reluctance to delve into cash reserves is holding back new investment, training and R&D.

Rising unemployment threatens labour flexibility and Europe’s ability to maintain a highly skilled workforce. Fewer than half of those surveyed said Europe’s workforce remained a competitive advantage for industry.

European policy makers are determined to reverse industry’s decline. The European Commission last year proposed by 2020 to raise industry’s share of EU gross domestic product from 15.6 per cent to 20 per cent.

“We cannot continue to let our industry relocate outside Europe,” said Antonio Tajani, vice-president of the European Commission.

European companies remain leaders in sectors ranging from automotive to aerospace, engineering to pharmaceuticals, and two-thirds of surveyed business leaders said European industry was still competitive internationally.

But some Chinese companies such as Huawei, the telecoms equipment maker, are drawing level in innovation capability and gaining share in Europe. Some 61 per cent of those surveyed said they feared Europe would struggle to recover from its economic crisis for at least three years.

Some 90 per cent of German business leaders said Europe’s industry was competitive compared with only half of business leaders in Spain.

The Accenture study identified two areas to support growth: rebuilding Europe’s skills base and reinvigorating industry’s access to finance, including better access to capital markets and venture capital funding for start-ups.

Although Europe is mired in recession, there remain opportunities in areas ranging from low-carbon technology and smart grid networks to biotechnology and advanced manufacturing.

“The China machine is definitely going to invest a lot of money in technology innovation over the next 10 years . . . [But] there’s a sense that if we get our act together Europe can remain successful in manufacturing,” said Mark Spelman, strategy chief at Accenture.

“Just because there is zero growth across Europe doesn’t mean there are not segments of good growth within that . . . So it’s about how you place bets in an intelligent way.

To address the innovation deficit, business leaders want to see more public funding for R&D, reduced tax for R&D and capital investment and improved financing conditions.

European executives raised a variety of other worries ranging from the cost of energy to labour costs.

A majority of respondents were pessimistic that European industry would be cost-competitive in energy compared with markets such as the US, Russia and China in three years’ time.

US industry is enjoying cheap energy courtesy of discoveries of shale gas that permit new investment in gas-intensive industry, such as petrochemicals.

In contrast, Europe remains dependent on more expensive Russian gas, and costly regulation and investments in renewable energy are adding to the burden.”

via China in innovation challenge to Europe – FT.com.

See also: https://chindia-alert.org/prognosis/how-well-will-china-and-india-innovate/

Posted in China alert, Economics, innovation, patents | Leave a Comment »

Tags: , , , , ,
16/05/2013

* Pupil commissars quit jobs as Tiger Mothers put exams first

From The Times, 16 May, 2013: “China’s Tiger Mothers are driving a revolutionary shift in attitudes towards primary school cadres — the system that applies rigid communist-style structure to the jobs of child blackboard-wiper, hand cleanliness checker and window-opener.

Battle Hymn of the Tiger Mother

Battle Hymn of the Tiger Mother (Photo credit: Wikipedia)

For many years parents fought to secure the coveted positions for their children — feverishly lobbying and bribing teachers to grant responsibilities that would look good on a university application form.

The most hotly desired cadre positions for 11-year-old Chinese children have traditionally included Sport Commissary (organising games), Cultural Commissary (organising class performances) and Labour Commissary (organising classroom tidy-up operations).

But, according to teachers in the southern province of Guangdong, priorities have changed. As increasing numbers of Chinese parents thrust their children into the country’s ferocious educational arms race, the new emphasis is on exam performance, not Communist Party play-acting.

The effect of this, one teacher in the city of Guangzhou told Chinese media, has been a scramble by parents to unravel their previous machinations and release their children from onerous duties. Once liberated from their tasks, runs the Tiger Mother theory, children will claw back precious minutes that can be spent instead on exam revision.

After bullying teachers to give cadre positions to their children, parents are cravenly avoiding any part in the resignations.

“When their children were in second grade [seven years old], the parents made every possible attempt to get me to arrange cadre titles for them. Now those same kids are in fifth grade [11 years old], they put the same effort into resigning those titles,” said a teacher called Deng.

“Dear Miss Deng. Thank you for giving me so many opportunities, which have tempered me very well and greatly helped my personal development . . . I would like to step aside to give the same opportunities to other students and therefore tender my resignation,” read one of the letters.

