Archive for ‘Chindia Alert’

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.

21/01/2015

India’s Poor Are More Upwardly Mobile Than You Think – India Real Time – WSJ

Despite India’s reputation as a country where millions of families are stuck in grinding poverty, a new World Bank report shows that a surpassingly large portion of the South Asian nation’s poor population has been finding its way out of poverty.

The report titled “Addressing Inequality in South Asia,”– which looked at the gaps between the haves and have-nots in India and its neighbors– looked at different income groups and how they changed over the five year period up to March 31, 2010.

Over that period close to 40% of the people that had been classified as poor had clawed their way above the poverty line. Of course, the income mobility went both ways, but was not as bad on the down side. Around 15% of the people that had been previously classified as middle class or just above the poverty line fell into poverty over the five years.

via India’s Poor Are More Upwardly Mobile Than You Think – India Real Time – WSJ.

21/01/2015

India’s Tiger Population: Reading Between the Lines – India Real Time – WSJ

India this week cheered figures that showed it now has the largest tiger population in the world.

A 30.5% jump in the big cat headcount since the last census in 2011 means there are now 2,226 tigers in India – that’s 70% of all the tigers in the world.

“That is a huge success story,” Environment and Forests Minister Prakash Javadekar said. “We must be proud of our legacy and we must be proud of our efforts.”

But what the minister didn’t say was that the rate of tiger poaching has been increasing over the same time, according to figures from the Wildlife Protection Society of India.

The government says that between 2011 and 2014, there were 274 tiger deaths. Most of them –192 — lost to poaching or unexplained causes.   Authorities said poaching caused 83 of the total number of tiger deaths and acknowledged that they have not identified causes for 109 other deaths.

The WPSI says that those figures are an underestimate. According to data it has compiled, 110 tigers were killed by poachers between 2011 and 2014. Even that may be understating the actual number, says Tito Joseph, program manager at WPSI. “Because of demand for tiger products from other countries, we can only assume that some cases go undetected,” Mr. Joseph said. Those deaths that are unexplained could be as a result of poaching, he added.

via India’s Tiger Population: Reading Between the Lines – India Real Time – WSJ.

21/01/2015

As Obama visits, signs that India is pushing back against China | Reuters

When Sri Lanka unexpectedly turfed out President Mahinda Rajapaksa in an election this month, it was the biggest setback in decades for China’s expansion into South Asia – and a remarkable diplomatic victory for India.

Prime Minister Narendra Modi addresses a campaign rally ahead of state assembly elections, at Ramlila ground in New Delhi January 10, 2015. REUTERS/Anindito Mukherjee

Despite New Delhi’s protestations, diplomats and politicians in the region say India played a role in organizing the opposition against pro-China Rajapaksa.

His successor, President Maithripala Sirisena, has said India is the “first, main concern” of his foreign policy and that he will review all projects awarded to Chinese firms, including a sea reclamation development in Colombo that would give Beijing a strategic toehold on India’s doorstep.

India has pushed back against China elsewhere in the region since Prime Minister Narendra Modi took office in May, improving ties with Japan and Vietnam, both locked in territorial disputes with Beijing, and contesting a port project in Bangladesh that could otherwise have been a cakewalk for China.

The new robust diplomacy, which Modi calls “Act East”, has delighted Washington, which has been nudging India for years to dovetail with the U.S. strategic pivot toward the region.

When President Barack Obama makes a landmark visit to India starting Sunday, he will be the chief guest at New Delhi’s showpiece Republic Day military parade, and rarely for a presidential trip, is not scheduled to visit any other country before returning to Washington.

“What is appealing to me and my colleagues is the fact that Prime Minister Modi has undertaken to build from what has been a ‘Look East’ policy to an ‘Act East’ policy,” U.S. Assistant Secretary of State for East Asia and the Pacific Daniel Russel said in Washington last month.

“He has shown in word and deed his interest in involving India in the thinking and the affairs of the broader region. That’s very much to be welcomed.”

Washington made no bones about its distaste for Rajapaksa, who critics accuse of war crimes, corrruption and nepotism. But until last year India was indecisive, perhaps afraid of pushing the hero of the war against Tamil separatists even closer to China.

