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20/07/2013

Joe Biden’s India Itinerary

WSJ: “U.S. Vice President Joe Biden arrives in New Delhi Monday for a visit focused on improving business ties between the two nations.

Mr. Biden, 70, begins his four-day India tour with a trip to Gandhi Smriti in New Delhi, a museum dedicated to Mahatma Gandhi, who led India to independence from Britain in 1947. The Democratic Party politician, who is visiting India with his wife, is also expected to meet Prime Minister Manmohan Singh, President Pranab Mukherjee and Vice President Mohammad Hamid Ansari, among other leaders, before travelling to Mumbai. Mr. Biden last visited India in 2008, when he was a member of the American Senate.

Mr. Biden’s wife, Jill Biden, will visit the Taj Mahal in Agra and is expected to address school children in Mumbai.

Relations between Washington and New Delhi have been warming in recent years, with the U.S. viewing India as an emerging superpower that can serve as a counterbalance to China’s growing influence in South Asia.

In a speech at the George Washington University in the U.S. on Friday, Mr. Biden singled out civil-nuclear cooperation, trade and investment as key issues the U.S. sought to collaborate on with India in the coming years. “There’s a lot of work to do,” Mr. Biden said in his speech, referring to strengthening India-U.S. ties. He also welcomed India’s decision this week to ease overseas-investment rules for telecom, defense and insurance.”

via Joe Biden’s India Itinerary – India Real Time – WSJ.

Posted in Diplomacy, Economics, GeoPolitics, India alert, Politics | Leave a Comment »

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20/07/2013

China frees up lending rates in major reform

Reuters: “China’s central bank removed controls on bank lending rates, effective Saturday, in a long-awaited move that signals the new leadership’s determination to carry out market-oriented reforms.

An employee counts money on the last workday of the week at a bank in Taiyuan, Shanxi province in this June 28, 2013 file picture. China's central bank announced long-awaited interest rate reforms on July 19, 2013, scrapping the previous floor on the rates that banks charge clients for loans. Picture taken June 28, 2013. REUTERS/Jon Woo

The move gives commercial banks the freedom to compete for borrowers, a reform the People’s Bank of China said on Friday will help lower financial costs for companies. Previously, the lending floor was 70 percent of the benchmark lending rate.

However, the PBOC, in a statement, left a ceiling on deposit rates unchanged at 110 percent of benchmark rates, avoiding for now what many economists see as the most important step Beijing needs to take to free up interest rates.

The latest step underscores Beijing’s resolve to start fixing distortions in its financial system and the economy more broadly as it tries to shift from export- and investment-led growth to more consumption-led activity.

Some analysts said cheaper credit could help support the economy, which has seen year-on-year growth fall in nine of the last 10 quarters.

“This is a big breakthrough in financial reforms,” said Wang Jun, senior economist at China Centre for International Economic Exchanges, a prominent government think-tank in Beijing.

“Previously, people had thought the central bank would only gradually lower the floor on lending rates. Now they scrapped the floor once and for all.”

The Australian dollar rose modestly on the news on hopes cheaper credit will lead to more demand from Australia’s biggest export market.

The announcement provided some support to weak stock markets in Europe .FTEU3 and a timely reminder to the world’s top financial leaders meeting in Moscow of China’s intention to rebalance its economy.

A Group of 20 draft communiqué will urge China to encourage more domestic demand-driven growth as part of wider efforts to rebalance the world economy, G20 sources said.

The United States welcomed the move, saying China promised to let markets play a bigger role in allocating credit during the U.S.-China Strategic and Economic Dialogue in Washington last week.

“This is a welcome further step in the reform and liberalization of China’s financial system,” Holly Shulman, a spokeswoman for the U.S. Treasury, said in an email.”

via China frees up lending rates in major reform | Reuters.

Posted in China alert, Economics | 1 Comment »

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19/07/2013

China Seeks Australias Help Building Emissions Trading Scheme

Sydney Morning Herald: “Australia has been drafted in to help design an emissions trading scheme for China, the world’s biggest polluter.

A deal announced in Canberra on Thursday will see the Australian National University take leadership of a program that will analyse pollution data provided by China and allow Chinese university researchers to examine Australia’s experience of the carbon tax and transition to an emissions trading scheme.

China pollutionChina is aiming for a full national emissions trading scheme by 2015.

The program, known as the “Australia-China research program on market mechanisms for climate change policy”, will team Australian researchers with those from three provincial universities in China and the Beijing Institute of Technology.  The University of New South Wales and Melbourne University will also take part.

The deal comes less than a month after China launched the first of seven pilot emissions trading schemes.

The first, in the manufacturing city of Shenzhen, will cover 635 companies, responsible for 38 per cent of the city’s total emissions. Chinese authorities are under pressure to do something about the chronic air pollution affecting public health in Shenzen and across China.

