Posts tagged ‘Economy of the People’s Republic of China’

19/08/2016

The return of the Xia | The Economist

CHINA’S leaders are immensely proud of their country’s ancient origins. President Xi Jinping peppers his speeches with references to China’s “5,000 years of history”. The problem is that archaeological evidence of a political entity in China going back that far is scant.

There is some, including engravings on animal bones, that shows the second dynasty, the Shang, really did control an area in the Yellow river basin about 3,500 years ago. But no such confirmation exists for the legendary first ruling house, the Xia. Even inside China, some historians have long suspected that the country’s founding story—in which Emperor Yu tames flooding on the Yellow river (with the help of a magic black-shelled turtle, pictured), earns for himself the “mandate of heaven” and establishes the first dynasty—was either a Noah’s-Ark flood-myth or perhaps propaganda invented later to justify centralised state power. This month, however, state-controlled media have been crowing over newly published evidence in Science, an American journal, that at least the flooding was real. This, they say, has made it more credible that the Xia was, too. Not everyone is so convinced.

Catastrophic floods leave their mark on soil and rocks. Qinglong Wu of Peking University and others have examined the geology of the upper reaches of the Yellow river. In the journal, they conclude that a vast flood did take place in the right area and not long after the right time for the supposed founding of the Xia. Although their evidence does not prove the existence of an Emperor Yu or of the dynasty he founded, it does provide a historical context in which someone might have gained power with the help of flood-taming exploits.

According to Mr Wu, a vast landslide, probably caused by an earthquake, blocked the course of the Yellow river as it flowed through the Jishi gorge on the edge of the Tibetan plateau. For six to nine months as much as 16 cubic kilometres (3.8 cubic miles) of water built up behind the accidental dam, which, when it finally burst, produced one of the biggest floods ever. At its peak, the authors calculate, the flow was 500 times the normal discharge at Jishi Gorge. Mr Wu reckons the ancient flood could easily have been felt 2,000km downstream in the area of the Yellow river said by Chinese historians to have been the realm of the Xia.

At about this time, either coincidentally or (more probably) because of the flood, the river changed its course, carving out its vast loop across the north China plain. The significance is that, while the river was finding its new course, it would have flooded repeatedly. This is consistent with old folk tales about Emperor Yu taming the river not through one dramatic action, but by decades of dredging.

The ancient flood can be dated because the earthquake that set the catastrophic events in motion also destroyed a settlement in the Jishi gorge. Radiocarbon dating of inhabitants’ bones puts the earthquake at about 1920BC—not 5,000 years ago but close-ish. Xinhua, a state news agency, lauded the study as “important support” for the Xia’s existence. Xu Hong of the Chinese Academy of Social Sciences challenged this, saying the scholars’ findings had not proved their conclusions. The first dynasty has gone from myth to controversy.

Source: The return of the Xia | The Economist

27/05/2016

Foxconn replaces ‘60,000 factory workers with robots’ – BBC News

If manufacturers like Foxconn and high street companies like McDonald’s and, no doubt soon, offices too start replacing humans with robots, where will it all end? Where will all the ‘surplus’ people find jobs and pay.  And, eventually, who will be able to afford the iPhones, the hamburgers and so forth?  Won’t it be self-defeating in the long run for the employers with no customers or, at best, not enough customers to keep all the robots occupied and earning their keep.

“One factory has “reduced employee strength from 110,000 to 50,000 thanks to the introduction of robots”, a government official told the South China Morning Post.

Xu Yulian, head of publicity for the Kunshan region, added: “More companies are likely to follow suit.”

China is investing heavily in a robot workforce.

In a statement to the BBC, Foxconn Technology Group confirmed that it was automating “many of the manufacturing tasks associated with our operations” but denied that it meant long-term job losses.

“We are applying robotics engineering and other innovative manufacturing technologies to replace repetitive tasks previously done by employees, and through training, also enable our employees to focus on higher value-added elements in the manufacturing process, such as research and development, process control and quality control.

“We will continue to harness automation and manpower in our manufacturing operations, and we expect to maintain our significant workforce in China.”

Since September 2014, 505 factories across Dongguan, in the Guangdong province, have invested 4.2bn yuan (£430m) in robots, aiming to replace thousands of workers.

Kunshan, Jiangsu province, is a manufacturing hub for the electronics industry.

