Posts tagged ‘China’

« Older Entries  |   Newer Entries »
15/05/2013

* Chinese austerity hits Diageo’s sales

English: Songhe and Moutai - modern Baijiu bra...

English: Songhe and Moutai – modern Baijiu brands from China (Photo credit: Wikipedia)

Read “corruption” for “austerity” and that would explain why sales and profits have dropped like a stone.

FT: “Sales of Diageo’s baijiu, a clear grain spirit popular in China, slumped 40 per cent in the first quarter of this year as the world’s biggest distiller became the latest casualty of China’s crackdown on conspicuous consumption.

 

The rapid deterioration in fortunes at Shui Jing Fang, one of the first Chinese household names to be taken over by a foreign company, comes as other makers of high priced spirits have suffered falling sales amid the chill winds of austerity with socialist characteristics. It is a turnround for the drinks industry which, like other purveyors of status symbols, had become accustomed to runaway growth in China comfortably offsetting European weakness.

Pernod Ricard, the world’s second-biggest distiller after UK-listed Diageo, is set to report an annual decline in Scotch whisky sales in China, following years of surging growth. This came after flat sales over the Chinese New Year period, when it sold more Cognac but saw Scotch sales fall by double-digits in percentage terms year-on-year.

Diageo has so far shrugged off concerns about the crackdown saying it is having little effect on gifting, which makes up 10 to 15 per cent of Scotch and Cognac sales in the country.

Kweichow Moutai, China’s largest baijiu maker, reported a halving in year-on-year profit growth in the first quarter. Baijiu, like a host of other food and drinks in China, has also been caught up in food safety concerns.

Shui Jing Fang, which Diageo acquired last year after years of protracted and complex negotiations, saw both sales and earnings before interest and tax fall by 40 per cent in the first quarter of the calendar year, Diageo said on an investor call on Tuesday. That followed net sales growth of 10 per cent and operating profit growth of 12 per cent in the previous full year.

Although Shui Jing Fang is just a drop of Diageo’s sales at around 1 per cent, baijiu dwarfs sales of international spirits in China and is seen as an attractive sector for multinationals to increase their grip on.”

via Chinese austerity hits Diageo’s sales – FT.com.

Related articles

Posted in austerity, China alert, Economics | Leave a Comment »

Tags: , , , , , , ,
15/05/2013

* Arctic Council to rule on observer status for China

FT: “The Arctic is at the centre of a global geopolitical battle as China, India and Japan attempt to join the main body involved in setting the rules for future development of the polar region.

Oil drilling in the Arctic seas has become a highly contentious issue.

At a meeting in Kiruna in northern Sweden on Wednesday and Thursday, ministers from the five Nordic countries, the US, Canada and Russia will decide whether to let 14 countries and organisations gain the status of “observer” to the Arctic Council.

China is the most controversial name on the list, but its candidacy has the support of all the Nordic countries.

Canada and Russia have expressed concerns about further opening up the council, which already has six European countries as observers as well as various intergovernmental and non-government organisations. The US has said it is undecided over the decision, which needs unanimity.

The Arctic is viewed as an increasingly strategic area due to the presence of many resources such as oil, as well as the possibility of quicker shipping routes between Europe and Asia as the ice in the polar region continues to melt.

China, Japan, South Korea, Singapore, India, the EU, Italy and Greenpeace are among the bodies applying at the twice yearly summit for observer status, which would allow them to attend all meetings but not participate in the ministerial conferences.

The council, which was launched in 1996 and serves as a body for international rulemaking on the Arctic.

In a sign of the importance the US is now according the Arctic, secretary of state John Kerry arrived on Tuesday in Sweden for talks first in Stockholm with the government and then in Kiruna.

China has heavily wooed Nordic countries such as Iceland, with which it signed the first free-trade agreement with a European country last month.

Oil exploration in the Arctic has proved to be incredibly difficult, but more than a fifth of the world’s undiscovered oil and gas reserves is thought to be in the region, and there is also great scope for mining of various minerals in places such as Greenland, northern Sweden and Finland.