China emits one-quarter of the worlds greenhouse gases – nearly 10 billion tonnes of carbon dioxide, more than the US and India combined.

The $305,000 program, announced by Trade Minister Richard Marles, will be run by the ANU Crawford School of Public Policy, and led by Associate Professor Frank Jotzo of the Schools Centre for Climate Economics and Policy. He said projects would include modelling the effects of emissions pricing on electricity sector investments in China; research on how energy markets can be reformed to make carbon pricing more effective and the design of China’s pilot emissions trading schemes.

Professor Jotzo said: In the future, China is expected to rely less on command-and-control economic management and more on market-based systems to help protect the environment and modernise its energy system.

The research under this program will help inform Chinese policymaker’s about innovative approaches and international experiences, he said.

Climate expert and economist Ross Garnaut, a professor at ANU, said the most recent climate science showed a two degree warming of the planet was now a minimum and Chinese leaders understand there is a huge potential impact from climate for that nation.

via China Seeks Australias Help Building Emissions Trading Scheme.

Posted in carbon emission, China alert, Climate change, Economics, Green, greenhouse gas, Pollution | Leave a Comment »

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15/07/2013

Hello 3D printing, goodbye China

If the following article’s predictions do come true, then the world economy as we know it will be destroyed as the unintended consequence. No trucks, freight trains, container ships, no major manufacturing facilities, no major hub warehouses. No truck and freight train drivers, no container ship crews, no depot warehousemen. No truck, freight train, container ship manufacturers; less construction workers and companies. And there will be further knock-on effects. I wonder …

Sunday Times: “A SPECTRE is haunting the great container ship ports of China, with their highways jammed by lorries and the vast factory estates stretching from the coast of the South China Sea to the mountainous inland provinces.

Cheap Chinese labour could be made redundant by 3D printers (Chu Yang)

It is the spectre of a revolution led by a quiet, software-driven 3D printer, a machine that can laser up layers of liquid or granular resin — or even cell tissue — into a finished product.

Some 3D printers are huge devices that make complete components such as aircraft parts. Others are small units that could stand next to a desk and create a small plastic prototype.

Maplin, the British electronics retailer, said last week it would start selling one for just £700. The Velleman K8200 will allow those who are so inclined to make simple objects — mobile phone covers, perhaps, or toys.

“The only restriction is your imagination. You can make whatever you want,” said Pieter Nartus, export manager at Velleman.

To visionaries in the West, the digital 3D printer promises to disrupt conventional manufacturing and supply chains so radically that advocates compare its impact to the advent of the production line, or the internet.

In China, whose big factories are thinking of using giant 3D printers for manufacturing, the technology does not seem to pose an immediate threat.

“It is on their horizon but it is not a factor right now,” says a British buying agent who sources plastics in China.

However, as Chinese leaders ought to know from their compulsory classes in Karl Marx, control of the means of production is everything. And if 3D printing takes off, production will come back to a place near you.

The implications, economists say, are limitless. No huge factories. No fleets of trucks. No ships. No supply chain. No tariffs. Few middlemen. Orders tailored exactly to demand, so no need for stock and warehouses. Just a printer, raw materials, software and a design.

The advantages do not end there. Because the item is “sintered” — created from a powdered material — to precise settings using a laser, there is no waste such as metal shavings. To customise a product, the user simply changes the software. An operator presses a button and the printer spits out the item.

“The first implication is that more goods will be manufactured at or closer to their point of purchase or consumption,” said Richard D’Aveni, a professor at Dartmouth College in America.

Writing in the Harvard Business Review, D’Aveni predicted the elimination of the long supply chain linked to a huge factory staffed by cheap workers and sited on the other side of the world.

It may be the most significant, if underplayed, article in that distinguished publication in decades.

via Hello 3D printing, goodbye China | The Sunday Times.

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13/07/2013

Women and the property market: Married to the mortgage

The Economist: “CHINA’s communists attacked many bourgeois institutions after taking power in 1949. But marriage was not one of them. On the contrary, they enacted a marriage law in 1950, four years before they introduced a constitution. The pressure to marry remains heavy in today’s China, where almost 80% of adults have tied the knot at some point, compared with only 68% in America. But today, in contrast to the 1950s, marriage is bound up with another bourgeois institution: property.

In China mortgages often precede marriages. According to popular belief, if a man and his family cannot buy property he will struggle to find a bride. In choosing a husband, three-quarters of women consider his ability to provide a home, according to a recent survey of young people in China’s coastal cities by Horizon China, a Beijing-based market-research firm. Even if a woman herself dismisses this criterion, her family and friends, not to mention the country’s estate agents, will not let her forget it.

