continuously updated blog about China & India
You will be living in their world, very soon
Beware the Waking Dragon
If China does agree to ASEAN multi-lateral agreement on South China Sea dispute, it will probably be the first time. It much prefers to do bilateral deals; conforming tot the old principle of ‘divide and conquer’.
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Bad news for ruling Congress Party as national general elections are scheduled for next year.
WSJ: “India’s merchandise exports are set to fall way short of initial estimates because of a demand slowdown in key markets, shows a government projection that is likely to deepen concerns on the country’s financial health and hurt its currency.
India’s exports could be as low as $291 billion in the fiscal year through March, compared with the initial target of $360 billion, according to a trade ministry document. At best, that if market conditions improve dramatically from now, exports could total $300 billion to $320 billion.
via India to Miss Export Target – WSJ.com.
Australia faces the reality of the 21st Century. Others are bound to follow.
BBC: “Australian PM Julia Gillard has outlined a major foreign policy plan aimed at improving Asian ties.
A government white paper sets out 25 national objectives to be met by 2025, with targets ranging from improving trade links to teaching more Mandarin.
Mrs Gillard said she wanted to refocus Australia away from Europe’s “old countries” towards its near neighbours – particularly China and India.
The plan is detailed in a 312-page paper, Australia in the Asian Century.
With Asia on track to become home to most of the world’s middle class in the next 20 years, this was a moment in history to grasp, said Mrs Gillard during the release of the white paper at Sydney’s Lowy Institute.
“The scale and pace of Asia’s rise is staggering, and there are significant opportunities and challenges for all Australians,” she said.
“It is not enough to rely on luck – our future will be determined by the choices we make and how we engage with the region we live in.””
via BBC News – Australia PM Julia Gillard outlines Asia manifesto.
As China increases its own Intellectual Property and the number of registered and granted patents, it is in its own self-interest to take IPR and copyright more seriously than it has hither to. This is good news for all innovators whether Western or Eastern.
Xinhua: “An increasing number of patents and trademark registrations is boosting social awareness of intellectual property rights (IPR) in China, which will change the way that the world’s second-largest economy grows, experts said.
The number of trademark registration applications reached 1.42 million in 2011, a sharp rise from the 19,000 applications submitted in 1983, when the country’s trademark law took effect, a national news magazine Outlook Weekly reported.
“The increasing number of patents will be conducive to IPR awareness in China,” said Prof. Liu Chuntian at Renmin University.
Liu said IPR protection is a basic tenet of the modern market economy, adding that China should carry out top-down reforms to further improve IPR regulations and laws.
The government’s previous efforts to protect IPR include a strategic guideline published in 2008 that set a goal of making substantial progress in creation, application, protection and management of IPR by 2020.
China has only 21 of the world’s top 500 brands, despite a large number of patents and trademark applications, the report said, adding that China’s performance in IPR does not match the size of its economy.
However, home-grown technologies, including the TD-SCDMA and TD-LTE telecommunications interfaces, and emerging hi-tech giants, such as Huawei and ZTE, indicate that China is starting to improve its capacity to innovate, the report said.”
via IPR awareness rises in China: experts – Xinhua | English.news.cn.
As the article below (and this one – https://chindia-alert.org/2012/09/27/japanese-car-plants-in-china-whos-feeling-the-heat/) demonstrates so clearly, today no country is an island. Economic inter-dependency means that compromise and pragmatism must win the day. However, the enmity between China and Japan goes back to the late 19th Century when Japan joined the eight nations that sacked Beijing, followed by the yet-to-be admitted by the Japanese atrocities of the Sino-Japan war.
We can only hope that common sense will prevail. From afar (in the UK) one cannot see why China and its neighbours, including Japan, cannot agree to sharing the bounty of the sea and that underwater. Why should lines drawn on a map dictate that oil, gas or whatever lies beneath belong to one nation and not another? But then I was trained as an engineer and not a politician or lawyer!
NY Times: “After allowing anti-Japanese demonstrations that threatened to spin out of control, China has reined them in and turned instead to hard-edged diplomacy over disputed islands in the East China Sea to lessen any potential damage the conflict might have inflicted on the nation’s softening economy and a delicate leadership transition.
With relations between the two Asian powers at a low point, China decided to go ahead with a scaled-back reception here on Thursday night to honor the 40th anniversary of the resumption of their diplomatic ties on Sept. 29, 1972. A member of the Politburo’s Standing Committee, Jia Qinglin, attended with several other Chinese officials.
But Beijing sent a not-so-subtle message to Tokyo by not granting clearance to the plane that would have brought in an important Japanese guest, the chairman of Toyota. Other Japanese attended the event, though, and at the United Nations in New York, the two sides met in private and sparred in public.
Around the disputed islands in the East China Sea, called the Diaoyu by the Chinese and the Senkaku by the Japanese, a large flotilla of Chinese patrol boats was being monitored Friday by about half of Japan’s fleet of coast guard cutters, the Japanese newspaper Asahi Shimbun reported.