A northern sea route through the Arctic to the north of Russia could cut several weeks off shipping times and thousands of kilometres off distances between Europe and Asia, especially in the summer, which experts think could soon be ice-free in parts of the region.”

via Arctic Council to rule on observer status for China – FT.com.

Related articles

Posted in China alert, Economics, GeoPolitics, Politics | Leave a Comment »

Tags: , , , , , , , , ,
14/05/2013

* An addiction that could spell economic disaster

The Times: “Fund managers who between them control more than $1 trillion in assets were warned yesterday that China was in the grip of a debt addiction that could destabilise its financial system.

Traditional houses in the shadow of new high-rise apartment blocks in Shanghai

Speaking at the annual CLSA China Forum in Beijing, Francis Cheung, the brokerage’s China head, said that the country was hooked on an “unsustainable” pace of growth requiring ever-greater injections of debt to keep going.

Fifty per cent of the Chinese econ-omy is made up of investment, an unprecedented level for a country at its stage of development, sucking in increasing amounts of credit, effectively to buy growth.

Total debt in the world’s second-largest economy soared from 148 per cent of gross domestic product in 2008 to 205 per cent of GDP last year and is expected to hit 245 per cent by 2015, Mr Cheung said in a report.

But despite the rising tide of investment being poured in to build everything from houses and roads to railways and power plants, China’s credit habit is becoming less effective, with the same amount of debt generating lower returns every year.

China’s annual GDP growth has almost halved from 13 per cent in 2007 to an expected 7.5 per cent this year, while total debt has more than doubled in the same time, a development model that President Xi Jinping also has called “unsustainable”.

“China is running just to stand still … China is not a rich country; it is a lot of debt for a country at this GDP level. What I worry about is unregulated lending,” Mr Cheung told the forum.

With Chinese industry suffering from overcapacity in every sector from steel to cement to solar panels, the country “cannot use any more stimulus policies to boost growth”.

The fastest-growing debt is that shouldered by local governments, with the undisclosed sum estimated to have hit 20 trillion yuan (£2 trillion) last year — a doubling in two years. Local governments are being forced to pay more to service their debts, while their ability to raise money through selling land is slowing.

The biggest risk, Mr Cheung said, came from the growing use of unregulated loans generated by “trust companies”, financial sector intermediaries that make money from offering risky loans known as “wealth management products” to private companies unable to get credit from state-run banks.

A report published by Moody’s yesterday found that China’s “shadow banking” sector had hit an estimated 29 trillion yuan (£3 trillion) last year, posing a “systemic risk” to the financial system, despite a partial clampdown in March. The credit ratings agency also warned of the threat of contagion, stemming from little-regulated shadow lending that has swollen by 67 per cent in the past two years.

Last month China sudffered its first sovereign credit rating downgrade in 14 years as Fitch lowered its appraisal amid fears that its debt problems would necessitate a government bailout.”

via An addiction that could spell economic disaster | The Times.

Related articles

Posted in Banking, China alert, Economics | Leave a Comment »

Tags: , , , , , , , , , ,
14/05/2013

* Right thing to do comes with a price tag

Now we know why the Chinese government has been hesitant about correcting the rights of its vast migrant worker population. If the public expenditure required to turn a rural migrant worker into an urban citizen is estimated to be around 80,000 yuan ($12,664) in China, then the total for the estimated 230m migrant workers to be fully urbanised will cost some 3 trillion US dollars. A cost even China will find too large to handle in one go.

The Times: “100,000 … yuan is the estimated cost of turning a rural resident into a fully registered urbanite and providing them with all the healthcare, education and social security rights denied to China’s vast migrant worker population when they move to the cities.

Workers weld a standing on the roof of a building at the Guanyinqiao Pedestrian Street in Chongqing Municipality, China

Dangerously belated reform of China’s household registration — hukou — system may or may not be unveiled by Beijing this year. Clearly there is the political will, but officials mutter that the reform package is snagged on the details.

