Archive for ‘Economics’

20/09/2012

* Foxconn to Build Fifth Brazil Plant

WSJ: “Contract manufacturer Foxconn Technology Group, which counts Apple Inc.  and Sony Corp.  as major customers, will build a fifth factory in Brazil, whose tax breaks and proximity to fast-growing markets are making it an attractive alternative to China.

Foxconn, the parent of Hon Hai Precision Industry Co., first invested in Brazil, the largest country in Latin America, only last year. While founder Terry Gou had said earlier that China would remain the company’s major production base for the foreseeable future—80% of its workforce is there—analysts said rising labor costs and taxes have led companies like Foxconn to reassess growth opportunities there.

Taipei-based Foxconn said in a statement Wednesday it has earmarked one billion Brazilian reals (US$492 million) for the new facility in São Paulo, which will produce smartphones, tablets and other electronic devices. The plant will start operations in 2014 and reach full capacity in 2016, employing 10,000 workers, the company added.

It didn’t specify which customers the new factory will produce for.”

via Foxconn to Build Fifth Brazil Plant – WSJ.com.

Another sign that China’s gradual cost increases are enabling other developing countries to become more attractive for manufacturers.

See also: https://chindia-alert.org/2012/09/20/china-worries-spur-mexico-stock-market-flows/

20/09/2012

* China worries spur Mexico stock market flows

Reuters: “Mexico has been on the wrong side of China’s economic boom for the last decade, but is now seeing an upturn in its fortunes as the Asian powerhouse’s economy slows and international stock pickers look to hedge their bets.

Fund managers are shifting the composition of their portfolios to protect themselves against further slowing in China. That is bad news for exporter Brazil, but good news for Mexico, which has low trade exposure to Asia and which is starting to claw back the export share and wage competitiveness it lost to China.

After China joined the World Trade Organization in 2001, Brazil boomed due to a seemingly endless Chinese appetite for soybeans and iron ore, while Mexico’s manufacturers struggled to compete with cheap goods in their main U.S. market.

Brazil has grown almost twice as fast as Mexico in the last decade and overtook its northern rival as Latin America’s biggest economy in 2005, becoming a darling of investors.

But a recent soft patch in Brazil and a slowdown in China’s breakneck growth are prompting some investors to take another look at Mexico’s strong ties to the United States and the chances its new president will undertake major reforms that could push up growth.”

via Analysis: China worries spur Mexico stock market flows | Reuters.

Nothing ever stands still. At one time Japan was the destination of all new and high tech; then came South Korea’s turn; soon followed by China. But the laws of physics say that everything seeks equilibrium and the lowest common denominator (water seeks its own level). So as China’s minimum wages rise (by law – at 10 to 15% pa), other countries that appeared to be expensive are slowly becoming competitive. China, of course, will not stand still either; but will move up the value chain, as it has been doing steadily over the last 5 to 10 years.

20/09/2012

* India strike over supermarket reforms

BBC News: “Opposition parties and trade unions in India are staging a day-long strike over plans to open the country’s retail sector to global supermarket chains.

Demonstrators from the Samajwadi Party, a regional political party, shout slogans after they stopped a passenger train during a protest against price hikes in fuel and foreign direct investment (FDI) in retail, near Allahabad railway station September 20, 2012.

Workers blocked railways in Uttar Pradesh and Bihar states, and Calcutta and Bangalore virtually shut down, but the response was more mixed elsewhere.

The reforms are essential to revive India’s slowing economy, ministers say.

A key ally left the ruling coalition in protest, although its majority in parliament is not at immediate risk.

The Congress-led government attempted to introduce the retail reforms last year, but backed down in the face of opposition.

Thursday’s nationwide strike, called by the main opposition Bharatiya Janata Party (BJP), its allies and Communist parties, has shut down schools, businesses and public transport in many cities.

TV channels showed protests taking place in the cities of Patna, Allahabad and Varanasi in northern India.

Most businesses were shut in the eastern city of Calcutta and public transport was disrupted, reports said.

The southern state of Karnataka, which is governed by the BJP, was shut down in response to the strike call with buses off the roads and schools, hotels and businesses closed. The state capital, Bangalore – home to hundreds of IT companies including multinationals like IBM and Microsoft – was completely shut down.

“We have asked our employees to stay back at home. We will instead work on Saturday,” an official of Infosys, one of India’s leading software companies, said.

“The fear factor is the reason for the closure,” a spokesperson for another multinational company told the BBC.

