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02/05/2014

Leaked Comments From Top Property Developer: China Is Built Out – China Real Time Report – WSJ

Spring hasn’t sprung for China’s chilly housing market and it may not for some time, a high level executive with the country’s largest real-estate developer said in rare remarks leaked online.

A glut of apartments and tightness in the credit market don’t bode well for property developers, said Mao Daqing, vice chairman of China Vanke.

A Chinese flag flies in front of a residential building developed by China Vanke Co., in the Fangshan district of Beijing. Bloomberg News

“Overall, China has reached its capacity limit for new construction of housing projects, only some coastal third- and fourth-tier cities have potential for capacity expansion,” Mr. Mao, who oversees the firm’s Beijing operations, said at a closed door meeting in Beijing on Wednesday (in Chinese). “As to whether there is room for home prices to rise, I don’t see any possibility for a rise in home prices, especially in cities with large housing inventory, unless the government pushes out another few trillion (in stimulus).”

China Vanke Beijing confirmed that Mr. Mao provided an analysis of the housing market in a private event, but added that there were no official transcripts.

Housing sales fell 7.7% in the first quarter this year, and remained sluggish in April, according to private sector estimates.

There is a glut of homes in China’s second-tier cities and some third- and fourth-tier cities due to oversupply of land, Mr. Mao said, highlighting cities like Tangshan, Shenyang and Wuxi. There is insufficient demand as there are not enough new migrants moving into these cities, and with the rich preferring to buy homes in major cities like Beijing.

Any developer who invests in Tangshan, an industrial city east of Beijing, is walking into a trap, he said.

China Vanke, which has a presence in more than 60 Chinese cities, earlier this weak reported a rare year-on-year slide in net profit in its first quarter results.

Mr. Mao also raised some red flags in tier-one cities such as Beijing and Shanghai as well. While demand from end-users is still strong in such cities, he said, land values — seen as a measure of a potential property bubble — are too high. He said land prices were accelerating faster than housing prices in the capital as a result of government efforts to containing prices of new homes there.

He went on to compare land values in Beijing with those in Japan and Hong Kong just before bubbles in those cities burst. Tokyo’s total land value in 1990, prior to the property bust there, was equal to 63.3% of U.S. GDP in 1990, he said. During the Hong Kong bubble in 1997, land values there reached 66.3% of U.S. GDP

In 2012, the total land value in Beijing was 61.6% of U.S. GDP, “which is a scary number”, Mr Mao said.

via Leaked Comments From Top Property Developer: China Is Built Out – China Real Time Report – WSJ.

Posted in China alert, Construction, Economics, housing | Leave a Comment »

Tags: Beijing, China, China Vanke, China Vanke Co., Hong Kong, List of cities in the People's Republic of China, Real estate development, Shanghai, Tangshan

02/05/2014

Maybe China’s Currency Isn’t Undervalued After All – China Real Time Report – WSJ

Note to rest of the world: Stop bugging China on undervaluation of its currency.

The World Bank’s re-estimation of global pricing is leading to a second day of questioning of economic verities. Yesterday, a number of publications used the new numbers to pronounce that the U.S. would next year lose its century-long ranking as the world’s number one economy. (China Real Time came to a more nuanced—and skeptical—conclusion.)

Today, two economists at the Peterson Institute for International Economics, perhaps the world’s top econ think tank, used the numbers to conclude that the Chinese yuan was no longer undervalued, as it has been for decades.

“This estimate is of potential historic significance,” conclude Martin Kessler and Arvind Subramanian. “The end of Chinese mercantilism—and relief for the rest of the world—may be in sight,” they write in a Peterson blog post.

To review, the World Bank re-estimated the size of different economies using a calculation known as purchasing power parity (PPP), which tries to estimate relative wealth by looking at differing prices in different countries for the same goods or services. Such comparisons usually show that developing countries aren’t as poor as they seem. For instance: A haircut in Beijing costs far less than a haircut in Boston, which means the wealth of a Chinese person with a full head of hair –- let’s call him Mr. Wang—is greater than usually understood.

