Gross domestic product | CHINDIA ALERT: You'll be living in their world, very soon

10/07/2013

Growth of China’s Service Sector Slows

BusinessWeek: “The latest less-than-encouraging news from China’s economy: Service-sector companies are seeing lackluster business, according to two separate surveys released July 3. That follows disappointing news showing China’s manufacturing growth is also slowing, announced just days earlier.

The opening of the K11 Art Mall in Shanghai, China, on June 28, 2013

A government survey by China’s National Bureau of Statistics and Federation of Logistics and Purchasing of 1,200 nonmanufacturing companies in 27 industries, including retail, catering, construction, and transportation, showed business activity losing steam, with a reading of 53.9 in June, down from 54.3 the previous month (a reading above 50 shows expansion). A separate private survey conducted by HSBC and Markit Economics, covering 400 private service-sector companies, showed business basically unchanged, at 51.3 in June, compared with 51.2 the month before.

“The underlying growth momentum is likely to be softening for services sectors, along with the slowdown of manufacturing growth,” warned Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC (HSBA:LN), in a statement released July 3.

This is not good news for China’s new leaders, who have recently reiterated a national goal of economic rebalancing. That means moving from an emphasis on investment to one more reliant on consumption, with a crucial need for a bigger, stronger service economy. China’s service sector, now at 44.6 percent of the economy, is up 2.7 percentage points from 12 months ago. Still, that’s well below the 60 percent of GDP common in most developed countries, reported China’s official Xinhua News Agency on May 29.”

via Growth of China’s Service Sector Slows – Businessweek.

China service-sector growth remains weak: HSBC (marketwatch.com)

Posted in China alert, Economics, Service industry | 1 Comment »

Tags: Business, China, Economic growth, economy, economy china, Gross domestic product, service sector companies, Tertiary sector of the economy

30/05/2013

China designates service industry new growth engine

Xinhua: “China will step up efforts to build up its service industry to make it a new engine to power sustainable growth, Premier Li Keqiang said on Wednesday.

CHINA-BEIJING-LI KEQIANG-GLOBAL SERVICES FORUM (CN)

Speaking at a summit during the second Beijing International Fair for Trade in Services, Li stressed the important role of the service industry in job creation and economic upgrading.

“Increasing service supplies and improving service qualities will help unleash huge potential in domestic demand, and thus offer firm support for stable economic growth and structural optimization,” he said.

The latest emphasis on service trade is part of China’s efforts to drive growth in the sector to build an upgraded version of the economy.

In 2012, the service industry accounted for 44.6 percent of gross domestic product (GDP), up 2.7 percentage points from a year earlier but still significantly below the share of 60 percent or more seen in many developed countries.

Li noted the key to spur growth in the area lies in reform and opening-up to remove institutional barriers.

“China will further open up the service industry, and pilot free trade experimental zones to tap development,” he said, adding that the government will seek balanced trade and encourage cross-border investments in the sector.

The premier stressed countries should abide by the win-win principles of rising against protectionism, removing trade barriers, and coordinating efforts to facilitate personnel flows, recognition of qualifications and a setting of standards.

Developed countries should lead the effort to open up their markets, while developing economies should be actively engaged in building the global trade mechanism and standards in the service industry, according to Li.

Under China’s 12th Five-Year Plan (2011-2015), the country aims to bring the sector’s proportion of GDP to 47 percent by 2015 and to make it a strategic focus for the country’s industrial restructuring and upgrading to ease reliance on traditional manufacturing.”

via China designates service industry new growth engine – Xinhua | English.news.cn.

* China Still Has a Long Way to Go to Build a Service Economy (chindia-alert.org)

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

Tags: Beijing, Business, China, economy, GDP, Gross domestic product, Li Keqiang, Tertiary sector of the economy

14/05/2013

* An addiction that could spell economic disaster

The Times: “Fund managers who between them control more than $1 trillion in assets were warned yesterday that China was in the grip of a debt addiction that could destabilise its financial system.

Traditional houses in the shadow of new high-rise apartment blocks in Shanghai

Speaking at the annual CLSA China Forum in Beijing, Francis Cheung, the brokerage’s China head, said that the country was hooked on an “unsustainable” pace of growth requiring ever-greater injections of debt to keep going.

