Economics | CHINDIA ALERT: You'll be living in their world, very soon

24/05/2014

Modi’s Big Chance to Fix India – Businessweek

After five weeks of staggered voting, more than 550 million ballots cast, and almost $5 billion spent, the world’s largest democracy finally has a new leader. Yet the question that has loomed over India’s long campaign remains: What kind of leader is Narendra Modi going to be?

Narendra Modi speaks to supporters in Vadodara, India, on May 16

Modi fought an impressive campaign focused mostly on the right issues. He successfully cast the election as a referendum on who could better deliver jobs, government services, and economic growth: himself or Rahul Gandhi, the ruling Congress party’s heir apparent. The landslide victory of Modi and his Bharatiya Janata Party—the biggest for any party since 1984—testifies to Indians’ hunger for decisiveness and efficiency after years of policy drift and corruption scandals.

Yet voters have little idea how Modi will govern. He has given no sign of how far he’ll challenge his own supporters on economic and social policies. Investors expecting miracles are in for a letdown, because India’s political system is bound to intervene. According to JPMorgan Chase (JPM), about 70 percent to 80 percent of regulatory and other roadblocks impeding big industrial projects aren’t within Modi’s power to remove. Even so, he needs to make progress where he can.

A good place to start would be to keep an election promise to introduce a combined goods and services tax—something Modi’s own party has long opposed, because it would force revenue losses on state governments. (Modi could offset some of the losses using central revenues.) He should move to phase out petroleum subsidies. He should give state and local governments greater flexibility in regulating labor markets, land sales, and more. Economic competition among the states is key.

Above all, India’s new leader must also reach out to the country’s Muslims—assuring them that he recognizes they are full and valued citizens entitled to an equal measure of security, trust, and respect. Modi’s campaign was based in part on a simple point: India can no longer afford to muddle through, endlessly avoiding difficult decisions. Now it’s time to deliver.

via Modi’s Big Chance to Fix India – Businessweek.

Posted in Economics, Elections, India alert, Politics, Reform, reform | 1 Comment »

Tags: Bharatiya Janata Party, Government, impressive campaign, India, Indian National Congress, Jpmorgan Chase, Modi, Narendra Modi, rahul gandhi

24/05/2014

China’s 430 Million Families Shrink and Age – Businessweek

China’s families keep shrinking in size, says a new report by the National Health and Family Planning Commission, released earlier this month.

It’s well known that the One-Child Policy played a key role in radically reducing the size of China’s households, which have shrunk from an average of 5.3 members in the 1950s to just 3.02 in 2012. (The numbers were 3.96 and 3.10 in 1990 and 2010, respectively.)

But that longtime policy restriction has not been the main driver in recent years, according to the China Family Development Report 2014. Instead, internal migration and changing social norms have been bigger contributors to the phenomenon in recent years. (That also means last year’s loosening of the family planning regulation isn’t going to reverse the smaller household phenomenon.)

By 2010, China had 160 million households made up of either one or two people. That’s 40 percent of the total number of households, a proportion that rose from 25 percent of the total in 2000. Over the same decade, the number of single person households doubled, and those of two people went up by 68 percent, according to the commission.

So what’s driving the surge in little families? In the cities it has a lot to do with young people waiting longer to get married. “A growing number of well-educated people now decide to marry at a later age because of their careers,” the China Daily reported, citing the survey. “Changing attitudes toward marriage also prompted many to stay single.”

As China’s population rapidly ages, more and more families are elderly. China now has 88 million families made up of people over 65, about one-fifth of the total, the report says. That reverses the longtime Chinese custom of older parents living with their children. With some 300 million rural migrant workers living far from their hometowns, the problem is particularly acute in the countryside—that is contributing to a growing problem of poverty among the elderly.

via China’s 430 Million Families Shrink and Age – Businessweek.

Posted in Affluence, aging population, China alert, Economics, Social & cultural | Leave a Comment »

Tags: China, China Family Development Report, Family planning, Household, migrant worker, National Health and Family Planning Commission, one-child policy

24/05/2014

‘Four Dishes, One Soup’ Not Enough For Sino-Russian Gas Deal Celebration – China Real Time Report – WSJ

Say you’re the leader of the world’s No. 2 economy. You just signed a massive energy deal with your Russian counterpart that has major political and economic implications – and that, under international protocol, calls for a big-time state wingding. At the same time, you’re pushing a government austerity platform to convince your people that their leaders aren’t corrupt fat cats living large off the people.