If that £10,600 estimate proves even close to reality (it’s a government estimate, so don’t expect too much from it) and if the reforms were tested initially on a limited basis to affect only 10 per cent of China’s overall migrant worker population, that would still cost about two trillion yuan (£211 billion). If the Government shouldered only a third of that (splitting the financial burden three ways with companies and employees), China would be paying more on this first blush of hukou reform than it is spending on its entire military budget.

But, according to the CLSA economist Andy Rothman, it would be money well spent. Grant migrant workers an urban household registration and all sorts of good things would happen. They would become consumers, they would become a more highly skilled and better-educated slab of workforce. They would be a less consistent source of social unrest.

For Beijing, it is painfully clear that foot-dragging on hukou reform is really not an option any more. If the Government flinches at the cost, the very considerable social implications or the politics of reform, China’s great urbanisation story could lurch from nice to nasty in short order. Miss the chance to reform and, at best, the whole programme of switching China’s growth model towards consumption stalls because tens of millions of migrant workers are forced to remain precautionary savers. They would remain unwilling to think of more than a small percentage of their income as disposable because, without an urban hukou, they are condemned to live without the protection of a welfare system.

At worst, the migrants create a permanent underclass in each of the 150 Chinese cities with populations of more one million. As the administration in Beijing knows well, this is not an underclass that could be relied on to behave itself: without reform, it will only grow angrier.

The problem, as usual, is one of scale. China’s 234 million migrant workers are unambiguously the backbone of the economy. Somebody has had to constitute an unlimited supply of labour and be prepared to work at a subsistence wage for the Chinese “miracle” to work at all. The migrants are those people. Migrant workers keep China’s factories humming, they cook, they clean, they funnel money from the cities to the countryside and, most symbolically, they built the place as 90 per cent of the construction industry workforce.

And the problem is that they all have mobile phones and internet access. Much though China would like to test out a bit of hukou reform on a smallish initial batch of 20 million people (equivalent to the population of Romania), as soon as that process began the other 210 million migrant workers (equivalent to the population of Indonesia) would start asking why some were receiving the blessing of urban residency and not others.

It’s an all-or-nothing game, unfortunately for Beijing, and that calculation of 100,000 yuan per person suddenly implies a £1 trillion burden for the State.”

via China in numbers: right thing to do comes with a price tag | The Times.

Related articles

Posted in China alert, Economics, employment, Labour, Migrant workers, temporary workers | 3 Comments »

Tags: , , , , , , ,
14/05/2013

* China issues white paper on human rights

China Daily: “The Chinese government on Tuesday released a white paper detailing the progress made in human rights in 2012, stressing its achievements in improving living standards and increasing room for citizens to express their opinions.

Human Rights in China (organization)

Human Rights in China (organization) (Photo credit: Wikipedia)

“The cause of human rights in China has entered a stage of planned, sustainable, steady and comprehensive development,” says the white paper, published by the State Council Information Office under the title “Progress in China’s Human Rights in 2012.”

Development is the key to solving all existing problems and facilitating the progress of human rights in China, the paper says.

China has combined its human rights endeavors with economic, political, cultural, social and ecological construction, it said.

The country has prioritized people’s rights to subsistence and development and made efforts to promote the comprehensive and balanced development of their economic, social and cultural rights, as well as their civil and political rights, it notes.

“After years of unremitting efforts, China has reached a higher level in terms of people’s living standards, democracy, rule of law, cultural development, social security and environmental protection,” says the white paper.

In 2012, the annual per capita net income for both urban and rural residents increased, hefty investment was directed to poverty reduction programs, housing conditions were improved for both urban and rural residents and the state made proactive efforts to boost employment, according to the white paper.

Practical measures have been taken to ensure citizens’ right to know and right to be heard, according to the white paper.

Deepened reform and the rapid development of information technology have given the public greater power to acquire information and express their opinions, it notes.

The creation of the Regulations on Government Information Disclosure has helped establish a system for disclosing information, the white paper says.

In 2012, more than 90 central government departments made their budgets and expenses for official receptions, vehicles and overseas trips known to the public. The Communist Party of China (CPC) continued to press ahead with making Party affairs public and established a spokesperson system for Party committees, the paper says.

