Posts tagged ‘Economic growth’

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01/03/2013

* China plans bond overhaul to fund $6 trillion urbanization

Reuters: “China plans major bond market reform to raise the money the ruling Communist Party needs for a 40 trillion yuan ($6.4 trillion) urbanization program to buoy economic growth and close a chasm between the country’s urban rich and rural poor.

A man walks past a construction site for a new stadium in Mentougou district, suburb of Beijing February 28, 2013. REUTERS-Kim Kyung-Hoon

The Party aims to bring 400 million people to cities over the next decade as the new leadership of president-in-waiting Xi Jinping and premier-designate Li Keqiang seek to turn China into a wealthy world power with economic growth generated by an affluent consumer class.

The urban development would be funded by a major expansion of bond markets, sources with leadership ties, and a senior executive at one of China’s “Big Four” state banks, who was formerly at the central bank, told Reuters.

“The urbanization drive will push the domestic capital market liberalization agenda,” the senior bank executive said on condition of anonymity. “Urbanization is Li Keqiang’s big project. He has to get it right and he is willing to pursue innovation to make it a success.”

Set to be confirmed as premier at the end of the annual meeting of China’s rubber-stamp parliament, which opens next week, Li must find ways to pay for the urban development that he has made a policy priority.

Central and local governments, as well as bank loans, will fund the costs, the sources said. But, sweeping reforms to create a fully-functioning municipal bond market, boost corporate and high-yield bond issuance and actively steer foreign capital into the sector, are crucial to raising the sums of money China will need, they added.

Despite its ranking as the second-largest economy globally after three decades of stellar growth, China remains an aspiring middle-income country riven with inequality and dependent on state-backed investment.

“If we continue to walk down the path of government spending, it’ll be like wearing new shoes, but walking the old road,” a source with leadership ties said, requesting anonymity to avoid repercussions for speaking to foreign media without authorization.”

via Exclusive: China plans bond overhaul to fund $6 trillion urbanization – sources | Reuters.

Posted in Chindia Alert, Economics, urban development | 1 Comment »

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30/01/2013

* Indian Rupee at Over 3-Month High

Indian rupee collection

Indian rupee collection (Photo credit: Wikipedia)

WSJ: “The Indian rupee rose to its highest level in more than three months against the U.S. dollar Wednesday, tracking strong gains in the euro.

At 1005 GMT, the dollar was trading at 53.37 rupees, after falling to 53.35 rupees–a level not seen since Oct. 23. The dollar was at 53.76 in late Asian trade Tuesday.

The euro touched a fresh 13-month high of $1.35367 Wednesday.

The rupee benefited also from hopes of more monetary-policy easing by the central bank in 2013 to help boost economic growth which has slowed to its weakest in nearly a decade.

Tuesday, the Reserve Bank of India trimmed its key lending rate by a quarter-percentage point to 7.75%–the first rate cut in nine months–and said “it is critical now to arrest the loss of growth momentum.”

The RBI said its policy stance intends to “provide an appropriate interest rate environment to support growth as inflation risks moderate.””

via Indian Rupee at Over 3-Month High – WSJ.com.

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31/08/2012

* India’s economic growth better than forecast

BBC News: “India’s economy grew faster than expected in the three months to the end of June, easing some fears about a sharp slowdown in Asia’s third-largest economy.

Growth was 5.5% in the April to June period from a year earlier. Most analysts had forecast a rate of 5.2%.

That compares with a 5.3% annual growth rate in the previous quarter.

However, there are concerns that a lack of reforms, slowing factory output and investment may hurt long-term growth.

“Whilst an upside surprise at 5.5%, the pace of growth is undeniably below potential and validates the need for the government to address sluggishness in investment and external sector activity,” said Radhika Rao an economist at Forecast Pte.”

via BBC News – India’s economic growth better than forecast.

Posted in Economics, Good news, India alert | 2 Comments »

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27/08/2012

* $135 – $12 = the pay gap the West can’t bridge

The Times: “We can’t compete with China on wages and are living beyond our means. We must retrench before we grow again

Two numbers — $135 and $12 — explain why Britain’s and Europe’s economies are stagnant or shrinking. Pundits and economists have lined up with suggestions about how to stimulate our economy: more quantitative easing; clever schemes such as “funding for lending”; while others say enough of austerity, let’s stop the cuts. But all that assumes that growth is the natural order of things.

None of these proposals will solve our problems because they ignore the two numbers $135 and $12. The first is what the average worker in the West earns per day; the second what the average worker in urban China earns.

