Archive for ‘Economics’

24/06/2012

* Ikea Applies for Big Indian Investment

WSJ: “Swedish housewares giant IKEA Group asked India for permission to invest €1.5 billion ($1.9 billion) in the country to set up 25 retail stores in coming years, a commitment that provides some relief for New Delhi policy makers who have been trying to boost sagging foreign-investor sentiment.

IKEA’s foray into India, made possible by a policy change last year that allowed some retailers to own 100% of their Indian units, could help transform India’s largely unorganized, $500 billion retail sector. But the company will face significant challenges, including meeting the government’s mandate that it source 30% of inventory from local small-scale industries.

IKEA, which has 290 stores in 26 countries and is known for selling affordable, modern-looking furniture and housewares, said that if the Indian government approves its application it could have a significant effect on the country’s retail sector, “vastly improving availability of high-quality, low-price products not available in India.”

The company announced its decision after its chief executive, Mikael Ohlsson, met with Indian Commerce Minister Anand Sharma on Friday at a conference in St. Petersburg, Russia.”

via Ikea Applies for Big Indian Investment – WSJ.com.

See also: Consumerism grows in India

22/06/2012

* China adds more trains for holiday travel rush

Xinhua: “China’s Ministry of Railways said Friday it has put more trains on to ease transportation pressure during the three-day Dragon Boat Festival holiday from June 22-24.

The ministry added 196 provisional passenger trains for the travel rush Thursday, one day ahead of the holiday, 70 more than the eve of last year’s holiday, it said in a statement.

China’s railways are expected to carry 6.75 million passengers on Friday, the travel peak of this holiday, up 4.7 percent from the holiday travel peak last year, the ministry has said.

It estimated a daily average passenger flow of 6.1 million from June 21 to 24, up 5 percent from that during last year’s holiday travel rush.

The Dragon Boat Festival, also called Duanwu Festival, is traditionally celebrated on the fifth day of the fifth month on the Chinese lunar calendar.

The festival commemorates the famous ancient Chinese poet Qu Yuan. Chinese people prepare and eat zongzi, or leaf-packed glutinous rice dumplings, drink wine and race dragon boats on the day.

The festival falls on June 23 this year.”

via China adds more trains for holiday travel rush – Xinhua | English.news.cn.

Although the festival commemorates a historic Chinese event – see http://mandarin.about.com/od/chineseculture/a/dragon_boat.htm – over recent years it has become an international sporting event http://www.dragonboatcalendar.com/ . Not dissimilar to the Greek Marathon now an international sport.

21/06/2012

* All eyes on China’s green leap forward

New Scientist: “TWENTY years ago this week, the United Nations’ Earth Summit closed in Rio de Janeiro having forged landmark agreements on climate change and biodiversity. Next week, delegates from around the world will meet again in Rio for a new Conference on Sustainable Development, dubbed Rio+20. How far have things advanced in the interim?

On the face of it, the picture is dispiriting. Annual global carbon dioxide emissions have risen by over 50 per cent, and the demise of the Kyoto protocol has halted co-ordinated action on climate change. And while the Convention on Biological Diversity is still in force, it has not prevented rampant habitat destruction.

With global co-operation proving hard to secure, progress now depends heavily on the unilateral actions of individual countries. The US tops the priority list, just as it did at the original Earth Summit – but it has been joined there by China. The Asian giant’s extraordinary economic growth has come at enormous environmental cost: it is now among the world’s largest polluters, and its natural resources have been massively exploited in recent years.

Despite this, China’s appetite for resources still falls well short of the west’s on a per capita basis, and its people do not generally enjoy the prosperity, health and life satisfaction common to the world’s richest billion inhabitants. It has become the received wisdom that nothing approaching global parity can possibly be achieved without utterly gutting the planet. The implication? That the lives of 6 billion of the world’s residents are, and must remain, “nasty, brutish and short”.

We now have a first sense that this picture is not true to life. Much discussion revolves around GDP, but this is a poor measure of sustainable development. Pick a metric that emphasises citizen well-being in combination with the environment, such as the Happy Planet Index, and the pecking order is turned on its head, with countries such as Costa Rica topping the league (see “What is wealth on a happy planet?”).

