If rural people getting richer, there will be no 15 mega cities with population min 25 million people like what McKensey said. I hope rural people getting richer, but I also hope people keep migrate to the big cities.

I wonder why China didn't develop industrialize agriculture like in US?

You're better off looking at the European development experience where you still have lots of people farming small-ish plots all over the country

An investor in Shanghai recently bought 54 apartments in a single day; a villa sold for $30 million last year

Wow? Can somebody in Shanghai confirm how the real estate prices there now?

Wow? Can somebody in Shanghai confirm how the real estate prices there now?

In terms of rentals, I was looking at an "average" 100m2 2bed apartment in a fairly central area for about 2000-2500USD per month. You can get an old apartment for less than 1000USD per month, or a huge villa for 5000USD+

In terms of purchases, for a 100m2 apartment, I think they're normally between 200,000USD and 700,000USD

reminds of my stay in Mumbai .Where i was living in santa cruz a suburb and not Mumbai . Where i paid monthly 900 USD for a very old house which had walls on the outside charred with soot and I had to climb up 4 stories (no elevator as its an ancient building) . It was barely 60 square meters. Though the only good thing it was near the local railway station.

People keep howling about the Shanghai real estate bubble . They seriously have no idea how bad things in other places are . I mean they will realise how cheap Shanghai actually is .if they bother to visit other places :D

Everybody? Everybody? I stopped reading from here, no wonder why the NYT is blocked from time to time. These well fed thugs believe they can ruin the performing of a major economy by flooding the world with fake rumors about its coming collapse? I love this Pravda style propaganda, it doesn't matter if we publish contradictory statements all the time, the result is always the same: collapsing! Collapsing real estate, collapsing exports, collapsing labor market, collapsing investments, collapsing stocks, collapsing GDP growth, collapsing banks, collapsing government! collapse, collapse, collapse!

LOL! I guess you had it with the word 'collapse'. Oh well, that's how propaganda works. You better get used to those Western Media doing everything to make a normal story a big story. For example, the Media always do something to put US Politics in disarray.

Fox News is probably the best news in bashing Democratic Party while MSNBC and CNN is destroying Republican Party. All those News Networks are doing it for their own entertainment and their own ideology. So look what happened? America is now divided. And it's going to get worst because the left is going more left and the right is going more right. They have a totally different world now and they are going to be separated more in the future.

I don't mean to bash Western Media but sometimes they need to make some limits. They have no idea how they are destroying the American Society.

^^ How do you see the WSJ? Looks quite balanced from an external point of view, but Americans may think otherwise. They bash my gov quite often though, lol.

^^ How do you see the WSJ? Looks quite balanced from an external point of view, but Americans may think otherwise. They bash my gov quite often though, lol.

WSJ seems to me is a neutral to moderate republican. Most of their subscribers are mostly investors and shareholders so I guess they have to lean to the right wing. WSJ doesn't like higher taxes or tax increase. They don't like big government spending too. But they like bailout and stimulus packages. They are like CNBC and Fox Business News who both are leaning to Republicans in terms of 'Tax' and 'Spending'.

In terms of China, WSJ is probably leaning slightly favorably. But I am not sure if it will betray the country soon but It might be highly unlikely. It's making money in Asia though especially China. So I guess it's not going to do anything to China.

China's February trade surplus shrinks to $7.6 billion

http://www.marketwatch.com/story/chinas-tr...nk=MW_news_stmp (http://www.marketwatch.com/story/chinas-trade-surplus-shrinks-further-in-february-2010-03-09?reflink=MW_news_stmp)

HONG KONG (MarketWatch) -- China's trade surplus narrowed further in February to $7.6 billion from $14.2 billion in January because of soaring imports, according to government data released Wednesday.

China's trade surplus during the month came in lower than the $8 billion expected in a Reuters survey of economists, but was higher than the $6.4 billon estimated in a Dow Jones Newswires poll.

When compared with the same month last year, both exports and imports grew at a higher-than-expected rate, with the value of imports climbing 44.7%, reflecting growing domestic consumption on in mainland China. The value of outbound goods and services surged 45.7% from February 2009 on a recovery in demand for Chinese goods.

The growth in exports is likely to add to international pressure on China to allow the yuan, also known as the renminbi, to appreciate.

This performance does cement the case for a recalibration of China's exchange rate policy," said Royal Bank of Scotland economists in a note.

Since July 2008, China has restricted the local currency's movement to a very tight range around the 6.82 yuan to a U.S. dollar.

