Archive for ‘Economics’

01/12/2013

For Cognac Makers, the Chinese Party is Over – Businessweek

French cognac makers won’t be toasting the Chinese New Year. After several years of double-digit growth, cognac sales in China have tanked as President Xi Jinping clamps down on conspicuous consumption.

Shares in Rémy Cointreau (RCO:FP), maker of Rémy Martin cognac, plunged nearly 10 percent on Nov. 26 after the company said it expected a “substantial double-digit decline” in profits because of weak Chinese sales.

The Chinese New Year, which falls on Jan. 31 in 2014, ordinarily would bring a sales windfall, with Communist Party leaders hosting cognac-soaked banquets and giving each other bottles costing $200 and up. But, Rémy Chief Executive Officer Frédéric Pflanz told Bloomberg Television, “We don’t necessarily expect a bettering of the situation” for the next few months. Chinese distributors are sitting on large, unsold stocks and aren’t placing new orders, he said.

via For Cognac Makers, the Chinese Party is Over – Businessweek.

01/12/2013

China Poised to Surpass India in Gold Purchases – Businessweek

Yang Cuiyan, a 41-year-old housekeeper from Anhui province, is one reason China is poised to topple India as the world’s top consumer of gold. Standing outside Beijing’s busiest jewelry store, wearing a thick coat against the autumn chill, she clasps a gold necklace that cost her 10,000 yuan ($1,640), or five months’ wages. “I can put it on when I go back home to show everyone that I’m doing well.”

Yang is one of the legions of middle-aged Chinese women, respectfully referred to as aunties, who bought coins and jewelry this year. Gold purchases in the world’s second-largest economy will surge 29 percent in 2013, to a record 1,000 metric tons, according to the median of 13 estimates from analysts, traders, and gold producers in China surveyed by Bloomberg News. China’s purchases of gold climbed 30 percent, to 996.3 tons, in the 12 months through September, while sales in India rose 24 percent, to 977.6 tons, according to the London-based World Gold Council. India was No. 1 in 2012. Each country buys more gold than the U.S., Europe, and the Middle East combined.

Gold’s burnished appeal in China stems in part from a lack of alternative investments. While the MSCI All-Country World Index of equities rose 18 percent this year through Nov. 22, the Shanghai Composite Index slumped 3.2 percent. Policymakers clamped down on property investments in March to cool the housing market, ordering the central bank to raise down-payment requirements for second mortgages in cities with excessive price gains. “In China, you look around and see very few places to put your money,” says Duan Shihua, a partner at Shanghai Leading Investment Management. “With the share market down and the government nudging people away from real estate, gold will remain a favored choice.”

via China Poised to Surpass India in Gold Purchases – Businessweek.

01/12/2013

Xinhua Insight: Aging China wants fairer, efficient social insurance – Xinhua | English.news.cn

Wang Hong, a 31-year-old woman and stay-at-home mother in South China\’s Haikou City, is worried about her future pension as she stopped paying social insurance four years ago.

After paying the insurance for five years while at work, Wang quit her hotel job to look after her child. With her child now 3 years old, Wang Hong, not her real name, is looking for a new job. But she is hesitant about paying the insurance she has missed for the past four years.

\”I don\’t know what will happen to my money in a social insurance account with possible inflation and other risks. It feels safer to keep it in my own pocket,\” she said.

In China, 38 million people stopped paying social insurance this year, either before or after reaching the pension-receiving threshold of 15 years.

Laid-off workers, employees in cash-strapped small companies and migrant workers are the majority of those who have stopped paying the insurance halfway through, according to Cui Peng, a research fellow with People\’s Insurance Company of China.

Social insurance funds cover basic endowment for senior citizens, basic medicare, unemployment, work-related injury and maternity.

The spending of endowment insurance funds, a key part of social insurance, grew 22 percent in 2012 year on year, while its revenue increased by 19 percent, according to the Ministry of Finance last week. This poses challenges for future pension payments.

