Posts tagged ‘economy’

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15/06/2012

* More people see China as the world’s top economy, poll finds

LA Times: “Never mind that the U.S. economy is about twice the size of China’s. More people than ever perceive the Asian giant as the world’s dominant economic power, according to a Pew Research Center global survey.

The results are believed to reflect popular opinion that the U.S. and Chinese economies are heading in opposite directions.

“The global financial crisis and the steady rise of China have led many to declare China the world’s economic leader,” said the report, which was released Wednesday and also addressed a series of global opinions on the perception of nations and their leaders.

For the first time, respondents around the world picked China as the world’s leading economy over the U.S., by a margin of 42% to 36%.

Asked the same question last year, a median of 41% said the U.S. is the world’s leading economy and only 35% picked China.

Even many American respondents said they believed China was ahead, with 41% saying China was the leading power and 40% saying the U.S.

Chinese respondents were more sanguine (and realistic), with 48% calling the U.S. the primary economic power and 29% choosing China.

There’s ample reason to believe that China is ascendant. The country was able to insulate itself from the 2008 financial crisis with minimal exposure to foreign banks. What it lost in trade it made up for with a massive stimulus plan. China is also sitting on a cache of $3.2 trillion in foreign reserves that many believe it can wield as a financial weapon.

But China’s path to global dominance is anything but assured and, at the very least, decades off, economists say.”

via More people see China as the world’s top economy, poll finds – latimes.com.

They say: “perception is reality”!

See also: G2?

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10/06/2012

* China Passenger-Car Sales Pick Up

WSJ: “Passenger-car sales in China accelerated in May, a positive sign for the world’s second-largest economy and the largest auto market. Strong auto sales in China, a signal consumers are still buying big-ticket items, could reassure markets concerned that the country is heading for a sharp economic slowdown.

Sales in May were up 23% from a year earlier, to 1.28 million vehicles, the semiofficial industry group China Association of Automobile Manufacturers said in a statement Saturday. That’s faster than Aprils 13% pace—which was itself an encouraging turnaround from the decline in the first quarter, when sales were down 1.3% from a year earlier.”

via China Passenger-Car Sales Pick Up – WSJ.com.

One small positive indicator amongst lots of negatives.  See: https://chindia-alert.org/2012/06/10/chinese-economy-shows-a-second-month-of-anemic-growth/

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10/06/2012

* Chinese Economy Shows a Second Month of Anemic Growth

NY Times: “The Chinese economy, widely seen until the last few weeks as the strongest remaining locomotive that could drag the global economy back from the brink of recession, showed a second month of anemic growth in May and performed even worse than the already lowered expectations of most economists.

Growth in industrial production, retail sales and investment in fixed assets like factories and office buildings was little changed from April, according to data released on Saturday afternoon in Beijing by China’s National Bureau of Statistics. Some economists had considered the April figures to be a fluke and had predicted a rebound in May, when the Chinese government began measures to rekindle growth.

April had been the weakest month in China since 2001 for growth in fixed-asset investment, and May was slightly weaker still. Before adjustment for inflation, retail sales grew even more slowly in May than in April. But retail sales were a little stronger in May after they were adjusted for inflation, which has slowed steadily this spring. Industrial production grew at a slightly faster pace in May from a year earlier, 9.6 percent, than it had in April, when growth was 9.3 percent.

And in an unexpected piece of good news released Sunday morning, China’s exports and imports both grew twice as fast last month as economists had expected. Exports rose 15.3 percent, triple the pace in April, and imports grew 12.7 percent after stalling the month before. Some economists said that if demand for China’s exports held up long enough for the Chinese government to start the many infrastructure projects approved in recent weeks, the country’s economy could avoid a more serious downturn.”

via Chinese Economy Shows a Second Month of Anemic Growth – NYTimes.com.

This overall view of the economy contrasts with the huge increase in passenger car sales.  See: https://chindia-alert.org/2012/06/10/china-passenger-car-sales-pick-up/

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30/05/2012

* Apple CEO wants to make less products in China

 

From China Daily Mail blog: Apple CEO wants to make less products in China.

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30/05/2012

* China Buys Spanish Assets

WSJ: “A debt-laden Spanish construction firm became the latest European company to unload assets onto eager Chinese buyers, as Europes debt woes force firms to look to China for cash.

State Grid Corp., China’s government controlled power-grid operator, said Tuesday it would buy high-voltage electricity transmission assets in Brazil from Spain’s Actividades de Construccion y Servicios SA  for 1.86 billion reais ($938.2 million), including debt. The deal is State Grid’s second investment in Brazil and its fourth major investment overseas, and is the most recent in a string of deals in which a European company has looked to exit an investment amid financial troubles facing the region. ACSs standing has weaken because of its debts and the falling value of investments made during Spain’s boom years. Chairman Florentino Pérez, who is also the president of Spain’s soccer club Real Madrid CF, led ACS’s expansion when liquidity was abundant and Spain’s economy was booming on the back of a real-estate bubble that imploded about five years ago. As credit dried up, ACS began to cut down on debt by shedding assets. ACS currently has more than €9.33 billion ($11.70 billion) in debt, about a half of what it had a few years ago.