The Internet has become an important channel for citizens to exercise their rights to know, participate, be heard and supervise, as well as become an important means for the government to hear public opinions, according to the white paper.

Democracy building at the grassroots level further expanded citizens’ right to participate, the paper says.

By the end of 2012, direct elections had been held for over 98 percent of village committees across the country, with participation reaching 95 percent.”

via China issues white paper on human rights |Politics |chinadaily.com.cn.

Posted in China alert, Elections, Freedom, Human rights, Illegal practices, Internal politics, Justice, Politics, Rule of law | Leave a Comment »

Tags: , , , , , , ,
14/05/2013

* India and China; making up, but what about trade?

FT: “Salman Khurshid, India’s foreign minister, is back from a trip to China last week, happy to see the end of a tense stand-off over a long-running border dispute. Settling that issue will re-open the way for a planned visit by Chinese Premier Li Keqiang to India and allow the two countries to concentrate on the big topic on Khurshid’s agenda: trade.

But here, too, relations between the region’s big powers are not entirely friendly.

Back in November 2011, India and China set a target for bilateral trade of $100bn for 2015. That’s quite a leap from $2.3bn a decade ago and marks a concrete step in bringing the two nations closer together.

But the balance of trade is strongly in China’s favour. Now Kurshid has put the November 2011 agreement “on pause” until the imbalance is resolved.

According to India’s department of commerce, India’s exports to China in April to December 2012 were worth $9.7bn. In the same period, China’s exports to India were worth $41.2bn – a bilateral trade deficit for India of $31.5bn, nearly a quarter of India’s entire trade deficit in the period.

Khurshid claimed not to have minced his words:

We said that let the trade imbalance be addressed upfront as an urgent priority, and then of course we can move to the next stage which is the regional trading arrangement.

What does the minister want from China? One target is better market access, especially for India’s IT and pharmaceuticals companies. Indian business leaders complain that exports to China would be much greater if China’s big state owned enterprises could be persuaded to source from foreign suppliers.

But others say a lack of competitiveness among Indian manufacturers contributes to the problem.

“China has a very competitive manufacturing sector that is able to produce at a large scale pretty efficiently and for reasonable prices,” says Louis Kuijs, chief China economist at RBS.

“Sometimes we would be inclined to think there is a lot of [Chinese] government policy behind this. People point to the subsidies that China’s government has given to industries in the past and companies having preferential access to loans. But in the bigger scheme of things, those subsidies aren’t the driving force. China is a bit ahead in industrialisation and has becomes very competitive globally.”

Kuijs doesn’t think this is about to change. Chinese manufacturers do good business in India in both consumer goods and capital goods. And he takes the view that, despite the current cyclical slowdown, both consumption and infrastructure investment will remain robust in India, so demand for Chinese products will continue to grow.

A little tinkering on a calculator provides a bit of good news for Indian trade, however. According to data from the World Trade Organization, India’s global merchandise exports grew faster than China’s between 2005 and 2012. Over the seven-year period, India’s exports grew at an average 18.3 per cent a year, against a figure of 16.3 per cent for China and 9.4 per cent for the world as a whole.

So, Indian exports are growing relatively quickly. But China’s lower growth comes from a far higher base. In 2012, China exported goods worth more than $2tn while India’s exports were worth $293bn. Even with their faster rate of growth, it will take a long time for India’s exporters to catch up on China’s lead.”

via India and China; making up, but what about trade? | beyondbrics.

Posted in China alert, Chindia Alert, Defence, Diplomacy, Economics, Foreign invasion, GeoPolitics, History, India alert, Military, Neighbour conflict, Politics, Trade | Leave a Comment »

Tags: , , , , , , , ,
14/05/2013

* China launches new crackdown on internet celebrities

My personal view is that “the genie is out of the bottle” or that you cannot shut “Pandora’s box” with the Internet and social media.

Telegraph: In its latest bid to contain the often riotous jumble of news and rumour on the Chinese internet, the Communist party has decided to bring the most high-profile and influential voices to heel.