The protests in more than 80 cities, including in urban centers where Japanese car dealerships and electronics plants were damaged, suggested that the Chinese leadership approved the outpouring of nationalism in part as insulation against criticism of the party itself during the transition of power that formally is scheduled to take place at the 18th Communist Party Congress, now set to begin on Nov. 8. But the protests threatened to turn against the Chinese government itself, diplomats and analysts said.
Even though China has overtaken Japan as the biggest economy in Asia, Beijing’s handling of the dispute, precipitated by the Japanese government’s decision to buy three of the islands from their private Japanese owners, highlighted the interdependence of the Chinese and Japanese economies, and the limitations on what the leadership could allow.
Notions of punishing Tokyo economically for buying the islands, whose status was left unclear after World War II, are unrealistic, said Hu Shuli, editor in chief of Caixin Media and one of China’s chief economic journalists. So many Chinese workers are employed at Japanese-owned companies, she said, that any escalation of tensions leading to a boycott of Japanese goods could lead to huge job losses.
This would be disastrous in an already shaky Chinese economy, Ms. Hu wrote in the Chinese magazine Century Weekly.
At a time when overall foreign investment in China is shrinking, Japan’s investment in China rose by 16 percent last year, Ms. Hu noted. The Japan External Trade Organization reported $12.6 billion of Japanese investment in China last year, compared with $14.7 billion in the United States.
Not just China, but all of Asia, could face a serious economic downturn if Japanese investments in China were threatened, said Piao Guangji, a researcher at the China Academy of Social Science.”
via China Alters Its Strategy in Dispute With Japan – NYTimes.com.
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WSJ: “Australia’s former prime minister and longtime China watcher Kevin Rudd said Thursday that China’s incoming leadership will be strongly reform-minded on the economy and usher in a new era of diplomacy in the region.
As territorial disputes between China and Japan escalate, Mr. Rudd said Chinese leaders also face numerous challenges, including the flight of capital among the nation’s wealthy and a slowing economy. However, he expressed confidence in the ability of presumptive next leader Xi Jinping and his team to manage domestic challenges and foreign relations, calling him “the sort of leader that the Americans can do business with.”
The U.S. has sought to expand its influence in Asia to counterbalance China’s growing regional clout, announcing plans to increase its naval presence in the Pacific and sending top officials to canvass the region. Such moves have complicated relations between the two powerhouses, but Mr. Rudd—who said he spent much time with Mr. Xi when he was Australia’s prime minister—said he anticipates Mr. Xi’s rise will help alleviate such tensions.
“I believe that Xi Jinping will want to work…with the Americans on a common road map for the region’s future,” Mr. Rudd told The Wall Street Journal at the end of a two-week trip to China and Hong Kong. Mr. Xi’s ascension will allow the U.S. and China to “carve out a different period of strategic cooperation.”
Mr. Rudd said he expects further privatization of Chinese state-owned firms after the new leadership takes over, in part to address private sector companies’ concerns about their business prospects, which has led to some capital outflows. He also expects further currency liberalization and said that change is necessary, because the current growth model can’t sustain full employment in China.”
via Rudd Sees More Economic Reforms in China – WSJ.com.
Reuters: “China sent its first aircraft carrier into formal service on Tuesday amid a tense maritime dispute with Japan, a show of naval force that could worry its neighbors.
China’s Ministry of Defense said the newly named Liaoning aircraft carrier would “raise the overall operational strength of the Chinese navy” and help Beijing to “effectively protect national sovereignty, security and development interests”.
In fact, the aircraft carrier, refitted from a ship bought from Ukraine, will have a limited role, mostly for training and testing ahead of the possible launch of China’s first domestically built carriers after 2015, analysts say.
But China cast the formal handing over of the carrier to its navy as a triumphant show of national strength — at a time of bitter tensions with neighboring Japan over islands claimed by both sides.
Sino-Japanese relations deteriorated sharply this month after Japan bought the East China Sea islands, called Senkaku in Japan and Diaoyu in China, from their private owner, sparking anti-Japan protests across China.
“China will never tolerate any bilateral actions by Japan that harm Chinese territorial sovereignty,” Vice Foreign Minister Zhang Zhijun said on Tuesday. “Japan must banish illusions, undertake searching reflection and use concrete actions to amend its errors, returning to the consensus and understandings reached between our two countries’ leaders.”
The risks of military confrontation are scant, but political tensions between Asia’s two biggest economies could fester.
For the Chinese navy, the addition of carriers has been a priority as it builds a force capable of deploying far from the Chinese mainland.
China this month warned the United States, with President Barack Obama’s “pivot” to Asia, not to get involved in separate territorial disputes in the South China Sea between China and U.S. allies such as the Philippines.
U.S. Secretary of State Hillary Clinton in turn urged China and its Southeast Asian neighbors to resolve disputes “without coercion, without intimidation, without threats and certainly without the use of force”.
