Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
BEIJING (Reuters) – China’s Hubei province where the coronavirus pandemic originated will lift travel restrictions on people leaving the region as the epidemic there eases, but other regions will tighten controls as new cases double due to imported infections.
The Hubei Health Commission announced it would lift curbs on outgoing travellers starting March 25, provided they had a health clearance code.
The provincial capital Wuhan, where the virus first appeared and which has been in total lockdown since since Jan. 23, will see its travel restrictions lifted on April 8.
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However, the risk from overseas infections appears to be on the rise, prompting tougher screening and quarantine measures in major cities such as the capital Beijing.
China had 78 new cases on Monday, the National Health Commission said, a two-fold increase from Sunday. Of the new cases, 74 were imported infections, up from 39 imported cases a day earlier.
The Chinese capital Beijing was the hardest-hit, with a record 31 new imported cases, followed by southern Guangdong province with 14 and the financial hub of Shanghai with nine. The total number of imported cases stood at 427 as of Monday.
Only four new cases were local transmissions. One was in Wuhan which had not reported a new infection in five days.
Wuhan residents will soon be allowed to leave with a health tracking code, a QR code, which will have an individual’s health status linked to it.
In other parts of the country, authorities have continued to impose tougher screening and quarantine and have diverted international flights from Beijing to other Chinese cities, but that has not stemmed the influx of Chinese nationals, many of whom are students returning home from virus-hit countries.
Beijing’s city government tightened quarantine rules for individuals arriving from overseas, saying on Tuesday that everyone entering the city will be subject to centralised quarantine and health checks.
The southern city of Shenzhen said on Tuesday it will test all arrivals and the Chinese territory of Macau will ban visitors from the mainland, Hong Kong and Taiwan.
The number of local infections from overseas arrivals – the first of which was reported in the southern travel hub of Guangzhou on Saturday – remains very small.
On Monday, Beijing saw its first case of a local person being infected by an international traveller arriving in China. Shanghai reported a similar case, bringing the total number of such infections to three so far.
CONCERNS ABOUT NEW WAVE OF INFECTIONS
The rise in imported cases and the lifting of restrictions in some cities to allow people to return to work and kickstart the battered Chinese economy has raised concerns of a second wave of infections.
A private survey on Tuesday suggested that a 10-11% contraction in first-quarter gross domestic product in the world’s second largest economy “is not unreasonable”.
The epidemic has hammered all sectors of the economy – from manufacturing to tourism. To persuade businesses to reopen, policymakers have promised loans, aids and subsidies.
In the impoverished province of Gansu, government officials are each required to spend at least 200 yuan (24.31 pounds) a week to spur the recovery of the local catering industry.
The official China Daily warned in an editorial on Tuesday that maintaining stringent restrictions on people’s movements would “now do more harm than good”.
Plunges in official and private sector purchasing managers’ indices amid the coronavirus outbreak prompted sharp revisions of economic forecasts
Analysts expect China to enact additional fiscal and monetary stimulus but stop short of massive support enacted after the global financial crisis in 2008
Due to the outbreak of the coronavirus, the once unthinkable scenario in which China’s economy posts a zero growth rate or even an absolute contraction compared to the previous quarter is now seen as a real possibility. Photo: AP
The odds are rising that China will report a sharp deceleration in growth – or even a contraction in the first quarter as a result of the impact of the coronavirus epidemic.
The outbreak has paralysed the country’s manufacturing and service sectors, putting Beijing in the difficult position of either forgoing its economic growth goal for 2020 or returning to its old playbook of massive debt-fuelled economic stimulus to support growth.
The larger-than-expected deterioration in the official and private sector purchasing managers’ indices for both the manufacturing and services sectors to all-time lows in February – the first available economic indicators showing the extent of the economic damage done by the epidemic – has prompted economists to slash their Chinese growth forecasts.
Several are even expecting the once unthinkable scenario in which China’s economy posts a zero growth rate or even an absolute contraction compared to the previous quarter, even though the weakness is likely to be only short-lived.
A contraction in first quarter growth would be the first since the end of the Cultural Revolution in 1976.
A report published by the East Asian Institute at the National University Singapore noted that China could report a contraction of 6.3 per cent in the first quarter from the first quarter of 2019, while the growth rate for 2020 is set to fall well short of the 5.6 per cent needed by Beijing to meet its economic goal.
If China still wants to achieve an average 5.6 per cent growth for 2020, it would have to engineer a growth rate of as high as 12.7 per cent in the second half of the year, according to the report by Bert Hofman, Sarah Tong and Li Yao.
“The question is whether this is feasible and whether the consequences in terms of increased debt and potentially less productive investment are worth the price,” according to the report.
What is gross domestic product (GDP)?
China’s headline year-over-year gross domestic product (GDP) growth rate has hovering in a narrow range between 6 per cent and 7 per cent for 18 consecutive quarters until the end of 2019, but a sharp dip in the otherwise steady growth trajectory in the world’s second largest economy would send fresh warning signs about the risks of relying excessively on China as a production base and consumption market, particularly for large multinationals from Hyundai to Apple.