“Naked marriages”, as property-less ones are known, are endorsed by increasing numbers of young people. But as they get older, their attitudes may regress faster than society’s progress. One 28-year-old Beijing woman married her husband after falling in love with him at college. But “if you introduced a man to me now, and he couldn’t afford a home, I wouldn’t marry him,” she says. “I need to be more realistic. I’m not a 20-year-old girl.”

Some economists argue that competition for brides in China’s marriage “market” helps explain the punishingly high prices in its property market. Houses are least affordable in those parts of China where men most outnumber women, argue Shang-jin Wei of Columbia University, Xiaobo Zhang of the International Food Policy Research Institute and Yin Liu of Tsinghua University (see chart).

 

via Women and the property market: Married to the mortgage | The Economist.

Posted in Economics, Gender imbalance, housing, marriage, Social & cultural | Leave a Comment »

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13/07/2013

China cancels $6 billion uranium project after protest

Reuters: “China has canceled plans to build a uranium processing plant in a southern Chinese city a day after hundreds of protesters took to the streets demanding the project be scrapped, a local government website said on Saturday.

The proposed 230-hectare complex in the heart of China’s Pearl River delta industrial heartland in Guangdong province had also sparked unease in neighboring Hong Kong and Macau.

Authorities in the gambling enclave had formally raised the issue with their Guangdong counterparts, the South China Morning Post reported.

A one-line statement published on the Heshan city government’s website said that “to respect people’s desire, the Heshan government will not propose the CNNC project”. State-run China National Nuclear Corporation had planned to build the 37 billion yuan ($6 billion) project.

CNNC officials could not be reached for comment.”

via China cancels $6 billion uranium project after protest | Reuters.

Posted in China alert, Economics, Politics, public protest | Leave a Comment »

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12/07/2013

How Shale Gas Can Save China From Itself

BusinessWeek: “For years the Chinese have been told that the blinding, sooty haze choking Beijing and other cities is the price of progress. Yet China’s appetite for energy is literally killing its people. A study published in the Proceedings of the National Academy of Sciences, based on data compiled between 1980 and 2000, estimated that pollution caused by burning coal stripped five years from the life expectancy of Chinese in the northern half of the country—a collective loss of 2.5 billion years. A separate study published in December in the Lancet attributed about a million deaths a year in China to air pollution.

Cars in Beijing travel on the road in heavy smog on March 7

Although other factors have contributed to the blackening of China’s skies—including millions of cars and motorbikes clogging roads—coal remains the deadliest. In the past decade, China’s coal consumption has more than doubled. It now burns almost as much coal as the rest of the world combined. In the first three months of the year, levels of PM-10 (particulates with a diameter of 10 micrometers or less) in Beijing were almost 30 percent greater than during the same period a year earlier.

By contrast, in the U.S. CO2 emissions hit an 18-year low in 2012. The reason? An explosion in shale gas production raised the share of electricity produced by natural gas from 20 percent to 30 percent, while bringing down the proportion produced by coal from 50 percent to 37 percent.

China’s recoverable shale gas reserves are estimated to be 25 trillion cubic meters, 50 percent larger than those of the U.S. The government has already announced subsidies to local shale gas producers; it should also help finance new pipelines and gas-fired power plants. Officials must lower barriers to entry and increase incentives to encourage the most innovative drilling companies—the majority of which are American—to work in China.

Shale is no silver bullet. In the near term, China will have to keep building coal-fired plants to meet its voracious energy demand. Yet failure to address coal pollution will condemn millions more Chinese to premature deaths. It’s hardly a choice.”

via Bloomberg View: How Shale Gas Can Save China From Itself – Businessweek.

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12/07/2013

China’s Savers Block the Consumer Economy

The Chinese public must be very confused.  The government is urging them to spend rather than save. Yet, government itself is on a serious austerity drive. See post on the cut back in budget for the National Games – https://chindia-alert.org/2013/07/12/austerity-threatens-to-take-gloss-off-chinas-national-games/.

BusinessWeek: “Twenty-seven-year-old lawyer Kevin Han is frugal. Breakfast is 5 yuan (82¢) for a cup of soybean milk and a hard-boiled egg or a steamed bun. He has a 20-yuan lunch of white rice, with small portions of meat and vegetables, in the cafeteria at his workplace in Beijing. He spends about the same for dinner. Han gets deals buying clothes online, lives in a cheap rental apartment, and takes the subway to work (4 yuan round-trip). Scrimping is a must if he’s to buy his own place. He says he saves about half his monthly take-home pay of 13,000 yuan. “I want to get married and have a child, which will cost lots of money. My parents are not rich. So I have to save everything by myself.”

China's Savers Block the Consumer Economy

China’s leaders want these super savers to open their wallets and boost​ a slowing economy. Chinese on average put away 30.6 percent of their disposable income, amounting to 6.9 trillion yuan in total household savings in China in 2012, estimates Louis Kuijs, chief China economist at Royal Bank of Scotland (RBS) in Hong Kong. That’s up from 23 percent 10 years ago. With increasing overcapacity in steel and cement, rising corporate debt, and a growing problem with unregulated shadow finance, Beijing must wean China off investment-led growth in favor of more household consumption—only 35.7 percent of gross domestic product, way behind the 50 percent to 60 percent in many other countries.