Cheaper in China: haircuts. Not cheaper: iPhones, BMWs and other imports. Reuters

But Mr. Wang doesn’t buy things in PPP; he buys them using actual currency. When he leaves the hair salon and buys an import, say a U.S. iPhone or a German car, his yuan are converted into dollars or euros at the current exchange rate. Given that Chinese earn far less money than Americans or Germans on average, exchange rate comparisons accentuate the gap between developing and developed nations. Most comparisons of international power are done using the prevailing exchange rate, not PPP.

Now, back to the value of the yuan.

Messrs. Kessler and Subramanian use the new PPP calculations to estimate that between 2011 and March 2014 China’s per-capita GDP grew about 13 percentage points faster than the U.S., which they say should translate into a currency appreciation of around 3.2%. Since the actual appreciation was 7%, that suggests the yuan appreciated too rapidly during that period and made up for some of the time when the yuan didn’t strengthen rapidly enough. “The renminbi in 2014 is thus fairly valued,” they conclude.

Any estimate of a currency’s valuation is a black art. Different economists use different methods and come up with different conclusions, especially if there isn’t an obvious undervaluation or overvaluation.

It’s hardly surprising that many countries accuse the others of deliberately undervaluing their currencies, and use estimates of currency valuation to make their point. Nearly every government has the same strategy for growth — export more — and a cheap currency helps exporters.

via Maybe China’s Currency Isn’t Undervalued After All – China Real Time Report – WSJ.

Posted in China alert, Economics | Leave a Comment »

Tags: Arvind Subramanian, Beijing, China, Chinese yuan, IPhone, Peterson Institute for International Economics, PPP, The World Bank, United States, World Bank

01/05/2014

How Women Lost Out as China’s Property Market Boomed – Businessweek

In 2005, Zhang Yuan and her husband bought an apartment in Beijing for $30,000. Seven years later, in 2012, the same apartment was worth $317,000. Zhang, a professional woman in her 30s, and her husband both contributed money to the down payment and mortgage payments. Only her husband’s name appears on the property deed.

Beijing's central business District is home to high-end housing

At the time the young couple bought their home, Zhang wasn’t thinking much about legal formalities. Men—still regarded as the ostensible heads of households in China—have commonly registered property in their own names.

Since China’s Supreme Court issued a new interpretation of the country’s Marriage Law in 2011, Zhang’s has had second thoughts. The law now stipulates that if a couple divorces and only one person’s name is on the deed, that person—usually a “he”—walks away with full ownership of the marital home.

Since she took two years off work to care for her young child, Zhang has had trouble climbing back onto the career ladder. Today she worries more about money—and her financial dependence on her husband.

According to a 2012 Horizon Research and IFeng.com survey of homeowners in China’s leading cities, men’s names appear on property deeds for marital homes 80 percent of the time, while women’s names appear on just 30 percent of them. “The law is so unfair to women,” Zhang told sociologist Leta Hong Fincher, author of a new book, Leftover Women: The Resurgence of Gender Inequality in China.

The upshot, as Fincher’s book argues, is that China’s women have a claim that is tenuous, at best, to the country’s burgeoning real estate wealth. “Chinese women have largely missed out on what is arguably the biggest accumulation of residential real-estate wealth in history, valued at around 3.3 times China’s [gross domestic product], according to figures from the bank HSBC,” she writes. “That amounted to over $27 trillion at the end of 2012.”

via How Women Lost Out as China’s Property Market Boomed – Businessweek.

Posted in China alert, Economics, Gender imbalance, Gender issues, real estate | Leave a Comment »

Tags: Beijing, China, China’s Supreme Court, Divorce, HSBC, Marriage law, women in china, Zhang, Zhang Yuan

01/05/2014

China’s Income-Inequality Gap Widens Beyond U.S. Levels – Businessweek

The gap between China’s rich and poor is now one of the world’s highest, surpassing even that in the U.S., according to a report being released this week by researchers at the University of Michigan.

