Archive for ‘Economics’

17/12/2012

* Testing time for China’s migrants as they demand access to education

If 1/3 of the population of Beijing consists of migrant workers, then the city authority better watch out. Sooner rather than  later the anger and frustration will erupt into something very violent.  That applies equally to central government unless it reforms the Hukou system that is at least two if not three decades out-of-date.

SCMP: “Dozens of frustrated parents crowded into a Beijing office, surrounding an education official and brandishing copies of the constitution to demand their children be allowed to take an exam.

china_gaokao.jpg

Mothers and fathers around the world fight to send their children to the best schools they can, in the hopes of drastically improving their futures.

But China’s migrant families are victims of a decade-old residency system that denies urban incomers equal access to advantages from jobs and healthcare to the right to buy a home or car – and education.

Chinese university admission is based on a single test, the “gaokao”.

Cities such as Beijing that host China’s best universities – and large incomer populations – only allow those with official residency permits, or “hukou”, to take their exam and benefit from preferential quotas for places.

Around a third of the capital’s 20 million population are migrants, but many of their families become split by rules requiring their children to go to their “home” provinces – even if they have never lived there – sometimes for years, to study for and take the test, which varies by location.

Even then, because of the quota system they will have to score higher to win places at top schools.

“Either you let the country share in your education resources or you accept the reality that outsiders are stuck in your education gutter,” said Du Guowang, a 12-year Beijing resident from Inner Mongolia.

He and dozens of parents packed Beijing’s education bureau each week hoping – in vain – it would let their children take next year’s exam. But registration closed last week.

“This will directly affect their studies and their future prospects so of course it’s unfair,” said Xu Zhiyong, a prominent legal activist who has assisted the parents.

Over the past three decades more than 230 million people – four times the entire population of Britain – have moved to China’s cities in a phenomenal mass migration.

The hukou system restrictions date back to 1958, when the government sought, among its many controls, to designate where people should farm in rural areas, and work or live for those in towns.

It has loosened the rules in recent decades to encourage urbanisation, and acknowledges the need to better accommodate newcomers – especially as resentment mounts over China’s widening rural-urban inequality.

At a key gathering of the ruling Communist Party last month, President Hu Jintao urged officials to “accelerate” hukou reform and work to “ensure that all permanent urban residents have access to basic urban public services”.

But bigger cities are less willing to share residency or benefits, fearing doing so would burden their already strained resources and spur a new influx.

Some point to congested roads and overcrowded hospitals to argue that cities cannot handle larger loads.

But critics say the system is discriminatory.

Full reform would need years, but should begin sooner to defuse resentment, said Wang Zhenyu, deputy director of a public policy research centre at China University of Political Science and Law.

“From the basics like education and healthcare to social security to employment to buying a home or car, hukou-based discrimination covers every aspect,” he said. “Your hukou will affect you your entire life.””

via Testing time for China’s migrants as they demand access to education | South China Morning Post.

10/12/2012

* China wealth gap continues to widen, survey finds

This is the kind of disparity that is most worrying to the Party. Unless it gets the support of the majority, including the poor, its mandate is suspect.

SCMP: “The chasm between China’s rich and poor has widened to alarming levels, according to survey results released by the Survey and Research Centre for China Household Finance.

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The survey, released on Sunday, reported a rise in China’s Gini coefficient, a key yardstick of income or wealth inequality, to 0.61 in 2010, the latest year for which there is data on China.

That number is significantly higher than the global average of 0.44 and 50 per cent above the “risk level” for social unrest, the Beijing Times reported.

The figure was 0.56 for urban households and 0.60 for rural households.

Measured on a scale of 0 to 1, a Gini coefficient of 0 represents perfect equality in which everyone has the same income, and 1 represents maximal inequality in which just one person holds all the wealth.

Since China first published data on the Gini-coefficient in 2000, the official figure has stayed level at 0.412. In 2005, the World Bank data put the figure at 0.425, the last year it published a Gini index for the country.

Li Shi, executive dean of Beijing Normal University’s China Institute of Income Distribution, who compiled his own Gini survey in 2007, told Bloomberg News in September that a poll of 20,000 households gave an index of 0.48.

“A high Gini coefficient is a common phenomenon in the process of rapid economic development. It is the natural result of the market allocating resources efficiently,” said Gan Li, the director of the research centre, at a briefing in Beijing.