Fifty per cent of the Chinese econ-omy is made up of investment, an unprecedented level for a country at its stage of development, sucking in increasing amounts of credit, effectively to buy growth.

Total debt in the world’s second-largest economy soared from 148 per cent of gross domestic product in 2008 to 205 per cent of GDP last year and is expected to hit 245 per cent by 2015, Mr Cheung said in a report.

But despite the rising tide of investment being poured in to build everything from houses and roads to railways and power plants, China’s credit habit is becoming less effective, with the same amount of debt generating lower returns every year.

China’s annual GDP growth has almost halved from 13 per cent in 2007 to an expected 7.5 per cent this year, while total debt has more than doubled in the same time, a development model that President Xi Jinping also has called “unsustainable”.

“China is running just to stand still … China is not a rich country; it is a lot of debt for a country at this GDP level. What I worry about is unregulated lending,” Mr Cheung told the forum.

With Chinese industry suffering from overcapacity in every sector from steel to cement to solar panels, the country “cannot use any more stimulus policies to boost growth”.

The fastest-growing debt is that shouldered by local governments, with the undisclosed sum estimated to have hit 20 trillion yuan (£2 trillion) last year — a doubling in two years. Local governments are being forced to pay more to service their debts, while their ability to raise money through selling land is slowing.

The biggest risk, Mr Cheung said, came from the growing use of unregulated loans generated by “trust companies”, financial sector intermediaries that make money from offering risky loans known as “wealth management products” to private companies unable to get credit from state-run banks.

A report published by Moody’s yesterday found that China’s “shadow banking” sector had hit an estimated 29 trillion yuan (£3 trillion) last year, posing a “systemic risk” to the financial system, despite a partial clampdown in March. The credit ratings agency also warned of the threat of contagion, stemming from little-regulated shadow lending that has swollen by 67 per cent in the past two years.

Last month China sudffered its first sovereign credit rating downgrade in 14 years as Fitch lowered its appraisal amid fears that its debt problems would necessitate a government bailout.”

via An addiction that could spell economic disaster | The Times.

China’s High Corporate Debt Signals Imminent Crisis (theepochtimes.com)
* Fitch Lowers Rating on China Local-Currency Debt (chindia-alert.org)

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

Tags: Beijing, China, chinese industry, CLSA, Debt, Economic growth, GDP, gdp growth, Gross domestic product, local governments, Xi JinPing

04/03/2013

* China: The next phase of growth

China Policy Institute: “As the new Chinese leadership takes over, their biggest economic challenge remains generating growth for another 30 years. In addition to re-balancing the economy and stimulating more productivity, a key aspect will be the re-defining the role of the state. After over 30 years of marketisation and reform, China remains a mixed picture of state-led policies and a growing number of facially neutral laws with some exemptions for state-owned enterprises.

lyu In addition, the state-owned commercial banks continue to benefit from official “financial repression” policies, such as the preservation of a spread between lending rates and deposit rates. It helps to generate margins for banks and facilitate their recapitalisation. This policy also enables the state-owned commercial banks to continue to support government policies ranging from fiscal stimulus to supporting state-owned enterprises, though not without cost to overall economic growth as financial repression distorts the allocation of capital.

The high levels of capital formation (some 40% of GDP) in the past two decades and the inefficient allocation of capital away from more productive private firms are worrying. The Twelfth Five Year Plan (2011-15) plans to re-balance the economy towards greater domestic demand and less of a reliance on exports. A key part of the plan is to increase consumption and other parts such as more urbanization and services development would support investment in developing larger urban areas where migrants can settle and government services can be dispersed more efficiently.

This plan in actuality has an implicit 30 year time horizon as these policies of migration, urban development and boosting consumption cannot be achieved in a short time period. Unless China can re-orient its growth model including towards more efficient investments by private firms, then it could find it difficult to sustain a strong growth rate. Part of this challenge will include creating a more secure welfare state.”

via China Policy Institute Blog » The next phase of growth.

China’s affluence trap (newstatesman.com)

Posted in China alert, Economics | Leave a Comment »

Tags: Business, China, Economic growth, economy, Financial repression, Fiscal policy, GDP, Gross domestic product, Private sector, Xi JinPing

20/01/2013

* China’s R&D expenditure expected to top 1 trln yuan

Xinhua: “China’s spending on research and development (R&D) in 2012 is expected to surpass 1 trillion yuan (160.8 billion U.S. dollars) as the country has been pushing for a more innovation-driven economy, according to official statistics released Saturday.