The metric used in these studies, the Gini coefficient, would be zero in a society in which all income is equally distributed, while a score of one would reflect a society in which all income is concentrated in the hands of a single individual. Over a three-decade period starting in 1980—shortly after China’s economic reform and opening commenced—the Gini coefficient has grown from 0.3 to 0.55 in 2010.

In the U.S., by contrast, the index reads 0.45. Anything over 0.50 is considered “severe disparity,” says the report in the Proceedings of the National Academy of Sciences. The authors used data from seven separate surveys conducted by a number of Chinese university-affiliated organizations, including Peking University’s Institute of Social Sciences.

via China’s Income-Inequality Gap Widens Beyond U.S. Levels – Businessweek.

Posted in Affluence, China alert, Economics, income-wealth gap, poverty | Leave a Comment »

Tags: China, Economic inequality, Gini, Gini coefficient, Peking University, Proceedings of the National Academy of Sciences of the United States of America, Social science, U.S., University of Michigan

01/05/2014

The U.S. Is Big and Rich. China Is Just Big – Businessweek

Let’s assume, for the sake of argument, that China’s economy is on the verge of surpassing the U.S. economy in size. (By one measure, anyway—purchasing power parity as calculated by the World Bank’s International Comparison Program.) What does it mean?

Start with what it doesn’t mean. It doesn’t mean China is rich. All that gross domestic product has to be spread around more than a billion people. On a per-capita basis, the highest-income country in the world in 2011 was the oil-soaked and lightly populated Gulf monarchy of Qatar, at $146,000 per person. The U.S., as this chart shows, was No. 12, at just under $50,000.

China? China was No. 101, at a little less than $10,000 per capita. It’s not labeled on the chart, but if it were, it would appear between Serbia and Dominica.

via The U.S. Is Big and Rich. China Is Just Big – Businessweek.

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

Tags: China, Dominica, Gross domestic product, Purchasing power parity, Qatar, Serbia, United States, World Bank

01/05/2014

Will ‘Mega-Trader’ China Turn Into a Free Trader? – China Real Time Report – WSJ

For more than a decade, China has been accused of one protectionist move after another: subsidizing state-owned firms, blocking imports, manipulating currency. Just yesterday, the U.S. Trade Representative put China, once again, on its “Priority Watch List” for ripping off intellectual property.

But if Standard Chartered is right, all that may soon be changing. China depends so much on global trade, the bank argues in a new report, that Beijing will likely become a “champion of free trade.”

Here’s the logic: China has become the world’s first “true mega-trader” since Britain in the 1800s, the report says, borrowing mega-trader terminology coined in a report last year by two Peterson Institute for International trade researchers.

As the Peterson Institute researchers describe it, a country qualifies as a mega-trader if it is has a big share of global trade and also if its economy depends greatly on trade. By that definition, the U.S. hasn’t really made the cut even though the U.S. and China both had about 12% of global merchandise exports at their height. That’s because the U.S. economy is far less dependent on exports than China’s is.

Once a country reaches such an exalted status, Standard Chartered reasons, it recognizes that its interest lies in opening markets overseas and at home.

“Our view is that because China is a highly competitive exporter and also needs substantial imports, it will increasingly recognize that it is in its self-interest to encourage global free trade,” said John Calverley, the bank’s head of economic research in an email. He adds that China’s reform agenda “would be well-served by increasing opening, including closer to a free-trader position on issues like services, intellectual property, competition policy” and other areas.

Well, maybe.

via Will ‘Mega-Trader’ China Turn Into a Free Trader? – China Real Time Report – WSJ.

