Archive for ‘Economics’

18/08/2014

Drought in Northeast China Is the Worst in 63 Years – Businessweek

Southern China is a rice-growing region, while the northeast is the country’s wheat and corn-growing “bread basket.” This summer the northern province of Liaoning is suffering the worst drought in 63 years, according to the local meteorological bureau: The province has seen the lowest precipitation since the government began keeping records in 1951. The dry summer threatens immediate drinking water supplies and autumn harvests.

A farmer stands at the bottom of the Zhifang Reservoir, near Dengfeng, China

The agricultural research service Shanghai JC Intelligence predicts that China’s corn yields may drop 1.5 percent this year, which could drive up domestic corn prices and compel farmers to use alternative grains for animal feed.

(China also imports from the U.S., but since last fall, Chinese inspectors have rejected an increasing number of shipments found to contain unapproved genetically modified organisms (GMO) varieties.)

Other regions have also suffered under the drought, including the northern provinces of Inner Mongolia and Jilin, and central Henan province. In Inner Mongolia, 300,000 people have faced drinking-water shortages, according to state-run Xinhua newswire. More than 270,000cattle have also gone without water. Xinhua reported economic losses to the poor northwestern province total $37 million so far.

Harvests of soybean and barley may also be hurt by the drought, as well as livestock health.

via Drought in Northeast China Is the Worst in 63 Years – Businessweek.

18/08/2014

Modi Sends India’s Soviet-Inspired Planning Commission Packing – India Real Time – WSJ

India’s prime minister used his inaugural Independence Day speech last Friday to cut off an arm of the country’s government that dates back nearly all the way to independence: the powerful, unloved and sometimes irrelevant-seeming Planning Commission.

The body was the creation of Jawaharlal Nehru, India’s first prime minister, who took from the experience of Japan and the Soviet Union the lesson that late-industrializing countries needed to use state intervention to transform their economies from the “commanding heights.” In the words of the 1950 cabinet resolution that created the commission: “The need for comprehensive planning based on a careful appraisal of resources and on an objective analysis of all the relevant economic factors has become imperative.”

Narendra Modi said on Friday that India could do better. The new prime minister said circumstances had changed since the commission’s creation. He said the federal government wasn’t the only driver of economic growth, and that state governments needed to be empowered to innovate. He promised the creation of a new institution that would serve as a platform for exchanging economic-policy ideas within government.

The announcement wasn’t unforeseen. The prime minister serves ex officio as the Planning Commission’s chairman. But Mr. Modi had spent his first months in office leaving the commission’s other full-time seats conspicuously unfilled. As a former chief minister of the western state of Gujarat, Mr. Modi was said at the time of his election this spring to have a strong interest in giving state governments more space to set budget priorities.

Killing the Planning Commission won’t entirely decentralize government spending in India. Federal tax revenue, according to the country’s constitution, is first distributed between the central and state governments by the Finance Commission. The Planning Commission then allocates spending to states along lines laid out in its Five-Year Plan for the economy.

That’s how it’s supposed to work, at least. Critics have accused the Planning Commission of gradually usurping the Finance Commission’s role as chief arbiter between the federal and state governments, all in the service of Five-Year Plans that are meticulously crafted but rarely achieved. The current plan, which covers 2012 to 2017, runs to three volumes and more than 1,000 pages. It covers all and sundry from boosting the manufacturing sector and increasing female literacy to promoting sports medicine and modernizing the powerloom sector.

The Five-Year Plans pervade policy making in India, at least in name if not always in effect. All federal expenditure is classified as either “plan” or “non-plan,” depending on whether it is undertaken in pursuit of the current Five-Year Plan. The Planning Commission occupies a monolithic grayish structure in New Delhi—Yojana Bhawan, or “Planning House”—just down the road from Parliament.

via Modi Sends India’s Soviet-Inspired Planning Commission Packing – India Real Time – WSJ.

15/08/2014

Online sites shake up hidebound retailing in India – Businessweek

Finding a way into India’s vast but vexing market has long frustrated foreign retailers. Now, overseas investors are pouring billions of dollars into e-commerce ventures that are circumventing the barriers holding back retail powers such as Wal-Mart and Ikea.

Some investors see India as the world’s next big e-commerce opportunity, with the upcoming mammoth public stock offering of Chinese online giant Alibaba hinting at the potential.