According to the Ministry of Human Resources and Social Security, at the end of 2012 about 210 million urban employees paid endowment insurance.

Endowment insurance is paid by staff and the company, 8 percent and 20 percent of his or her wage respectively.

The money from companies is used to meet current pension demands while personal payments are accumulated for his or her own future pension after retirement.

However, as China\’s population ages, personal payments are often used to supplement growing current pension demands.

via Xinhua Insight: Aging China wants fairer, efficient social insurance – Xinhua | English.news.cn.

01/12/2013

Cameron tweets in Mandarin on Weibo for China trip | South China Morning Post

British Prime Minister David Cameron has joined Sina Weibo, China’s version of Twitter, and posted his first message ahead of a visit to Beijing, Downing Street said Saturday.

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“Hello my friends in China. I’m pleased to have joined Weibo and look forward to visiting China very soon,” he said in English and Mandarin in his first message.

It has since been forwarded more than 24,000 times.

Cameron has attracted more than 101,000 followers since setting up his account, which helpfully points out that he has the star sign Libra.

A Downing Street spokesman confirmed to AFP that the account was genuine.

The British premier’s social media savvy has come a long way since he said in 2009 that he was not joining Twitter because “too many twits might make a twat”.

He set up his own Twitter account in October 2012 under the handle David—Cameron, which now has more than 525,000 followers.

Cameron is due to leave for China on Sunday on a trip aimed at fostering good relations with the new leadership in Beijing and forging business links.

He will be accompanied by a delegation of ministers and business leaders on the visit, his first to the Asian powerhouse since President Xi Jinping took office in March.

via Cameron tweets in Mandarin on Weibo for China trip | South China Morning Post.

30/11/2013

BBC News – Why China is fixated on the Moon

The Moon could be a \”beautiful\” source of minerals and energy, a top Chinese scientist has told the BBC.

Exotic materials including helium-3 and the potential for solar power could prove invaluable for humankind, he says.

The comments come from Prof Ouyang Ziyuan of the department of lunar and deep space exploration.

His first interview with the foreign media provides insights into China\’s usually secretive space programme.

Prof Ouyang was speaking ahead of the first Chinese attempt to land an unmanned spacecraft on the lunar surface.

The Chang\’e 3 lander is due to launch imminently, perhaps as soon as Sunday evening, UK time.

It will be the first to make a soft touchdown on the Moon since an unmanned Russian mission in 1976.

No humans have set foot on the lunar surface since America\’s Apollo missions ended in 1972.

via BBC News – Why China is fixated on the Moon.

26/11/2013

Sales of postcards drop amid push for austerity |Politics |chinadaily.com.cn

Printers claim SOEs scrapping orders of gifts

Companies making calendars and greeting cards say they have seen a huge drop in orders after the Party\’s top discipline body banned officials spending public money on their products.

The Central Commission for Discipline Inspection announced the ban on Oct 31, forbidding Party organs, government departments, State-owned enterprises and public institutions from buying, printing, mailing and handing out New Year cards, postcards and calendars.

The move was seen as the latest attempt to promote frugality and curb extravagance among officials.

In recent years, local governments and institutions have bought, printed and given away a large number of cards and calendars at the Spring Festival holiday, the commission said, adding that as the materials have become more luxurious, the waste in public funds has become more serious.

On Oct 14, the State-owned Assets Supervision and Administration Commission issued a notice saying the authority will strengthen supervision and inspection as well as strictly prohibit State-owned enterprises from buying, printing, mailing and giving away New Year cards.

While figures on the amount of public money spent on greeting cards, postcards and calendars every year are unavailable, a county official in Jiangxi province, who gave only her surname, Li, said her government purchases 40,000 New Year cards or postcards every year for about 5 yuan (80 cents) each.

While civil servants can each get 10 cards, some officials may ask for more than 150, she said.

\”Some cards are sent in the name of individuals, some are sent in the name of departments to higher level governments or officials,\” Li added.