What to do?

That’s the dilemma Chinese President Xi Jinping faced this week after he reached a 30-year, potentially $400 billion gas supply deal with Vladimir Putin. His answer, it seems, was to split the difference. The state dinner that followed the high-profile deal-signing had enough fancy dishes, tipple and desserts to fail the sort of austerity test Mr. Xi might apply to, say, a banquet thrown by county-level officials in a tier-three burg.

Still, experts said, the wines steered more to the local than to the Bordeaux, and the whole affair fell short of what you might get at a fancy wedding.

After 10 years of difficult negotiation, China and Russia signed a landmark natural-gas contract on Wednesday. The night before, Chinese President Xi Jinping and his wife Peng Liyuan hosted a dinner in Shanghai welcoming more than 300 guests from 46 countries, including Russian President Vladimir Putin.

What dishes were served during the 90-minute dinner?

The dinner was definitely more elaborate than the “four dishes and one soup” set promoted by Xi Jinping as a form of domestic cost-cutting. There were four plates of desserts alone—implying that the anti-corruption rules don’t always apply when it comes to state events, as China doesn’t want to lose face on diplomatic occasions. The six appetizers included mashed green beans, spicy cabbage, sliced whitebait, a pea dish and bamboo shoots with green onions. The five dishes and one soup served included shrimp balls, fried and braised beef, macadamia nuts with greens, flatfish with bean curd sauce, luffa with green beans and mushroom with fish maw. Other dishes included moulded pudding, vegetable dumplings and plates of fruit.

This dinner was intended to be a creative combination of Chinese and western-style cooking, one that highlighted fresh ingredients from southern regions of the Yangtze River. The executive chef behind it, Su Dexing, was also the chief cook for the state banquet during the APEC meeting in 2001, according to Shanghai International Convention Center staff.

As at many state events, China’s ubiquitous luxury liquor Maotai was also served, along with a dry red and dry white wine produced by Cofco Wines & Spirits. According to prices advertised on e-commerce websites, such red and white wine would likely cost between 400-600 yuan ($64-96) per bottle and 300 yuan per bottle, respectively.

Although abundant, the dinner was still simple compared to other options available in Shanghai, where wedding banquets can easily cost a minimum of 500 yuan per person, excluding liquor. In 5-star hotels, such meals might cost more than double that amount.

via ‘Four Dishes, One Soup’ Not Enough For Sino-Russian Gas Deal Celebration – China Real Time Report – WSJ.

Posted in China alert, Economics, energy, GeoPolitics, oil & gas | Leave a Comment »

Tags: China, Chinese President Xi Jinping, Maotai, Peng Liyuan, Russia, Shanghai, Vladimir Putin, Xi JinPing, Yangtze River

24/05/2014

India hits U.S., China with solar imports anti-dumping duties | Reuters

India will impose anti-dumping duties on solar panels imported from the United States, China, Taiwan and Malaysia to protect domestic solar manufacturers, according to a government statement seen by Reuters on Friday.

A man cleans panels installed at a solar plant at Meerwada village of Guna district in Madhya Pradesh June 18, 2012. REUTERS/Adnan Abidi/Files

The order, almost certain to anger India’s trading partners, sets duties of between 11 and 81 U.S. cents per watt and comes after a investigation which started in 2011. The ruling by a quasi-judicial body has to be published by the Finance Ministry before it takes effect.

The decision adds to India’s growing trade disputes just before Narendra Modi takes office as prime minister on Monday.

“Imposition of anti-dumping measures would remove the unfair advantages gained by dumping practices,” said India’s Anti-Dumping Authority in its order released on Thursday.

Local manufacturers have long complained that U.S., Chinese and Malaysian companies enjoy state subsidies and are selling their products at artificially low prices to capture the Indian market.

India also believes that anti-dumping duties imposed on Chinese solar producers by the European Union and the United States have further driven down the price of Chinese solar products, to the detriment of Indian suppliers.

India aims to raise its solar power capacity to 20,000 MW by 2022 from 1,700 MW currently. It imported solar products worth nearly 60 billion rupees ($1.03 billion) last year, according to an industry estimate. Domestic manufacturers got less than 2 percent of that business.

“India’s solar manufacturing is now bound to revive and further increase with both local and overseas participation ensuring a robust supply chain,” said H.R. Gupta of the Indian Solar Manufacturers’ Association.