February's data compare with a 21% growth in exports in January, when imports surged by as much as 85.5%. But on a seasonally adjusted-basis, February exports dropped 2.2%, although the adjusted figure was still up 59.1% from the year-earlier month, according to Dow Jones Newswires.

Jing Ulrich, managing director and chairman of China equities and commodities at J.P. Morgan, said that just as a slump in exports hurt Chinese economic growth in 2009, the improving trend could add to the gross domestic product growth this year.

"Signs of the export recovery are broadening and can be found in rising container shipping rates, reported labor shortages in coastal manufacturing hubs and in renewed political pressure for renminbi (yuan) appreciation," she said.

"Improving exports and the seasonal pick up in manufacturing and construction activity will also support the demand outlook for commodities. However, elevated Chinese inventories lead us to expect a return to more normal monthly commodity import levels," Ulrich said.

China faces most complicated year
(Xinhua)
Updated: 2010-03-14 15:49


BEIJING - Chinese Premier Wen Jiabao said on Sunday that China is facing the "most complicated" economic conditions this year, and it will be "very cautious and flexible" in choosing the timing of the stimulus exist to shore up the hard-won recovery.

Since the world economy still faces the risk of "double dip", China has to strike a balance between maintaining economic growth, adjusting economic development model and managing inflation expectations, Wen told reporters after the conclusion of the annual parliamentary session.

As China has come under huge pressure for strengthening its currency, or yuan, Wen said China opposed to "fingerpointing" of its currency policy, and pledged to keep the yuan stable at an appropriate and balanced level.

'Double Dip' Risk

The complications facing the Chinese economy come from the tricky relations between its domestic economic targets and uncertainties in the global recovery, Wen said.

"Challenges and problems in the world economy have not been fully addressed, as major economies are plagued by high unemployment and debt crisis, which poses risk of a 'double dip'," Wen said.

As the world's major economies still kept in the mires of recesssion, China staged a speedy recovery with a 8.7-percent economic growth last year, on the back of a 4-trillion yuan stimulus package and 9.6 trillion yuan of bank loans.

However, the runaway monetary expansion adds concerns of asset bubbles, posing a dilemma for the government to keep a smart intensity of the stimulus to contain potential inflation without derailing economic expansion.

"We must be very cautious and flexible on decision of stimulus exist in order to shore up the hard-earned economic recovery," Wen said.

He restated to maintain the continuity and stability of macro economic policy, or the implementation of the proactive fiscal policy and moderately loose monetary policy.

The government will make more efforts to keep its policies flexible while keeping close watch on domestic and international economic changes, he said.

Consumer price growth quickened to 2.7 percent in February, the highest in 16 months, and also neared the 3 percent full year target set by the government.

The government should properly handle the relations between maintaining economic growth, adjusting economic development model and managing inflation expectation this year, which the premier described as "a tough job".

Wen said agriculture is the life-line of the national economy, and it plays a decisive role in ensuring economic growth and managing inflation expectations.

Although China quickly emerged from the global recession on stimulus, chronical problems such as over-dependence on public investments and exports still existed.

Wen said a lot of Chinese enterprises have not witnessed improvement in performance, and rely on stimulus to keep them afloat.

Priority must be given to economic restructuring and transformation in development pattern to solve China's economic imbalances, incoherence and unsustainability exposed in the crisis, he added.

Unchanged Stance on Stable Yuan

Since China leapfrogged Germany to become the world's largest exporter, the country is facing increasing criticism for devaluating the yuan to earn artificial price advantages.

"I don't think the yuan exchange rate is undervalued," Wen told reporters.

In July 2005, China abandoned a decade-old peg to the US dollar and allowed its currency to appreciate by 2.1 percent. Since then, the yuan has strengthened further, rising 21 percent against the US dollar.

Despite pressures for appreciation, China has kept the yuan exchange rate basically stable, which the premier said has helped facilitate the recovery of the global economy from the worst financial crisis in decades.

Wen rejected these pressures, saying "We oppose accusations and even forceful measures that press for yuan appreciation, which will not help the reform."

The premier reiterated China will further improve the yuan exchange rate formation mechanism and keep the yuan exchange rate basically stable at a reasonable and balanced level.

"Some countries' moves to shore up exports are understandable. But what I can not understand is they devaluate their own currencies while on the contrary pushing for the appreciation of others' currencies. I think it is protectionism," he said.

Wen said China will launch new measures to increase imports for balanced international payment and promote free trade, although protectionism worsens as the global financial crisis deepens.