Other southern European companies have also been selling their crown jewels abroad to raise cash. Portugal, for example, is attracting significant investments from China because of its presence in former colonies that are resurfacing as high-growth markets, rich in natural resources. In December, fellow state-controlled power giant China Three Gorges Corp. won a 21% stake in EDP-Energias de Portugal SA— which has significant Brazil operations—with a €2.69 billion bid.

via China State Grid to Buy Brazilian Assets – WSJ.com.

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

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24/05/2012

* Who Cares if the Rupee Keeps Falling?

NY Times: “As the Indian rupee continues to fall in global markets, many respected analysts contend that the weakening currency signals the failure of the economic policies of the Indian government.

In an op-ed column last weekend in The Business Standard, a leading business daily in India, Shankar Acharya said: “The real cause of the rupee’s weakness is the relentless deterioration in our economic policies in recent years. A falling rupee is simply a symptom of the underlying disease: unsound economic policies.” Mr. Acharya was part of the team that helped design the original economic reforms of 1991 and is a former chief economic adviser to the Indian government so his words should be taken seriously.

In a similar vein, in a recent op-ed column in The Wall Street Journal, Eswar Prasad wrote: “The falling Indian rupee, which Monday closed at an all-time low relative to the dollar, is a perfect metaphor for the free fall India’s economy seems to be in.” He went on to lay the blame squarely on the government’s failure to pursue necessary economic reforms, contending that the “real message” of the depreciating currency is that “India’s policy making has lost its way.” Mr. Prasad is a professor at Cornell and a former senior official of the International Monetary Fund, and his voice too must be given heed.

With all due respect to these eminent economists and others in the media who have been opining in a similar fashion, the charge that the rupee’s misfortune principally reflects the government’s policy failures cannot be decisively established on the basis of the evidence at hand. If the Indian government was in the dock, and Anglo-American rules of evidence were applied, the verdict would have to be “not guilty,” or, at best, “not proved,” if Scottish rules were used instead.

The rupee’s downward trajectory, if it were drawn on paper, could best be seen as a Rorschach test of analysts’ hopes and expectations. There is no doubt that the current Indian government has failed to deliver on much-needed “second generation” reforms, as many observers, including myself here in India Ink, have noted. This fact – driven by the reality that good economics is often bad politics in a democracy, as I argued late last year in an op-ed column in the Business Standard – is surely regrettable.”

via Who Cares if the Rupee Keeps Falling? – NYTimes.com.

Author: Vivek Dehejia is an economics professor at Carleton University in Ottawa, Canada, and a writer and commentator on India. You can follow him on Twitter @vdehejia.

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23/05/2012

* Detroit’s Wages Take on China’s

WSJ.com: “For the past four weeks, a team of 45 workers in gray smocks have been doing something here that hasn’t been attempted on a large scale in America for at least four years. They’re making TVs.

The new assembly line is tucked inside a cavernous factory in this Detroit suburb that once made old-style tube televisions. Their first product: a 46-inch flat-screen model going on sale soon at Target stores for $499. The project is the unusual result of a partnership between a U.S. branding company and a Chinese producer and is as much about marketing a U.S.-made television as it is about a global shift in manufacturing costs.

“We think the economics favor this,” says Michael OShaughnessy, chief executive of Element Electronics Corp., the Eden Prairie, Minn., company that has sold Chinese-made televisions in the U.S. under its Element brand name for six years. To be sure, costs in China are going up as worker pay and other expenses, such as transportation, rise. Meanwhile, muted wage gains in the U.S. and fast productivity advances have reshaped many U.S. factories into tougher competitors.

A recent survey of large U.S.-based producers by the Boston Consulting Group found more than a third plan to or actively considering bringing work home from China. But Elements televisions also illustrate the limitations in restoring some types of production on U.S. soil. The only other domestically assembled televisions today come from a tiny California producer of waterproof models designed for use outdoors and there is virtually no domestic supply base for crucial parts, such as glass screens. The upshot: Virtually all the key parts needed to make a television today are imported.Few industries have fallen as hard as television manufacturing.

In the 1950s, there were some 150 domestic producers and with employment peaking at about 100,000 people in the 1960s. Then came the imports, first from Japan and later from other parts of Asia. TV manufacturing in the U.S. went all but extinct in the last decade. Syntax-Brillian Corp., a Tempe, Ariz.-based, company opened a production facility in Ontario, Calif., in 2006 to much fanfare—but that operation lasted only two years.

