Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
BEIJING/SHANGHAI (Reuters) – China’s biggest listed banks posted higher profits in the first quarter despite the wider impact of the coronavirus pandemic on the economy, though margins shrank.
The world’s largest commercial lender Industrial and Commercial Bank of China Ltd (ICBC) (601398.SS)(1398.HK) on Tuesday reported a 3.04% rise in first quarter net profit compared to a year earlier, while Bank of Communications Co Ltd (BoCom) (601328.SS)(3328.HK) reported a 1.8% rise.
Meanwhile at Agricultural Bank of China Ltd (AgBank) (1288.HK)(601288.SS) and China Construction Bank Ltd (CCB) (601939.SS)(0939.HK), first quarter net profit rose 4.79% and 5% respectively from the same period last year.
Following suit, Bank of China Ltd (BOC) (601988.SS) (3988.HK) posted on Wednesday a 3.17% rise in first-quarter net profit.
The growth came despite China’s economy posting the first quarterly contraction since at least 1992 due to the coronavirus pandemic. The government restricted people from travelling and going back to work to contain the spread of the virus, reducing revenue for companies and income for residents.
China’s largest banks are historically more resilient than their smaller kin, as they lend more to state-backed enterprises and have larger capital reserves.
However, despite this firmer base, net interest margins shrank at four of the five lenders, as loan prime rate reform and looser monetary policy weighed, said analysts.
AgBank did not report its net interest margin, the difference between what banks pay on deposits and earn on loans.
SOURED DEBT
ICBC, AgBank and CCB bucked the trend of the wider banking sector by posting steady non-performing loan (NPL) ratios.
The banking sector’s NPL ratio climbed in the first quarter to 2.04%, the banking and insurance regulator said, the highest level since the global financial crisis.
The rise came despite Chinese regulators moving to give banks leeway, allowing them to postpone some loan repayments until the end of June, as credit card and mortgage defaults surged.
About one-third of Chinese bank loans are to sectors including transport and retail that are significantly stressed by the pandemic, according to S&P Global.
“You can see generally from banks’ results that some lenders have reported falling asset quality, the NPL ratios have risen quite a lot,” said Richard Cao, an analyst at Guotai Junan International on Monday.
The largest banks are best placed to absorb such losses with a better ability to get financing and withstand a substantial volume of bad loans, S&P said in a research note in April.
SHANGHAI (Reuters) – Apple Inc’s (AAPL.O) discounts on the iPhone 11 in China and the release of a new low-price SE model have put the company in a better position than rivals to weather a coronavirus-related plunge in global smartphone demand.
While China, which accounts for roughly 15% of Apple’s revenue, appears to be a rare bright spot, investors will be keen to get a picture of global demand when the Cupertino, California-headquartered company reports second-quarter results on Thursday.
The iPhone maker has shut retail stores in the United States and Europe following the COVID-19 outbreak, and China is the only major market where it has been able to reopen all shops.
Consumer spending is expected to be muted as the pandemic has crippled economies and Apple, the world’s second-most valuable tech company, is better armed with the launch of its new price-conscious iPhone model, analysts said.
“Apple is better positioned than most to experience a rapid recovery in a post COVID world,” Evercore analyst Amit Daryanani said in a research note. “We see demand as pushed out, not canceled.”
He added that the launch of the $399 iPhone SE suggested that Apple’s supply chain was getting back on its feet after weeks of shutdown earlier this year.
Analysts expect Apple to report a 6% drop in revenue and an 11% fall in net income in its fiscal second quarter, according to Refinitiv data.
On the other hand, Chinese brands such as Oppo and Vivo who have steadily moved to offer high-end models to challenge iPhones, stand to lose marketshare as bargain hunters choose Apple.
Earlier this month, several online retailers in China slashed prices of the iPhone 11 by as much as 18% – a tactic Apple has used in the past to boost demand. And while initial social media reaction to the new iPhone SE was muted, analysts said they were seeing a pick up in demand.
The cheaper iPhone SE could tempt iPhone owners to opt for a newer device, something they might have otherwise delayed in a weak economy, said Nicole Peng, who tracks the smartphone sector at research firm Canalys.
“People want to avoid uncertainty in a downturn,” she said. “Having a brand like Apple that can showcase quality and make people less worried about breakdowns or after-sales service can bring in buyers.”
CHEAP IS GOOD
Early data suggests that the Chinese smartphone market is recovering rapidly in the aftermath of the virus, and Apple has emerged relatively unscathed.
Sales of iPhones in China jumped 21% last month from a year earlier and more than three fold from February, government data showed, meaning March-quarter sales in the country were likely to have slipped just 1%.