In 2009, China's exports fell 16 percent from a year earlier while imports dropped only 11 percent, leading to a decline of 102 billion US dollars in trade surplus.

With China trying to shift to a more home-demand driven growth, consumption, replacing exports, is contributing more to drive the economy.

Of the 8.7-percent economic growth recorded last year, consumption contributed 4.6 percentage points, investment accounted for 8 percentage points while exports subtracted 3.9 percentage points.

China has become an important export market not only for its neighboring countries, including the Republic of Korea and Japan, but also the European Union and the United States, Wen said.

'Still Worrried' about Dollar Assets

At the conference, Wen explicitly stated that he is "still worried" about China's US dollar assets, the same remark that he had made last year on the same occasion.

"The instability of the US dollar is a great concern for China's foreign assets," he said, urging the US government to take actions to assure foreign investors of its treasury bonds

China remains the largest creditor of the United States by holding 894.8 billion USdollars in the US treasury bonds at the end of last year, according to the US Treasury Department.

Wen reiterated that China needs to guarantee the "safety, liquidity and good value" of its foreign exchange reserves and diversify the investment of the reserves.

"Safety is China's top concern for the country's foreign reserve investment," Wen said, noting that China cannot afford any mistake in the management of the country's financial assets.

Wen expressed hopes that the United States could take concrete actions to ensure the security of the assets and assure its foreign investors, as the value of US treasury bonds are guaranteed by its national credibility.

China's foreign exchange reserves stood at 2.3992 trillion US dollars at the end of 2009.

http://www.chinadaily.com.cn/china/2010-03/14/content_9587748.htm

Highlights of Premier Wen's press conference
(chinadaily.com.cn)
Updated: 2010-03-14 12:46

I will be committed to my work in next three years

The development road of China will be bumpy and even thorny in the next few years, Premier Wen Jiabao told the press conference.

He called for unslackened efforts to tackle difficulties, saying "we must have firm confidence."

"No matter how high a mountain is, one can always ascend to the top. The only way out and hope when facing difficulties lies in our own efforts," Wen said.

The premier said he loves China deeply and will be committed to his work during the next three years.

http://www.chinadaily.com.cn/china/2010npc/2010-03/14/content_9587306.htm

China: World might face ‘double dip’ recession (http://www.gmanews.tv/story/186088/china-world-might-face-double-dip-recession)

BEIJING — China's premier said the world might face a "double-dip" recession due to continued high unemployment and risks in financial systems.

Premier Wen Jiabao made the comments Sunday following the close of China's annual legislative session. He cited high unemployment in some countries, risks in finance, government debt problems and instability in exchange rates and commodity prices.

Wen said: "All these may cause setbacks in the course of promoting recovery in the global economy and may even lead to a double dip." The premier says China's improvement from the global downturn was still uncertain and many Chinese companies still depend on stimulus spending to stay afloat. — AP

It raise me a question when China just planning to grow 8% in 2010. I think we will have a difficulty year in 2010.

^^ China always plans 8%.

CNOOC to buy stake in Argentina's Bridas for $3.1 billion

(Reuters) - China National Offshore Oil Corp, China's biggest offshore oil explorer, plans a joint venture with Argentina's Bridas Energy Holdings, paying $3.1 billion to take a 50 percent stake in a subsidiary, Bridas Corporation, the company said on Sunday.

Bridas Corp, currently wholly-owned by Bridas Energy, will become equally owned by the partners and could have its name changed once the transaction is completed, CNOOC said in a statement to the Hong Kong stock exchange.

"Bridas, with a world-class oil and gas asset portfolio, is a very good beachhead for us to enter Latin America," said Yang Hua, CNOOC's president, in a separate statement.

Bridas Corp holds a 40 percent stake in Pan American Energy, a hydrocarbons producer 60 percent controlled by UK-based oil major BP.

Bridas Corp had proven reserves of 636 million barrels of oil equivalent (BOE) and an average daily production of 92,000 boe at the end of 2009, CNOOC said in its statement. The new joint venture company will have exploration and production activities in Argentina, Bolivia and Chile.

The partners expect to complete the deal in the first half of this year.

CNOOC (CEO.N) has been a noticeable absentee from overseas M&A since it paid $2.7 billion for a stake in French oil major Total's (TOTF.PA) African Akpo field in 2006. A year earlier it was bumped by a U.S. political backlash from buying U.S.-based oil company Unocal.

Last month it was also reported to be in negotiations with Iraq's oil ministry over the 2.5 billion barrel Maysan oil field.