“Relying on market forces alone can’t narrow the gap so China must change the structure of income distribution and rely on massive fiscal transfers to narrow the yawning disparity.””

via China wealth gap continues to widen, survey finds | South China Morning Post.

10/12/2012

* Defiant villager leaves developers stumped over gravesite

Having seen the success of ‘nail house’ resisters in gaining better compensation, we now have ‘nail graves’. Wonder what will come next.

SCMP: “A villager refusing to concede to a property developer’s demands to move a family gravesite off a piece of land left construction workers no choice but to dig around the grave, leaving behind a bizarre sight that has since spread on social media.

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The solitary grave, which now sits on a mound of earth 10 metres off the ground in the middle of a construction site in Taiyuan, Shanxi province, has been given the term “nail grave” by netizens.

The term is a play on “nail house”, which was coined by developers for homes belonging to people – “stubborn as nails” – who refused to move even after being offered compensation.

Media reports speculate that developers had offered to pay about one million yuan (US$160,400) to move the grave and headstone.

The construction site, which once served as a public graveyard for local villagers, is giving way to a residential complex expected to be completed in April.

Since construction started in 2009, most villagers had already moved their family’s graves after compensation agreements with the developer.

In the face of China’s rapid economic development, Chinese property developers have been meeting much greater public resistance to what many see as forced land-grabs. Most are compensated with amounts less than their property’s net worth.

“Nail graves are an inevitable product of our country’s progress…the souls of the dead can not rest in peace,” wrote one blogger on Sina Weibo, China’s main microblogging site.

Although China has long encouraged cremation due to an alleged shortage of land for burials, ancestors are traditionally held in deep respect and many in the countryside continue to construct tombs in accordance with culture.

A similar incident occurred last month when authorities from the city of Zhoukou, Henan province, were forced to stop a campaign to clear graves for farmland after the demolition of more than two million tombs sparked an outcry across the country.”

via Defiant villager leaves developers stumped over gravesite | South China Morning Post.

10/12/2012

* Uproar in Rajya Sabha over Wal-Mart lobbying disclosure; opposition seeks probe

Retail entry into India; two steps forward, one step back?

Times of India: “The issue of FDI in retail came to haunt the government again in Parliament with a united opposition demanding an inquiry and reply from Prime Minister Manmohan Singh on reports of Wal-Mart spending huge money to lobby for entry into the Indian market.

Forcing two adjournments in the Rajya Sabha before lunch, members from BJP, CPM, CPI, SP, JD-U, Trinamool Congress, AGP and AIADMK said the measure should be withdrawn as “corruption” has come to fore now because lobbying is illegal in India.

Raising the issue during Zero Hour, Ravishankar Prasad (BJP) said apprehensions were raised earlier also about Wal-Mart spending huge money to lobby for entering the Indian market, which has now been proved true.

“Wal-Mart has in its lobbying disclosure report to the US Senate said it has spent Rs 125 crore on lobbying and $ 3 million have been spent in 2012 itself for entering the Indian market.

“Lobbying is illegal in India. Lobbying is a kind of bribe. If Wal-Mart has said that hundreds of crores of rupees were spent in India, then it is a kind of bribe. Government should tell who was given this bribe. This raises a question mark on the implementation of FDI in retail,” Prasad said.

He was supported by members from other opposition parties with TMC leader D Bandopadhyay waving a newspaper report and CPM member P Rajeeve asking for an “independent inquiry” into the whole episode alleging that there are some reports saying Wal-Mart invested money even before FEMA was amended.

“This is bribery,” he said as the opposition members shouted slogans in favour of withdrawing FDI.

The opposition was reacting to media report that global retail giant Wal-Mart — waiting for years to open its supermarkets in India — had been lobbying with the US lawmakers since 2008 to facilitate its entry into the highly lucrative Indian market.

via Uproar in Rajya Sabha over Wal-Mart lobbying disclosure; opposition seeks probe – The Times of India.

10/12/2012

* China’s Great Wall Motor in talks for India entry

China is sensing that India’s time is about to come.  Earlier it offered to support infrastructure projects, now it is hoping to make and sell cars in India.

Reuters: “Great Wall Motor Co, China’s biggest SUV maker, is in talks to set up a wholly-owned business in India, an Indian industry official said on Monday, in what would be the first Chinese car maker to enter the country alone.