Economists have issued dire warnings about how automation will affect the job market, with one report, from consultants Deloitte in partnership with Oxford University, suggesting that 35% of jobs were at risk over the next 20 years.

Former McDonald’s chief executive Ed Rensi recently told the US’s Fox Business programme a minimum-wage increase to $15 an hour would make companies consider robot workers.

“It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who is inefficient, making $15 an hour bagging French fries,” he said.”

Source: Foxconn replaces ‘60,000 factory workers with robots’ – BBC News

29/02/2016

China expects to lay off 1.8 million workers in coal, steel sectors | Reuters

China said on Monday it expects to lay off 1.8 million workers in the coal and steel industries, or about 15 percent of the workforce, as part of efforts to reduce industrial overcapacity, but no timeframe was given.

It was the first time China has given figures that underline the magnitude of its task in dealing with slowing growth and bloated state enterprises.

Yin Weimin, the minister for human resources and social security, told a news conference that 1.3 million workers in the coal sector could lose jobs, plus 500,000 from the steel sector. China’s coal and steel sectors employ about 12 million workers, according to data published by the National Bureau of Statistics.

“This involves the resettlement of a total of 1.8 million workers. This task will be very difficult, but we are still very confident,” Yin said.

For China’s stability-obsessed government, keeping a lid on unemployment and any possible unrest that may follow has been a top priority.

The central government will allocate 100 billion yuan ($15.27 billion) over two years to relocate workers laid off as a result of China’s efforts to curb overcapacity, officials said last week.

Source: China expects to lay off 1.8 million workers in coal, steel sectors | Reuters

24/02/2016

China cuts more red-tape – Xinhua | English.news.cn

I wish the UK government would follow this excellent lead.

“The State Council, China’s cabinet, has decided to abolish another 13 items of administrative approval to reduce intervention in the economy.

The items released on Tuesday involve finance and business qualification reviews.

The decision will help vitalize the economy and strengthen growth, the State Council said.

Facing a complicated global landscape and pressure from an economic slowdown at home, the central government has made transforming government functions a top priority.

State Council agencies have canceled or delegated administrative approval powers on 599 items since March 2013, meeting the target to cut the number of items requiring approval by one-third within the term of this government ahead of schedule.”

Source: China cuts more red-tape – Xinhua | English.news.cn

15/02/2016

Home on the Range, Chinese Style – China Real Time Report – WSJ

It’s a small step in the right direction, driven more by necessity than enlightened policy.

That’s the view from economists on China’s move this year to put forward a range for its economic growth target rather than a single number. The head of the National Development and Reform Commission, China’s top economic planning agency, said early this month that the 2016 target is likely to be “6.5% to 7%,” the first time in recent memory that China has used such a band. The target is set to be officially released early next month when China’s parliament convenes.

For decades, Beijing beat its annual growth targets without breaking a sweat. More recently, as growth decelerated faster than expected, it has faced growing difficulty hitting its number, so a range provides more wiggle room.

This follows Beijing’s decision to add an “about” to both its 7.5% target in 2014 and its 7% target last year. The adjective proved handy when the actual growth figures wound up falling short both times.

The risk this year, economists say, is that even a 6.5% to 7% target may be too high, heaping pressure on local officials to artificially stimulate growth in ways that increase debt and blunt reform initiatives.

This is also the year that China sets a growth target for the coming five years that’s expected to be 6.5%, in line with a Communist Party goal of doubling per capita income by 2020 over 2010 levels. This benchmark also may be high, analysts said, given China’s many structural problems and so-far limited appetite for reform.

“If they really stick to the 6.5% target by adopting unsustainable policies, throwing up more credit, they face a bigger problem with debt down the road,” said Fitch Ratings Inc. analyst Andrew Colquhoun. “Many emerging market problems in the past have happened when countries veer off and start to believe their own hype on what growth is possible.”

Source: Home on the Range, Chinese Style – China Real Time Report – WSJ

10/12/2015

Aging population could shrink workforce by 10% in China|Society|chinadaily.com.cn

The graying of the population could shrink the number of working-age adults by more than 10 percent in China by 2040, a report from the World Bank said on Wednesday. It means a net loss of 90 million workers in the country until that time, according to the report named “Live Long and Prosper: Aging in East Asia and Pacific”.

“Developing middle-income countries in East Asia, such as China, are already aging quickly and face some of the most pressing challenges in managing aging,” it said. East Asia, as the Word Bank’s research showed, is aging faster than any other region in history. Nearly 36 percent of the world’s population aged 65 and over, or 211 million people, live in this region, which is the largest share among all regions in the world.