To be sure, a recovery in Chinese demand won’t offset sales lost in the United States and Europe. And the company is yet to launch a smartphone enabled with 5G wireless technology like those offered by Asian rivals, a disadvantage for Apple so far.
But those same expensive 5G models may not sell well in the current climate of frugality, analysts said.
“If there are no massive subsidies (in China), I doubt there will be many smartphone users who will be eager to upgrade to 5G,” said Linda Sui, who tracks the smartphone sector at research firm Strategy Analytics.
Sui expects iPhone shipments in 2020 to be down 2 percentage points at the most, versus double digit declines at Chinese firms.
Apple also has revenue from its services business to fall back on. It has leveraged its large iPhone customer base to boost services revenue from music, apps, gaming and video.
“Apple’s Services segment should remain resilient in today’s work-from-home environment, thereby demonstrating the durability of Apple’s model,” Cowen analyst Krish Sankar said.
BEIJING, April 26 (Xinhua) — China announced Sunday to extend tax exemptions by an additional four years to further improve the inclusive finance service for smaller businesses.
The tax exemptions, which expired at the end of last year, will be extended to Dec. 31, 2023, according to a statement jointly issued by the Ministry of Finance and State Taxation Administration.
In order to boost policy support and encourage financial institutions to step up financial services, Chinese authorities decided in 2017 that financial institutions will be exempt from value-added taxes (VAT) on income from interests for loans to small and micro-sized businesses and individually-owned businesses.
The joint statement also said the VAT, which was already collected but eligible to be waived, can be deducted in subsequent months or refunded.
Image copyright GETTY IMAGESImage caption An empty stretch of the road and Delhi Police barricades to screen commuters during lockdown, at Delhi Gate on April 16, 2020 in New Delhi, India.
India has eased some restrictions imposed as part of a nationwide lockdown to curb the spread of the coronavirus.
Most of the new measures are targeted at easing pressure on farming, which employs more than half the nation’s workforce.
Allowing farms to operate again has been seen as essential to avoid food shortages.
But some other measures announced last week, will not be implemented.
This includes the delivery of non-essential items such as mobile phones, computers, and refrigerators by e-commerce firms – the government reversed its decision on that on Sunday.
And none of the restrictions will be lifted in areas that are still considered “hotspots” for the virus – this includes all major Indian cities.
Domestic and international flights and inter-state travel will also remain suspended.
So what restrictions are being eased?
Most of the new measures target agricultural businesses – farming, fisheries and plantations. This will allow crops to be harvested and daily-wagers and others working in these sectors to continue earning.
To restore the supply chain in these industries, cargo trucks will also be allowed to operate across state borders to transport produce from villages to the cities.
Essential public works programmes – such as building roads and water lines in rural areas – will also reopen, but under strict instructions to follow social distancing norms. These are a huge source of employment for hundreds of thousands of daily-wage earners, and farmers looking to supplement their income.
Banks, ATMs, hospitals, clinics, pharmacies and government offices will remain open. And the self-employed – such as plumbers, electricians and carpenters – will also be allowed to work.
Some public and even private workplaces have been permitted to open in areas that are not considered hotspots.
But all businesses and services that reopen are expected to follow social distancing norms.
Who decides what to reopen?
State governments will decide where restrictions can be eased. And several state chief ministers, including Delhi’s Arvind Kejriwal, have said that none of the restrictions will be lifted in their regions.
Mr Kejriwal said the situation in the national capital was still serious and the decision would be reviewed after one week.
India’s most populous state, Uttar Pradesh, will also see all restrictions in place, as will the southern states of Andhra Pradesh, Telangana and Karnataka.
The southern state of Kerala, which has been widely acknowledged for its success in dealing with the virus, has announced a significant easing of the lockdown in areas that it has demarcated as “green” zones.
This includes allowing private vehicular movement and dine-in services at restaurants, with social distancing norms in place. However, it’s implementing what is known as an “odd-even” scheme – private cars with even and odd number plates will be allowed only on alternate days, to limit the number of people on the road.
People walk in Huahongyuan residential area in Zhanyi District in Qujing, southwest China’s Yunnan Province, Nov. 22, 2019. In 2013, under the guidance of local government, farmers in Songlin community started to build a new residential area following the principle to integrate environmental improvement, infrastructure construction and industrial development into building beautiful countryside. In 2016, the farmers moved in the newly-built Huahongyuan residential area and conducted various ways to boost income. (Xinhua/Yang Zongyou)
Image copyright GETTY IMAGESImage caption The onion is India’s most “political” vegetable
Onion prices have yet again dominated the headlines in India over the past week. BBC Marathi’s Janhavee Moole explains what makes this sweet and pungent vegetable so political.