The Confederation of All India Traders said 50 million people were expected to participate in the protests, and that large demonstrations were planned in Delhi and other cities.

However, much of the capital was operating normally on Thursday, BBC reporters said. There was a similar picture in the financial capital, Mumbai.”

via BBC News – India strike over supermarket reforms.

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20/09/2012

* Dezhou, China’s solar city

China knows it is a major emitter of green gases and polluter. But it is also at the forefront of trying to minimize the effects without slowing down economic development. One example is Dezhou, a city not very far from Beijing.

Here is one image –

But if you want to get a proper impression go to – http://inhabitat.com/china-building-the-biggest-solar-energy-production-base-in-the-whole-world/dezhou-solar-valley-1/

Also read – http://www.renewableenergyworld.com/rea/news/article/2012/06/solar-thermal-scales-new-heights-in-china – extracts below:

“Ask any six-year-old in a Chinese street, ‘What’s a solar water heater and what’s it for?’ Without hesitation they will tell you: ‘A solar water heater is on the roof of a building to make hot water for the shower’. This story is told by Hongzhi Cheng, vice secretary-general of the Beijing-based Chinese Solar Thermal Industry Federation (CSTIF) and head of The Sun’s Vision, a company based in the city of Dezhou in Shandong province.

Dezhou, one hour by car south of Beijing, has become one of China’s solar towns due to the presence of Himin Solar, one of the country’s largest solar water heater manufacturers. For a German visitor with an interest in solar thermal technology, driving in the city provides an exciting tour past scores of roof and facade installations.

From Retrofits to Central Systems

Dezhou is also a great city to see how the solar thermal industry is developing from retrofitted systems for individual households towards large-scale rooftop solar fields serving entire buildings.

Building-integrated Systems Take Off

The third generation of solar thermal technology in China consists of building-integrated systems. Himin Solar is blazing a trail with several demonstration projects in Dezhou’s ‘Solar Valley’.

Pressurised Balcony Systems

Each flat at these new developments also includes a vacuum tube collector installed in the facade and a 300-litre tank on the balcony to supply hot water. These solar systems represent a totally new generation of residential solar water usage in China. They are pressurised, indirect systems with u-pipe collectors, and a closed-loop solar circuit filled with glycol. If the facade collector fails to reach 60°C, the electric element in the tank compensates. Solar domestic hot water is therefore separate from the buildings’ central heating and cooling system.

Sales Double for Balcony Systems

Balcony systems are popular for multi-family buildings that lack roof space for a solar unit for each apartment. ‘We produced 60,000 tanks for balcony systems last year and we expect a doubling this year,’ says Jie Xu, Linuo Paradigma’s production manager.

China’s tall buildings seem to have no upper limit for solar thermal installations. The industry aims high and still has huge growth potential, says Hongzhi Cheng. ‘Only 30% of the market demand is fulfilled yet in the rural area. We expect the rural segment to grow [from around RMB100 billion ($15 billion) today] to RMB600 million.’ But he predicts even stronger growth of thousands of billions of renminbi for the large-scale solar thermal sector. European visitors will then be astonished by even more solar thermal installations on Chinese skylines.”

See also: https://chindia-alert.org/economic-factors/greening-of-china/

Related articles

20/09/2012

Another small but inexorable step towards the reduction of American dominance. We are seeing the beginning of the end of the ‘American century’.

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19/09/2012

* CIC Invested About $2 Billion in Alibaba

WSJ: “China’s sovereign wealth fund invested about $2 billion in Alibaba Group Holding Ltd. as the Chinese Internet company bought back a large stake owned by Yahoo Inc., according to people with knowledge of the deal.

image

Alibaba said late Tuesday that it had completed an initial buyback of half of Yahoo’s 40% stake in Alibaba in a deal valued at approximately $7.6 billion. China Investment Corp. led a consortium of Chinese investors including buyout funds Boyu Capital, Citic Capital, and China Development Bank Corp.’s private-equity arm.

Alibaba’s deal with Yahoo valued the Chinese e-commerce company, which includes Alibaba.com, payment service Alipay and other properties, at about $40 billion.

Under terms of the deal, Yahoo is receiving about $6.3 billion in cash, $800 million in preferred stock in Alibaba and $550 million as a result of amending the firms’ technology and intellectual-property licensing agreement.

Yahoo retains about a 23% stake in Alibaba, following the transaction announced Tuesday. Alibaba said it has the right to repurchase half of Yahoo’s remaining stake.