An official recognition of an economic contraction, even a brief one, would break a long tradition of China reporting consistent growth to prove the Communist Party’s ability to manage the economy and to rally the whole country to achieve one historical milestone after another.
insisted last week that China would realise the vision of building up a “comprehensively well-off” society by 2020, an inheritance from China’s former paramount leader Deng Xiaoping and a major gauge of progress to realise Xi’s grand “Chinese dream” by the middle of the century.
One key but loosely defined parameter for achieving a “comprehensively well-off” society is that the size of the economy at the end of this year will be double that of 2010.
To achieve that, economists calculate that China must achieve a 5.6 per cent growth this year, although Beijing has been vague about the specific target, although this now seems out of reach barring massive stimulus or a redefinition of the goal.
Louis Kuijs, head of Asia economics at Oxford Economics, said his group has cut its forecast for the year-on-year growth rate to 2.3 per cent for the first quarter and 4.8 per cent for 2020 overall, adding that it would be next to impossible for China to make up the lost ground during the reminder of the year given the impact of the coronavirus
on the rest of the world, particularly South Korea, Japan and Italy, who are all major trading partners.
It will be extremely difficult, to say the least, to meet the annual growth targets for 2020 set previously. It would require massive, unreasonable amounts of stimulus, if it is at all possible, given the headwinds Louis Kuijs
“It will be extremely difficult, to say the least, to meet the annual growth targets for 2020 set previously. It would require massive, unreasonable amounts of stimulus, if it is at all possible, given the headwinds,” Kuijs said.
Instead, it would “make much more sense” for the Chinese leadership to play down the need to literally meet the previously set economic target,” he added.
Beijing’s social and economic development targets for this year have not yet been made public, even though Xi has pledged that the government would still achieve them despite the challenge posed by the virus outbreak.
The full-year targets covering growth, employment and inflation are usually released at the National People’s Congress, the ceremonial gathering of China’s legislature in early March, but this key annual event has been postponed due to the threat of the coronavirus, which has infected over 80,000 people and killed more than 2,900 in the country as of Tuesday.
China’s National Bureau of Statistics is due to publish first quarter GDP growth data in mid-April, with combined industrial production, retail sales and fixed-asset investment data for January and February due next week.
They will offer a clearer picture of how much the coronavirus epidemic has damaged China’s growth in the first two months of this quarter, although the damage it has caused in China and the rest of the world is hard to measure because the epidemic is still evolving.
Production among manufacturing companies across China, except in the virus epicentre of Wuhan, Hubei province, have been gradually returned to normal, with firms that have close ties to local governments and access to financial resources resuming production faster than the much larger number of small businesses.
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The latest data from China’s industry ministry showed that only 32.8 per cent of
had restarted production as of the middle of last week, an increase of just 3.2 percentage points from three days earlier. But even among the larger enterprises the government is trying to help, many are not running at full capacity due to disrupted logistics that have impeded the delivery of raw materials to factories and finished products to customers.
A shortage of workers due to travel barriers erected to stem the spread of the virus, or local regulations that prevent factories from resuming full operations until they have implemented sufficient health safeguards, are also hampering efforts.
Foxconn, which assembles most of Apple’s iPhones in China, said normal production is not expected to resume until the end of March.
China, though, has limited its economic aide policies to “targeted” fiscal and monetary moves, avoiding the massive stimulus it undertook in 2008 in response to the global financial crisis that led to the negative side-effects of high debt and unproductive investments.
[China] will be cautious about the scale of any intervention. The size of the stimulus will likely depend on how quickly economic activity recovers on its own Andy Rothman
Andy Rothman, a San Francisco-based strategist for investment fund Matthews Asia and a long-time watcher of the Chinese economy, said China will report a sharp fall in economic activity in the first quarter and that it “is prepared to implement a stimulus”.
“But [China] will be cautious about the scale of any intervention. The size of the stimulus
will likely depend on how quickly economic activity recovers on its own,” Rothman said.
China’s ruling Communist Party has never reported a contraction in economic growth since the country started the reform and opening up movement in 1978.
Even in 1990, when China was hit by Western sanctions following the crackdown on the 1989 pro-democracy movement, the country still reported an annual growth of 3.8 per cent.
The larger-than-expected fiscal and monetary policy stimulus will help make meeting the targets for 2020 less challengingLiu Li-Gang
In the history of quarterly GDP growth rates – China started to report such data in 1994 going back to 1992 – the lowest growth rate on record of 6.0 per cent was in the third and fourth quarters of 2019.
The most recent year that China admitted to an economic contraction was 1976, the final year of the Culture Revolution and the year when chairman Mao Zedong died.
Liu Li-Gang, the chief China economist for Citigroup Global Markets Asia in Hong Kong, said Beijing has the policy reserves to keep economic growth on track, including increasing the fiscal deficit and loosening monetary policy.
“The lower GDP growth [in the first quarter] means that larger fiscal and monetary policy easing will be needed,” Liu said. “The larger-than-expected fiscal and monetary policy stimulus will help make meeting the targets for 2020 less challenging.”