China launches new crackdown on internet celebrities

Before his account was removed, Mr Hao had 1.85 million followers

On Saturday, Hao Qun, a famous 39-year-old novelist and frequent government critic who goes by the pen name Murong Xuecun, found his account on Sina Weibo, China’s version of Twitter, deleted. He tried to open another account but failed.

Before his account was removed, Mr Hao had 1.85 million followers and his postings on the site often went viral.

The world of Weibo, which had 368 million registered users last year, operates much like Speaker’s Corner. Its most famous inhabitants command huge followings and have the power to steer debate in a way that is often uncomfortable for the Communist party.

The deletion of Mr Hao’s account follows a series of actions against other high-profile users.

He Bing, the vice president of the law school at China’s Political Science and Law university was suspended last week “for deliberately spreading rumours”. Prof He, who had close to 500,000 followers, had posted a snippet of news, which later turned out to be false, claiming that there had been a mass stabbing in a hospital in Hefei.

Since the Chinese media is carefully controlled, Weibo has developed into the country’s most important source of news.

And since newspapers and television stations are not allowed to report on many of the topics that are voiced on the internet, rumours often go unchecked and develop their own momentum.

“Some of the [high profile users] have become rumour relay stations,” noted the Global Times in an editorial last week. “Any frequent Weibo user knows that rumours cannot be widely spread unless there is a [high-profile user] helping to spread it,” it added.

“Theoretically they have the right of speech on the internet, but they should also have an equal responsibility. Currently they have no moral responsibility or legal liability for what they post.”

Kaifu Lee, the former head of Google in China, who has more followers (40 million) than Barack Obama does on Twitter (33 million), said he was careful to verify information before posting it on Weibo.

“I realise with the number of followers I have that I need to make sure the messages I forward are legitimate,” he said. “With great power comes great responsibility,” he added.

However, he noted that Weibo already has inbuilt checks that should prevent false news from gaining traction.

“If you suggest something that is clearly false and do not retract it, your reputation (online) will suffer. I think the social ecosystem should largely be self-reinforcing,” he said, adding that Sina already has a type of tribunal system that can rule over the veracity of certain posts.

Mr Lee said he did not know what the purpose of the new government “internet management” campaign was. There already exists a sophisticated censorship system that filters posts and deletes sensitive topics. “I am not in the government, so I cannot say why the government is doing this,” he said.

Zhang Lifan, a historian with almost 270,000 followers said the attempt to control high-profile users would be fruitless. “Shutting them down will not make much difference. For each account they silence, other people will speak up,” he said.

“Of course people should not spread rumours, but the government is using a double standard,” he said. “CCTV (China’s state television station) also sometimes reports the wrong news.”

The campaign appears to have sent a firm message however. Yao Bo, a commentator and restaurateur with close to 900,000 followers said a number of his friends had seen their accounts shut down. “Some of the accounts are shut down for criticising government policy, others for reporting bits of information. I now feel I need to watch what I say before I post something,” he said.”

via China launches new crackdown on internet celebrities – Telegraph.

Posted in Censorship, China alert, Dissident, Freedom, Internal politics, Internet, Openness, Politics, social media, Technology, Transparency | Leave a Comment »

Tags: , , ,
14/05/2013

* A shift in Chinese strategy on North Korea?

Wonder if North Korea is finally getting the message, that if it does not change its ways, its only friend, China, will be forced to abandon it.

Posted in China alert, GeoPolitics, Politics | Leave a Comment »

Tags: , , , , , , ,
13/05/2013

* Myanmar Pipeline Puts China Ahead in Energy Shipping Dilemma

WSJ: “A new crude oil pipeline through Myanmar due to begin operations in September will put China in a favorable position compared to other Asian economic powerhouses challenged by energy security issues.

China’s Myanmar pipeline, which in the photo is under the red dirt trail, means it will be less dependent on the Strait of Malacca for its imported oil needs.