Xinhua News Agency also quoted another county official in Central China as saying, \”the money used (in his county) to buy cards is more than 300,000 yuan, equivalent to the money needed to build a Hope Primary School\”.

There are more than 2,800 county-level administrative regions and more than 300 city-level administrative regions in China, as well as thousands of State-owned enterprises and public institutions.

The Bank of China\’s Zhejiang branch has scrapped a plan to purchase 73,900 wall calendars, 52,600 desk calendars and 26,000 postcards, Xinhua reported.

The ban, however, is potentially a disaster for companies that make postcards and calendars.

via Sales of postcards drop amid push for austerity |Politics |chinadaily.com.cn.

26/11/2013

China in Numbers: Children pay deadly price for attitude to car seats | The Times

51 . . . is the number of children under the age of 14 killed every day in traffic accidents on the roads of China. That’s 18,500 deaths every year, according to China’s top government research body, a figure that has pushed accidents ahead of disease as the primary dispatcher of young Chinese lives.

A woman holds a child on a bus in Hami, China

By any measure, it is a gruesome tally, but the parental calculations behind it are, if anything, more disturbing. A proportion of those deaths involved child pedestrians, but in all too many cases the victims were passengers.

On paper, China is creating a large, financially potent and emotionally nervous middle class, one that sees the perils of 21st century China and is protective of its little emperors. Yet, curiously, this emerging middle class doesn’t bother much with infant car seats.

Some affluent parents of Beijing and Shanghai may stuff their cars with Maxi-Cosi and the like, but most do not believe in wasting valuable room on the back seat with a cumbersome lump of plastic that meets solely the needs of the smallest bottom in the car. Not when there are grandparents, nannies and other claimants to seat space. Once you get to China’s tier-2 and tier-3 cities, it is hard to find a baby seat in the shops, even if you want one. Most Chinese, when surveyed, believe firmly (but wrongly) that a child is safest in a car when cradled in the arms of an adult.

The grisly result is that just one in every 100 children being whisked around China’s roads is enjoying the ride in any kind of protective seat.

The child deaths are even more poignant for the fact that China’s factories produce millions of high-quality baby seats every year, the overwhelming majority of which are exported.

via China in Numbers: Children pay deadly price for attitude to car seats | The Times.

26/11/2013

China Takes Away Civil Servants’ Official Cars in Anticorruption Crusade – China Real Time Report – WSJ

The perks of being a civil servant keep dwindling.

As part of new anticorruption regulations announced by China’s cabinet Monday lower-ranking civil servants will no longer be allotted official cars for general use,  excluding vehicles needed for law enforcement or emergency-response services.

A security officer stands next to a Chinese made Hongqi car outside the Great Hall of the People in Beijing. Reuters

The move is one of several Beijing has made in recent years to step up scrutiny of its official fleets. It has previously urged governments to buy Chinese-made brands and earlier this year cracked down on other auto-related perks enjoyed by the country’s leaders, including the military.

Cars no longer needed because of the new rules will be disposed of via a public bidding process or other forms of auctions, the guidelines said. In the future, civil servants will be allowed to select their preferred mode of travel and will be reimbursed under a transportation-allowance system.

UBS Securities estimated the value of auto sales to governments in China at about 120 billion yuan, or roughly $20 billion, a year, which looks set to decline given the ongoing fleet-reform regulations, said Andreas Graef of management-consulting firm A.T. Kearney.

While governments will continue to procure some cars for official use, there will be greater centralization of purchasing procedures for cars and related products and services such as car insurance, maintenance services and gasoline, he said.

via China Takes Away Civil Servants’ Official Cars in Anticorruption Crusade – China Real Time Report – WSJ.

25/11/2013

China to launch two new carbon trading exchanges | Reuters

China will launch two new pilot carbon trading schemes this week in Beijing and Shanghai as it strives to cut soaring rates of greenhouse gas, reduce choking smog and determine the best system for a nationwide roll-out.