Under the new duties, importers will have to bear additional costs of between 5 percent and 110 percent while importing solar cells and panels from the United States, Malaysia and China.

via India hits U.S., China with solar imports anti-dumping duties | Reuters.

Posted in Anti-dumping, China alert, Chindia Alert, Economics, India alert | Leave a Comment »

Tags: China, Dumping (pricing policy), European Union, India, Malaysia, Narendra Modi, solar panels, Taiwan, United States

23/05/2014

Wal-Mart to open 110 stores in China as part of $100 million expansion bringing 19,000 jobs to world’s second-largest economy | Mail Online

Wal-Mart, the world’s largest retailer, has announced plans to accelerate its expansion into China by adding as many as 110 stores over the next three years, resulting in an almost $100 million investment.

Re-adjustment: Wal-Mart Stores Inc is changing its approach, closing some big-box stores that never quite caught on with locals

The Bentonville, Arkansas-based firm wants to open the new stores in the world’s second-largest economy at the same time as closing 30 under-performing outlets over the next 18 months.

China is key to Wal-Mart’s international ambitions but it has stumbled in a market where consumers value safe and authentic food over the low prices for which the retailer is known.

The U.S. retailer, which operates about 400 units in China, said last October that it would open up to 110 facilities in the country between 2014 and 2016 and was looking to close 15-30 others over the next 18 months as part of a rationalization process in the country.

Its local rival, Sun Art Retail Group Ltd, said in March it would continue to maintain steady new store expansion after China’s top hypermarket operator posted a 15.2 percent rise in 2013 net profit with an expanding store network helping it shrug off an economic slowdown.

‘China presents one of the biggest opportunities for us around the world to grow our stores and clubs, so its really important,’ Doug McMillon, president of Wal-Mart’s international business, said today in an interview with Bloomberg Television.

Wal-Mart already has 400 outlets across China and Wal-Mart is looking to develop a larger presence in the country’s largest center’s while building bigger stores in third- and fourth-tier cities.

via Wal-Mart to open 110 stores in China as part of $100 million expansion bringing 19,000 jobs to world’s second-largest economy | Mail Online.

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

Tags: Bentonville, Bentonville Arkansas, China, Doug McMillon, United States, Wal-Mart, Walmart

23/05/2014

In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek

Cruise lines are betting that the growing number of middle class consumers in China are keen to sample chocolate buffets and stroll the Lido deck. And that’s leading to an influx of ships being sent to sail year-round from mainland China.

Cruise Ship (Photo credit: sebastien.barre)

China is expected to be the world’s second-largest cruise market (after the U.S.) by 2017, with growth rates far higher than in North America and Europe, the two regions where the industry has historically collected most of its profits. Carnival (CCL), the industry’s largest player, with 10 brands and more than 100 ships, plans to base four ships in mainland China next year, while also boosting its year-round fleet in Australia. The Asian Cruise Association estimated in a 2013 report that area demand will nearly triple to 3.8 million annual cruisers in 2020, with 1.6 million from China.

“The reality is that the [Asian] market’s huge, and it’s going to be very significant over the next 10 to 20 years,” Carnival Chief Executive Officer Arnold Donald says. “We have never been more committed to China as a market of great strategic importance for our company.”

The industry’s second-largest cruise company, Royal Caribbean Cruises (RCL), surprised many in the industry last month by announcing plans to move a brand new ship, Quantum of the Seas, to Shanghai in May after its inaugural six-month run in New York. Traditionally, the industry has deployed only older ships to Asia—a practice that’s likely to wane, given Chinese consumers’ demand for equal access to the newest and best amenities from companies vying to break into the market.

via In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek.

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

Tags: Asian Cruise Association, China, Cruise line, Cruise lines, Cruise Ship, Lido, Mainland China, New York

23/05/2014

Will New Delhi Be Able to Translate Modi’s Gujarati Guidelines? – India Real Time – WSJ

As India waits for prime minister-designate Narendra Modi to take charge in New Delhi, many are wondering whether he can reproduce the policies that powered growth in his home state of Gujarat.

While the western state has long been one the richer states in the country thanks to a populace packed with entrepreneurs, it prospered even more than usual under Mr. Modi’s rule as chief minister for more than a decade.

Companies say with his leadership the state has cut corruption and restrictions on doing business. Meanwhile its networks of roads, ports and power plants are among the best in India and have even convinced some companies to move operations from other states to Mr. Modi’s vibrant Gujarat.