The bank warned that the rapid pace and sheer scale of aging in East Asia raises policy challenges, economic and fiscal pressure, as well as social risks. “Without reforms, for example, pension spending in the region is projected to increase by eight to 10 percent of GDP by 2070.”

Axel van Trotsenburg, regional vice-president of the World Bank‘s East Asia and Pacific Region, said on Wednesday that “East Asia Pacific has undergone the most dramatic demographic transition we have ever seen, and all developing countries in the region risk getting old before getting rich.” He suggested a comprehensive policy approach across the life cycle to enhance labor-force participation and encourage healthy lifestyle through structural reforms in childcare, education, healthcare, pensions, long-term care and more.

The report also recommends a range of pressing reforms in China, including removing incentives in pension systems that have encouraged some workers, especially urban women, to retire too early. Developing countries in the region can take steps to reform their existing pension schemes, including considering gradual increase in retirement age, it said.

Source: Aging population could shrink workforce by 10% in China|Society|chinadaily.com.cn

04/12/2015

Selective Equality? China Retirement Age Plan Sparks Backlash Among Women – China Real Time Report – WSJ

China’s policy makers have long accepted the need for workers to delay retirement to ease social and fiscal pressures from a rapidly aging population. Few, however, could agree on how to do it.

This week, state-backed researchers fueled fresh debate on the issue with a new proposal on how to coax more productive years out of China’s silver-haired generation. They called for gradually extending the country’s statutory retirement thresholds over the next three decades, culminating in a flat retirement age of 65 years. But their plan is proving unpopular. It is particularly striking a nerve among some women, who in China can retire between five and ten years earlier than men. The statutory retirement age for men is set at 60 years.

On social media, many female users mocked what they perceived as selective pursuit of gender equality. “In 2045, would there be equal pay between men and women? Would men be able to give birth?” a user, who identified as female, wrote on the popular Weibo microblogging service. “Chinese society, in reality, is rife with gender inequality; why bring about gender equality in retirement age?” another user wrote.

In an online survey, the state-run China National Radio found nearly 80% of respondents objected to setting a flat retirement age for men and women. “Delaying retirement is understandable, but setting the same retirement age for men and women isn’t compatible with our country’s conditions,” CNR quoted a Weibo user as saying. “Men would only have to work five more years, while women would have to work ten years longer. And women still have to face family pressures, so it’s clearly unsuitable.”

The proposal from the Chinese Academy of Social Sciences comes amid a longstanding debate in government and academic circles on how to implement a much-needed but deeply unpopular policy. Beijing has said it will gradually raise retirement thresholds starting in 2022, though the policy would only be finalized in 2017. Under rules unchanged since the 1950s, China allows most female workers to retire when they turn 50, while women in public-sector jobs can do so at 55 years of age. To change this, the CASS researchers proposed that the government could in 2017 set a flat retirement age for women at 55 years, eliminating the distinction between private and public-sector workers. Authorities could begin extending retirement thresholds—for men and women—at a fixed pace, starting in 2018.

CASS researchers suggest adding a year to the female retirement age every three years, while doing so for men every six years. Beijing could also allow flexibility for workers to bring forward or delay their retirement by up to five years, on the condition that their pension payouts would be adjusted accordingly, CASS said.

Source: Selective Equality? China Retirement Age Plan Sparks Backlash Among Women – China Real Time Report – WSJ

02/11/2015

What Will the Two-Child Policy Mean for China’s Property Market? – China Real Time Report – WSJ

China’s latest move to scrap its one-child policy buoyed property developer stocks Friday on hopes it could provide a boost to housing demand.

All Chinese couples will be allowed to have two children, Chinese official media said Thursday, after a meeting of top officials. While a timetable hasn’t been established, there are prospects that an increase in the size of Chinese households could raise demand for larger homes.

Shanghai housewife Tracy Li said she and her husband will be looking for a larger home once their two sons, one aged four and one who is almost a year, get older. They currently live in a two-bedroom apartment in Shanghai’s Minhang district. Like many Chinese parents, she doesn’t think it’s necessary for each child to have their own room but want to be able to accommodate grandparents, who in China are frequently deeply involved in childcare.