The timing of the carrier launch might be associated with China’s efforts to build up patriotic unity ahead of a Communist Party congress that will install a new generation of top leaders as early as next month.
Narushige Michishita, a security expert at the National Graduate Institute for Policy Studies in Tokyo, said he thought the timing had nothing to do with the islands dispute.”
via China carrier a show of force as Japan tension festers | Reuters.
See also: https://chindia-alert.org/political-factors/chinese-tensions/
Reuters: “China’s leader-in-waiting Xi Jinping sought to reassure Southeast Asian leaders on Friday that his country wanted only peaceful relations with them, following months of growing tensions over the strategically located South China Sea.
Speaking at the opening of a trade fair in southern China for Association of Southeast Asian Nations (ASEAN) members, Vice President Xi said China’s own prosperity could only be guaranteed by having good relations with its neighbors.
“The more progress China makes in development and the closer its links with the region and the world, the more important it is for the country to have a stable regional environment and a peaceful international environment,” Xi said.
“Having gone through numerous vicissitudes in modern times, we are deeply aware of the importance of development and how valuable peace is,” he added, according to state media.
Beijing’s assertion of sovereignty over a vast stretch of the South China Sea has set it directly against Vietnam and the Philippines, while Brunei, Taiwan and Malaysia also lay claim to other parts of the region, making it Asia’s biggest potential military troublespot.
At stake are potentially massive offshore oil reserves. The seas also lie on key shipping lanes.
Vietnam Prime Minister Nguyen Tan Dung is one of the ASEAN leaders attending the trade fair, held in the city of Nanning.
Xi said China – currently also involved in a dispute with Japan over a group of uninhabited islets in the East China Sea -wanted the peaceful resolution for its diplomatic arguments.”
via China’s Xi seeks to reassure Southeast Asia on sea dispute | Reuters.
See also: https://chindia-alert.org/political-factors/geopolitics-chinese/
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.
The Times: “China’s slowing economy has failed to dent its global ambitions, with an increasingly hungry dragon scouring the globe for higher-value corporate deals, according to new research.
It made 177 outbound acquisitions worth a combined $63.1 billion last year, five times more than in 2005, the study by Mergermarket and Squire Sanders, the law firm, found. Deals are also growing in value, with the planned $15.1 billion takeover of Nexen, the Canadian oil sands explorer, by the state-owned CNOOC set to be China’s biggest-ever foreign acquisition, if it goes ahead.
Next month China will release its third-quarter GDP data, with some economists suggesting that growth could fall below the 7.6 per cent it brushed in the second quarter, despite assurances from Beijing that the economy would stabilise in the second half.
Natural resources and energy, the sectors most critical to China’s future growth, continue to dominate purchases, accounting for almost one in three M&A targets between 2011 and the year to date. Almost all these buyers are state-owned companies making investments at the behest of the Government.
Mao Tong, a Hong Kong-based partner at Squire Sanders, said: “We are seeing companies becoming more interested in making a strategic play, rather than just adding to their portfolio. These are big deals designed to position them in a global context.
“Even if the Chinese economy slows sharply, I think this will continue for a while. China is still the world’s most important manufacturing base, using huge amounts of iron ore, for example.”
China is eager to deploy its $3 trillion of foreign exchange reserves, mainly held in dollars, to counter the gradual depreciation of the currency and put its national wealth to good use. Yet the number of private sector deals is also expected to increase as the Government encourages state-owned banks to step up lending to the corporate sector.Britain is the favoured destination for Chinese dealmaking in Western Europe, accounting for a third of deals and two thirds of all outbound investment to the region, thanks to its reputation for transparency and a large number of Russian and Central Asian resources companies, Mr Mao suggested.
China has shown an increasing taste for European luxury brands, such as Shandong Heavy Industry’s buyout of the Italian yacht group Ferretti this year. Recent British brands going East include Weetabix, bought by the Shanghai dairy group Bright Food, and the $7.8 billion buyout of Northumbrian Water by Cheung Kong Infrastructure, a Hong Kong group chaired by Li Ka-shing.
The Dragon Index, a quarterly measure of China’s overseas direct investment by the private equity firm A Capital, which was released last week, hit an historic high in the second quarter, with ODI said to grow by 67 per cent between April and June on the previous quarter, to $24 billion.
André Loesekrug-Pietri, founder of A Capital, said: “State-owned enterprises remain the dominant force behind China’s ODI, with 90 per cent of the total deal value in the second quarter 2012.”
European companies accounted for 95 per cent of all non-resources deals in the quarter, the figures suggested. China’s share of US deals has slowed this year, owing to the sensitive political climate before the presidential election.”
via For Beijing, expansion is not a big deal, it’s lots of them | The Times.
See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/
continuously updated blog about China & India
continuously updated blog about China & India
continuously updated blog about China & India
CHINDIA ALERT: You'll be living in their world, very soon 