Posted in China alert, Economics, free trade, GDP, Trade | Leave a Comment »

Tags: Beijing, Britain, China, Economy of the People's Republic of China, International trade, Standard Chartered, United States, World Bank

01/05/2014

Two attackers among three killed in China bombing | Reuters

Two of the assailants who carried out a bombing in western China were among the three people killed, state media said on Thursday, in an attack which also wounded 79 and has raised concerns over its apparent sophistication and daring.

The People’s Daily, the official newspaper of the ruling Chinese Communist Party, said on its official microblog that “two mobsters set off bombs on their bodies and died”, though the report did not call it a suicide bombing.

The other person who died was a bystander, the People’s Daily said.

Knives and explosives were used in the assault on a railway station in Urumqi on Wednesday, the first bomb attack in the capital of Xinjiang region in 17 years. The attack was carried out soon after the arrival of a train from a mainly Han Chinese province, state media said.

The bombing was possibly timed to coincide with a visit to the region with a large Muslim minority by President Xi Jinping, when security was likely to have been heavy.

On Thursday, dozens of black police vans were parked around the station, while camouflaged police with assault rifles patrolled its entrance. Despite the security, the station was bustling and appeared to be operating normally.

The government blamed the attack on “terrorists”, a term it uses to describe Islamist militants and separatists in Xinjiang who have waged a sometimes violent campaign for an independent East Turkestan state – a campaign that has stirred fears that jihadist groups could become active in western China.

State media accounts did not say if any other attackers had been killed or captured. Nor did they say if Xi, who was wrapping up his visit, was anywhere near Urumqi at the time.

Pan Zhiping, a retired expert on Central Asia at Xinjiang’s Academy of Social Science, described the attack as very well organized, saying it was timed to coincide with Xi’s visit.

“It is very clear that they are challenging the Chinese government,” he said.

“There was a time last year when they were targeting the public security bureau, the police stations and the troops. Now it’s indiscriminate – terrorist activities are conducted in places where people gather the most.”

There has been no claim of responsibility for the attack.

via Two attackers among three killed in China bombing | Reuters.

Xi demands action after China blast

Posted in China alert, Dissident, Economics, Ethnic clash, Politics, Religious clash, separatism, Separatist, terrorism, unrest | Leave a Comment »

Tags: Academy of Social Science, Ürümqi, China, chinese communist party, Han Chinese, People's Daily, President Xi Jinping, State media, Western China, Xi JinPing, Xinjiang, xinjiang region

29/04/2014

Documents prove the truth can’t be buried[1]- Chinadaily.com.cn

Unearthed files provide new details of Japan’s occupation, report He Na and Dong Fangyu from Changchun.

Documents prove the truth can't be buried

Cruel life of miners under Japanese subjugation In 1990, Zhao Yujie, a young teacher of Japanese at a high school, decided to fully exploit her linguistic skills by applying for a job at Jilin Provincial Archives.

Although she wasn’t aware of the fact, Zhao had applied at exactly the right time. The management of the archives was searching for Japanese speakers to help decipher a huge number of records, totaling about 100,000 documents, made by the Japanese and detailing the activities of the Imperial Army during the occupation of China.

Recently, 89 of the 100,000 files discovered in Changchun, the provincial capital, have been made available to the public for the first time. The documents were buried following Japan’s surrender in August 1945. At the time, Changchun, then called Hsingking, was the capital of the Japanese-controlled puppet state of Manchukuo, which covered most of Manchuria.

Eighty-seven of the files describe the activities of Kwantung Kempeitai, or military police corps, while the other two detail the work of the Manchukuo central bank. Because around 90 percent of the files were written in Japanese, the words, photos, audio material and blueprints provide clear descriptions of the behavior of the Japanese troops in the period 1931 to 1945.

The documents provide insights into Japan’s invasion, its battle plans and colonization strategies, and key episodes such as the Nanjing Massacre, the use of sex slaves, or “comfort women” as they were known, bacteriological experiments on prisoners and civilians, suppression of an anti-Japanese army in China’s Northeast, and the inhuman treatment of civilians, soldiers and Allied prisoners of War.

