Posts tagged ‘China’

21/08/2014

Cognac Makers Are Feeling the Hangover from China’s Corruption Crackdown – China Real Time Report – WSJ

Worldwide sales of cognac dipped in 2013 after several years of heady increases, according to new industry data. The culprit? China’s ongoing battle on corruption.

The Bureau National Interprofessionnel du Cognac (BNIC), the main industry group for the fortified wine from southwestern France, said earlier this week that sales of the drink slipped 6.7% by volume and 10.2% by value during the 12-month period ending July 2014. Exports to the Far East region, which includes Southeast Asia, China and Japan, fell by about one-fifth in the past year in both volume and value, the BNIC reported.

The industry group said the loss in the Far East region was directly related to a slowdown in the Chinese market, which was a large consumer of the more expensive bottles of the famed French eau de vie. China’s ongoing crackdown on corruption and excessive spending by government officials and state-owned company employees has cribbed spending on lavish entertaining – one reason some economists are predicting as much as a 1.5% dip in GDP growth this year.

The weak sales results are a stark contrast from two years ago, when China was the promised land for cognac makers. Sales hit a record high in 2012 in China when the country was knocking back the special brandy, clinking glasses at banquets and karaoke bars alike. Regarded as a status drink, many Chinese imbibers often sprung for the most expensive bottles and exchanged them as gifts. The world’s most expensive bottle was auctioned in Shanghai in 2011.

But the party has crashed. Owners of major cognac brands, such as Remy Cointreau SARCO.FR -0.74% (which owns Remy Martin cognac), reported a sobering 30% decline in sales during the last quarter of 2013.

Cognac is hardly the lone liquor getting caught in the corruption crackdown. Sales of baijiu, China’s notoriously fiery grain alcohol, and whisky are down, too.

China’s largest wine importer, ASC Fine Wines, said its sales stalled in 2013 as the anti-graft campaign drastically reduced sales of the most expensive bottles. Earlier this week, the company told the Journal it has since slashed the average price of its wines by 32% in a bid “to stimulate more demand for these wines through more attractive pricing.”

The Chinese are still drinking, they insist, just not splurging.

via Cognac Makers Are Feeling the Hangover from China’s Corruption Crackdown – China Real Time Report – WSJ.

21/08/2014

Bosses at China’s state-owned enterprises face pay cuts of up to 50pc | South China Morning Post

Officials in charge of China’s state-owned enterprises face pay cuts of up to 50 per cent and new job descriptions under a reform plan approved by President Xi Jinping.

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Xi said at a meeting on Monday that China needed to speed up reform targeting the salaries of top executives at SOEs. He also approved a seven-year overhaul of their management structure.

Sources say the reform plan involves two steps.

The first is to cut the salaries of top executives at major SOEs, particularly those in finance and banking. Some may have to take a 50 per cent pay cut.

The second step is to gradually change their job responsibilities. The government-appointed officials will probably join the board of directors. The day-to-day operations will be handled by senior managers recruited from outside, with salaries in line with international standards.

The new model will be similar to that of the MTR Corporation in Hong Kong. As the major shareholder, the Hong Kong government appoints three representatives to the board of directors to ensure the firm follows its policy direction. The day-to-day operations, however, are run by top managers hired through an open recruitment process.

The reform is to address public discontent over the ambiguous status of top SOE managers, particularly those in charge of the so-called central enterprises directly under the State Council. Most of these top executives carry a vice-ministerial or ministerial-level ranking that comes with perks and privileges. At the same time, they are paid like top Western business executives and earn many times more than their fellow officials.

There has been criticism that the high salaries are unwarranted because many SOEs operate as monopolies or near-monopolies.

An executive of an energy industry SOE said the head of a central enterprise in his field could make one million yuan (HK$1.26 million) a year. Those working for banking and finance central enterprises could earn more.