Online shopping is still in its infancy in India at $2.3 billion of an overall $421 billion retail market in 2013, according to research firm Crisil. But it is growing fast and the potential of reaching a mostly untapped market of 1.2 billion people has sparked a funding-and-expansion arms race.

Flipkart, a Bangalore-based company founded in 2007 by two former Amazon employees, last month announced it had raised $1 billion in mostly foreign capital after building its registered users to 22 million.

A day later, Amazon raised the stakes with founder Jeff Bezos saying the company would pour $2 billion into developing its India business.

Snapdeal.com, another Indian e-commerce contender, has raised at least $234 million in the past year, and recently local media have reported that Rajan Tata of India’s Tata Group conglomerate is considering a personal investment in the company.

via Online sites shake up hidebound retailing in India – Businessweek.

15/08/2014

Modi Targets Bureaucrats, Manufacturing and Toilets in Independence-Day Speech – India Real Time – WSJ

In his first Independence Day speech Friday, Indian Prime Minister Narendra Modi listed the issues he plans to focus on as the leader of the world’s largest democracy: bickering bureaucrats, women’s rights, manufacturing jobs, trash and toilets.

“You might say Independence Day is an opportunity to talk about big ideas and make big declarations. But sometimes, when these declarations are not fulfilled, they plunge society into disappointment,”said Mr. Modi, who is the South Asian nation’s first prime minister born after India gained independence from Britain 67 years ago. “That’s why I’m talking about things we can achieve in our time.”

Mr. Modi’s Bharatiya Janata Party was propelled to power by Indians who, hungry for better jobs and a higher standard of living, grew frustrated with slowing growth under the previous Congress-led government. Since coming to power in May, Mr. Modi has made some cautious policy moves, disappointing some of his supporters who had expected immediate and bold change from his administration.

Addressing the nation from the ramparts of New Delhi’s regal Red Fort Friday, Mr. Modi said he plans to set the government in order and stop bureaucratic squabbling, underlining his focus on administrative processes rather than economic overhauls. As “an outsider” to New Delhi, he said, he has been shocked since taking office to find that “there were dozens of governments inside the government,” each with “its own fiefdom.”

“Departments are fighting each other, suing each other in the Supreme Court,” Mr. Modi said. “How can they move the country forward?”

In his nearly hour-long speech delivered largely in Hindi, Mr. Modi reiterated his focus on making India a global manufacturing hub and export powerhouse.

Offering a new slogan in English, “Come, make in India,” Mr. Modi invited the world to come to India to manufacture.

“Sell anywhere in the world but make it here,” he said. “Electricals to electronics, chemicals to pharmaceuticals, automobiles to agro-products, paper or plastic, satellites or submarines — Come, make in India.”

Mr. Modi questioned why India needs to import “every little thing,” and urged the country’s youth to open factories and export goods.

Manufacturing makes up only around 15% of India’s gross domestic product as most of its rapid expansion over the last decades has come from the service sector. During spring elections the BJP said it planned to create millions of new jobs if elected. Economists say one of the best ways India can generate employment is through exports.

While India’s labor costs are among the lowest in the world, it has consistently failed to become an export powerhouse like China and Asia’s other largest economies.

Prime Minister Modi also announced initiatives aimed at modernizing India: a nationwide drive for cleanliness that would boost tourism, a program for parliamentarians to transform villages, one by one, into “model villages,” encouraging politicians and companies to build more toilets so people don’t have to use the outdoors and a push to open bank accounts for all Indians.

Mr. Modi also used his speech to address an issue the new opposition has been demanding discussion on: religious violence. A Hindu nationalist leader accused of not doing enough to stop communal violence in the state of Gujarat in 2002 when he was chief minister there, Mr. Modi Friday urged Indians to stop communal fighting. Just this week, opposition parties accused the BJP of polarizing Indians on religious lines and analysts have blamed Mr. Modi of not addressing recent tensions.

“Who benefits from this poison of communalism? It is an impediment to growth,” Mr. Modi said. “Let us choose peace instead and see how it propels our nation forward.”

via Modi Targets Bureaucrats, Manufacturing and Toilets in Independence-Day Speech – India Real Time – WSJ.

14/08/2014

Chinese Buyers Are Driving a Boom in Australian Real Estate – China Real Time Report – WSJ

Australian house prices are rising quickly and demand from China is increasingly driving the boom, according to a report by Hong Kong-based brokerage CLSA.