People look at cars of Chinese automaker Great Wall Motor Co Ltd displayed during the Sofia Motor Show 2011 in Sofia June 15, 2011. REUTERS/Stoyan Nenov

Great Wall, China’s eighth-largest car maker, sent a delegation to India last week, and targets starting manufacturing of vehicles in India in 2016, Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers (SIAM), told Reuters in an interview.

“They are looking at coming into India to set up manufacturing,” said Mathur. “They are meeting industry, they are meeting government, they are meeting suppliers.”

Great Wall executives met with SIAM representatives last week, Mathur said. He did not provide details of investments planned.

Great Wall representatives could not be reached by Reuters for comment.

India’s car market has attracted billions of dollars in investment from overseas manufacturers, such as General Motors (GM.N), Ford (F.N) and Toyota (7203.T). But Chinese car makers have not yet made significant inroads into the country.”

via China’s Great Wall Motor in talks for India entry: industry official | Reuters.

See also:

09/12/2012

* Canada OK’s foreign energy takeovers, but slams door on any more

China acquires more natural resources.

Reuters: “Canada approved China’s biggest ever foreign takeover on Friday, a $15.1 billion bid by state-controlled CNOOC Ltd for energy company Nexen Inc., but drew a line in the sand against future buys by state-owned enterprises.

A man walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol

In a fierce defense of a tough, new foreign investment framework, Prime Minister Stephen Harper said Canada would not deliver control of the oil sands – the world’s third-largest proven reserves of crude – to a foreign government.

The ruling, anxiously awaited by investors and politicians alike, followed months of heated debate about how much of Canada’s energy sector could and should be absorbed by companies run by other nations.

The bid triggered unusually open dissent among legislators in the ruling right-of-center Conservatives, many of whom were particularly nervous about the idea of allowing China to gain control of the oil sands.

Canada said yes to this deal, but will not do so next time.

“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead,” Harper told reporters after Ottawa gave the deal the green light, along with approval for the less controversial takeover of gas company Progress Energy Resources Corp by another state-owned energy company, Petronas of Malaysia.

“Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada,” he added.”

via Canada OK’s foreign energy takeovers, but slams door on any more | Reuters.

See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

09/12/2012

* China’s Wanxiang wins auction for U.S. government-backed A123

Chinese firms continue to acquire foreign firms’ expertise and assets.

Reuters: “China’s largest maker of auto parts won a politically sensitive auction for A123 Systems Inc (AONEQ.PK), a bankrupt maker of batteries for electric cars that was funded partly with U.S. government money, A123’s investment banker said on Saturday.

Battery maker A123 Systems Inc. has struggled for years.

Timothy Pohl of Lazard Freres said Wanxiang Group Corp’s bid of about $260 million topped a joint bid from Johnson Controls Inc (JCI.N) of Milwaukee and Japan’s NEC Corp (6701.T) for the maker of lithium-ion batteries.

Siemens AG (SIEGn.DE) of Germany had also qualified to bid, according to two people familiar with the auction, who asked not to be identified. The auction began on Thursday.

Chinese companies have launched $51.3 billion worth of outbound deals this year, making it Asia’s second-biggest spender on overseas acquisitions behind Japan, according to Thomson Reuters data.

While state-owned oil giants continue to dominate outbound deals, recently Chinese companies have targeted deals aimed at securing technology know-how. That shift is supported by China’s five-year development plan that puts emphasis on industries such as high-end manufacturing equipment.

Earlier this year, Shandong Heavy Industry Group agreed to buy a quarter stake in Germany’s Kion Group KIONG.UL, giving China access to industrial technology from the world’s number two fork lift truck maker.

Before that, Xuzhou Construction Machinery Group agreed to buy a majority stake in privately held German machinery manufacturer Schwing, while Sany Heavy Industry (600031.SS) bought rival Putzmeister in a 360 million euro ($472 million) deal.

Wanxiang, one of the largest non-government-owned companies in China, has annual revenue of more than $13 billion and supplies auto parts to many of China’s largest automakers.”

via China’s Wanxiang wins auction for U.S. government-backed A123 | Reuters.

See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

09/12/2012

* China to Flatten 700 Mountains to Build a City

Is there anything the Chinese won’t attempt?