(Reporting by Alison Leung; Editing by Greg Mahlich)

http://www.reuters.com/article/idUSTRE62D0OF20100314

http://s.wsj.net/img/wsj_print.gif (http://www.wsj.com)

Google Exit Could Help China Firm

By LORETTA CHAO (http://online.wsj.com/search/term.html?KEYWORDS=LORETTA+CHAO&bylinesearch=true)


BEIJING—Stock investors are betting that Chinese Internet-search company Baidu (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=BIDU) Inc. will benefit from the expected closure of Google (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=GOOG) Inc.'s Chinese Web site. But another, larger, Chinese Internet company may also stand to benefit if Google goes: Tencent Holdings (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=0700.hk) Ltd.

Tencent may be the biggest Internet company most people outside China have never heard of. It boasts hundreds of millions of users for its instant-messaging service, which it has leveraged to build other fast-growing businesses.

http://si.wsj.net/public/resources/images/MK-BB775_TENCEN_D_20100317181801.jpg
EPA Pony Ma, chairman of Tencent Holdings.



It has a market capitalization of more than $38 billion, bigger than Yahoo (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=YHOO) Inc. and almost twice the size of Baidu—even after Baidu's shares have risen nearly 50% since Google's Jan. 12 announcement that it might close its China site, Google.cn.

And Tencent is developing its own search engine that could enable it to take advantage if Google closes Google.cn, as expected, within weeks.

On Wednesday, Tencent said its fourth-quarter net profit rose 74% from a year earlier to 1.51 billion yuan ($221.2 million), boosted by strong growth in its online-games and social-networking services. Revenue rose 76% to 3.69 billion yuan. For the year, Tencent had revenue of about $1.8 billion.

Co-founded in 1998 by Chief Executive Ma Huateng, who sometimes goes by the English name Pony, Tencent is best known for its flagship product, the instant-messaging program QQ. Analysts estimate that more than 70% of China's roughly 400 million Internet users—the largest such population in the world—use instant messaging and that about 80% of those people use QQ. Tencent says it had 523 million active QQ user accounts at the end of last year, but that includes people who have multiple accounts.

Tencent previously used Google for search services on its site, but it dropped Google's technology last year and began to develop its own search engine, called Soso (which sounds like "search search" in Chinese). Soso was ranked fourth in China's Internet-search market in the fourth quarter of 2009, with less than 1% of total industry revenue, behind Baidu, Google, and Sohu.com (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=SOHU) Inc.'s SoGou service but ahead of Microsoft (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=MSFT) Corp.'s Bing search engine.

Google said Jan. 12 it planned to stop obeying Chinese-government requirements to censor the results on Google.cn, a move that will almost certainly require the site to close. Google cited concerns over tightening limits on expression and a series of cyber attacks from China against foreign companies.


http://sg.wsj.net/public/resources/images/MK-BB775A_TENCE_NS_20100317181801.gif



Tencent may not be poised to pounce quickly on Google.cn's departure. The Chinese company has acknowledged that its search technology isn't ready to compete with established search engines like Baidu. The relevance and ranking of search results are enhanced by high volumes of user traffic, so it can take time to improve. A Tencent spokeswoman didn't respond to requests for comment Wednesday.

Still, Tencent is beefing up investment in new products. Mr. Ma, in discussing Tencent's latest results Wednesday, said the company "will continue to increase investments in research and development, technology and branding in the coming years but will incur significant costs and may even have to forgo certain revenues."

He didn't specify Soso, but Tencent executives in the past have described the search project as a key initiative.

If it invests enough, "Tencent could be a strong competitor to Baidu," given Tencent's "massive user-base and solid brand," says Fang Li, an analyst for research firm Analysys International.

Baidu hasn't commented on Google's possible departure, but the company has said it will continue to focus on its "core strengths in Chinese search technology."

Tencent has a strong track record in launching new products. With its logo—a winking cartoon penguin wearing a red scarf—QQ is especially popular among Chinese youth. Tencent has capitalized on the service's ubiquity by adding other offerings, many of which have proven lucrative.

Users pay real money to buy QQ coins, Tencent's virtual currency, which they exchange for things like virtual flowers they can send through QQ, or cellphone ringtones or virtual weapons for online games.

QQ coins became so popular that people began exchanging them for real-world goods, prompting the government last year to ban such transactions.

Tencent also has leveraged QQ to develop a range of online games, an online music service, social networking and e-commerce. Games contributed 40% of Tencent's revenue last quarter. In addition to the sale of virtual items, it earns revenue from advertising and subscription fees.