The expenditure will bring the proportion of R&D funds in the country’s gross domestic output (GDP) to 2 percent, Minister of Science and Technology Wan Gang said at a national science and technology work conference.

Businesses invested the most in R&D, accounting for 74 percent of the total, according to official statistics.

Wan said that China’s innovation capability has been greatly boosted in the past five years, with scientific progress contributing 51.7 percent to the nation’s economic growth in 2011, compared with 48.8 percent in 2008.”

via China’s R&D expenditure expected to top 1 trln yuan – Xinhua | English.news.cn.

Posted in China alert, Economics, innovation, patents, Technology | Leave a Comment »

Tags: China, Gross domestic product, innovation capability, science

09/11/2012

* Hu sets out path for future

“The issue of what path we take is of vital importance for the survival of the Party, the future of China, the destiny of the nation, and the well-being of the people,” Hu, general secretary of the Central Committee of the Communist Party of China, said on Thursday at the opening of the CPC’s 18th National Congress.

Hu sets out path for future

Looking back at China’s eventful modern history and looking to the future, Hu, also the Chinese president, said a definite conclusion has been drawn: China must unswervingly follow the path of socialism with Chinese characteristics.

He said proceeding along the path is key to completing the building of a moderately prosperous society in all respects, accelerating socialist modernization, and achieving the great renewal of China.

To reach that goal, China must lose no time in deepening reform in key sectors and discard all notions and systems that hinder efforts to pursue development in a scientific way, he said.

“Our overall approach (in building socialism with Chinese characteristics) is to promote economic, political, cultural, social and ecological progress,” Hu said.

This is the first time that ecological progress has been incorporated into the overall development plan by the CPC.

By 2020, the country’s 2010 GDP and per capita income should be doubled, he said in a 100-minute keynote speech, punctuated by applause dozens of times, at the Great Hall of the People.

This is also the first time that per capita income has been included in the economic growth target set for 2020. Previous targets called for the growth of GDP, not of per capita income.

The head of the world’s largest political organization sounded the alarm on what he said was the “serious graft situation”, calling on Party members to be ethical and rein in their family members.

Combating corruption and promoting political integrity, a major political issue of great public concern, is a clear-cut and long-term political commitment of the Party, he said.

Failure to handle the issue could prove fatal to the Party, and even lead to the collapse of the Party and the fall of the country, he warned.”

via Hu sets out path for future |Politics |chinadaily.com.cn.

Code Red: China’s Leadership Transition Begins Amid Pomp and Security (world.time.com)

Posted in 10 year leadership change, Economics, Politics | 1 Comment »

Tags: central committee of the communist party, China, communist party of china, General Secretary of the Communist Party of China, Gross domestic product, Hu Jintao, politics, Socialist market economy

06/11/2012

* India Is Clamping Down on Spending

WSJ: “India’s government has started to tighten its belt as it strives to meet the revised budget deficit target of 5.3% of gross domestic product for the year through March 2013.

It’s not that spending is decreasing: it’s still increasing – only a lot less. So in September, government spending rose by a “paltry” 1.4% from a year earlier, according to a new report by brokerage Nomura. By comparison, in August, spending had increased by a whopping 32% from a year earlier, Nomura economist Sonal Varma told India Real Time.

To look at it another way, public spending rose by 0.47% between August and September compared to a 30.7% increase in the same period last year.

Nomura’s Ms. Varma told India Real Time said that the government has cut spending on sectors such as defense. A recent increase in fuel prices means the government is also saving money on subsidies. In September, the government raised the price of diesel by 14% to about 47 rupees to reduce its expenses on fuel subsidy. The government estimates this will save it around 150 billion rupees in the year ending March 31, 2013.

One of the reasons why public spending has slowed down, says Ms. Verma, is because the government has delayed paying subsidies to oil marketing companies. These are costs that may be partly rolled over to next year.

A senior finance ministry official told India Real Time that the government expects to cut at least 500 billion rupees, or about 4% of the 14.9 trillion rupees that it had planned to spend this year. The official said spending cut will be across the board, but did not want to single out any particular area.

Despite spending cuts, public expenditure remains high, mainly due to subsidies on fuel, food and fertilizers, and on social sector schemes.