Jiang Jianqing, the chairman of the Industrial and Commercial Bank of China, was paid nearly two million yuan in 2013. In comparison, the annual salary of some ministry-level party cadres is about 200,000 yuan. Yet some top executives point to their counterparts in the West and complain their incomes are too low.

via Bosses at China’s state-owned enterprises face pay cuts of up to 50pc | South China Morning Post.

18/08/2014

Drought in Northeast China Is the Worst in 63 Years – Businessweek

Southern China is a rice-growing region, while the northeast is the country’s wheat and corn-growing “bread basket.” This summer the northern province of Liaoning is suffering the worst drought in 63 years, according to the local meteorological bureau: The province has seen the lowest precipitation since the government began keeping records in 1951. The dry summer threatens immediate drinking water supplies and autumn harvests.

A farmer stands at the bottom of the Zhifang Reservoir, near Dengfeng, China

The agricultural research service Shanghai JC Intelligence predicts that China’s corn yields may drop 1.5 percent this year, which could drive up domestic corn prices and compel farmers to use alternative grains for animal feed.

(China also imports from the U.S., but since last fall, Chinese inspectors have rejected an increasing number of shipments found to contain unapproved genetically modified organisms (GMO) varieties.)

Other regions have also suffered under the drought, including the northern provinces of Inner Mongolia and Jilin, and central Henan province. In Inner Mongolia, 300,000 people have faced drinking-water shortages, according to state-run Xinhua newswire. More than 270,000cattle have also gone without water. Xinhua reported economic losses to the poor northwestern province total $37 million so far.

Harvests of soybean and barley may also be hurt by the drought, as well as livestock health.

via Drought in Northeast China Is the Worst in 63 Years – Businessweek.

15/08/2014

Rule of law: Realigning justice in China | The Economist

IN JULY Zhou Qiang, the president of China’s Supreme People’s Court, visited Yan’an, the spiritual home of the Communist Party in rural Shaanxi province, to lead local court officials there in an old communist ritual: self-criticism. “I have grown accustomed to having the final say and often have preconceived ideas when making decisions,” one local judge told the meeting. “I try to avoid taking a stand in major cases,” said a judicial colleague. “I don’t want to get into trouble.”

In China’s judiciary such shortcomings are the norm. But change may be coming. On July 29th it was announced that the party’s Central Committee, comprising more than 370 leaders, will gather in October to discuss ways of strengthening the rule of law, a novelty for such a gathering. President Xi Jinping, who is waging a sweeping campaign against corruption, says he wants the courts to help him “lock power in a cage”. Officials have begun to recognise that this will mean changing the kind of habits that prevail in Yan’an and throughout the judicial system.

Long before Mr Xi, leaders had often talked about the importance of the rule of law. But they showed little enthusiasm for reforms that would take judicial authority away from party officials and give it to judges. The court system in China is often just a rubber-stamp for decisions made in secret by party committees in cahoots with police and prosecutors. The party still cannot abide the idea of letting a freely elected legislature write the laws, nor even of relinquishing its control over the appointment of judges. But it is talking up the idea of making the judiciary serve as the constitution says it should: “independently … and not subject to interference”.

In June state media revealed that six provincial-level jurisdictions would become testing grounds for reforms. Full details have not been announced, but they appear aimed at allowing judges to decide more for themselves, at least in cases that are not politically sensitive.

There is a lot of room for improvement. Judges are generally beholden to local interests. They are hired and promoted at the will of their jurisdiction’s party secretary (or people who report to him), and they usually spend their entire careers at the same court in which they started. They have less power in their localities than do the police or prosecutors, or even politically connected local businessmen. A judge is often one of the least powerful figures in his own courtroom.

“It’s not a career that gets much respect,” says Ms Sun, a former judge in Shanghai who quit her job this year (and who asked to be identified only by her surname). The port city is one of the reform test-beds. “Courts are not independent so as a result they don’t have credibility, and people don’t believe in the law.” She says people often assume judges are corrupt.