This inequality in pay is the main reason our economy is in peril. What entitles the rich world’s 500 million workers to salaries ten times greater than the 1.1 billion workers in urban bits of the developing world who toil and study so much harder, let alone nearly 100 times greater than the 1.3 billion adults who live in rural poverty?

In the global marketplace it is now impossible to preserve well-paid jobs for Westerners. Many of those jobs have gone or are going south or east. In the 1950s the most successful company by market capitalisation was General Motors. In 1955 it employed nearly half a million Americans and 80,000 foreigners. Today Apple, the world’s biggest company, employs 4,000 Americans and more than 700,000 overseas contractors. And in jobs that have not moved, wages are under severe downward pressure: US high- school dropouts now earn less in real terms than their dropout grandfathers.

It was not always like that. For 55 years after the Second World War annual growth in jobs in Western economies was about 2 per cent and real wages grew by about 3 per cent year after year. The idea that we would all earn more without having to work harder, and that there would be jobs for our children, became a democratic “right”. But this right is now broken because, starting in 1990, developing nations ditched the failed socialist and Marxist policies that kept them poor. Since 2000 China’s economy has quintupled — while jobs, wages and GDP growth over the cycle for Western economies was, with few exceptions, negative.

For the first time in centuries we have to compete on a level playing field. We cannot compete on wages. Do we have other advantages that will protect our living standards? Aren’t Europe’s workers better educated? More creative? No: 10,000 science PhDs graduated from Chinese universities last year. In 1995, global patents granted to China amounted to 0.5 per cent of the total; in 2010 it had reached 9 per cent and is rising exponentially. Our best universities are educating many future business leaders and scientists of developing countries. Our advantage in physical and intellectual capital is eroding fast. What the developing world does not create, it can steal; the global value of counterfeit and pirated goods is forecast to rise by $1.5 trillion by 2015.

Most importantly, we consume more and invest less. China’s investment levels (however misdirected some of those investments may be) have risen to almost half of GDP, while the West is at about 15 per cent and falling. The truth is that Western nations have been living beyond their means. Our build-up in total debt — corporate, individual and government — has now become an enormous overhang. The UK is more indebted than Greece, Spain or Italy and only Japan and Ireland’s total debt per head is greater than ours.

So how do we get out of this mess?

…”

By Jon Moynihan, , 15 August 2012 | PA Consulting Group

via The Times – $135 – $12 = the pay gap the West can’t bridge, 15 August 2012 | PA Consulting Group.

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29/07/2012

* China waste water pipeline scrapped after protest

BBC News: “Authorities in China say a project to build a waste water pipeline in the city of Qidong has been scrapped after a protest over pollution.

Demonstrators took to the streets of the city, north of Shanghai, and ransacked local government offices. They said the pipeline, proposed as part of a paper-making company, would pollute their coastal waters.

China has seen rising anger about environmental damage after three decades of rapid economic growth.

The thousands of protesters overturned cars as well as storming the local government offices and throwing documents from the windows. Items which the protesters allege are often received as bribes by officials – such as wine – were also seized from the offices, reports say.”

via BBC News – China waste water pipeline scrapped after protest.

Yet another example that ‘people power’ is beginning to affect decisions by local authorities in China.

See also: https://chindia-alert.org/2012/07/03/china-factory-construction-halted-amid-violent-protests/

Posted in China alert, Ecology, Economics, Good news, Pollution, public protest | 2 Comments »

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11/07/2012

* Socialist market economy turning point for China

Xinhua: “Good education, housing, medical care and insurance are within the reach of more Chinese since the adoption of a market economy, according to a Tuesday commentary in the People’s Daily, the flagship newspaper of the Communist Party of China (CPC).

The formation and improvement of China’s socialist market economy has reshaped the lives of 1.3 billion people and exerted an influence on the future of the whole world, wrote Ren Zhongping.

In the past 20 years, the most populous nation has become the world’s second-largest economy and has stood among middle-income countries in terms of its per capita gross domestic product, Ren said.

China turned itself from a seller’s market to a buyer’s market and became the world’s biggest exporter and a member of the World Trade Organization, Ren said.

At the beginning, China’s transformation faced many obstacles, including domestic prejudice and doubts of foreign countries, Ren said.

However, the “China miracle” surprised everyone, Ren wrote.

“It is said that everything happened in the past 20 years could not be planned in any plan,” Ren said.

Focusing on developing productivity, adhering to the common development of public-owned and private economies and integrating market allocation with the government regulation helped make China successful, Ren said.

However, the problems that have emerged after development are no smaller than those that existed before China’s prosperity, Ren said.