China, the world\’s biggest source of climate-changing carbon emissions, is under domestic pressure from its population to counter air pollution and has pledged to cut the 2005 rate of CO2 emissions per unit of GDP growth by 40-45 percent by 2020.

As U.N.-led climate talks stumbled in Warsaw last week, the country\’s chief negotiator Xie Zhenhua was keen to push the country\’s CO2 cutting credentials, challenging developed nations to match the efforts being made by China to tackle global warming.

The new platforms, which will force industrial firms to buy credits to cover any CO2 they emit above allocated quotas, also underscore Beijing\’s commitment to \”market mechanisms\” to slow emissions growth, in line with an ambitious raft of reforms outlined earlier this month.

\”It is definitely a move in the right direction, but there are concerns about activity — these are pilot schemes and are used as a learning experience, and local governments might not be particularly concerned by volumes,\” said Shawn He, a climate lawyer with the Hualian legal practice in Beijing.

Trading is likely to start slowly as the government treads cautiously and tries to learn lessons from Europe, where an excess of credits has left carbon prices in the doldrums.

Hualian\’s He said there were concerns how effective the pilot schemes would be, as no binding carbon caps would be imposed on enterprises and there were no legal means of forcing them to participate.

via China to launch two new carbon trading exchanges | Reuters.

24/11/2013

Between a desert and a dry place: Beijing’s green projects drain scarce water resources | South China Morning Post

Smog-plagued Beijing is anxiously awaiting its first batch of synthetic natural gas – a material converted from coal and piped 300 kilometres from Heshigten Banner in northeastern Inner Mongolia.

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The gas will power some of Beijing\’s central heating systems in the harsh winter months, replacing coal to cut harmful emissions of particulate pollutants.

When the pipes are fully pumping next year, Beijing will receive 4 billion cubic metres of synthetic gas a year – nearly half of last year\’s natural gas consumption – a step towards switching all the city\’s heating systems and industrial boilers from coal to gas.

But there is an ominous tinge to the seemingly green investment: environmental experts say the water-intensive conversion process could drain already scarce water resources in the country\’s drylands in the northwest, eroding land and causing more sandstorms.

\”If water depletion continues … not only will the local people suffer, the environmental impact could be profound,\” Chinese Academy of Sciences ecology researcher Xie Yan says.

Nationwide, replacing dirty coal with cleaner natural gas is a key measure in reducing the choking smog that spreads over more than a quarter of the country and is inhaled by nearly 600 million people. Because of the country\’s limited conventional natural gas and abundant coal reserves, converting coal to natural gas seems a convenient choice.

Beijing\’s demand for natural gas is expected to rise rapidly, reaching 18 billion tonnes in 2015 and 28 billion tonnes in 2020, as all its heating systems and industrial boilers make the switch from coal to gas. Beijing Gas Group, which is fully owned by the municipal government, has invested in the coal-to-gas project in Inner Mongolia to meet the demand.

The coal-to-gas industry, which had been sputtering for several years, received a boost in September when the State Council released a national action plan to fight air pollution, giving the sector explicit support.

But ecological experts have voiced concern for the unintended environmental consequence of coal-to-gas plants. The conversion requires vast quantities of water not just for production, but also for cooling and the removal of contaminants. On average, one cubic metre of synthetic natural gas needs six to 10 tonnes of freshwater.

\”Freshwater is a key raw material for turning coal to gas, so it\’s impossible to reduce water demand in such projects,\” Wen Hua, an associate at the US-based World Resources Institute (WRI), says.

To make things worse, the coal-abundant northwest, where the gas projects are based, already experiences chronic water shortages. Five provinces – Shanxi , Shaanxi , Ningxia , Inner Mongolia and Xinjiang – which possess 76 per cent of the country\’s coal reserves, have just 6.14 per cent of its total water resources.

via Between a desert and a dry place: Beijing’s green projects drain scarce water resources | South China Morning Post.

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