Career prospects are unappealing for the young and well-educated like Ms Sun, who got her law degree from Peking University. The overall quality of judges has risen dramatically in recent decades, but there are still plenty of older, senior judges with next to no formal legal training. Seeing no opportunity for advancement after eight years, Ms Sun left for a law firm and a big multiple of her judge’s salary of about 120,000 yuan ($19,000) a year. She says many other young judges are leaving.

It is unclear how much the mooted changes will alleviate these concerns. Those Shanghai courts that are participating in the pilot reforms (not all are) are expected to raise judges’ pay. They are also expected greatly to reduce the number of judges, though younger ones fear they are more likely to be culled than their less qualified but better connected seniors.

The most important reforms will affect the bureaucracies that control how judges are hired and promoted. Responsibility will be taken away from the cities and counties where judges try their cases, or from the districts in the case of provincial-level megacities like Shanghai. It will be shifted upwards to provincial-level authorities—in theory making it more difficult for local officials to persuade or order judges to see things their way on illegal land seizures, polluting factories and so on.

Central leaders have a keen interest in stamping out such behaviour because it tarnishes the party’s image. But many local officials, some of whom make a lot of money from land-grabs and dirty factories, will resist change. With the help of the police they will probably find other means to make life difficult for unco-operative judges. And provincial authorities are still likely to interfere in some cases handled by lower-level courts, sometimes in order to help out county-level officials.

via Rule of law: Realigning justice | The Economist.

14/08/2014

Chinese Buyers Are Driving a Boom in Australian Real Estate – China Real Time Report – WSJ

Australian house prices are rising quickly and demand from China is increasingly driving the boom, according to a report by Hong Kong-based brokerage CLSA.

The report, based on interviews with 50 industry participants in Australia, including major realtors, finds Chinese are now “driving the residential property market Down Under” adding that the “phenomenal investment” will continue for at least three more years.

CLSA says China is now the top source of foreign-capital investment in Australian real estate and anecdotal evidence indicates that foreign investment from China has continued to increase in 2014, having slowly accelerated over the last 5 years. The stock brokerage did not attempt to put a value on the investment.

CLSA said good education and a clean environment were driving demand from China.

“Australia offers both and we see no reason why its fundamental appeal will diminish,” it added.

There are currently only limited curbs on foreign buying of Australian property. Any newly built Australian property can be bought by foreigners . The purchase of existing properties needs the approval of Australia’s Foreign Investment Review Board.

Government data this week showed house prices nationally grew by 10% in the year-to-June 30, with Sydney prices racing at 15% over the same period.

The issue of Chinese investment in Australian housing investment has prompted concern among Australians about the potential to be frozen out of the housing market, especially the highly desirable inner city markets of Sydney and Melbourne.

A government investigation into the issue of foreign investment in Australian property is underway and will report its recommendations in October.  One of the limitations of the debate over the issue is that there is not reliable data on how much money is coming into property from overseas.

Australia’s central bank has been watching the rise in house prices but has so far downplayed the role Chinese money has had on prices growth. If house prices continue to climb, the reserve Bank of Australia might have to raise interest rates at a time when the economy is weak and unemployment at more than decade highs.

via Chinese Buyers Are Driving a Boom in Australian Real Estate – China Real Time Report – WSJ.

13/08/2014

Chinese medical workers arrive in Sierra Leone’s Freetown to battle Ebola – Xinhua | English.news.cn

A team of three Chinese medical workers arrived in Sierra Leone’s capital Freetown on late Tuesday to help the country fight against the deadliest-ever Ebola virus which has claimed over 1,000 lives in west African countries.

Chinese disease control experts arrive in Sierra Leone

The first batch of three medical workers arrived in Guinea on Monday and another three medical staff are expected to carry out anti-Ebola work in Liberia soon, medical sources told Xinhua.