Such measures are for the moment informal. But the World Bank has for some time been plugging away at its own tweaked index, which would offset the environmental damage caused by a nation’s industry against its productivity. It has been slow going, due to political resistance and the difficulties of pricing up “natural capital”.

This is where China’s role becomes most surprising – and promising. It is setting out on a huge green experiment that could provide lessons far afield (see “China leads the march for the green economy”). Even as its economy booms, it is sharply reducing its “carbon intensity” – CO2 emissions per unit of GDP – and deploying new economic models to price natural resources.

Such models are routinely scorned in the west as the products of ivory-towered wishful thinking, and their adoption deemed unthinkably risky. Yet China, acting largely out of economic self-interest, and perhaps with a longer-term vision than beleaguered western democracies can muster, is forging ahead.

All this does not expiate China from its environmental sins. But its experiment offers the west scope to learn from its experience. Our representatives at Rio+20 should pay close attention.”

via All eyes on China’s green leap forward – opinion – 14 June 2012 – New Scientist.

21/06/2012

* Imagine if every resident of Mumbai had a car?

IT Decisions: “Professor Stéphane Garelli of IMD Business School and the University of Lausanne delivered one of the opening keynotes, describing the future of the world economy. One of the key points he made related to consumers in emerging economies creating ‘needs’ from what were previously ‘wants’.

“In China, everybody is buying a fridge. How many times have you bought a fridge? Once you have one then it lasts a long time before you replace it. You are living in a replacement economy where you are just upgrading what you already have. In China, you have no fridge, you want one. You have no TV set, you want one. You have no telephone, you want one…” he said.

The idea that enormous tranches of humanity are about to start consuming items they have never used before, such as cars, washing machines, fridges, and air conditioning, is a scary thought for environmental campaigners. Economic growth benefits those who are lifted from poverty, but how can the world really cope with billions of new drivers all expecting their own car?

Professor Garelli said: “The problem for the environment is that the infrastructure is not following [consumption].  For example in China, in 2020 they will buy 30m cars and only 15m will be sold in the USA. So everybody wants a car, but there are not enough roads for all of them. You need growth, you need traffic control, etc – the infrastructure has to grow in parallel.”

Professor Garelli went on to explain: “This means there is an enormous environmental impact and I think that this growth has to be checked. At a certain stage they will have to slow down some access. There are some countries where people can perhaps wait for a car – can you imagine if every single person in Mumbai has a car?”  …  “

via Imagine if every resident of Mumbai had a car? | IT Decisions.

16/06/2012

* China launches spaceship with first female astronaut

Xinhua news: “China launched Saturday Shenzhou-9 spacecraft with the country’s first female astronaut aboard.

Shenzhou-9, atop an upgraded Long March-2F carrier rocket, blast off from the Jiuquan Satellite Launch Center in northwestern China at 6:37 p.m. Saturday.

A see-off ceremony was held at the center hours before the launch. Wu Bangguo, the country’s top legislator, attended the ceremony and extended wishes to the three astronauts.

“The country and the people are looking forward to your successful return,” he said.

The first Chinese woman in space Liu Yang, 33, is joined by commanding officer Jing Haipeng and Liu Wang, who has been selected as an astronaut trainee since January 1998.

Main tasks of the Shenzhou-9 mission include the manual docking procedure conducted between the Shenzhou-9 and the orbiting space lab module Tiangong-1.

China succeeded in the automated rendezvous and docking between unmanned Shenzhou-8 spacecraft and Tiangong-1 last year.

A successful manual docking will demonstrate a grasp of essential space rendezvous and docking know-how, a big step in the country’s manned space program to build a space station around 2020.

Liu, a People’s Liberation Army (PLA) major, was a PLA Air Force pilot with 1,680 hours of flying experience and deputy head of a military flight unit before being recruited as an astronaut candidate in May 2010.

After two years of training, which shored up her astronautic skills and adaptability to space environment, Liu excelled in testing and was selected in March this year as a candidate for the Shenzhou-9 manned space mission.

“Female astronauts generally have better durability, psychological stability and ability to deal with loneliness,” Wu Ping, spokeswoman for China’s manned space program, said.