It’s imperative to enhance the quality of economic development, eliminate factors that hamper economic growth mode and smash the administrative monopoly so as to further free development of the private economy, Ren said.

The author called for a sound insurance system that can relieve social anxiety and narrow the income gap, as well as stark government reforms.

Unswerving reform is the only way to realize the goal of “establishing a sound social market economic system by 2020,” Ren said.

Changing China’s economic growth mode, promoting transformation of government functions and boosting equality in public services will allow China to shoulder a sea of challenges both now and in the future, Ren wrote.”

via Socialist market economy turning point for China: People’s Daily – Xinhua | English.news.cn.

A fair summary of the past 20 years and a good prognostication of the next twenty.

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03/05/2012

* China’s Bright Food buys Weetabix

Reuters: “China’s Bright Food will take control of breakfast cereal maker Weetabix, beloved by generations of British children, in the biggest foreign acquisition by a Chinese food group.

State-owned Bright Food has agreed to buy a 60 percent stake in a deal which puts a value of 1.2 billion pounds $1.94 billion, including debt, on the private-equity owned company that coined the slogan “Have you had your Weetabix today?”

The Shanghai-based group has been on the acquisition trail, seeking to raise its profile and cater for its rapidly growing home market. Weetabix is its second foreign purchase in a year and its first in Europe after other deals fell through. Eighty-year-old Weetabix is Britain’s second biggest maker of breakfast cereals and cereal bars after Kellogg. Its brands include Alpen muesli and Ready Break as well as Weetabix, which lays claim to being Britain’s No. 1 breakfast cereal for under-5s and is made from wheat grown within 50 miles 80 km of its base in southern England.

“As China’s leading food group, we are pleased to become the controlling shareholder of Weetabix,” Bright Food chairman Wang Zhongnan said in a statement on Thursday. “Weetabix has an excellent product portfolio, including leading British cereal brand Weetabix and other category-leading brands. “Private equity owners Lion Capital and Weetabix management will keep a 40 percent stake. The quintessentially British breakfast cereal group was founded in 1932 by the secretive George family and soon producing its iconic bricks of wheat. It was bought by a private equity firm in 2004.

Bright Food now sees a big opportunity for Weetabix in China, where breakfast is a very important meal and there is a trend towards healthy eating.The group, which makes “White Rabbit” candy, bought majority stakes in Australias Manassen Foods and New Zealands Synlait Milk over the past two years.”

via UPDATE 2-Chinas Bright Food buys Weetabix | Reuters.

Related post: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

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29/04/2012

* China’s great leap forward – into the supermarket

The Guardian: “Made in China says everything, economically, about the last decade. Sold in China tells you everything about the next.

Recent output figures from China were greeted with concern after the country reported its lowest GDP growth for three years, although, at 8.1%, its magnificent compared to the UK’s double-dip recession. Still, there is much talk among economists about a “hard landing”, a “property bubble” and “bankrupt banks”. But there is one key fact to remember about the economy in China. It’s that the minimum wage is going up 15% a year, every year, for the next five years. Take a billion workers and give them a 100% pay rise. It changes everything.

Within a generation, China is likely to displace the US as the biggest consumer market in the world. At Tianjin Port, the world’s fifth biggest, container ships used to export Chinese goods to the rest of the world but come back empty. Now they return with the finished and semi-finished goods from the rest of the world to satisfy a ravenous consumer appetite.

In Tianjin’s vast factory zone, across the road from a Foxconn plant making the next wave of Apple iPhones, the Master Kong factory makes more pot noodles than anywhere else in the world. The huge automated production lines, with machine tools imported from Japan and Germany, churn out five billion noodle packets a year – enough to reach to the moon and back. All the raw materials come from China, all of the finished product is consumed in China. Its just one of 23 Master Kong plants on the mainland.

Further south in the “groundscraper” and weirdly Hogwarts-esque Shanghai offices of Ping An, China’s second biggest insurer, 12,000 commission-led telesales agents make one million sales calls every day. It is the largest telemarketing operation on the planet, feeding on the explosive growth of domestic car sales. Last year 14.5m cars were sold in China – or 2m more than in the US, previously the world’s biggest auto market. Nine in 10 were to people who had never bought a car before. Ping An now insures 32m private cars, raking in premiums of £2.2bn 22.3bn renminbi a year. Four years ago, that revenue was below £100m.

Just off outer ring road five in Beijing, a mundane average-income district, the Wu Mart hypermarket is perhaps an early indicator of how domestic consumption will grow.