China announced on Sunday it would send three expert teams and medical supplies to Guinea, Liberia and Sierra Leone to assist in the prevention and control of the Ebola virus, with each medical team composed of one epidemiologist and two specialists in disinfection and protection.

China announced on Sunday that it would provide relief worth 30 million yuan (4.9 million U.S. dollars) to the three countries. It was the second round of Ebola relief from China so far.

via Chinese medical workers arrive in Sierra Leone’s Freetown to battle Ebola – Xinhua | English.news.cn.

13/08/2014

Beijing cuts coal use by 7 percent in first half of year – China – Chinadaily.com.cn

Beijing cut coal consumption by 7 percent in the first half of 2014 as part of its efforts to tackle smog, the city’s environmental protection bureau said.

Beijing cuts coal use by 7 percent in first half of year

Beijing is at the front line of a “war on pollution” declared by the central government earlier this year in a bid to head off public unrest about the growing environmental costs of economic development.

The city has already started to close or relocate hundreds of factories and industrial plants.

The coal-fired power generators at Beijing’s Gaojing Thermal Power Plant are decommissioned on July 23. Provided to China Daily

It will also raise vehicle fuel standards and is mulling the introduction of a congestion charge.

To reduce coal consumption, it is in the process of shutting down all of its aging coal-fired power plants and replacing them with cleaner natural gas-fired capacity or with power delivered via the grid.

Based on last year’s coal consumption level of 19 million metric tons, the 7 percent cut would amount to around 1.33 million tons per year.

Beijing has said previously that it plans to reduce total coal use by 2.6 million tons in 2014, and aims to slash consumption to less than 10 million tons per year by 2017.

The Beijing environmental bureau said the city had cut sulfur dioxide emissions by 5.4 percent over the first six months of the year.

It also took 176,000 substandard vehicles off the road.

Previous data issued by the Ministry of Environmental Protection showed that concentrations of hazardous airborne particles known as PM2.5 stood at 91.6 micrograms per cubic meter in Beijing in the first half of the year, down 11.2 percent year-on-year but still more than twice the recommended national limit of 35 mcg.

Much of the pollution that hits Beijing drifts in from the surrounding province of Hebei, a major industrial region that is home to seven of China’s 10 most polluted cities.

Under new plans to integrate Beijing with Hebei and the port city of Tianjin, the region will be treated as a “single entity” with unified industrial and emission standards.

Hebei said last week that it had cut coal consumption by 7.53 million tons in the first half of 2014, amounting to just over half of its target of 15 million tons for the year.

The province agreed last year to cut coal use by 40 million tons by 2017, and it is also planning to shed at least 60 million tons of excess steel capacity over the same period.

via Beijing cuts coal use by 7 percent in first half of year – China – Chinadaily.com.cn.

13/08/2014

China Demands that Japan Return the Plundered Honglujing Stele – Businessweek

Islands. Airspace. Antiquities. Until now, China has concentrated its attention on the first two as it fights against Japan for dominance in East Asia. In focusing on the wrongs done by Imperial Japan before and during World War II, China’s government has escalated its claims to uninhabited islands in the East China Sea controlled by Japan and has designated airspace in the area as its own.

The Honglujing Stele is housed in Tokyo's Imperial Palace, home to Japan's Emperor Akihito

The dispute has had humorous moments, such as the time officials invoked Voldemort.  The conflict has potential to become far more dangerous, though, with ships and planes from both sides provoking one another. On Tuesday, for instance, Chinese Coast Guard vessels patrolled near the islands, called the Senkaku by Japan and Diaoyu by China.

China’s foreign ministry voiced “strong dissatisfaction and resolute opposition” last week to a white paper published by Japanese Prime Minister Shinzo Abe’s government that had expressed concern over China’s behavior in the East China Sea and South China Sea. Over the weekend, China’s defense ministry followed with a statement accusing Japan of looking for excuses to re-militarize.

