Archive for ‘Economics’

05/09/2012

* Guangzhou Moves to Limit New Cars

NY Times: “It is as startling as if Detroit or Los Angeles restricted car ownership.

The municipal government of Guangzhou, a sprawling metropolis that is one of China’s biggest auto manufacturing centers, introduced license plate auctions and lotteries last week that will roughly halve the number of new cars on the streets.

The crackdown by China’s third-largest city is the most restrictive in a series of moves by big Chinese cities that are putting quality-of-life issues ahead of short-term economic growth, something the central government has struggled to do on a national scale.

The measures have the potential to help clean up China’s notoriously dirty air and water, reduce long-term health care costs and improve the long-term quality of Chinese growth. But they are also imposing short-term costs, economists say, at a time when policy makers in Beijing and around the world are already concerned about a sharp economic slowdown in China.

“Of course from the government’s point of view, we give up some growth, but to achieve better health for all citizens, it is definitely worth it,” said Chen Haotian, the vice director of Guangzhou’s top planning agency.

Nanjing and Hangzhou in east-central China are moving to require cleaner gas and diesel. Cities near the coast, from Dongguan and Shenzhen in southeastern China to Wuxi and Suzhou in the middle and Beijing in the north, are pushing out polluting factories. And Xi’an and Urumqi in northwestern China are banning and scrapping cars built before 2005, when automotive emissions rules were less stringent.

“There’s a recognition finally that growth at all costs is not sustainable,” said Ben Simpfendorfer, the managing director of Silk Road Associates, a Hong Kong consulting firm.

Facing public pressure to address traffic jams and pollution, municipal governments from across China have been sending delegations to Guangzhou. But the national government in Beijing is pushing back against further car restrictions because of worries about the huge auto industry, said An Feng, a senior adviser in Beijing to transportation policy makers.

“This has really become a battle,” Mr. An said.”

via Guangzhou Moves to Limit New Cars – NYTimes.com.

See also: 

03/09/2012

* India’s top court allows some iron ore mining to resume

BBC News: “India’s Supreme Court has partially lifted its 16-month-old ban on iron ore mining, allowing some mines to resume work in southern Karnataka state.

Iron ore mining in Goa

Companies which had “not violated their lease conditions” could resume mining, the court ruled on Monday.

The ban was imposed last year in Bellary, Chitradurga and Tumkur districts over environmental concerns.

The order will open up about 5 million tonnes a year of production again, reports say.

India is the third largest producer of iron ore in the world and Karnataka, which produces about 45 million tonnes of iron ore per year, is India’s second largest supplier.

But mining in the state has been under the spotlight for some time with reports of illegal mining and has become a hot political issue.

The Supreme Court order follows recommendations of the court-appointed Central Empowered Committee (CEC).

In a report in February, the CEC recommended that licences of as many as 49 iron ore miners in Karnataka should be cancelled.

It said 72 other miners should be fined for operating mining pits and burden dumps outside sanctioned areas.

“The extent and level of unauthorised, unregulated, environmentally unsustainable and illegal mining in its various facets has no other parallel in the country,” the CEC said it is report.

Last year, BS Yeddyurappa, the then chief minister of Karnataka, resigned after an anti-corruption panel indicted him in a mining scandal. Mr Yeddyurappa denies the allegation.”

via BBC News – India’s top court allows some iron ore mining to resume.

03/09/2012

* China’s steel traders expose banks’ bad debts

Reuters: “China’s banks are coming after the country’s steel traders, hauling executives into court to chase down loans that some traders said they didn’t initially need and can’t now repay.

An employee checks on a steel product at a steel production factory in Wuhan, Hubei province in this August 2, 2012 file photo. China's banks are coming after the country's steel traders, hauling executives into court to chase down loans that some traders said they didn't initially need and can't now repay. The heavy push to recover the loans is another sign of strain on China's financial system at a time when the country's leaders are contemplating another round of stimulus to boost the economy, and when banks are worried about bad debts piling up. REUTERS-Stringer-Files

The heavy push to recover the loans is another sign of strain on China’s financial system at a time when the country’s leaders are contemplating another round of stimulus to boost the economy, and when banks are worried about bad debts piling up.

The battle between the banks and steel traders also exposes flaws in the 4 trillion ($629 billion) stimulus round in 2008, and offers a warning to those calling for pumping more money into the system. At that time, Chinese banks threw money at the steel trade – a crucial cog in supplying the country’s massive construction and infrastructure growth.

But those steel loans, after offering a quick fix, became excessive, poorly managed, or a combination of the two. Government officials insisted more money was needed to prop up the industry. Steel executives said the money flow was too heavy, and they had to put the money to work in real estate and the stock market.