“When the children are older, it’s not too good for them to share a bedroom with their grandparents when they come over,” said the 34-year-old Ms. Li, who asked to be referred to by her English, rather than her Chinese, name. Finding a home in a good school district will take some time, said Ms. Li, who wants to move before her oldest son reaches school age.

Source: What Will the Two-Child Policy Mean for China’s Property Market? – China Real Time Report – WSJ

01/11/2015

Gauging the strength of Chinese innovation | McKinsey & Company

The events of 2015 have shown that China is passing through a challenging transition: the labor-force expansion and surging investment that propelled three decades of growth are now weakening.

Gauging the strength of Chinese innovation

This is a natural stage in the country’s economic development. Yet it raises questions such as how drastically the expansion of GDP will slow down and whether the country can tap new sources of growth.

New research1 by the McKinsey Global Institute (MGI) suggests that to realize consensus growth forecasts—5.5 to 6.5 percent a year—during the coming decade, China must generate two to three percentage points of annual GDP growth through innovation, broadly defined. If it does, innovation could contribute much of the $3 trillion to $5 trillion a year to GDP by 2025.2 China will have evolved from an “innovation sponge,” absorbing and adapting existing technology and knowledge from around the world, into a global innovation leader. Our analysis suggests that this transformation is possible, though far from inevitable.

To date, when we have evaluated how well Chinese companies commercialize new ideas and use them to raise market share and profits and to compete around the world, the picture has been decidedly mixed. China has become a strong innovator in areas such as consumer electronics and construction equipment. Yet in others—creating new drugs or designing automobile engines, for example—the country still isn’t globally competitive. That’s true even though every year it spends more than $200 billion on research (second only to the United States), turns out close to 30,000 PhDs in science and engineering, and leads the world in patent applications (more than 820,000 in 2013). Video   McKinsey director Kevin Sneader discusses global innovation trends at a recent World Economic Forum event.

When we look ahead, though, we see broad swaths of opportunity. Our analysis suggests that by 2025, such new innovation opportunities could contribute $1.0 trillion to $2.2 trillion a year to the Chinese economy—or equivalent to up to 24 percent of total GDP growth. To achieve this goal, China must continue to transform the manufacturing sector, particularly through digitization, and the service sector, through rising connectivity and Internet enablement. Additional productivity gains would come from progress in science- and engineering-based innovation and improvements in the operations of companies as they adopt modern business methods.

To develop a clearer view of this potential, we identified four innovation archetypes: customer focused, efficiency driven, engineering based, and science based. We then compared the actual global revenues of individual industries with what we would expect them to generate given China’s share of global GDP (12 percent in 2013). As the exhibit shows, Chinese companies that rely on customer-focused and efficiency-driven innovation—in industries such as household appliances, Internet software and services, solar panels, and construction machinery—perform relatively well. Exhibit Enlarge However, Chinese companies are not yet global leaders in any of the science-based industries (such as branded pharmaceuticals) that we analyzed. In engineering-based industries, the results are inconsistent: China excels in high-speed trains but gets less than its GDP-based share from auto manufacturing. In this article, we’ll describe the state of play and the outlook in these four categories, starting with the two outperformers.

Source: Gauging the strength of Chinese innovation | McKinsey & Company

21/10/2015

Time to end China’s one-child policy urgently: government advisers warn of demographic crisis ahead | South China Morning Post

Government advisers have strengthened calls for China to further ease its stringent one-child policy urgently, ahead of a meeting this month during which the Communist Party’s decision-making body will set the tone for national economic and social development for the next five years.

Newborns receive vaccines in a hospital in China. Photo: Reuters

In a report recently submitted to the authorities, China’s top think tanks urged Beijing to immediately relax restrictions on the number of children couples are allowed to have, according to an academic with knowledge of the matter.

The report was based on a survey jointly conducted by several institutes including the Chinese Academy of Social Sciences, Renmin University and a think tank under the national family planning office, said the academic, who did not want to be named.

“There is already a consensus among China’s demographers that the limits should be relaxed,” said Wang Feng, a demographer with the University of California, Irvine, and a guest professor at Fudan University. “It’s … already too late to be doing so.”

While the survey’s contents were not made public, an earlier report by the China Business Network, a consultancy group, said it included predictions of the population trend and when it would peak. The survey had been commissioned by the decision-making authorities, highlighting the likelihood of a revision in the policy, the group said.

Source: Time to end China’s one-child policy urgently: government advisers warn of demographic crisis ahead | South China Morning Post

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