MEXICO CITY, Nov. 12 (Xinhua) — China and Latin America sit on the opposite sides of the globe, but the formidably vast Pacific Ocean that separates them did not stop them from sharing a long history of exchanges.
Today, the major developing country in the East is forging an increasingly close partnership with the dynamic region in the Western Hemisphere, especially since Chinese President Xi Jinping took office in 2013, and set into motion what is now known as Xiplomacy.
In the past six years, Xi has visited 11 Latin American and the Caribbean (LAC) countries. On Tuesday, he is setting foot on the region for the fifth time as president, as he arrives in Brazil for the upcoming 11th BRICS summit.
Thanks in no small part to Xi’s push, the time-honored, distance-defying China-Latin America relationship is flourishing with new vitality. China has become the second largest trading partner of Latin America, while the latter is one of the fastest growing sources of exports to China. Two-way trade rose 18.9 percent year on year to 307.4 billion U.S. dollars in 2018.
GRAND VISION
Every time Xi visited Latin America, he reaffirmed China’s commitment to cementing bilateral friendship and expanding win-win cooperation.
His first trip to the region as head of state, in 2013, took him to Trinidad and Tobago, Costa Rica and Mexico. The following year saw him travel to Brazil, Argentina, Venezuela and Cuba.
It was in Brazil that Xi met with leaders from 11 LAC countries, and for the first time laid out his grand vision for building a China-Latin American community with a shared future.
“Let us seize the opportunities presented to us and work together to blaze new trails in building a community of shared destiny for common progress and usher in a bright future for the relations between China and Latin America and the Caribbean,” Xi said in a keynote speech at the first ever China-Latin American and Carribean Countries Leaders’ Meeting in 2014.
He then proposed a “1+3+6” cooperation framework to “promote faster, broader and deeper cooperation between the two sides for real results.”
The “1” refers to “one plan,” the Chinese-Latin American and Caribbean Cooperation Plan (2015-2019), formulated to promote inclusive growth and sustainable development.
The “3” alludes to “three engines” for driving practical cooperation for comprehensive development, namely trade, investment and financial cooperation.
The “6” means the six priority cooperation fields of energy and resources, infrastructure building, agriculture, manufacturing, scientific and technological innovation, and information technologies.
In 2016, Xi visited Ecuador, Peru and Chile. Two years later, he traveled to Argentina for the Group of 20 summit as well as Panama, a Central American country which established diplomatic ties with China in June 2017.
In a landmark speech at the Peruvian Congress in Lima in 2016, Xi expounded the significance of strengthening China-Latin America cooperation.
“With one fifth of the world’s total area and nearly one third of the world’s population, China and Latin America and the Caribbean are crucial forces for world peace and stability,” he said.
China, he added, “will increase sharing of governance experience and improve planning and coordination of macro policies with Latin American and Caribbean states to better synergize our development plans and strategies.”
Besides top-level engagement, Xi also reaches out to local people from all walks of life, in order to keep cementing the China-Latin America friendship and the public support for bilateral cooperation.
While in Costa Rica, Xi visited a family-run coffee plantation and tried some local brew. “I think some more coffee can well be exported to China,” Xi told his hosts with a smile.
Today, Costa Rica exports coffee to the Asian market, along with pork, dairy, pineapples and other high-quality agricultural goods, especially after the inauguration of the China International Import Expo in 2018.
NEW OPPORTUNITIES
With international cooperation within the framework of the Belt and Road Initiative (BRI) gaining steam worldwide, the Xi-proposed vision is creating new opportunities for China-Latin America cooperation.
The BRI, designed to promote common development along and beyond the ancient Silk Road trade routes, comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and the latter is closely connected to Latin America.
For two and a half centuries, from the mid-1500s to the early 1800s, galleons laden with Chinese silk, spices, porcelain and other goods sailed across the ocean to today’s port city of Acapulco on the Mexican Pacific coast.
Latin America is the natural extension of the 21st Century Maritime Silk Road, Xi said in a meeting with visiting Argentine President Mauricio Macri in May 2017.
In a congratulatory message to the second Ministerial Meeting of the China-Community of Latin American and Caribbean States (CELAC) Forum held in Chile on Jan. 22, 2018, Xi stressed that China and LAC countries “need to draw a new blueprint for our joint effort under the Belt and Road Initiative and open a path of cooperation across the Pacific Ocean that will better connect the richly endowed lands of China and Latin America and usher in a new era of China-LAC relations.”
During Xi’s visits, the Chinese president is always dedicated to better aligning the BRI — an open platform for cooperation — with the development plans of LAC countries.
In his meeting with Macri, Xi called for dovetailing the BRI with Argentina’s development strategy, expanding cooperation in such sectors as infrastructure, energy, agriculture, mining and manufacturing, and implementing existing major cooperation projects in hydro-power, railway and other fields.
Similarly, during the state visit to Panama in December 2018, Xi said the National Logistics Strategy of Panama 2030 and the BRI are highly compatible, calling on the two sides to synergize their respective development strategies, boost cooperation and promote connectivity.