More than 50 female astronauts from seven countries have gone into space to date. The longest space flight by female astronauts lasted 188 days.”

via China launches spaceship with first female astronaut – Xinhua | English.news.cn.

https://chindia-alert.org/prognosis/innovation/

15/06/2012

* Toilets Become a Battle Cry in India

NY Times: “You could be forgiven for thinking that safety is the top concern for travelers brave enough to venture on Indian railways. It’s not. Unclean toilets appear to be their main grouse, according to a recent survey.

Across India, toilets appear to be the new battleground on which wars are being waged, whether it’s about hygiene, austerity, gender equality or corruption.

On India Ink, we’ve previously written how sanitation is a dump in India, with more than half of all households having no toilet facilities.

Even Bill Gates, one of the world’s richest people, has made his new mission to “reinvent the toilet.” “One of my ultimate dreams now is to reinvent the toilet — find a cheaper alternative to the flush toilet that does not require running water, has smell characteristics better than the flush toilet and is cheap,” he told the Times of India newspaper.

But it’s mostly the women in India who are paying a price for toilets -– literally. On Thursday Jim Yardley wrote in The New York Times that unlike men, many women in Mumbai often have to pay to urinate –- an injustice that has started a “Right to Pee” campaign.

Toilets have also been flushed into the austerity debate last week, when India’s Planning Commission ran up a 3 million rupee, or $54,100, bill for renovating the toilets at its headquarters, a move viewed by some as lavish and a drain on public funds. That was followed by news that the western state of Goa had given 2 million rupees, or $35,700, to build a single air-conditioned toilet in the constituency of the former chief minister of the state.

Think that raises a stink? In India, where the government is reeling with corruption scandals, the innocuous toilet made a brief swirl when many reportedly went missing. According to an April report in an Indian daily, the Telegraph, the federal government says it delivered about 87.1 million toilets to households across villages over the last decade. But the census shows that only about 51.6 million had toilets in 2011. That’s a case of 35 million missing toilets.”

via Toilets Become a Battle Cry in India – NYTimes.com.

Another example of discrimination against women in India.  See: https://chindia-alert.org/2012/06/14/india-the-worst-big-country-to-be-a-woman/

See also: Will India overtake China in 25 years?

15/06/2012

* Deutsche Bank Makes Cross-Border Yuan Payment Under New China Central Bank Scheme

WSJ: “A pilot scheme intended to make it easier for companies to settle trade in the Chinese yuan officially kicked off Friday, with Deutsche Bank AG completing the first cross-border yuan payment transaction under the program.

The new program, launched by the Shanghai branch of the People’s Bank of China on a trial basis, aims to streamline the process for settling cross-border trade in the yuan by exempting qualified companies from submitting original trade documentation to support each payment. Information on the program has recently been circulated among banks in Shanghai, bankers said, though the central bank hasn’t yet made a public announcement on the initiative.

Deutsche Bank, one of the largest providers of liquidity to currency markets, executed the transaction on behalf of the China subsidiary of Huettenes-Albertus, a German manufacturer of foundry chemical products, under which the company paid a foreign supplier in yuan.

“In the past, settling trade in yuan has been both time-consuming and labor intensive,” said Beng-Hong Lee, Deutsche Bank’s head of foreign-exchange trading in China. “This is a big leap forward.”

The new scheme currently is limited to companies and banks operating in Shanghai. It follows the PBOC’s move in March, when the central bank expanded the use of yuan in trade settlement to exporters and importers across the country.

As China pushes ahead with its drive to spread global use of its currency, many analysts expect the yuan to account for a bigger share of international trade settlement. Beijing started to allow cross-border trade to be invoiced and paid for in its currency about three years ago, and since then, yuan-settled trade has grown to about 10% of China’s total trade. Some analysts have predicted that figure to grow to 3.7 trillion yuan ($587 billion) this year, or 15% of China’s total trade.”

via Deutsche Bank Makes Cross-Border Yuan Payment Under New China Central Bank Scheme – WSJ.com.

Another step in freeing the world economy from US $ domination.

15/06/2012

* More people see China as the world’s top economy, poll finds

LA Times: “Never mind that the U.S. economy is about twice the size of China’s. More people than ever perceive the Asian giant as the world’s dominant economic power, according to a Pew Research Center global survey.

The results are believed to reflect popular opinion that the U.S. and Chinese economies are heading in opposite directions.