QQ enables to Tencent to use "the power of the buddy list," says Duncan Clark, chairman of consulting firm BDA China. "They have a captive audience, right there."

Mao Lan, who works at a securities company in Beijing, says she uses QQ on-and-off for more than ten hours a day, at work and at home, for instant messaging, online video conferences, file transfers, picture editing, and games. Ms. Mao sometimes uses Tencent's Soso but says Baidu is still a better search engine. "But I will definitely [use Soso] more in the future," she says.

Tencent has outdone some major competition in the past. State-owned China Mobile (http://online.wsj.com/public/quotes/main.html?type=djn&symbol=CHL) Ltd., the world's biggest mobile carrier by number of subscribers, launched its own instant-messaging service, called Fetion, in 2006. It was widely seen as a move to compete with QQ, which is also used on mobile phones. But Fetion had just 6% of China's registered instant-messaging users as of last quarter, according to Analysys.

Tencent's consumer-to-consumer online-trading platform ranked second in China last quarter, with a 10% share of total transactions, behind the Taobao.com service owned by Alibaba Group, another fast-growing Chinese Internet company.

—Sue Feng, Gao Sen and Lorraine Luk contributed to this article.
Write to Loretta Chao at loretta.chao@wsj.com


Source (http://online.wsj.com/article/SB10001424052748704059004575127580407669118.html?mod=WSJASIA_hps_MIDDLEThirdNews#articleTabs%3Darticle)

I never heard of Tencent. I did not even know their market value is bigger than Yahoo. Are there other companies besides Baidu and Tencent that are unheard of inside China?

Alibaba group , sohu group . renren or xiaonei also has great scope but i am not sure if renren are getting enough revenues.

Ofcourse they even have a Wikipedia like website called Hudong .With over 3 million articles in Chinese. Only second to Wikiipedia English which was 3.2 million articles.

World Bank praises China's re-focus on economic restructuring
WASHINGTON, March 18 (PNA/Xinhua) -- The World Bank has welcomed the efforts of the Chinese government to restructure the country's economy.

The World Bank said in its latest China Quarterly Update released Wednesday that the re-focus had trained onto key areas.

"As China is preparing for the 12th Five-Year Plan, the key overall objectives are making further progress in 're-balancing' the economy, enhancing efficiency gains, moving to a more sustainable spatial transformation of economic activity and employment, further changing the role of the state in the economy, and taking account of China's interaction with the rest of the world," said the update, a regular assessment of China's economy.

The document found that massive state investment-led stimulus was key in driving the economy last year, with real estate investment gaining prominence more recently and household consumption growth holding up very well.

But it pointed to the fact that with stronger imports, the country's trade surplus declined sharply, becoming a major drag on China's growth in 2009.

Under such circumstances coupled with a global recession, China's economy still expanded 8.7 percent in 2009, and the growth momentum continued into the first months of 2010.

In its latest World Economic Outlook, the World Bank projected that China's economy will grow 9.5 percent in 2010. (PNA/Xinhua)
http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=265018

Ofcourse they even have a Wikipedia like website called Hudong .With over 3 million articles in Chinese. Only second to Wikiipedia English which was 3.2 million articles.

According to Wikipedia, Hudong now has 4million articles.

http://en.wikipedia.org/wiki/Hudong

Does that mean it is now the world's largest wikipedia?

According to Wikipedia, Hudong now has 4million articles.

http://en.wikipedia.org/wiki/Hudong

Does that mean it is now the world's largest wikipedia?

No i was clear with what i said .It has 3 million articles in Chinese .The rest are in foreign language

Wikipedia has close to 10 million articles .The largest number of articles in any one single language is in English which is 3.2 million.

Hudong has no entries written in foreign languages.

Currently it has 4,450,513 articles, all in Chinese.

^^ And unlike Wikipedia, I bet it hasn't over 1 million of stupid articles about every monster in the Half Life games, every secondary character in The Simpsons, etc.

Guangdong minimum wage rises 21pc
Loss of competitive edge feared
Celine Sun
Mar 19, 2010
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Guangdong will raise the minimum wage by an average 21 per cent, fuelling fears it will weaken the competitive strength of the Pearl River Delta and not solve the region's chronic labour shortage.

The Guangdong Labour and Social Security Bureau announced earlier this week that the average minimum wage in the province would be raised by between 19.5 per cent and 24.5 per cent from May this year. That is the biggest rise since the province introduced standard minimum wages in 1994.