So far, 19 LAC countries have signed BRI cooperation agreements with China. China-Latin America cooperation in various areas has effectively promoted local economic and social development, bringing visible and tangible benefits to the Latin American people.
Just as Xi said in his speech at the Peruvian Congress in 2016, “China will share its development experience and opportunities with the rest of the world and welcome other countries to board the express train of its development, so that we can all develop together.”
NEW DELHI (Reuters) – India is set to impose a nationwide ban on plastic bags, cups and straws on Oct. 2, officials said, in its most sweeping measure yet to stamp out single-use plastics from cities and villages that rank among the world’s most polluted.
Prime Minister Narendra Modi, who is leading efforts to scrap such plastics by 2022, is set to launch the campaign with a ban on as many as six items on Oct. 2, the birth anniversary of independence leader Mahatma Gandhi, two officials said.
These include plastic bags, cups, plates, small bottles, straws and certain types of sachets, said the officials, who asked not to be identified, in line with government policy.
“The ban will be comprehensive and will cover manufacturing, usage and import of such items,” one official said.
India’s environment and housing ministries, the two main ministries leading the drive, did not respond to emails from Reuters to seek comment.
In an Independence Day speech on Aug. 15, Modi had urged people and government agencies to “take the first big step” on Oct. 2 towards freeing India of single-use plastic.
Concerns are growing worldwide about plastic pollution, with a particular focus on the oceans, where nearly 50% of single-use plastic products end up, killing marine life and entering the human food chain, studies show.
The European Union plans to ban single-use plastic items such as straws, forks, knives and cotton buds by 2021.
China’s commercial hub of Shanghai is gradually reining in use of single-use plastics in catering, and its island province of Hainan has already vowed to completely eliminate single-use plastic by 2025.
India lacks an organized system for management of plastic waste, leading to widespread littering across its towns and cities.
The ban on the first six items of single-use plastics will clip 5% to 10% from India’s annual consumption of about 14 million tonnes of plastic, the first official said.
Penalties for violations of the ban will probably take effect after an initial six-month period to allow people time to adopt alternatives, officials said.
Some Indian states have already outlawed polythene bags.
The federal government also plans tougher environmental standards for plastic products and will insist on the use of recyclable plastic only, the first source said.
It will also ask e-commerce companies to cut back on plastic packaging that makes up nearly 40% of India’s annual plastic consumption, officials say.
Cheap smartphones and a surge in the number of internet users have boosted orders for e-commerce companies, such as Amazon.com Inc (AMZN.O) and Walmart Inc’s (WMT.N) Flipkart, which wrap their wares – from books and medicines to cigarettes and cosmetics – in plastic, pushing up consumption.
The Chief Economic Adviser, K Subramanian, disagreed with the idea of industry-specific incentives and argued for structural reforms in land and labour markets. Members of Prime Minister Narendra Modi’s economic advisory council sound inchoate, resorting to social media and opinion editorials to counter one another.
In essence, the quibble among the members of the economic team of Mr Modi and his government is not about whether India is facing an economic slowdown or not, but about how grave the current economic crisis is.
To put all this in context, it was less than just two years ago, in November 2017, that the global ratings agency Moody’s upgraded India’s sovereign ratings – an independent assessment of the creditworthiness of a country – for the first time in 14 years.
Image copyrightGETTY IMAGESImage captionSales of cars and SUVs have slumped to a seven-year low
Justifying the upgrade, Moody’s had then argued that the economy was undergoing dramatic “structural” reforms under Mr Modi.
In the two years since, Moody’s has downgraded its 2019 GDP growth forecast for India thrice – from 7.5% to 7.4% to 6.8% to 6.2%.
The immediate questions that arise now are: is India’s economic condition really that grim and, if yes, how did it deteriorate so rapidly?
To make matters worse, Finance Minister Nirmala Sitharaman presented her first budget recently with some ominous tax proposals that threatened foreign capital flows and dented investor confidence. It sparked criticism and Ms Sitharaman was forced to roll back many of her proposals.
Image copyright GETTY IMAGESImage caption In 2016, India withdrew 85% of all currency notes from the economy
So, it is indeed true that India is facing a sharp economic downturn and severe loss of business confidence.
The alarm over the economic condition is not merely a reflection of a slowdown in GDP growth but also the poor quality of growth.
Private sector investment, the mainstay of sustainable growth in any economy, is at a 15-year low.
In other words, there is almost no investment in new projects by the private sector. The situation is so bad that many Indian industrialists have complained loudly about the state of the economy, the distrust of the government towards businesses and harassment by tax authorities.
But India’s economic slowdown is neither sudden nor a surprise.
Behind the fawning headlines in the press over the past five years about the robustness of India’s growth was a vulnerable economy, straddled with massive bad loans in the financial sector, disguised further by a macroeconomic bonanza from low global oil prices.
India’s largest import is oil and the fortuitous decline in oil prices between 2014 and 2016 added a full percentage point to headline GDP growth, masking the real problems. Confusing luck with skill, the government was callous about fixing the choked financial system.