CIC, which has about $410 billion in assets under management, said in June interview that it had confidence in China’s economic growth and was actively scouting overseas investment opportunities leveraged to China’s growth prospects.”

via CIC Invested About $2 Billion in Alibaba – WSJ.com.

18/09/2012

* In Africa’s warm heart, a cold welcome for Chinese

reuters: “Malawians bill their country as the “Warm Heart of Africa” and pride themselves on a reputation for friendliness. But Jaffa Shaibu, a burly 32-year-old merchant in a clothes market in Salima, a dusty town near the shores of Lake Malawi, feels less than welcoming to the Chinese traders who have moved in over the past four years.

Liberian children hold Chinese flags before the arrival of China's President Hu Jintao in Monrovia in this February 1, 2007 file photo. REUTERS-Christopher Herwig-Files

“The way it looks, one day there will be a big fight with them,” Shaibu said. “One day there will be blood.”

Echoing a grievance heard across Africa, Shaibu and his colleagues in this town of 40,000 complain of Chinese businessmen with better access to cheap imports of clothes, shoes and electronics, and deeper pockets that allow them to reduce their margins.

That sentiment is part of a grass-roots backlash against Beijing’s increasing diplomatic and commercial clout in Africa.

In many ways, the relationship between the two has never been stronger. Bilateral trade has almost doubled over the past three years, to $166 billion in 2011 from $91 billion in 2009. In July, Chinese President Hu Jintao offered Africa $20 billion in cheap loans over the next three years. China, he said, would forever be a “good friend, a good partner and a good brother” to Africa.

But a growing number of Africa’s billion people are less enthusiastic.”

via Insight: In Africa’s warm heart, a cold welcome for Chinese | Reuters.

17/09/2012

* China past and present: review

UK Telegraph: “China past and present: review

By Rana Mitter7:00AM BST 10 Sep 2012Comment

Two books on China explain why the country’s rise to superpower status is still far from inevitable

A vision of the Chinese future in a 1982 propaganda posterA vision of the Chinese future in a 1982 propaganda poster Photo: Alamy

Some time this autumn, the Chinese Communist Party will announce the date of the 18th Party Congress. Among the Party’s priorities will be two major issues: the need to project Chinese power more widely in the world, and the consolidation of a system of welfare that will prevent the country’s social discontent from spilling over into outright rebellion. These themes are at the centre of these two important books which, taken together, illustrate why the rise of China is far from inexorable.

Odd Arne Westad’s Restless Empire has two main purposes. The first is to provide an overview of China’s engagement with the world over the past three centuries. Westad starts with an important piece of myth-busting, arguing strongly against the idea that China has been an inward-looking society closed to the rest of the world. Whether it was the trade in silks and porcelains that made China part of a global trading network during the Ming and Qing dynasties that lasted from the 14th century to the 20th, or the forced engagement with the West that came with imperialism, China has always been connected with the wider world. Westad is particularly acute on the Cold War period, using impressive documentation to argue that China’s relationship to the rest of East Asia was not just communist, but Confucian in the ties that Mao nurtured with his ideological “younger brothers” such as Kim Il-sung and Ho Chi Minh (even if the family quickly became dysfunctional).

The second aim emerges in the last two chapters, which concern the foreign policy crises facing China today. Westad firmly rejects the received wisdom that China is set to become a global superpower, dominating policy on everything from international intervention to energy resources. Despite its rhetoric, China has in practice been almost entirely passive or reactive in the past few decades. China shows pleasure in being treated as a global player, but shows little sign of knowing what to do with that power other than criticising the United States. “China has to learn,” he says drily, “that sticking it in the eye of the world’s hyperpower may bring short-term gratification, but it does not amount to a grand strategy in international politics.”

Some of the reasons that China’s leadership may be distracted from visions of world domination are made clear in Gerard Lemos’s The End of the Chinese Dream. Lemos spent four years working in Chongqing, the city that has become notorious for the Bo Xilai murder scandal, but his account is of a less lurid but equally troubling failing in Chinese government. He examines the model of welfarist authoritarianism with which the Chinese Communist Party is attempting to gain the “performance legitimacy” that might keep it in power, and finds it seriously wanting. When the Maoist “iron rice bowl” of guaranteed employment, pensions and health care broke down as China privatised its economy in the Nineties, millions of urban and rural Chinese found themselves left behind as others got rich. Figures tell part of the story: food inflation ran at over 18 per cent in 2008, and some analysts expect that health care costs will rise by 11 per cent annually into the middle of the next decade. But the participants in the surveys that Lemos organised add human voices to the statistics: one among the hundreds he records is the 39-year-old woman who declares “Losing my job [changed my life]. I have no money to see the doctor.” She tells Lemos that she fears she’ll be unable to find “the education fee for my children’s education”. The “Chinese dream” of a middle-class existence with a flat, car, and high-quality education for the next generation has only become a reality in the last decade or two. Now it looks as if it may be slipping out of the grasp of millions even before they have had a chance to aspire to it.