She says she has received so many resignation letters from child cadres that she now faces a shortfall of “soldiers” prepared to sacrifice their exam performance for the dizzy heights of classroom officialdom.

One parent of a child in Guangzhou told reporters: “When my daughter first went to primary school, we would always push her to run for every cadre position, even if it was just the job of closing the doors. But she will have middle school entrance exams in a year. Being student cadre doesn’t help the exam, so now we mobilise her to study.””

Posted in China alert, Economics, education | Leave a Comment »

Tags: , , , , , , , ,
15/05/2013

* Premier promises administrative streamlining to create jobs

Li Keqiang 李克强

Li Keqiang 李克强 (Photo credit: Wikipedia)

Xinhua: “Chinese Premier Li Keqiang has called for reducing administrative barriers for launching businesses to create more job opportunities.

On a nationwide tele-conference held on Monday about the functional transformation of the institutions under the State Council, or the cabinet, Li said China faces a tough employment situation due to the tempered economic growth in the past few months this year.

The country will expect a record 6.99 million college graduates this year, Li said, adding that it is an important task to help them get employed.

Efforts should be made to vigorously develop medium-sized, small and micro businesses by canceling unnecessary administrative approvals, as state-owned enterprises and institutions have limited capacity in providing employment opportunities.

Li said that the government should also make efforts to lower the threshold for people to seek employment or start businesses.”

via Premier promises administrative streamlining to create jobs – Xinhua | English.news.cn.

See also: https://chindia-alert.org/2013/05/15/job-prospects-grim-for-chinas-7m-fresh-grads/

Posted in China alert, Economics, employment | Leave a Comment »

Tags: , , , , , ,
15/05/2013

* Job prospects grim for China’s 7m fresh grads

ANN: “When James Zhao, 23, read news reports last Friday claiming Renren, the “Facebook of China“, could be laying off three-quarters of the staff at its 3G technology department, his heart sank.

China Job

Having been unsuccessful in his job applications to several multinational tech firms, including mobile giant Motorola, he was hoping to have better luck with local companies like Renren.

“If even the local firms are cutting staff, then the hiring sentiment is getting from bad to worse,” Zhao told The Straits Times. He will graduate next month with a master’s degree in software engineering from a university in Beijing.

One key reason for his employment woes is the record bumper crop of 6.99 million fresh graduates – 190,000 more than last year – who will enter the job market this year.

A sluggish economic recovery also dampens hiring prospects, with some state media calling 2013 “the worst employment year” for white-collar workers.

In the first three months of this year, when the economy grew a slower-than-expected 7.7 per cent, demand for workers fell by 3 per cent, or 163,000 people, in China’s 84 major cities from a year ago.

The hardest hit were the prosperous eastern provinces, according to data from the China Labour Resources Market Research Centre. This region, which houses many of China’s key export and manufacturing hubs, saw a 7.2 per cent drop in labour demand.

In Guangdong province, the hiring rate for fresh graduates at its major universities is currently 52.4 per cent, about 7 percentage points lower than last year.

The job trend this year “may even be worse” than in 2008 during the global financial crisis, the Information News reported yesterday, citing a spokesman for the provincial education bureau’s employment guidance centre.

Industrial output data for April, released yesterday, showed weaker-than-expected growth of 9.3 per cent. This prompted analysts like Renmin University labour expert Liu Yuanchun to warn that “if the economy continues to slow, the impact on employment in certain sectors will be more obvious”, with even mass layoffs.

Earlier this year, MNCs had already made headlines with a round of dismissals in China. In March, some 50 employees at HSBC’s life insurance unit staged a protest outside its offices after 22 workers and 138 agents were axed. Motorola’s Mobility Unit in China is currently undertaking the first of three rounds of job cuts that would shrink its workforce by 800 in total.

Some larger local firms reportedly received local government support to keep their staff numbers stable. This is in line with the Chinese government’s pledge last week to keep this year’s jobless rate at 4.6 per cent or less. It will create nine million urban jobs, the same number as last year, when the jobless rate was 4.1 per cent.

But there are signs that some local players are starting to buckle under pressure.

Loss-making Chery Automobile is said to be planning 9,000 job cuts, China Business News reported yesterday, citing unnamed company insiders. The company bled 191 million yuan (US$30.79 million) in losses in the first quarter.

Even here in Beijing, where white-collar jobs are traditionally more plentiful, Zhang Mi, 25, has yet to land an offer as a teacher or a trainer despite submitting 60 job applications to schools and private firms since last October.