Media caption What is really happening with India’s economy?
This move destroyed supply chains and impacted agriculture, construction and manufacturing that together account for three-quarters of all employment in the country.
Before the economy could recover from the currency ban shock, the government enacted a transition to a new indirect taxation system of the Goods and Services Tax (GST) in 2017. The GST rollout wasn’t smooth and many small businesses initially struggled to understand it.
Such massive external shocks to the economy, coupled with a reversal in low oil prices, dealt the final blow to the economy. Millions of Indians started to lose their jobs and rural wages remained stagnant. This, in turn, impacted consumption, slowing down the economy sharply.
Not easy
The wobbly state of the economy has also thrown government finances in disarray: tax revenues are much below expectations.
On Monday, the government got a much-needed breather when India’s central bank announced a $24bn (£19bn) one-time payout for the cash-starved government. (This amount is more than the dividend paid by the central bank to the government in all five years of the Congress rule between 2009 and 2014.)
The solutions to the economic crisis are not easy.
Indian industry, fed and fattened with government protection through decades, is once again clamouring for tax cuts and financial incentives.
But it is not clear that such benefits will revive private sector investment and domestic consumption immediately.
For all the hype about the Make in India programme, hailed as the harbinger of the country’s emergence as a manufacturing power, India’s dependence on China for goods has only doubled in the past five years.
India today imports from China the equivalent of 6,000 rupees ($83; £68) worth of goods for every Indian, which has doubled from 3,000 rupees in 2014.
So, India is neither making goods for itself nor for the world.
Image copyright AFPImage caption India’s agrarian crisis is a major stumbling block
Ornamental tax and other fiscal incentives to specific industries are not suddenly going to make Indian manufacturers competitive and stop India’s addiction for affordable Chinese goods. If any, the trade spat between China and the United States only saw countries such as Vietnam and Bangladesh benefit and not India.
More currency or trade tariffs are not the solutions either. The central bank has lowered interest rates and there is some push to lowering the cost of capital for industry. But again, Indian industry will invest more only when demand for goods and services increases. And demand will increase only when wages increase, or there is money in the hands of people.
So, the only immediate solution for India seems to be to boost consumption through a stimulus given directly to people, in the classical Keynesian mould.
Of course, such a stimulus should be combined with reforms to boost business morale and confidence.
In sum, India’s economic picture is not pretty.
It is important for India’s political leadership to see this not-so-pretty picture and not hide behind rose tinted glasses. Prime Minister Modi has a unique electoral mandate to embark on bold moves to truly transform the economy and pull India out of the woods.
BEIJING (Reuters) – China’s manufacturing sector unexpectedly returned to growth for the first time in four months in March, in a sign that government stimulus measures may be slowly gaining traction, a private business survey showed on Monday.
But growth in new domestic and exports orders was marginal, suggesting the economy will remain under pressure in coming months and will likely require more policy support before it can convincingly stabilize.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) expanded at the strongest pace in eight months in March, rising to 50.8 from 49.9 in February, above the neutral 50-mark dividing expansion from contraction on a monthly basis and the highest level seen since July 2018.
Economists polled by Reuters had forecast the reading for March would stay unchanged at 49.9. The surprise expansion seen in the Caixin survey echoed that seen in the official PMI released on Sunday, which also showed factory activity defying expectations for another contraction in March.
“With a more relaxed financing environment, government efforts to bail out the private sector and positive progress in Sino-U.S. trade talks, the situation across the manufacturing sector recovered in March,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a commentary accompanying the data release.
China has made proposals in talks with the United States on a range of issues that go further than it has before, including on forced technology transfer, as the two sides work to overcome obstacles to a deal to end their protracted trade war, U.S. officials told Reuters on Wednesday.
But sources close to the talks have stressed that a deal is by no means certain, and tit-for-tat tariffs on both sides have remained in place.
Zhang noted the employment situation improved significantly in March, a trend that may ease some government and investor concerns after the unemployment rate in urban areas for February rose to the highest since early 2017.
Caixin’s findings showed factories added headcount in March for the first time in 65 months, arresting a relentless spell of job shedding since October 2013. Some firms were hiring to support higher production and new business development, the release said.
New orders — an indicator of future activity — increased for the second month running, though the pace of growth was marginal. Output also grew for the second straight month.
New export orders expanded after contracting in the previous month. Though the rate of increase was fractional, Caixin said the broad trend appeared to have steadied in the first quarter.
Chinese manufacturers also signaled an improvement in pricing power in March, which could ease pressure on profit margins. Output charges edged up into expansionary territory and outpaced growth in input prices, reflecting reduced pressure from raw material costs.
“The producer price index might have risen faster year-on-year in March, and increased month-on-month, compared with a monthly decline in February,” Zhong added.
Optimism among businesses edged up to a 10-month high partly on expectations that market conditions, both at home and abroad, will improve, the statement said.
But purchasing activity declined for the third straight month, suggesting some firms remain cautious.
Economists at Nomura have forecast that China’s industrial production growth will moderate again in April and May after a brief rebound in March mainly due to last year’s low base.