Flat screens tipped the scales even more in favor of the Far East, because as tube televisions grew bigger, the weight and size of the glass made shipping increasingly costly. That was the one thing that kept U.S. production going even in the face of imports. Flat screens, however, are a fraction of the weight and much more compact. Element says the decision to produce in Detroit hinges on savings they gained by avoiding the roughly 5% duty on imported televisions and the reduced cost of shipping final products from the heartland of the U.S. to retailers. All the parts are initially being imported—which is one reason the products can only be marketed as “U.S. assembled. “Mr. OShaughnessy estimates the average savings on duties is about $27 for a 46-inch television—enough “to account for the increase in labor costs” in Detroit. The company declined to give more specifics, but noted that production methods in the U.S. are streamlined, involving component assemblies that in China might be separate steps on the production line.

The first televisions being made for Target have 52 pieces and require 24 production steps, including testing and final packaging.Mickey Cho, chief operating officer of Tongfang-Global, the television-making arm of state-owned Tsinghua Tongfang Co., the Chinese partner, says Canton is only its first move toward what he calls global localization, making more products closer to where they are sold.”

via Detroits Wages Take on Chinas – WSJ.com.

Ironically, the US TVs are being made in CANTON, Michigan!

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23/05/2012

* U.S. lets China bypass Wall St for Treasury orders

Reuters: “China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasurys first-ever direct relationship with a foreign government, according to documents viewed by Reuters.

The relationship means the People’s Bank of China buys U.S. debt using a different method than any other central bank in the world. The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions. China, which holds $1.17 trillion in U.S. Treasuries, still buys some Treasuries through primary dealers, but since June 2011, that route hasn’t been necessary. The documents viewed by Reuters show the U.S. Treasury Department has given the People’s Bank of China a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011. China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market.”

Incidentally, there is no finance benefit as commissions are not charged for such dealings.

via EXCLUSIVE: U.S. lets China bypass Wall St for Treasury orders – Reuters –.

An example of pragmatism on the part of the US government – giving special treatment to its biggest customer.

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20/05/2012

* China seeks export recovery

China Daily: “China is now losing an increasing number of export orders to other emerging countries because of rising costs at home. That’s driving the government to consider supportive measures including tax rebates and reduced transportation fees, a commerce official said on Saturday during an investment and trade expo held in Changsha, Hunan province.

“Rising costs of labor and land as well as enhanced environment protection criteria has reduced the competitive edge of Chinese exporters,” said Wang Shouwen, director of the department of foreign trade at the Ministry of Commerce. Chinese labor-intensive exports, including textile, apparel and light industrial products, increased rapidly in such traditional markets as the US, the EU and Japan before 2010. But the first four months of 2012 saw Chinas textile and apparel exports to Japan expand only slightly, by about 7 percent year-on-year, while Japanese imports from other emerging countries surged by more than 40 percent in the same period, Wang said. “Overseas buyers strategy, called China plus one, also contributed to the shifting away of Chinese exporting order. China remained the main supplier for overseas buyers but one alternative procurement source in other emerging countries is established to compare the cost with China. “Further rising costs at home will drive buyers to rely more and more on their plus-one countries,” the director said.

via China seeks export recovery|Economy|chinadaily.com.cn.

Compounding worries about the Greek economy, recessions across many Euro countries, low growth in the US and slowing growth in India, comes the bad news that Chinese exports are not as high as it used to be. Bad news all round.

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07/05/2012

* Foreign firms bullish about Chinese economy

China Daily: “Germany looking more to China than Europe for overseas investment

Germany has always been the cornerstone of the European economy but Europe is not as important to Germany as it used to be.

For the first time China has become German companies top foreign investment destination, totaling $1.36 billion by the end of last year, according to a survey by the Association of German Chambers of Industry and Commerce. The amount was more than the combined German investment in France, Spain and Italy.

The profound shift is visible in the case of Knauf Gips KG, a German-headquartered plasterboard manufacturer.When asked what helped turn the family-owned workshop into the world’s second-largest gypsum board maker, Mark Norris, the company’s China chief executive officer, said one particular factor stands out – China. After its entry into the Chinese market in the 1990s, Knauf built three plants in Beijing, Shanghai and Guangzhou. The initial investment soon gave Knauf a solid foothold in the country’s dry-wall market. Norris said he was quite bullish about the future and remained committed to continuing investment, despite decelerating economic growth in China, compounded by the European crisis and stagnation in the United States. “In relative terms, China remains a dynamic growth engine compared with places like Spain and Greece, where there is absolutely no growth,” he said. “And people seem to forget that the market is so big, the demand for good quality is there.” As we noticed over the past five years, a mid-to-upper class has emerged and the quality of life is increasing. People are prepared to pay for green building materials. Even though its not comparable to the European or US standard, it is catching up quick.””

via Foreign firms bullish about economy[1]|chinadaily.com.cn.

Posted in Affluence, China alert, Consumer, Economics, Green, Manufacturing | Leave a Comment »

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