To meet its budget deficit target, India needs to slash government expenditure as well as raise funds through stake sales in state-run companies and the sale of radio bandwidth.

These are the governments priorities as laid out by Finance Minister P. Chidambaram last week, when he announced a fiscal roadmap aimed at lowering the budget gap from 5.3% in the year through March 2013 to 3% by 2017.”

via India Is Clamping Down on Spending – India Real Time – WSJ.

* India minister Chidambaram promises more reforms (chindia-alert.org)

Posted in deficit, Economics, India alert | 1 Comment »

Tags: Business, economy, Government, Government budget deficit, Gross domestic product, India, p chidambaram, politics, Rupee, Subsidy

30/07/2012

* India’s Power Demand Fuels Bhutan’s Economy

WSJ: “When northern India was hit by its worst power outage in a decade early Monday – bringing trains to a standstill, creating massive road jams in the absence of traffic signals, and keeping thousands of offices and factories shut – the country’s leaders turned to its tiny neighbor Bhutan for help.

The Himalayan kingdom responded by releasing additional power from its hydroelectric plants, allowing New Delhi to restore some order while government officials and engineers worked to fix its electricity network.

This example of David coming to Goliath’s rescue speaks of Bhutan’s successful efforts to increase its electricity generation capacity to help boost its modest economy.

Bhutan – which is just 1% of India’s size and has fewer than 800,000 people compared with its neighbor’s 1.2 billion – now provides 1% of India’s electricity needs.

India has a deal to buy 5.480 billion kilowatt hours of power from Bhutan in the year that began April 1. The number might seem small, but it is hugely significant for Bhutan.

The electricity sector’s share of Bhutan’s economy has reached almost 20%, and it now outstrips agriculture as the single-largest contributor to gross domestic product, according to a World Bank report published in September.

Bhutan’s gross domestic product grew 8.1% in the year that ended March 31, 2011, helped by the construction of new hydropower projects, the report added. It anticipated that electricity exports will be the country’s main source of growth in the short-to-medium term.

Bhutan has hydro power potential of 30,000 megawatts, about a fifth of India’s own potential. However, the hydro projects in India aren’t making much progress due to strong protests from environmentalists and other issues.

So New Delhi is focusing on tapping the potential of land-locked Bhutan. India has helped build 96% of the kingdom’s overall hydropower capacity (1,472 megawatts.)

In July 2006, India agreed to develop and import 5,000 megawatt of electricity from Bhutan by 2020. The target was doubled to 10,000 MW in May 2008.

India also has a significant military presence in Bhutan, which it views of strategic importance as it shares a disputed border with China.”

via India’s Power Demand Fuels Bhutan’s Economy – India Real Time – WSJ.

India-Bhutan-China Strategic Triangle – Analysis (eurasiareview.com)
Bhutan may get 50% ownership of Joint-Venture hydroprojects (thebhutanese.bt)
Tata Power seeks nod to produce in Bhutan and sell to India (thehindu.com)
Bhutan’s move reflects maturing Sino-Indian ties (thehindu.com)

Posted in Economics, GeoPolitics, India alert, Infrastructure | Leave a Comment »

Tags: Asia, Bhutan, electricity generation capacity, Gross domestic product, Hydroelectricity, India, New Delhi, World Bank

10/07/2012

It is only natural that the world’s number two in GDP should sooner rather than later take number two spot in Fortune 500.

Tags: Fortune 500, GDP, Gross domestic product, United States

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’.

Posted in corruption, Economics, India alert, Reform | 1 Comment »

Tags: Economic growth, economy, Fiscal year, Foreign direct investment, GDP, Government budget deficit, Gross domestic product, politics

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

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

Categories

Blogs I Follow

Posts tagged ‘Gross domestic product’

Growth of China’s Service Sector Slows

China designates service industry new growth engine

* An addiction that could spell economic disaster

* China: The next phase of growth

* China’s R&D expenditure expected to top 1 trln yuan

* Hu sets out path for future

* India Is Clamping Down on Spending

* India’s Power Demand Fuels Bhutan’s Economy

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

Tags

Creative Commons

Archives

Meta

Blog Stats

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

Categories

Blogs I Follow

Posts tagged ‘Gross domestic product’

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Related articles

Tags

Creative Commons

Archives

Meta

Blog Stats