Both writers make poignantly clear the obstacles to China becoming a global leader. At bottom, China does not have a vision of what a Chinese-led world would look like. Nor does its domestic political model of party-led authoritarianism export well to the rest of the world. African and Latin American nations may welcome Chinese investment and on occasion find it expedient to use the threat of Beijing to squeeze concessions from Washington. But however shaky these countries’ engagement with democratisation, they do not seriously tout the “Chinese model” as an alternative, because it is clear that China has not solved its most pressing problems: a demographic crisis exacerbated by the one-child policy, a creaking welfare system, and slowing growth.”

via China past and present: review – Telegraph.

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17/09/2012

* China files WTO complaint against U.S. CVDs

Xinhua: “China on Monday requested to negotiate with the U.S. over countervailing duties (CVDs) levied by it against Chinese tyres within the trade dispute settlement mechanism of the World Trade Organization (WTO).

“Through consultations within the WTO trade dispute settlement mechanism, the Chinese side hopes the U.S. can correct its wrong-doing and properly deal with concerns from China,” said Shen Danyang, a spokesman for the Ministry of Commerce (MOC).

In a statement on MOC’s website, Shen said China has reiterated its stance on different occasions that it resolutely opposes the abuse of trade remedy rules or trade protectionism. He added that China will exercise its rights as a WTO member to protect the legitimate interests of domestic industries.

China’s request for consultation came after the U.S. Court of Appeals for the Federal Circuit passed a so-called GPX bill earlier this year to authorize the U.S. Department of Commerce (DOC) to apply CVDs to “non-market economy” countries.

The bill, a remedy for the Tariff Act of 1930, overturned a previous federal court ruling that the U.S. DOC did not have legal authority to impose CVDs on goods from non-market economy countries and gives an application retroactive period since Nov. 20, 2006.

Shen said the U.S. has for many years kept launching countervailing probes against Chinese products without legal support of U.S. laws.

The GPX bill will place Chinese enterprises under an uncertain legal environment and violates WTO rules on transparency and procedural justice, Shen said.

According to the MOC, the trade dispute on tyres involves 24 types of tyre products worth about 7.23 billion U.S. dollars.”

via China files WTO complaint against U.S. CVDs – Xinhua | English.news.cn.

17/09/2012

* China, EU face dumping claim

China Daily: “Beijing said Brussels has agreed to begin dialogue and cooperation to resolve the multi-billion-dollar anti-dumping investigation towards China’s solar panel manufacturers.

But Brussels refused to go into details of such a stance, revealed by Chong Quan, China’s deputy representative for international trade talks, after three-hour intensive talks with senior officials of European Commission on Friday afternoon.

“They (Brussels) agreed (to hold dialogues) – and I found they are very candid and pragmatic,” Chong told China Daily. “I respect my negotiation partner.”

But when asked how strong Brussels’ intention is, Chong said: “I don’t know.”

Brussels was part of Chong’s three-stop mission to send a clear message from Beijing, which wants to solve this dispute through “consultation, dialogues and cooperation.” Before holding talking with Jean-Luc Demarty, the European Commission’s director general for trade, he was negotiating in Germany and has now moved on to talks in France.

EU trade spokesperson John Clancy refused to elaborate about the three-hour discussion in Brussels. Clancy said the European Commission has begun an “open” anti-dumping investigation on China’s solar panel exports, as it is required to do under the WTO framework and EU law.

He said input “from all stakeholders” is now welcome.

Clancy also confirmed that EU and Chinese trade officials discussed preparations for next week’s EU-China summit in Brussels.

Chong confirmed that China’s Minister of Commerce Chen Deming will be in Premier Wen Jiabao’s delegation that will attend the summit during a one-day visit to Belgium.

Wen and Chen are expected to urge Brussels to negotiate. Chong said both sides are eager to resolve this dispute through dialogue and both sides need to make every effort to avoid a trade war.

In the face of a severe economic slowdown and the magnitude of this dispute, Chong said: “Both of us will become losers if a trade war occurs and the situation is out of control.””

via China, EU face dumping claim |Economy |chinadaily.com.cn.

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