The report, based on interviews with 50 industry participants in Australia, including major realtors, finds Chinese are now “driving the residential property market Down Under” adding that the “phenomenal investment” will continue for at least three more years.

CLSA says China is now the top source of foreign-capital investment in Australian real estate and anecdotal evidence indicates that foreign investment from China has continued to increase in 2014, having slowly accelerated over the last 5 years. The stock brokerage did not attempt to put a value on the investment.

CLSA said good education and a clean environment were driving demand from China.

“Australia offers both and we see no reason why its fundamental appeal will diminish,” it added.

There are currently only limited curbs on foreign buying of Australian property. Any newly built Australian property can be bought by foreigners . The purchase of existing properties needs the approval of Australia’s Foreign Investment Review Board.

Government data this week showed house prices nationally grew by 10% in the year-to-June 30, with Sydney prices racing at 15% over the same period.

The issue of Chinese investment in Australian housing investment has prompted concern among Australians about the potential to be frozen out of the housing market, especially the highly desirable inner city markets of Sydney and Melbourne.

A government investigation into the issue of foreign investment in Australian property is underway and will report its recommendations in October.  One of the limitations of the debate over the issue is that there is not reliable data on how much money is coming into property from overseas.

Australia’s central bank has been watching the rise in house prices but has so far downplayed the role Chinese money has had on prices growth. If house prices continue to climb, the reserve Bank of Australia might have to raise interest rates at a time when the economy is weak and unemployment at more than decade highs.

via Chinese Buyers Are Driving a Boom in Australian Real Estate – China Real Time Report – WSJ.

13/08/2014

Beijing cuts coal use by 7 percent in first half of year – China – Chinadaily.com.cn

Beijing cut coal consumption by 7 percent in the first half of 2014 as part of its efforts to tackle smog, the city’s environmental protection bureau said.

Beijing cuts coal use by 7 percent in first half of year

Beijing is at the front line of a “war on pollution” declared by the central government earlier this year in a bid to head off public unrest about the growing environmental costs of economic development.

The city has already started to close or relocate hundreds of factories and industrial plants.

The coal-fired power generators at Beijing’s Gaojing Thermal Power Plant are decommissioned on July 23. Provided to China Daily

It will also raise vehicle fuel standards and is mulling the introduction of a congestion charge.

To reduce coal consumption, it is in the process of shutting down all of its aging coal-fired power plants and replacing them with cleaner natural gas-fired capacity or with power delivered via the grid.

Based on last year’s coal consumption level of 19 million metric tons, the 7 percent cut would amount to around 1.33 million tons per year.

Beijing has said previously that it plans to reduce total coal use by 2.6 million tons in 2014, and aims to slash consumption to less than 10 million tons per year by 2017.

The Beijing environmental bureau said the city had cut sulfur dioxide emissions by 5.4 percent over the first six months of the year.

It also took 176,000 substandard vehicles off the road.

Previous data issued by the Ministry of Environmental Protection showed that concentrations of hazardous airborne particles known as PM2.5 stood at 91.6 micrograms per cubic meter in Beijing in the first half of the year, down 11.2 percent year-on-year but still more than twice the recommended national limit of 35 mcg.

Much of the pollution that hits Beijing drifts in from the surrounding province of Hebei, a major industrial region that is home to seven of China’s 10 most polluted cities.

Under new plans to integrate Beijing with Hebei and the port city of Tianjin, the region will be treated as a “single entity” with unified industrial and emission standards.

Hebei said last week that it had cut coal consumption by 7.53 million tons in the first half of 2014, amounting to just over half of its target of 15 million tons for the year.

The province agreed last year to cut coal use by 40 million tons by 2017, and it is also planning to shed at least 60 million tons of excess steel capacity over the same period.

via Beijing cuts coal use by 7 percent in first half of year – China – Chinadaily.com.cn.

13/08/2014

China Names U.S. as the Top Destination for ‘Economic Fugitives’ – Businessweek

China’s wealthy elite is fleeing the country for a better quality of life—better education, better air, and greater personal security. China’s Ministry of Public Security has just added a further potential reason: fleeing the police.

“The U.S. has become the top destination for Chinese [economic] fugitives,” Liao Jinrong, a ministry official told state-run China Daily on Monday. According to the English-language newspaper, “More than 150 economic fugitives from China, most of whom are corrupt officials or face allegations of corruption, remain at large in the United States.”