“The global financial crisis and the steady rise of China have led many to declare China the world’s economic leader,” said the report, which was released Wednesday and also addressed a series of global opinions on the perception of nations and their leaders.

For the first time, respondents around the world picked China as the world’s leading economy over the U.S., by a margin of 42% to 36%.

Asked the same question last year, a median of 41% said the U.S. is the world’s leading economy and only 35% picked China.

Even many American respondents said they believed China was ahead, with 41% saying China was the leading power and 40% saying the U.S.

Chinese respondents were more sanguine (and realistic), with 48% calling the U.S. the primary economic power and 29% choosing China.

There’s ample reason to believe that China is ascendant. The country was able to insulate itself from the 2008 financial crisis with minimal exposure to foreign banks. What it lost in trade it made up for with a massive stimulus plan. China is also sitting on a cache of $3.2 trillion in foreign reserves that many believe it can wield as a financial weapon.

But China’s path to global dominance is anything but assured and, at the very least, decades off, economists say.”

via More people see China as the world’s top economy, poll finds – latimes.com.

They say: “perception is reality”!

See also: G2?

14/06/2012

* What Happens if India Is Downgraded to ‘Junk’?

NY Times: “Since Standard & Poor’s warned Monday that India could be the first among the BRIC nations to lose its investment grade rating, politicians in India have moved quickly to discount the report.

Finance Minister Pranab Mukherjee “rejects” the report, the ministry said in a statement, which added that there are “several positives” for the Indian economy in the future. Rajkumar Dhoot, a member of Parliament and head of an industry trade group, referred to the report as “drawing room talk,” while Veerappa Moily, the minister of corporate affairs, said “S&P can not speak like this,” the Press Trust of India reported.

The criticism of Standard & Poor’s is overlooking an important point, analysts say. Whether politicians and industry leaders agree with the rating agency or not, a downgrade to so-called ‘junk’ status, could have very serious, very negative connotations.

“We shouldn’t ignore foreign rating agencies, either right or wrong,” said Vikram Limaye, deputy managing director at the Infrastructure Development Finance Company. “We should take their concerns into account. It is incumbent upon us to explain why their fears are misplaced or exaggerated in a reasonable way. Dismissal will not get us anywhere.”

A rating downgrade to junk status would mean that there would be an increase in the overseas borrowing costs for Indian companies and the country’s ability to attract foreign investment would be considerably diminished.

“This could have a major impact on overall fund flows, which rely heavily on international ratings,” said Dipen Shah, who leads fundamental research at Kotak Securities. “While the overall international debt is not so alarming as a proportion of the G.D.P., India needs a lot of capital flows to cover up its balance of payment deficit.”

While the cost of borrowing will increase, India’s borrowing capability will also be materially reduced, as certain investors who only invest in investment-grade paper will shun India.”

via What Happens if India Is Downgraded to ‘Junk’? – NYTimes.com.

13/06/2012

* Saab sold to Chinese-Swedish investment group

BBC News: “Bankrupt carmaker Saab has been sold to a Chinese-Swedish investment group which aims to turn the company into a maker of electric vehicles. Saab’s administrator said the buyer was National Electric Vehicle Sweden (Nevs). No sale price was given. Saab went bankrupt in December, two years after former owner General Motors sold it to Dutch group Spyker.

Saab “will start a new operation” to develop and produce electric cars, the administrator said in a statement.

The administrator said in April that Saab had assets to cover about a third of its debts of 13bn kronor (£1.2bn).

The chief executive and main owner of Nevs is a Chinese businessman with Swedish citizenship, Kai Johan Jiang. The chairman of Nevs is Karl-Erling Trogen, a former head of the truck division of truck and construction equipment maker Volvo.

“Nevs and the receivers of the Saab Automobile bankruptcy estate today signed a purchase agreement which covers the main assets of Saab Automobile AB, Saab Automobile Powertrain AB and Saab Automobile Tools AB,” Nevs and the administrators said in a joint statement.

Saab employs about 3,000 people, with its main base at Trollhattan, west Sweden, where investment in new electric car manufacturing will be made.”

via BBC News – Saab sold to Chinese-Swedish investment group.

Law of Unintended Consequences

continuously updated blog about China & India

ChiaHou's Book Reviews

continuously updated blog about China & India

What's wrong with the world; and its economy

continuously updated blog about China & India