That changed in September, when Rajapaksa allowed a Chinese submarine to dock in Colombo, without informing India, as it was bound to under an existing agreement.

“That was the last straw,” a senior Indian diplomat told Reuters.

“He told Modi: “the next time I will keep you informed,”” the diplomat said, a promise that was broken when the submarine visited again in November.

In the build up to the Jan 8 election, India played a role in uniting Sri Lanka’s usually fractious opposition, for which the station chief of India’s spy agency was expelled, diplomatic and political sources say.

“At least that was the perception of Mahinda Rajapkasa,” said M.A. Sumanthiran, a prominent member of the Tamil National Alliance, a coalition of parties close to India. “He managed to get one of their top diplomats recalled.”

The Indian government denies any of its officers was expelled. But Sumanthiran said Modi had in a meeting encouraged the Tamil alliance to join forces with others in politics.

“The Indians realized that you can’t do business with this man and they were hoping for a change,” he said.

“FAMILY MATTER”

On Friday, Sri Lanka said it would review a $1.5 billion deal with China Communication Construction Co Ltd to build a 233 hectare patch of real estate on redeveloped land overlooking Colombo’s South Port.

In return, China was to get land on a freehold basis in the development. This is of particular concern for India, the destination for the majority of the trans shipment cargo through Colombo.

“The message is clear, that you do not ignore Indian security concerns,” said the Indian diplomatic source.

Modi is looking for similar good news elsewhere in South Asia. He has already visited Nepal twice, becoming the first Indian prime minister to travel to the Himalayan buffer state with China in 17 years, and signing long delayed power projects.

India has muscled into an $8 billion deep water port project that Bangladesh wants to develop in Sonadia in the Bay of Bengal, with the Adani Group, a company close to Modi, submitting a proposal in October. China Harbour Engineering Company, an early bidder, was previously the front-runner.

“Modi is willing to engage on long-term issues that stretch beyond India’s border, including maritime security in the South China Sea, as well as North Korea and Islamic State militants in Iraq and Syria,” said Richard Rossow at policy think tank CSIS.

“That’s when we start to think about India as a regional global provider – or as a global provider of security.”

However, the bonhomie has limits – India and the United States do not see eye-to-eye on Pakistan, New Delhi’s traditional foe that enjoys substantial funding from Washington.

Tricky conflicts over trade and intellectual property hold back business, and India has limits to its ability to project force outside its immediate neighborhood.

But Modi’s policies mark a departure from India’s traditional non-aligned approach to foreign power blocs.

“Having the U.S. president at the Republic Day celebration is a good thing, he is blessing Modi,” said Mohan Guruswamy, of the Centre for Policy Alternatives, a think-tank.

“And that is a lesson to the Chinese that you have to mend your fences with us.”

via As Obama visits, signs that India is pushing back against China | Reuters.

20/01/2015

Tapping China’s ‘Silver Hair Industry’ – China Real Time Report – WSJ

Researchers at Abbott Laboratories in Shanghai are busy testing flavors of nutritional drinks for China’s senior citizens. Kimberly-Clark Corp. has launched television ads for its Depend adult diapers and expanded distribution online. Local e-commerce companies like Alibaba Group Holding Ltd. and JD.com Inc. are rolling out senior-focused marketing pushes.

The companies are after the growing ranks of people born during a Mao Zedong-inspired baby boom that took the country’s population to nearly one billion people in 1980 from 542,000 in 1949. China’s birthrate dropped sharply during the 1970s and 1980s as the government reversed course and implemented a one-child policy.

The boomers are now hitting old age: China’s over-65 population is projected to soar to 210 million in 2030 from 110 million, and by 2050 will account for a quarter of China’s total population, according to United Nations data. By then, the U.N. says, China’s elderly population may exceed the entire U.S. population.

“What has us interested…is that half a billion people over the age of 60 will be living in China over the next 35 years,” said Scott White, president of Abbott’s international nutrition division.

via Tapping China’s ‘Silver Hair Industry’ – China Real Time Report – WSJ.

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