The onion – ubiquitous in Indian cooking – is widely seen as the poor man’s vegetable.
But it also has the power to tempt thieves, destroy livelihoods and – with its fluctuating price a measure of inflation – end the careers of some of India’s most powerful politicians.
With that in mind, it’s perhaps unsurprising those politicians might be feeling a little concerned this week.
So, what exactly is happening with India’s onions?
In short: its price has skyrocketed.
Onion prices had been on the rise in India since August, when 25 rupees ($0.35; £0.29) would have got you a kilo. At the start of October, that price was 80 rupees ($1.13; £0.91).
Fearing a backlash, the Bharatiya Janata Party (BJP)-led government banned onion exports, hoping it would bring down the domestic price. And it did.
Image copyright GETTY IMAGESImage caption Onion prices peaked by the end of September
A kilo was selling for less than 30 rupees on Thursday at Lasalgaon, Asia’s largest onion wholesale market, located in the western state of Maharashtra.
However, not everyone is happy.
While high prices had angered consumers in a sluggish Indian economy, the fall in prices sparked protests by exporters and farmers in Maharashtra, where state elections are due in weeks.
And it is not just at home where hackles have been raised: the export ban has also strained trade relations between India and its neighbour, Bangladesh, which is among the top importers of the vegetable.
But why does the onion matter so much?
The onion is a staple vegetable for the poor, indispensable to many Indian cuisines and recipes, from spicy curries to tangy relishes.
“In Maharashtra, if there are no vegetables or you can’t afford to buy vegetables, people eat ‘kanda bhakari’ [onion with bread],” explains food historian Dr Mohseena Mukadam.
True, onions are not widely used in certain parts of the country, such as the south and the east – and some religious communities don’t eat them at all.
But they are especially popular in the more populous northern states which – notably – send a higher number of MPs to India’s parliament.
“Consumers in northern India wield more power over the federal government. So although consumers in other parts of India don’t complain as much about higher prices, if those in northern India do, the government feels the pressure,” says Milind Murugkar, a policy researcher.
Image copyright GETTY IMAGESImage caption Onions are so ubiquitous that the government has been selling them at subsided rates
A drop in prices also affects the income of onion farmers, mainly in Maharashtra, Karnataka in the south and Gujarat in the west.
“Farmers see the onion as a cash crop that grows in the short term, and grows well in dry areas with less water,” says Dipti Raut, a journalist, who has been on the “onion beat” for years.
“It’s like an ATM machine that guarantees income to farmers and sometimes, their household budget depends on the onion produce,” she said.
Onions have even attracted robbers: when prices skyrocketed in 2013, thieves tried to steal a truck loaded with onions, but were caught by the police.
Why do politicians care about the onion?
Put simply, because the price moving too far one way or another is likely to anger a large block of voters, be they everyday households, or the country’s farmers.
Image copyright GETTY IMAGESImage caption The Delhi government transported 70 vans full of subsidised onions
Onions are so crucial they have even featured in election campaigns. The Delhi state government bought and sold them at subsidised rates in September when prices were at their peak: chief minister Arvind Kejriwal, it should be noted, is up for re-election next year.
Meanwhile, Indira Gandhi swept to power in 1980 on slogans that used soaring onion prices as a metaphor for the economic failures of the previous government.
But why did onion prices rise this year?
A drop in supply, due to heavy rains and flooding destroying the crop in large parts of India, and damaging some 35% of the onions stocks in storage, according to Nanasaheb Patil, director of the National Agricultural Co-operative Marketing Federation.
He said the flooding had also delayed the next round of produce, which was due in September.
Image copyright GETTY IMAGES
“This has become a fairly regular phenomenon in recent decades,” Mr Murugkar said. “Onion prices swing heavily with a small drop or increase in production.”
In fact, the shortage – and subsequent rise in prices – happens almost every year around this time, according to Ms Raut.
“It’s a vicious cycle and the trader lobby and middlemen benefit from even the slightest price fluctuations,” she added.
What’s the solution?
Ms Raut says more grass-root planning and better storage facilities and food processing services will ease the problem – and making a variety of cash crops and vegetables available across the country would also ease the pressure on onions.
“The government is quick to act when onion prices rise. Why don’t they act as swiftly when prices fall?” asked Vikas Darekar, an onion farmer in Maharashtra. He said the government should buy onions from farmers at a “fair price”.
Mr Murugkar, however, feels that the government should never interfere in “onion matters”.
“If you are interested in raising purchasing power of the people, they should not curtail exports. Do we have such a ban on software exports? It’s really absurd. A government which has won such a huge majority should be able to withstand the pressures from a few consumers.”
CHINDIA ALERT: You'll be living in their world, very soon 