The social studies master’s degree holder has had only four interviews and her parents are “worried sick”.

“There are simply too many graduates this year. I will have to lower my expectations,” said Zhang, who is seeking a 5,000 yuan starting salary.

via Job prospects grim for China’s 7m fresh grads – ANN.

Posted in China alert, Economics, employment | 3 Comments »

Tags: , , , , , , ,
15/05/2013

* Chinese austerity hits Diageo’s sales

English: Songhe and Moutai - modern Baijiu bra...

English: Songhe and Moutai – modern Baijiu brands from China (Photo credit: Wikipedia)

Read “corruption” for “austerity” and that would explain why sales and profits have dropped like a stone.

FT: “Sales of Diageo’s baijiu, a clear grain spirit popular in China, slumped 40 per cent in the first quarter of this year as the world’s biggest distiller became the latest casualty of China’s crackdown on conspicuous consumption.

 

The rapid deterioration in fortunes at Shui Jing Fang, one of the first Chinese household names to be taken over by a foreign company, comes as other makers of high priced spirits have suffered falling sales amid the chill winds of austerity with socialist characteristics. It is a turnround for the drinks industry which, like other purveyors of status symbols, had become accustomed to runaway growth in China comfortably offsetting European weakness.

Pernod Ricard, the world’s second-biggest distiller after UK-listed Diageo, is set to report an annual decline in Scotch whisky sales in China, following years of surging growth. This came after flat sales over the Chinese New Year period, when it sold more Cognac but saw Scotch sales fall by double-digits in percentage terms year-on-year.

Diageo has so far shrugged off concerns about the crackdown saying it is having little effect on gifting, which makes up 10 to 15 per cent of Scotch and Cognac sales in the country.

Kweichow Moutai, China’s largest baijiu maker, reported a halving in year-on-year profit growth in the first quarter. Baijiu, like a host of other food and drinks in China, has also been caught up in food safety concerns.

Shui Jing Fang, which Diageo acquired last year after years of protracted and complex negotiations, saw both sales and earnings before interest and tax fall by 40 per cent in the first quarter of the calendar year, Diageo said on an investor call on Tuesday. That followed net sales growth of 10 per cent and operating profit growth of 12 per cent in the previous full year.

Although Shui Jing Fang is just a drop of Diageo’s sales at around 1 per cent, baijiu dwarfs sales of international spirits in China and is seen as an attractive sector for multinationals to increase their grip on.”

via Chinese austerity hits Diageo’s sales – FT.com.

Related articles

Posted in austerity, China alert, Economics | Leave a Comment »

Tags: , , , , , , ,
15/05/2013

* UK to try and simplify visas for Chinese tourists

Hard on the heels of special visas for Indian business applicants, Britain is trying to do something for Chinese visitors.

FT: “Home Office ministers are to start talks with Chinese tour operators in the hope of setting up an easier visa application system for groups of high-spending Asian shoppers who are discouraged by the UK’s border bureaucracy.

Chinese tourists at cake shop with windows decorated during Queen Elizabeth II Diamond Jubilee

The department has been under pressure from luxury retailers to streamline the process for Chinese tourists, who can enter most of continental Europe with just one Schengen visa and are therefore less likely to apply for a separate UK entry. As a result, France receives at least 25 per cent more Chinese tourists each year than Britain does.

Mark Harper, immigration minister, said on Tuesday that he hoped to begin discussions soon. “It’s just thinking about, practically, what can we do with the tour operators to enable them to make that process for getting both [UK and Schengen] visas as straightforward as possible,” he told the Financial Times. “We may not be able to get it to be perfect, but we can get it to be a lot better than it is now, which then makes us a lot more competitive.”

However, Mr Harper suggested that a previous idea of negotiating “parallel” processes – so that data for Schengen and UK visas could be submitted in one joint application – was looking less likely. This was because “you start running into issues about government IT projects and complex issues about data protection”, he said.

Mr Harper also indicated such a joint application would be difficult to achieve diplomatically because it was “not obvious” that it would be in the interests of Britain’s European partners.”

via UK to try and simplify visas for Chinese tourists – FT.com.

Related articles

Posted in China alert, Economics, Politics, Tourism | Leave a Comment »

Tags: , , , , , , , , ,
« Older Entries  |   Newer Entries »
CCChang

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