At a capacity of 440,000 barrels a day, the pipeline—running from Myanmar’s coast at the Bay of Bengal to China’s southern Yunnan region—will allow China to send less crude through the Strait of Malacca. The narrow waterway by Singapore, where the U.S. Navy has a strong presence, is considered a major threat to secure energy supplies by major Asian economies dependent on crude shipments from the Middle East and Africa.

China—helped by its own domestic oil production of just over 4 million barrels a day—last year relied on the narrow waters for around 37% of its total demand. That share will drop to about 30% once the Myanmar pipeline comes on stream.

In comparison, Japan, South Korea and Taiwan all rely on the Strait of Malacca for around 75% of their total oil consumption, in part due to their small domestic production.

The Myanmar pipeline, which will run parallel to a major natural gas pipeline, comes on top of a string of oil and gas import pipelines already completed or planned to supply China’s less-developed inland regions.”

via Myanmar Pipeline Puts China Ahead in Energy Shipping Dilemma – China Real Time Report – WSJ.

Posted in China alert, Economics, oil & gas, Politics | Leave a Comment »

Tags: , , , , , , , , , ,
13/05/2013

* China: unequal in death, as in life

FT: “The news that Guangzhou is to start building a costly cemetery exclusively for revolutionary heroes and government officials this October has stirred up something of an online controversy.

With the cost of cemetery space far higher than housing, it has highlighted the increasing inequality in Chinese society – in death, as well as in life.

The Fushan Revolutionary Cemetery, which will cover an area of 1,300 mu (870,000 sq m) and cost Rmb620m ($100m), is designated only for the privileged class, including “revolutionary martyrs”, “government cadres” and “military servicemen”, according to China Insight, a Beijing-based magazine, run by the Communist Party journal Qiushi (“Seeking Truth”).

The news, which came out last week, has created a buzz on the Chinese blogosphere and triggered criticism by many Weibo users (China’s answer to Twitter).

“No wonder people are trying so hard to get a job in the government; otherwise, they die without a burial place,” wrote one Weibo user.

“Chinese taxpayers take care of not only the living but also the dead [officials],” wrote another.

The discontent is shared by Fan Haiqun, a researcher at Guangdong Social Sciences Academy who specialises in funeral policy.

He was quoted by Insight China as saying: “Are there any new revolutionary heroes? Since the new China has been established for more than 60 years, most of people who sacrificed their lives in wars have already passed away. Today’s so-called revolutionary figures are just government officials.”

Guangzhou’s Civic Affairs Bureau later denied such accusations, saying the Fushan cemetery isn’t built for “only burying officials” and would also be open to the public, according to the Guangzhou-based Yangcheng Evening News. A lady who answered the bureau’s phone on Friday declined to comment on the issue.

However, such denials are not likely to convince the public or parts of the media. The Xi’an Evening News questioned: “Although the city’s Civil Affair Bureau denied the report [by China Insight], it didn’t offer any strong evidences to refute it, such as the proportion of the public graveyard [at the Fushan cemetery]. Therefore, it cannot shake off people’s doubts.”

On Sina Weibo, microbloggers fired back with sarcastic comments. “I would like to pay more tax if it’s built to bury them [officials] alive,” wrote one.

Apart from deep social inequality between the privileged and unprivileged in China, the issue highlights a new challenge for the country’s given the rate of urbanisation – scarcity of land for public cemeteries.

In Guangzhou, there are around 50,000 deaths per year, of which 30,000 are buried, according to China Daily. However, the city’s 10 commercial cemeteries are failing to cope with demand as there is no available land for new plots, reported Southern Metropolis Daily.

This has led the price of cemetery plots in Guangzhou to rocket – Rmb80,000 ($13,000) per sq m, much higher than that of local commercial housing (which is Rmb23,518 per sq m in April), according to Southern Metropolis Daily.

The sky-high price of plots is another hardship for Chinese people. As one blogger put it: “Life is never easy in China, now, [nor is] death.””

via China: unequal in death, as in life | beyondbrics.

Posted in China alert, Economics, Politics, Social & cultural | Leave a Comment »

Tags: , , , , , , ,
« Older Entries  |   Newer Entries »
CCChang

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