“After the financial crisis, when the government released its stimulus, banks begged us to borrow money we didn’t need,” Li Huanhan, the owner of Shanghai Shunze Steel Trading, told a judge at a recent hearing. “We had nothing to do with the money, so we turned to other investments, like real estate.””

via Insight: China’s steel traders expose banks’ bad debts | Reuters.

03/09/2012

* China probes ‘gutter oil in medicine’ claims

BBC News: “Chinese officials have told pharmaceutical firms to check their suppliers after claims that some have used “gutter oil” to make antibiotics, state-run media report.

File photo: Police inspecting illegal cooking oil seized in 2010

Officials are looking into firms that reportedly use the cheaper gutter oil rather than the more expensive soy bean oil in the production process.

Gutter oil is reprocessed kitchen waste dredged from restaurant drains.

It has been part of a series of recent food safety scandals in China.

The government said it would release its findings soon, without giving further details.

It is not clear whether these antibiotics pose a risk to public health, but the incident highlights how some firms cut corners to pursue profits, says the BBC’s Martin Patience in Beijing.

Scandals over contaminated food – most recently gutter oil – have caused considerable public alarm in China in recent years.

In April, state-run media reported on how officials cracked down on underground workshops that used decomposing animal fat and organs to produce gutter oil.

Police said that most of the oil was sold to oil manufacturers for food production and making hotpot soup in restaurants.

In September last year, police arrested 32 people in an operation to prevent the sale of gutter oil as cooking oil.”

via BBC News – China probes ‘gutter oil in medicine’ claims.

There seem to be no limits to the unethical behaviour of some Chinese business people. Central government is trying to do its best, in pharmaceuticals,and  food production, but the miscreants carry on.

31/08/2012

* Shandong Heavy seeks stake in Germany’s Kion

China Daily: “Shandong Heavy Industry Group Co Ltd, the Chinese construction machinery producer, is seeking a 25 percent stake in German fork-lift manufacturer Kion Group GmbH, according to a report in German newspaper Handelsblatt, citing sources with knowledge of the negotiations.

Wiesbaden-based Kion belonged to industry group Linde AG until 2006 and now is owned by finance houses Goldman Sachs Group Inc and KKR & Co LP.

With an expected price of around 700 million euro ($879m), the transaction would be the biggest investment yet by a Chinese company in Germany, Handelsblatt said.”

via Shandong Heavy seeks stake in Germany’s Kion |Companies |chinadaily.com.cn.

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

31/08/2012

* India’s economic growth better than forecast

BBC News: “India’s economy grew faster than expected in the three months to the end of June, easing some fears about a sharp slowdown in Asia’s third-largest economy.

Growth was 5.5% in the April to June period from a year earlier. Most analysts had forecast a rate of 5.2%.

That compares with a 5.3% annual growth rate in the previous quarter.

However, there are concerns that a lack of reforms, slowing factory output and investment may hurt long-term growth.

“Whilst an upside surprise at 5.5%, the pace of growth is undeniably below potential and validates the need for the government to address sluggishness in investment and external sector activity,” said Radhika Rao an economist at Forecast Pte.”

via BBC News – India’s economic growth better than forecast.

30/08/2012

* China to buy 50 Airbus planes for $3.5bn

BBC News: “China has signed a deal to buy 50 planes worth $3.5bn (£2.2bn) from Europe’s Airbus.

The agreement is part of a slew of trade deals signed by German Chancellor Angela Merkel at the start of a two-day visit to China.

An agreement on Airbus plane assembly in China was also signed, according to the Xinhua news agency.

Chinese Premier Wen Jiabao said on Thursday his country would continue to invest in the EU.

Emissions row

This is the first significant deal in China for Airbus, whose parent company is EADS, since a dispute between the country and the European Union over the Emissions Trading Scheme (ETS).

Effective from 1 January this year, the ETS charges airlines for the carbon they emit.

China and other countries say the system is not fair, as it charges airlines for the full journey, not just over European airspace.

Following this in March, EADS chief executive Louis Gallois said Airbus was facing “retaliation measures” by China.

According to him, China had blocked firms from buying planes made by Airbus. Beijing did not comment on the allegation.”

via BBC News – China to buy 50 Airbus planes for $3.5bn.

Although $3.5bn sounds big, it is only half that being ordered by the Philippines: Airbus wins $7 bln Philippine Air order (vancouverdesi.com)

29/08/2012

* China’s Exports to U.S. Gain Traction

WSJ: “China’s exports to Europe have remained weak during the traditional peak season for shipping, but the country’s trade with the U.S. appears to have more traction, according to the chief executive officer of Maersk Lines, the world’s largest container shipping group.