While this is a rather incredible admission, the intent of the article—no doubt placed by China’s propaganda authorities—seems to be to make the case for an extradition treaty between the U.S. and China. “We face practical difficulties in getting fugitives who fled to the US back to face trial due to the lack of an extradition treaty and the complex and lengthy legal procedures,” Liao told the paper.

via China Names U.S. as the Top Destination for ‘Economic Fugitives’ – Businessweek.

13/08/2014

Chennai, home of Indian coffee, scoffs as Starbucks enters the market

When Starbucks opened its first coffeehouse in Chennai last month, its 50th in India, many people wondered why the chain had waited so long to come to the city. Was it because it was summoning up courage to enter the land of filter coffee?

The US chain, which has entered India in partnership with the Tata group, opened its first outlet in Mumbai in October 2012. But it took two years for Starbucks to come to Chennai, where it opened its first outlet in the Velachary area on July 10. It plans to open a second outlet soon, in the Alwarpet locality.

Chennai is famous for its ubiquitous filter coffee, a potent brew made in a cylindrical metal device with two compartments separated by a fine filter that allows water to percolate through a bed of coffee powder. The decoction that drips through into the bottom compartment is then mixed with milk and sugar to produce the famous Chennai filter coffee.

For now, youngsters are thronging the new Starbucks outlet, but filter coffee, brewed in most Chennai homes and available in low-cost eateries around the city, might yet prove to be formidable competition.

Starbucks’ representatives did not reply to specific queries about the chain’s prospects in Chennai. But because Starbucks is not a pioneer, it will not have to create a market for its style of coffeehouse: another chain has already done that.

Indeed, the first battle for coffee in Chennai took place a good 15 years ago, when the city got its first Western-style coffee house with Café Coffee Day‘s first outlet in Nungambakkam in 1999. Since then, the chain has grown to 74 cafés, becoming the largest in the city.

Starbucks, therefore, not only has another competitor in Café Coffee Day but also a fellow-traveller, albeit one that got an early start.

via Scroll.in – News. Politics. Culture..

13/08/2014

Rising inflation, weak industrial output dampen hopes of economic turnaround in India

New economic data casts dark clouds over economic revival

The Consumer Price Index increased from 7.46%  in June to 7.96% in July, according to data released by the government on Tuesday. The CPI measures the change in market price levels for a representative basket of goods and services purchased by households. Meanwhile, overall factory output has decelerated by 1.8% in June to 3.4% due to a sharp decrease in the manufacturing activity.

via Scroll.in – News. Politics. Culture..

09/08/2014

China’s Shale-Gas Production Target Cut in Half by Top Official – Businessweek

Tapping China’s vast shale-gas reserves has proved more difficult than government planners in Beijing once hoped. In 2012, China’s National Energy Administration projected that, by 2020, from 60 billion to 80 billion cubic meters (bcm) of domestic shale gas would be pumped annually. Earlier this week the country’s energy chief, Wu Xinxiong, slashed the goal in half, to 30 billion bcm by 2020.

A shale well at Fuling, owned by Sinopec, China's largest oil refiner, in Chongqing, southwest China on April 21

According to the U.S. Energy Information Administration, China’s holds the world’s largest reserves of theoretically recoverable shale gas. But much of it is locked in mountainous regions in western China.

While China’s leaders—concerned about steeply rising energy demand accompanying rapid urbanization—dearly want to emulate the U.S.’s shale-gas boom, it turns out Americans have several practical advantages. For starters, the U.S. shale-gas revolution kicked off in fairly accessible regions: the flatlands of Texas, North Dakota, and Pennsylvania.

So far, explorations in China have identified only one clearly promising shale play: Fuling shale gas field, near the western megalopolis of Chongqing. Sinopec, which controls the Fuling field, projects that its annual shale gas production will reach 5 bcm by 2015 and 10 bcm by 2017. (China trivia fact: Fuling was also the site of River Town, well-known journalist Peter Hessler’s first book chronicling his years as a Peace Corps volunteer in the then-small city on the Yangtze.)

With no other comparable sites yet identified, it’s not clear where the other 20 bcm may come from. While Sinopec is currently at the forefront of China’s shale-gas development, two foreign companies, Royal Dutch Shell (RDSA:LN) and Hess (HES), have secured production-sharing contracts for other potential sites.

via China’s Shale-Gas Production Target Cut in Half by Top Official – Businessweek.

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