“As the largest batch of Japanese archives covering the period from 1931 to 1945 to be discovered so far, these files are of great historical value. They detail Japan’s cruelty to the people of the countries it occupied,” said Dong Hongmao, director of the Institute of Japanese History at the Jilin Provincial Academy of Social Sciences.

via Documents prove the truth can’t be buried[1]- Chinadaily.com.cn.

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

Tags: Changchun, China, Dong Fangyu, Imperial Japanese Army, Japan, Jilin, Jilin Provincial Archives, Manchukuo, Nanking Massacre, Northeast China, Zhao Yujie

29/04/2014

China vs. the U.S.: It’s Just as Cheap to Make Goods in the U.S.A. – Businessweek

An entire generation of Americans has come of age laboring under the assumption that the U.S. can’t compete in the manufacturing arena with low-cost competitors such as China and Brazil. That may have been true a decade ago, but it’s no longer true today.

An employee of Rebecca Minkoff handbags at the Baikal manufacturing facility in New York.

I recently completed a review of manufacturing costs in the top 25 export economies with my colleagues Justin Rose and Michael Zinser. Our research shows that when the most important economic factors are considered—total labor costs, energy expenses, productivity growth, and currency exchange rates—Brazil is one of the highest-cost manufacturing nations in the world, Mexico is cheaper than China, China is virtually even with the U.S. (as are most of the traditionally “low-cost” countries of eastern Europe), and the low-cost leader in western Europe is none other than the country that launched the Industrial Revolution: the United Kingdom.

So throw away the old playbook. Welcome to the new era.

via China vs. the U.S.: It’s Just as Cheap to Make Goods in the U.S.A. – Businessweek.

US, Mexico Are ‘Rising Stars’ in Manufacturing Cost Competitiveness

Posted in China alert, Economics, Manufacturing, Offshoring | Leave a Comment »

Tags: Brazil, China, Industrial Revolution, Justin Rose, Mexico, Michael Zinser, United States

29/04/2014

In China, Another Argument for Peeing in Public – China Real Time Report – WSJ

While peeing in public may be frowned upon in many places, mainlanders apparently take a slightly more tolerant attitude to the practice. In Hong Kong, this cultural clash has led to a number of altercations after mainland parents let their children relieve themselves in the territory’s streets.

But at times, evacuating one’s bladder in public apparently can have its upside.

According to local media in the southwestern city of Chengdu (in Chinese), there is at least one young man who now believes that when the call of nature is heard, just go with the flow.

Xu Yuanguang was riding home from work on his motorcycle last week, the Chengdu Business News reports (in Chinese), when he felt a sudden urge. The 29-year-old shop employee pulled off the road on the outskirts of Chengdu and took aim at a nearby pile of dirt.

After completing his task, he spotted a colorful object that had been uncovered by the sudden flow. Intrigued, he dug it out, only to find a terracotta figurine.

He and co-worker Yi Zhimin – who had been riding with him — reported the find to the local Bureau of Cultural Relics.

via In China, Another Argument for Peeing in Public – China Real Time Report – WSJ.

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

Tags: Asia, Associations, Chengdu, China, Chinese language, health, Hong Kong, Sina Weibo

CHINDIA ALERT: You'll be living in their world, very soon

Chindia Alert: You’ll be Living in their World Very Soon

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Maybe China’s Currency Isn’t Undervalued After All – China Real Time Report – WSJ

How Women Lost Out as China’s Property Market Boomed – Businessweek

The U.S. Is Big and Rich. China Is Just Big – Businessweek

Will ‘Mega-Trader’ China Turn Into a Free Trader? – China Real Time Report – WSJ

Documents prove the truth can’t be buried[1]- Chinadaily.com.cn

China vs. the U.S.: It’s Just as Cheap to Make Goods in the U.S.A. – Businessweek

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