“He is a very good administrator and he will try to replicate the same model he had in Gujarat at the national level,” said Gautam Singh, an economist at Spark Capital.

The source of power behind Mr. Modi’s magic is debatable but most agree it comes from his ability to simplify government and set deadlines as well as his facility to push through unpopular policies.

Like he did in Gujarat, he is expected to streamline the number of departments and different ministries to make his entourage of key policymakers more nimble and powerful. In New Delhi, Mr. Modi will likely combine related ministries such as coal, renewable energy and petroleum for better policy implementation, said Mr. Singh.

One of the biggest successes of Mr. Modi was in energy, which has made Gujarat one of the few states in India with a power surplus.

Across India, power companies are often forced to give away power and depend on massive state subsidies. They are also hurt by theft during transmission and distribution. With little incentive or money to expand, the power generating and distributing companies have failed to keep up with demand. The resulting frequent power interruptions force other companies to set up their own expensive, captive power-generating units.

Gujarat has been able to cut power subsidies where many states haven’t been able to muster the political will to do so. It separated the power supply lines for households and farmers, helping target power subsidies. This meant non-agricultural users had to pay higher tariffs but they received a more reliable power supply.

While Mr. Modi was in charge, Gujarat took steps to ease India’s ridiculously restrictive labor laws which make it difficult for larger companies to hire and fire people as they please. Gujarat used its own version of special economic zones to promote industry. In these zones companies were given more freedom to adjust their workforces depending on demand.

One Goldman study suggests that if a similar easing were to be applied across India, 40 million jobs would be created in the next ten years.

Land acquisition is another perennial problem for companies as well as local governments as they look for spots to build facilities and infrastructure. While businesses wanting to set up operations in most states have to go through tedious procedures to get land, Gujarat has been able to significantly cut down on the red-tape by building a huge land bank that was earmarked for setting up industrial units. A recent study by Accenture to identify best practices in different states showed Gujarat’s policies were indeed helping. It now takes just 45 days for applicants to get possession of land in the state, the study showed.

via Will New Delhi Be Able to Translate Modi’s Gujarati Guidelines? – India Real Time – WSJ.

Posted in Economics, India alert, Politics | 4 Comments »

Tags: Accenture, Anandiben Patel, Gujarat, India, Modi, Narendra Modi, New Delhi, Spark Capital

23/05/2014

The Secret Weapon Behind China’s Booming Online Retailers? Women – China Real Time Report – WSJ

The secret weapon for many of China’s booming e-commerce companies is women, who shop more, spend more and generate bigger profits. Though the income of Chinese women is generally lower than that of men, they are also more likely to spend on themselves.

As the WSJ’s Wei Gu reports:

A new crop of Chinese e-commerce companies has harnessed the power of female consumers. Shares of Vipshop Holdings Ltd., which specializes in branded apparel at big discounts, have soared 30-fold since the company went public in New York two years ago. Women are 75% of the customer base and provide 90% of the revenue.

The company said it chose apparel because it is more profitable than alternatives such as electronics, which appeal more to male buyers. VIPshop’s gross margin is a healthy 25%.

…

The companies are embracing a research-supported stereotype: Devoted shoppers are disproportionately female. A third of Chinese consumers shopped online more than 40 times in 2013, according to iResearch, a Chinese Internet tracking firm, and 59% of those frequent shoppers were women.

“The ones that are succeeding in China’s e-commerce space are the female-dominated ones,” said Shaun Rein, founder of China Market Research. “The optimism level for female is considerably higher, and they drive retail sales.”

A survey of 1,000 Chinese consumers by China Market Research found that 62% of the women between 25 to 45 plan to spend more in the next six months than in the previous six months, compared with only 52% of the men in that age range. Younger women, aged 24 to 35, are the most optimistic of all.

If they found themselves with extra money, Chinese women say they would spend on clothing and health products, while also setting some aside as savings, according to Nielsen. Women in developed markets would spend on a vacation and pay off debt, as well as saving some. As many as 86% of Chinese women believe their daughters will do well financially, versus less than 40% of women in developed countries.

via The Secret Weapon Behind China’s Booming Online Retailers? Women – China Real Time Report – WSJ.

Posted in China alert, Consumer, eCommerce, Economics, Internet | Leave a Comment »

Tags: China, china market research, Chinese women, iResearch, IResearch Consulting Group, New York, Online shopping, The secret weapon, Vipshop, Vipshop Holdings Ltd., Wei Gu

23/05/2014

Indonesia Beefs Up Air Force in South China Sea | The Diplomat

Indonesia is beefing up its air presence along the South China Sea, a military officer announced late last month.