Søren Skou, who took the helm this year of the container division of the Denmark’s A.P. Møller Maersk A/S said in an interview Wednesday with The Wall Street Journal that his confidence in global trade has deteriorated since June, mostly because of recessionary conditions in Europe, but he said volumes world-wide are likely to expand 4% for the full year compared with 2011.

August is a critical month for the containerized shipping industry, which depends on exports to the West from China for the bulk of its activity. Mr. Skou said his customers appear to be positioning for satisfactory holiday spending in the U.S.—but not Europe.

“The customers are expecting a Christmas season [in the U.S.], which doesn’t appear to be the case in Europe,” he said.”

via China’s Exports to U.S. Gain Traction – WSJ.com.

Some glimmer of hope for (part of) world economy!

27/08/2012

* $135 – $12 = the pay gap the West can’t bridge

The Times: “We can’t compete with China on wages and are living beyond our means. We must retrench before we grow again

Two numbers — $135 and $12 — explain why Britain’s and Europe’s economies are stagnant or shrinking. Pundits and economists have lined up with suggestions about how to stimulate our economy: more quantitative easing; clever schemes such as “funding for lending”; while others say enough of austerity, let’s stop the cuts. But all that assumes that growth is the natural order of things.

None of these proposals will solve our problems because they ignore the two numbers $135 and $12. The first is what the average worker in the West earns per day; the second what the average worker in urban China earns.

This inequality in pay is the main reason our economy is in peril. What entitles the rich world’s 500 million workers to salaries ten times greater than the 1.1 billion workers in urban bits of the developing world who toil and study so much harder, let alone nearly 100 times greater than the 1.3 billion adults who live in rural poverty?

In the global marketplace it is now impossible to preserve well-paid jobs for Westerners. Many of those jobs have gone or are going south or east. In the 1950s the most successful company by market capitalisation was General Motors. In 1955 it employed nearly half a million Americans and 80,000 foreigners. Today Apple, the world’s biggest company, employs 4,000 Americans and more than 700,000 overseas contractors. And in jobs that have not moved, wages are under severe downward pressure: US high- school dropouts now earn less in real terms than their dropout grandfathers.

It was not always like that. For 55 years after the Second World War annual growth in jobs in Western economies was about 2 per cent and real wages grew by about 3 per cent year after year. The idea that we would all earn more without having to work harder, and that there would be jobs for our children, became a democratic “right”. But this right is now broken because, starting in 1990, developing nations ditched the failed socialist and Marxist policies that kept them poor. Since 2000 China’s economy has quintupled — while jobs, wages and GDP growth over the cycle for Western economies was, with few exceptions, negative.

For the first time in centuries we have to compete on a level playing field. We cannot compete on wages. Do we have other advantages that will protect our living standards? Aren’t Europe’s workers better educated? More creative? No: 10,000 science PhDs graduated from Chinese universities last year. In 1995, global patents granted to China amounted to 0.5 per cent of the total; in 2010 it had reached 9 per cent and is rising exponentially. Our best universities are educating many future business leaders and scientists of developing countries. Our advantage in physical and intellectual capital is eroding fast. What the developing world does not create, it can steal; the global value of counterfeit and pirated goods is forecast to rise by $1.5 trillion by 2015.

Most importantly, we consume more and invest less. China’s investment levels (however misdirected some of those investments may be) have risen to almost half of GDP, while the West is at about 15 per cent and falling. The truth is that Western nations have been living beyond their means. Our build-up in total debt — corporate, individual and government — has now become an enormous overhang. The UK is more indebted than Greece, Spain or Italy and only Japan and Ireland’s total debt per head is greater than ours.

So how do we get out of this mess?

…”

By Jon Moynihan, , 15 August 2012 | PA Consulting Group

via The Times – $135 – $12 = the pay gap the West can’t bridge, 15 August 2012 | PA Consulting Group.

27/08/2012

* Car plate applicants exceed 1m in Beijing

China Daily: “A record 1-million-plus people in Beijing competed for fewer than 20,000 registration certificates qualifying them to buy cars through a lottery system on Sunday.

With a fixed number of car registrations issued each month and a lengthening waiting list, many potential car buyers are losing hope.

Some 1.05 million qualified applicants entered the registration lottery in August – 110,000 of them for the first time – and only 19,926 registrations will be issued, the city office in charge of the lottery system said on Saturday.

One in every 53 applicants will get the registrations, 80 percent fewer than in January last year, when Beijing introduced the lottery system to cap new car ownership at 240,000 a year.”

via Car plate applicants exceed 1m in Beijing |Society |chinadaily.com.cn.

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