Issue a key demand made by US President Donald Trump as part of the ongoing US-China trade war
China expected to pass new foreign investment law next week during National People’s Congress
26 Feb 2019
Foreign direct investment in China amounted to US$135 billion in 2018, an increase of 3 per cent from a year earlier, according to Chinese government data. Photo: EPA
Beijing will make it illegal to force foreign investors to transfer their technology to Chinese partners while also lowering market barriers for foreign firms to enter the domestic market, a senior economic planning official said on Wednesday, highlighting an effort to lure overseas investment inflows.
China is expected to pass a new law next week intended to protect the interests of foreign investors, both as a response to demands from the United States that have formed part of the ongoing trade war negotiations, and to help shore up economic growth, which slowed last year to its lowest rate in 28 years.
Foreign investors will be allowed to set up ventures in which they have full ownership, instead of being forced into joint ventures with local partners, in more industries, said Ning Jizhe, a vice-chairman of the National Development and Reform Commission, in Beijing on Wednesday during the National People’s Congress.
In addition, China will set up a special task force to facilitate “key” projects like electric-car maker Tesla’s new factory in Shanghai or BASF’s new chemical complex in Guangdong, both of which are solely owned by the foreign company.
China’s leadership has listed foreign investment as one of the six areas that it must “stabilise” in 2019, along with employment, growth, trade, domestic investment and market expectations.
Foreign direct investment in China amounted to US$135 billion in 2018, an increase of 3 per cent from a year earlier, according to Chinese government data.
But foreign investment into the world’s second biggest economy have slowed over last decade, which could deprive China of access to advanced technologies and marginalise the country in the development of future global supply chains.
Beijing is trying to lure more foreign capital and technology to support its plan to upgrade its manufacturing industries and boost the development of new, hi-tech sectors.
“China will roll out more opening-up measures in the agriculture, mining, manufacturing and service sectors, allowing wholly foreign-owned enterprises in more fields,” Ning said.
China law to protect intellectual property, ban forced tech transfer
Since December, China has been rushing to draft legislation for a new foreign investment law, a key clause of which prohibits local government’s from forcing transfer of technology in return for being allowed to conduct business in their jurisdictions.
The National People’s Congress is expected to endorse the new
“After passing the law, the government will take serious measures to obey and implement it,” Ning added.
He said that China will remove market entry restrictions for foreign investors to ensure that domestic and foreign firms “are treated as equals.”
Ning Jizhe, a vice-chairman of the National Development and Reform Commission. Photo: EPA
However, the jury is still out whether Beijing’s promises of fair treatment, market access and protection for intellectual property rights will be enough to generate a steady inflow of hi-tech investment.
The US has long complained that China has been unwilling to implement previous commitments under the World Trade Organisation to open up its market – allegation Beijing denies.
Shen Jianguang, chief economist at JD Digits, an arm of Chinese e-commerce firm JD.com, said restrictions on foreign investment will exist in China despite the government’s promises.
China’s domestic market remains large and attractive for some foreign investors, he said.
“Foreign investors are still very interested in the Chinese market, if the openness of the economy is sufficient,” Shen added.
Image captionSneh, 22, attended the awards ceremony where the film won an Oscar
A film based on young women in an Indian village who make sanitary pads has won an Oscar for best documentary short. The BBC’s Geeta Pandey met with the women in their village before the ceremony.
Sneh was 15 when she started menstruating. The first time she bled, she had no idea what was happening to her.
“I was very scared. I thought I was sick with something very serious and began crying,” she told me when I visited her home in Kathikhera village not far from Delhi earlier this week.
“I didn’t have the courage to tell my mother so I confided in my aunt. She said: ‘You’re a grown woman now, don’t cry, it’s normal.’ It was her who told my mother.”
Sneh, now 22, has travelled a long way from that point. She works in a small factory in her village that makes sanitary pads and is the protagonist of Period. End of Sentence., a documentary that has been nominated for an Oscar. She will be attending Sunday’s ceremony in Los Angeles.
The film came about after a student group in North Hollywood used crowdfunding to send a pad-making machine – and Iranian-American filmmaker Rayka Zehtabchi – to Sneh’s village.
Just 115km (71 miles) from Delhi, Kathikhera village in Hapur district is a world far removed from the glitzy malls and high-rises of the Indian capital. Normally, it’s a two-and-a-half-hour drive from Delhi, but construction work on the highway slows it down to four hours for us. And the final 7.5km drive to the village from Hapur town is a crawl, on narrow winding roads lined with open drains on both sides.
The documentary is filmed in the farms and fields – and classrooms – of Kathikhera. Like in the rest of India, periods are a taboo topic; menstruating women are considered impure and barred from entering religious places and often excluded from social events too.
Image captionSneh says that previously, menstruation was not discussed – even among girls
With so much stigma surrounding the issue, it’s no surprise that Sneh had never heard of periods before she started getting them herself.
“It was not a topic that was discussed – even among girls,” she says.