The store bears more resemblance to a Lidl than a Tesco but, unlike the oddly deserted luxury shops in the city centre, it is teeming. It’s instantly apparent that mid-range western brands are phenomenally popular with middle-income Chinese consumers. Shelf after shelf stocks the likes of Colgate toothpaste, Nivea, Quaker Oats and Snickers bars.

Whole aisles are devoted to disposable nappies. China’s one-child policy, rigorously enforced, means that spending on a sole child is proportionately huge. Hong Kong babies use 50% more diapers than those in the west, and mainland China is heading the same way. Want to invest in China? Maybe buy Procter & Gamble (Pampers) or Kimberly-Clark (Huggies) instead.“

via Chinas great leap forward – into the supermarket | Money | The Guardian.

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23/04/2012

* GM to Add 600 China Dealerships

WSJ: “General Motors Co. plans to add 600 dealerships in China this year, about a 20% increase, as the auto maker looks to bolster its presence here amid growing competition and an economic-growth slowdown.Chief Executive Dan Akerson on Monday outlined steps GM is taking to boost sales and market share in China, where it is the largest foreign auto maker.

The addition of 600 dealerships would bring the companys dealer network in China to 3,500 stores, up from 2,900 at the end of 2011.  At that size, Chinas dealers would begin to rival the companys U.S. network of 4,400.

GM is adding new models and factory capacity and expanding a technology center near its China headquarters in Shanghai, which will soon be its second-largest global development center. The largest is in Warren, Mich., near its Detroit headquarters. Like GM, many of the worlds major auto makers are expanding in China, concentrating on a market expected to grow to more than 30 million vehicle sales by the end of the decade from 18.5 million last year.”

via GM to Add 600 China Dealerships – WSJ.com.

If you are looking for a business opportunity in China, go for a tyre franchise. The vast majority of Chinese cars have yet to have their first set of tyres replaced!

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16/03/2012

* India: ‘Need for urgent reforms as corruption, civil society activism delay decisions’

The Hindu: “The government on Thursday gave a clarion call for urgent economic reforms while conceding that corruption scandals and compulsions of coalition politics have slowed down the decision-making process, as a result of which it is faced with fiscal slippages in 2011-12.

Making a strong pitch for raising tax resources and higher compliance, the Economic Survey 2011-12, tabled in Parliament on Thursday in tandem with the Reserve Bank in its mid-quarter policy review, expressed serious concern over the deteriorating state of government finances and stressed the need for fiscal consolidation if inflation is to be tamed.

Highlighting inflation and fiscal slippages as among the major challenges confronting the economy, the Survey said a slackening in the pace of reforms and high-profile corruption scandals along with “welcome civil society activism” have led to delay in decision-making by civil servants.

Tabled in the Lok Sabha by Finance Minister Pranab Mukherjee, the Survey said “coalition politics and federal considerations played their roles in holding up economic reforms on several fronts, ranging from diesel and LPG pricing to FDI in retail” and also pointed to the economic slowdown partly resulting from domestic issues “like pressures of democratic politics.”

In concert with the apex bank on the need for fiscal consolidation, the Survey said: “The principal way in which this has to be achieved is by raising tax-GDP ratio and cutting down wasteful expenditures.”

The Survey noted that the dismal economic performance this fiscal should be a “wake-up call” but, at the same time, expressed cautious optimism that the GDP growth in 2012-13 would go up to 7.6 per cent following a moderation in inflation and consequent low interest rates.

“The growth rate of real GDP [is expected] to pick up to 7.6 per cent [plus or minus 0.25 per cent] in 2012-13 and faster beyond that,” the Survey said and noted that economic expansion this fiscal would moderate to a three-year low at 6.9 per cent. Arguing out a case for fiscal consolidation, tax reforms, opening of the multi-brand retail to global chains, freeing of diesel prices and the need for honesty among political leaders and policy-makers, the Survey said that although government’s fiscal deficit was likely to significantly go off the target of 4.6 per cent of GDP this fiscal, it would narrow down to 4.1 per cent in 2012-13 on the strength of a pick-up in economic activities. After tabling the pre-budget document, the Finance Minister said: “It [the Survey] charts economic development and challenges faced during the fiscal year. It is a vital input for the preparation of the budget.”

At a press briefing later during the day, Chief Economic Adviser Kaushik Basu, prime architect of the document, said growth in manufacturing and agriculture sectors were likely to be key drivers in the next fiscal. “There could be one more year of a slight slowing down of investment and saving rates. We expect… rates to pick up handsomely after that,” he said.”

via The Hindu : News / National : ‘Need for urgent reforms as corruption, civil society activism delay decisions’.

Related page: https://chindia-alert.org/political-factors/indian-tensions/

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