Times: “Last month China made news with the surprising announcement that a firm in the city of Changsha would attempt to build the world’s tallest skyscraper in 90 days. Now, the country is making headlines with another ambitious challenge — flattening 700 mountains in order to build a city.

Lanzhou, China

The so-called “mountain-moving project,” was actually launched in October, and not only is the scale gargantuan, but the costs are astronomical. As much as $3.5 billion will be used to blow up 700 mountains, the Guardian reports, to make room for a full-fledged city in a poor, mountainous province in northwestern China. The country’s state council approved the plan in August after years of preparation, according to China Economic Weekly magazine.

The future city, called the Lanzhou New Area, will be built on the outskirts of Lanzhou, the capital of Gansu province with a population of 3.6 million. The company behind the proposal, China Pacific Construction Group,  promises to build an urban paradise, 10 square miles in size and capable of generating as much as $43 billion in GDP by 2030, China Daily reports.

The promotional video shows the new metropolis, which will cost another $11 billion to build, will be filled with high-rises, lakes, beaches and gardens.

It sounds grand — except for the fact that Lanzhou has some of the worst pollution in China, according to World Health Organization. Factories producing textiles, fertilizer and chemicals have clogged the air with smoke and particulates, while their waste has discolored the Yellow River, which runs through the province.

Experts have raised concerns about whether the project is environmentally viable. Gansu is an arid province, surrounded by deserts and scoured by sandstorms. But China Pacific Construction Group, one of the nation’s biggest construction companies, said there is no need to worry.

“Lanzhou’s environment is already really poor, it’s all desolate mountains which are extremely short of water,” a spokesperson told the Guardian via email. “Our protective style of development will divert water to the area, achieve reforestation and make things better than before.””

via China to Flatten 700 Mountains to Build a City | TIME.com.

07/12/2012

* Apple to return some Mac production to U.S. in 2013

Yet another instance of reverse offshoring or re-onshoring.

Reuters: “Apple Inc plans to move some production of Macintosh computers to the United States from China next year, Chief Executive Tim Cook said in remarks published on Thursday, in what could be a important test of the nascent comeback in U.S. electronics manufacturing.

An Apple logo is seen at the Apple Worldwide Developers Conference 2012 in San Francisco, California June 11, 2012. REUTERS/Stephen Lam

Apple makes the majority of its products, from Macs to the iPhone and iPad, in China, the world’s factory floor for electronics. But like other U.S. corporations, it has come under fire for relying on low-cost Asian labor and contributing to the decline of the U.S. manufacturing sector.

Cook did not say which Macintosh products will be produced in the United States. But the effort is expected to go well beyond simple final assembly of devices, with Apple and unnamed partners building most or all of the components in the United States as well.

The company will spend more than $100 million on the U.S. manufacturing initiative, Cook said in an interview with Bloomberg Businessweek, published on Thursday.”

via Apple to return some Mac production to U.S. in 2013 | Reuters.

See also: 

06/12/2012

* Xi unveils foreign policy direction

China Daily: “For German chemist Katharina Kohse-Hoinghaus, it was a huge surprise to get an invitation to a key meeting from newly-elected leader Xi Jinping just 20 days after he assumed his new role.

Xi unveils foreign policy direction

She was even more surprised on Wednesday to find that she was among the first group of foreigners Xi met as leader of the Party.

She was one of 20 foreigners from 16 countries invited to a face-to-face discussion with Xi on China’s development. Kohse-Hoinghaus, a world-renowned specialist in industrial combustion who has worked for about 10 years in China, said the meeting “demonstrates how serious you take the process of transformation and innovation in cooperation with other countries”.

It was the first time that Xi, the newly elected head of the Communist Party of China, met foreigners in this capacity.

Analysts said the meeting conveyed the new leadership’s foreign policy blueprint, and sent a strong signal that China cherishes its ties with foreign countries and people, and will continue on its road of opening up and cooperation with the outside world.

“We are open to the world and we want to learn from the world … We have learned from the past and realize we cannot succeed in our development behind closed doors,” Xi said at the meeting.

Foreigners with expertise in their fields have contributed immensely to national development and are called foreign experts in China. They also bridge China and the outside world.

The number of foreign experts has risen from less than 10,000 at the end of the 1980s to around 530,000 by the end of 2011.”

via Xi unveils foreign policy direction[1]|chinadaily.com.cn.

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