But things began to change when Action India, a charity that works on reproductive health issues, set up a sanitary napkin manufacturing unit in Kathikhera.
Image captionThe women employees work from 9-5 six days a weekImage captionA pack is priced at 30 rupees ($0.40; £0.30)
In January 2017, Sneh was asked by Suman, a neighbour who works with Action India, if she wanted to work in the factory.
A college graduate who dreams of working for the Delhi police one day, Sneh says she was excited. After all, there were “no other job opportunities” in the village.
“When I sought my mum’s permission, she said, ‘ask your father’. In our families, all important decisions are taken by men.”
She was too embarrassed to tell her father that she was going to be making pads so she told him that she would be making children’s diapers.
“It was two months into the job that mum told him that I was making pads,” she laughs. Much to her relief, he said, “That’s alright, work is work.”
Today, the unit employs seven women, between 18 and 31 years of age. They work from 9-5, six days a week and are paid a monthly salary of 2,500 rupees ($35; £27). The centre produces 600 pads a day and they are sold under the brand name Fly.
Image captionThe centre produces 600 pads a dayImage captionMost women in the village used to use old clothes when they got their periods, now 70% use pads“The biggest problem we face is power cuts. Sometimes we have to come back at night to work when the power is back to meet the targets,” Sneh says.
This little business, run from two rooms in a village home, has helped improve feminine hygiene. Until it was set up most women in the village were using pieces of cloth cut out from old saris or bedsheets when they had their period, now 70% use pads.
It’s also de-stigmatised menstruation and changed attitudes in a conservative society in ways that were unimaginable just a couple of years ago.
Sneh says menstruation is now discussed openly among women. But, she says, it’s not been an easy ride.
“It was difficult at the start. I had to help my mother with housework, I had to study and do this job. Sometimes during my exams, when the pressure became too much, my mother went to work instead of me,” she says.
Her father, Rajendra Singh Tanwar, says he is “very proud” of his daughter. “If her work benefits the society, especially women, then I feel happy about it.”
Image captionRajendra Singh Tanwar says he’s proud of what Sneh (left) has doneImage captionSushma Devi’s husband does not want her to work there – but she won’t give it up
Initially, the women faced objections from some villagers who were suspicious about what was happening at the factory. And once the film crew arrived, there were questions about what they were doing.
And some, like 31-year-old Sushma Devi, still have to fight daily battles at home.
The mother-of-two says her husband agreed to let her work only after Sneh’s mother spoke to him. He also insisted that she finish all the housework before going to the factory.
“So I wake up at 05:00, clean the house, do the laundry, feed the buffaloes, make dung cakes which we use as cooking fuel, bathe, and make breakfast and lunch before I step out. In the evening, I cook dinner once I get back.”
But her husband is still unhappy with the arrangement. “He often gets angry with me. He says there’s enough work at home, why do you have to go out to work? My neighbours too say it’s not a good job, they also say the salary is low.”
Two of Sushma’s neighbours had worked at the factory too, but left after a few months. Sushma has no intention of doing the same: “Even if my husband beats me up, I will not give up my job. I enjoy working here.”
Image captionAction India, a charity that works on reproductive health issues, set up the manufacturing unit two years ago
In the documentary, Sushma is heard saying she’d spent some of her earnings to buy clothes for her younger brother. “If I’d known this was going to go to Oscars, I would have said something more intelligent,” she says, laughing.
For Sushma, Sneh and their fellow workers, the Oscar nomination has come as a big boost. The film, which is available on Netflix, is nominated in the Best Short Documentary category.
As Sneh prepares to leave for Los Angeles, her neighbours are appreciative of the “prestige and fame” she has brought the village.
“No-one from Kathikhera has ever travelled abroad so I’ll be the first one to do so,” she says. “I’m now recognised and respected in the village, people say they are proud of me.”
Sneh says she had heard of Oscars and knew they were the biggest cinema awards in the world. But she had never watched a ceremony, and certainly didn’t think that one day she would be on the red carpet.
“I never thought I would go to America. Even now I can’t fully process what’s happening. For me, the nomination itself is an award. It’s a dream that I’m dreaming with my eyes open.”
India’s ambitious plan to push electric vehicles at the expense of other technologies could benefit Chinese car makers seeking to enter the market, but is worrying established automakers in the country who have so far focused on making hybrid models.
India’s most influential government think-tank unveiled a policy blueprint this month aimed at electrifying all vehicles in the country by 2032, in a move that is catching the attention of car makers that are already investing in electric technology in China such as BYD and SAIC.
The May 12 report by Niti Aayog, the planning body headed by Prime Minister Narendra Modi, recommends lower taxes and loan interest rates on electric vehicles while capping sales of petrol and diesel cars, seen as a radical shift in policy.
India also plans to impose higher taxes on hybrid vehicles compared with electric, under a new unified tax regime set to come into effect from July 1, upsetting car makers like Maruti Suzuki and Toyota Motor.
The prospect of India aggressively promoting electric vehicles was a “big opportunity”, a source close to SAIC, China’s biggest automaker, told Reuters.