Indonesia Beefs Up Air Force in South China Sea

According to IHS Jane’s, Lieutenant Colonel Andri Gandy, the commander of Ranai airbase on the Riau Islands, which borders the South China Sea, said Indonesia was upgrading the airbase so that it could accommodate Sukhoi Su-27 and Su-30 fighter aircraft. Separately, Indonesian Army (TNI-AD) Chief of Staff General Budiman said that four Boeing AH-64E Apache attack helicopters would be deployed to Ranai airbase.

Lt. Col Gandy said that the TNI had already installed runway lights, taxiway lights and integrated radar at the airbase. He added that there were plans to extend the length of the runway in order to accommodate the Su-27 and Su-30s.

The announcement comes at a time when Indonesia has been raising concerns about China’s territorial designs on the Natuna Sea off the coast of the Riau Islands. As The Diplomat previously reported, last month Commodore Fahru Zaini, a senior Indonesian defense official, told reporters: “China has claimed Natuna waters as their territorial waters. This arbitrary claim is related to the dispute over Spratly and Paracel Islands between China and the Philippines. This dispute will have a large impact on the security of Natuna waters.”

Although there have long been suspicions that China’s nine-dashed line overlapped with Indonesia’s exclusive economic zone (EEZ) off the Riau Islands, Indonesia has refused to officially acknowledge the dispute exists. Zaini’s comments seemed to depart from this position.

However, as Evan A. Laksmana has pointed out, the Indonesian government quickly disavowed Zaini’s statement. For example, just days after Zaini spoke, Foreign Minister Marty Natalegawa stated: “Firstly, there is no territorial dispute between Indonesia and China, especially about the Natunas. In fact, we are cooperating with China in possibly bringing about foreign direct investment plans in the Natunas. Second, we are not a claimant state in the South China Sea.”

Laksmana also points out that Indonesia has long planned to beef up its military forces in the Natuna region as one of its “flashpoint defense” areas. The Jane’s report said that Zaini described the Su-27 and Su-30s deployment as part of Indonesia’s Minimum Essential Force (MEF) concept, which Jane’s explained: “aims to establish the nature and minimum scale of military capabilities that Indonesia should seek to deploy in response to a strategic threat.”

via Indonesia Beefs Up Air Force in South China Sea | The Diplomat.

Posted in China alert, Defence, Economics, GeoPolitics, Politics, Territorial dispute | Leave a Comment »

Tags: China, Indonesia, Marty Natalegawa, Natuna, Natuna Island, Nine-dotted line, Paracel Islands, South China Sea

22/05/2014

Serving the People: Chinese Law Student Opens Noodle Shop, Kicks Off Debate – China Real Time Report – WSJ

A Peking University law student who was worried about finding a job and set up a noodle shop last month has become a social media sensation.

Zhang Tianyi has won online praise for his entrepreneurial spirit – though the 24-year-old has attracted heaps of criticism that he is wasting his skills. But his effort has struck a chord with many college graduates who are also finding it hard to land a job.

This week he got an official pat on the back from a senior government official who hailed Mr. Zhang, likening him to hugely successful entrepreneurs like Jack Ma, who founded Alibaba and turned it into an e-commerce powerhouse.

“I’d like to try those noodles,” said Xin Changxing, vice minister of human resources and social security, speaking at a news briefing. “He’s innovating and looking for a market niche.”

CHINDIA ALERT: You'll be living in their world, very soon

Chindia Alert: You’ll be Living in their World Very Soon

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Modi’s Big Chance to Fix India – Businessweek

‘Four Dishes, One Soup’ Not Enough For Sino-Russian Gas Deal Celebration – China Real Time Report – WSJ

India hits U.S., China with solar imports anti-dumping duties | Reuters

Wal-Mart to open 110 stores in China as part of $100 million expansion bringing 19,000 jobs to world’s second-largest economy | Mail Online

In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek

Will New Delhi Be Able to Translate Modi’s Gujarati Guidelines? – India Real Time – WSJ

The Secret Weapon Behind China’s Booming Online Retailers? Women – China Real Time Report – WSJ

Indonesia Beefs Up Air Force in South China Sea | The Diplomat

Serving the People: Chinese Law Student Opens Noodle Shop, Kicks Off Debate – China Real Time Report – WSJ

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