Middle-class Chinese like Han pinch pennies to pay for ever-more costly city apartments and save for their children’s education costs. The working class also hoards yuan. Twenty-six-year-old Sichuan native Wei Yinping, a worker in a Shenzhen watchband factory, worries about paying for medical care if she or her parents become seriously ill. She saves almost half her monthly salary of 2,500 yuan. Without a hukou, or household registration card, she can’t avail herself of Shenzhen’s public health-care network. “If I had a local hukou, I would have many social security benefits” and not save so much, she says. Wei plans eventually to move back home and take care of her mother.

One reason the Chinese are champion savers is that earning a decent return is so hard. China’s central bank has kept rates low: A one-year deposit rate offers 3 percent, while loans to support investment by free-spending local governments and state companies go for 6 percent. With inflation, Chinese households earn close to nothing on bank deposits. “Interest rate policy has limited the ability of households to earn income from their savings, and reduced the pressure on poorly performing companies to improve,” warned Andrew Batson and Joyce Poon, analysts at Beijing-based economic consulting firm GK Dragonomics, in a May report.

The government is taking steps to reform the hukou system. It’s expanding health-care and pension plans so Chinese need not save to protect themselves from catastrophe. Regulators are giving banks more flexibility to set market-based interest rates and encouraging lending to the service sector, which is creating jobs. It will take all this and more to unleash Chinese spending power.”

via China’s Savers Block the Consumer Economy – Businessweek.

Posted in China alert, Economics, frugality, saving | Leave a Comment »

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12/07/2013

Austerity threatens to take gloss off China’s national games

I wonder if the government’s austerity drive and the anti-corruption drive is contributing to the slow down in spending and exacerbating the slowdown in the economy?

FT: “Fireworks are out and frugality is in at China’s national games after the organising committee rushed to comply with edicts requiring officials across the country to tighten their belts as the economy slows.

A football match is held inside the Shenyang Olympic Sports Centre Stadium, one of the five football venues of the 2008 Beijing Olympic Games, in Shenyang...A football match is held inside the Shenyang Olympic Sports Centre Stadium, one of the five football venues of the 2008 Beijing Olympic Games, in Shenyang, capital of northeast China's Liaoning province August 1, 2007. Picture taken August 1, 2007. REUTERS/Stringer (CHINA) - RTR1SG8T

The austere sporting championships, which start at the end of August in the northeastern province of Liaoning, will contrast with China’s lavish spending on major events from the Beijing Olympics in 2008 to the world expo in Shanghai in 2010 when the economy was growing at a double-digit pace.

Now, with growth dipping towards 7.5 per cent and Xi Jinping, the new president, railing against ostentatious displays of wealth, the organisers of the Liaoning games – China’s national equivalent of the Olympics – have gone out of their way to highlight their cost-saving measures.

The funding for the games, held every four years and the largest national sporting event in the country, has been cut by 78 per cent from the original budget to Rmb800m ($130m), with fewer new competition venues and less spending on entertainment than initially planned, they announced.

The opening ceremonies will be held during the day to reduce the need for lighting, the first time since 1987 that they have not been at night. The organisers also vowed not to use fireworks, departing with the tradition of bombastic pyrotechnic displays at the start of Chinese sporting events.

“For the opening and closing ceremonies, stadium construction, the torch relay and all other segments of the national games, we strive to create, hopefully, a fresh fashion of organising big events in a thrifty manner,” said He Min, deputy director of the organising committee.

Along with cancelling a series of conferences and exhibitions on the sidelines of the games, the number of invited foreign guests has also been reduced by half. Those foreigners who do make the guest list will have to endure relative privation. There will be “neither welcome banquets nor souvenirs for them”, the official Xinhua news agency reported.

The shift to austerity falls in line with a tone set by Mr Xi since his first days in office late last year as head of the Communist party. He banned flower displays at official events and ordered that banquets should be pared back, demanding that government spending should be less wasteful.

These demands have intensified in recent months as the Chinese economy has slowed and after Mr Xi launched a new campaign against “hedonism and extravagance” among other ills.

The finance ministry this week ordered all units of the central government to reduce general expenditures such as car purchases and overseas travel.”

via Austerity threatens to take gloss off China’s national games – FT.com.

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10/07/2013

* Minimum wage per month for selected countries

Minimum wage per month for selected countries in US dollars

China                     $138

Cambodia            $75

Indonesia            $71

Vietnam               $67

India                      $65

Bangladesh         $38

Source: US State Department/The Wall Street Journal May 2013

See also:

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