China has plenty of ways to poke its neighbor. Determined to leave no grievance unaired, China has opened a fresh front in its battle against Japan: A group has  demanded the return of a 1,300-year-old relic that Japanese soldiers whisked away from China’s northeast a century ago.  The Honglujing Stele, three meters wide, 1.8 meters tall, and two meters thick, dates back to the Tang Dynasty and now belongs to Japan’s Emperor, according to the official Xinhua news agency.

A group called the China Federation of Demanding Compensation from Japan is now demanding that the Emperor give it back. Stolen items such as the Honglujing Stele “have done great damage to Sino-Japanese ties,” Wang Jinsi, the federation official in charge of recovering cultural relics, told Xinhua. “They should be returned to their rightful owner.”

That may be, but Wang’s group has chosen an interesting time to make its point. As Xinhua points out, Japanese troops went on a rampage in the mainland in the 50 years between China’s defeat in the First Sino-Japanese War and the end of the Second World War, with Japan stealing some 3.6 million relics. Only now is the Chinese group calling on the imperial family to return one of them.

via China Demands that Japan Return the Plundered Honglujing Stele – Businessweek.

13/08/2014

China Names U.S. as the Top Destination for ‘Economic Fugitives’ – Businessweek

China’s wealthy elite is fleeing the country for a better quality of life—better education, better air, and greater personal security. China’s Ministry of Public Security has just added a further potential reason: fleeing the police.

“The U.S. has become the top destination for Chinese [economic] fugitives,” Liao Jinrong, a ministry official told state-run China Daily on Monday. According to the English-language newspaper, “More than 150 economic fugitives from China, most of whom are corrupt officials or face allegations of corruption, remain at large in the United States.”

While this is a rather incredible admission, the intent of the article—no doubt placed by China’s propaganda authorities—seems to be to make the case for an extradition treaty between the U.S. and China. “We face practical difficulties in getting fugitives who fled to the US back to face trial due to the lack of an extradition treaty and the complex and lengthy legal procedures,” Liao told the paper.

via China Names U.S. as the Top Destination for ‘Economic Fugitives’ – Businessweek.

09/08/2014

China’s Shale-Gas Production Target Cut in Half by Top Official – Businessweek

Tapping China’s vast shale-gas reserves has proved more difficult than government planners in Beijing once hoped. In 2012, China’s National Energy Administration projected that, by 2020, from 60 billion to 80 billion cubic meters (bcm) of domestic shale gas would be pumped annually. Earlier this week the country’s energy chief, Wu Xinxiong, slashed the goal in half, to 30 billion bcm by 2020.

A shale well at Fuling, owned by Sinopec, China's largest oil refiner, in Chongqing, southwest China on April 21

According to the U.S. Energy Information Administration, China’s holds the world’s largest reserves of theoretically recoverable shale gas. But much of it is locked in mountainous regions in western China.

While China’s leaders—concerned about steeply rising energy demand accompanying rapid urbanization—dearly want to emulate the U.S.’s shale-gas boom, it turns out Americans have several practical advantages. For starters, the U.S. shale-gas revolution kicked off in fairly accessible regions: the flatlands of Texas, North Dakota, and Pennsylvania.

So far, explorations in China have identified only one clearly promising shale play: Fuling shale gas field, near the western megalopolis of Chongqing. Sinopec, which controls the Fuling field, projects that its annual shale gas production will reach 5 bcm by 2015 and 10 bcm by 2017. (China trivia fact: Fuling was also the site of River Town, well-known journalist Peter Hessler’s first book chronicling his years as a Peace Corps volunteer in the then-small city on the Yangtze.)

With no other comparable sites yet identified, it’s not clear where the other 20 bcm may come from. While Sinopec is currently at the forefront of China’s shale-gas development, two foreign companies, Royal Dutch Shell (RDSA:LN) and Hess (HES), have secured production-sharing contracts for other potential sites.

via China’s Shale-Gas Production Target Cut in Half by Top Official – Businessweek.

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