“For a newcomer, this is a good chance to establish a modern, innovative brand image,” the source said, although they added the company would need more clarity on policy before deciding whether to launch electric vehicles in India.
Earlier this year SAIC set up a local unit called MG Motor which is finalising plans to buy a car manufacturing plant in western India. A spokesman at SAIC did not comment specifically on the company’s India plans.
Warren Buffett-backed BYD already builds electric buses in the country, while rival Chongqing Changan has said it may enter India by 2020.
BYD said in a statement the company would have “a lot more confidence” to engage in the Indian market if the government supported the proposed policy. The company said it would look at increasing its investment in India but did not give details on how it would expand its business and market share.
HIGH COSTS
While the Niti Aayog report has not yet been formally adopted, government sources have said it was likely to form the basis of a new green cars policy.
If so, India would be following similar moves by China, which has been aggressively pushing clean vehicle technologies. But emulating China’s success could be tough.Electric vehicles are expensive due to high battery costs, and car makers say a lack of charging stations in India could make the whole proposition unviable.
The proposed policy focuses on electric vehicles, and is likely to also include plug-in hybrids. But it overlooks conventional hybrid models already sold in India, such as Toyota’s Camry sedan, Honda Motor’s Accord sedan and so-called mild hybrids built by Maruti Suzuki.
Hybrids combine fossil fuel and electric power, with mild hybrids making less use of the latter.
In doubling down on electric power India would be shifting away from its previous policy, announced in 2015, that supported hybrid and electric technology.
That could delay investments in India, expected to be the world’s third-largest passenger car market within the next decade, according to industry executives and analysts.
“All these policy changes will affect future products and investments,” said Puneet Gupta, South Asia manager at consultant IHS Markit, adding that most car makers would need to rethink product launches, especially of hybrids.
ECONOMIC GAP
Mahindra & Mahindra is the only electric car maker in India but has struggled to ramp up sales, blaming low buyer interest and insufficient infrastructure.
Pawan Goenka, managing director at Mahindra said the company was working with the government and other private players to set up charging stations in India. Mahindra was also focusing on developing electric fleet cars and taxis, Goenka said.
The cost of setting up a car charging station in India ranges from $500 to $25,000, depending on the charging speed, according to a 2016 report by online journal IOPscience.
While the proposed policy suggests setting up battery swapping stations and using tax revenues from sales of petrol and diesel vehicles to set up charging stations, it does not specify the investment needed or whether the government would contribute.
“For full electric vehicles, the economic gap remains huge and the charging infrastructure needed does not exist,” said a spokesman at Tata Motors. The company makes electric buses and is working on developing electric and hybrid cars.
DELAYED PLANS
Most automakers have focused on bringing in hybrid models that are seen as a stepping stone to electrification. Toyota recently launched its luxury hybrid brand Prius in India, while Hyundai Motor plans to debut its Ioniq hybrid sedan next year.
Maruti’s parent Suzuki Motor, along with Toshiba and Denso, plans to invest 20 billion yen ($180 million) to set up a lithium ion battery plant in India which would support Maruti’s plan to build more hybrids.
But the apparent sharp shift in policymakers’ thinking in favor of electrification is forcing automakers like Toyota and Nissan Motor to seek more clarity before finalising future products for India, while Hyundai may delay new launches.
Toyota, the world’s No. 2 carmaker by sales, had planned to have a hybrid variant for all its vehicles in India, but the company’s future launches would now depend on the new policy, said Shekar Viswanathan, vice chairman of its Indian subsidiary.
Nissan, which plans to launch a hybrid SUV later this year, said in a statement it was waiting for more clarity before deciding whether to bring electric cars to India.
A plan by Hyundai to launch at least three hybrid cars in India in 2019-2020 would likely to be delayed, said a source.
Hyundai did not comment on queries related to delays.
“If the government will be aggressive on electric vehicles and not support other technologies, companies will need to rethink investments,” said an executive with an Asian carmaker.
India on Saturday finalised a policy that would allow local private companies to work with foreign players to make high-tech defence equipment, in a boost to Prime Minister Narendra Modi’s bid to cut reliance on imports.
The policy, whose finer details are still to be formalised, will initially allow the entry of private companies into the manufacture of submarines, fighter aircrafts and armoured vehicles through foreign partnerships, a statement issued by the Defence Ministry said.”In future, additional segments will be added,” the statement said.
Industry experts have said that delays in finalising procurement policies have undermined India’s efforts to get local, largely inexperienced, companies to tie up with foreign manufacturers, a necessary step if domestic firms are to utilise the latest technology.
Prime Minister Modi has vowed to reverse India’s dependence on imports by building a local manufacturing industry. The government is forecast to spend $250 billion on modernisation of its armed forces over the next decade.The policy, announced on Saturday, would allow Indian companies to partner with global defence majors “to seek technology transfers and manufacturing know-how to set up domestic manufacturing infrastructure and supply chains,” the statement said.
Foreign manufacturers such as Lockheed Martin, Boeing, BAE Systems and Saab are looking to India as one of the biggest sources of future growth.
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