The increase aims at narrowing the income gap and relieving the labour shortage that has plagued the province's manufacturing industries in recent months.

But the Federation of Hong Kong Industries said the "higher than expected" wage rise would add extra cost to employers and even weaken the competitive strength of some labour-intensive industries.

Some Hong Kong factory owners said the new measure would be of little help in attracting more migrant workers as many manufacturers still face labour shortages even after paying their employees more than what the government requires.

New standards for the five levels of minimum wages have been set for different parts of the province based on the local employment rate, income level, inflation rate and social security level.

In Guangzhou, the capital city of the province, the minimum wage will increase from 860 yuan (HK$977.70) to 1,030 yuan; the standard in Zhuhai, Foshan, Dongguan and Zhongshan will be raised from 780 yuan to 920 yuan; while in Shantou, Huizhou and Jiangmen it will go up from 690 yuan to 810 yuan.

In Shaoguan, Heyuan and Meizhou it will be increased from 550 yuan to 710 yuan.

In other cities or counties with financial difficulties, employers will be required to pay workers no less than 660 yuan per month.

Stanley Lau Chin-ho, the deputy chairman of the Federation of Hong Kong Industries, said wages had been increased beyond expectations.

When the federation paid a visit to the labour bureau in Guangdong earlier this year, it was told the province would raise the minimum wage by no less than 12 per cent.

"We talked with some of our members running factories across the border this morning, and they all consider the increase was too high," Lau said.

He said the adjusted minimum wage will lead to higher payments for overtime work and working allowances.

"Some factories may be able to transfer the extra cost to buyers, but some cannot," Lau said.

He added that labour-intensive sectors such as garment and toy manufacturing would be the worst hit.

Another Hong Kong factory owner, Sin Kam-kuen, who runs a toy-making factory in Shantou, said the labour shortage had been a problem for the industry for more than a decade.

All the workers in his factory have been earning a salary no less than 1,000 yuan for many years, compared with the government's required 810 yuan.

"Our salary level is above the average in Shantou, but we are still short of hands." Sin said, adding there were still about 50 vacancies to be filled in his factory.

"Though we have received more orders than last year, we have to give some of them to other factories, as we don't have enough people to work on them."

Chan Wing-kee, the managing director of Yangtzekiang Garment, said the impact of the new policy would be significant to his business.

"Although there are not many workers in my factory earning a minimum wage, a pay rise for them means I have to increase the payment for all other workers," Chan said.

He said his factory in Panyu, Guangdong, was still short of labourers, especially skilled workers, although it had offered more attractive salaries this year. "I don't think the pay rise will be a good solution to the problem, since the affordability for each company is limited," he said.

Rio, Chinalco Agree to Develop African Iron Ore Mine

March 19 (Bloomberg) -- Aluminum Corp.of China agreed to pay $1.35 billion for a stake in Rio Tinto Group’s Simandou iron ore project in Guinea, in a sign relations between the world’s third-largest mining company and China are thawing.

Chinalco, as the state-owned company is known, signed a non-binding accord to acquire a 44.65 percent share of the project by funding development over the next two to three years, London-based Rio said today in a statement. Aluminum Corp. of China Ltd., Chinalco’s publicly traded unit, rose 10 percent.

... ...

‘Top’ Deposit

Simandou was described by Albanese in May 2008 as the world’s “top” undeveloped iron-ore deposit. It has 2.25 billion metric tons of resources, Rio said March 15 in its annual report. Rio may spend at least $6 billion on Simandou, the company said in 2007. It said today it had already spent $600 million on exploration and development work.

“This is a step forward for Chinalco to become international and fits in the company’s development strategy of becoming a diversified metals mining company,” Chinalco said in an e-mailed statement today. “Chinalco’s investment principle of seeking high quality, low-cost and long longevity mining projects is further proved in its participation in Simandou.”

The financing arm of the World Bank owns a 5 percent share of Simandou, Rio said today. The Guinean government holds an option to buy as much as 20 percent. Rio currently owns 95 percent of the project. Once Chinalco has paid its share in the venture, Rio’s share will be 50.35 percent, the company said.

New Government

In December 2008, Guinea ordered Rio to hand over half of Simandou to BSG Resources, a closely held company controlled by Israeli investor Beny Steinmetz.

“A number of issues related to security of tenure remain to be resolved with the new government of Guinea,” Rio said in its annual report.

China is the leading user of iron ore. Rio is shipping record amounts of the steelmaking raw material as prices surge. Annual contract prices may rise 80 percent this year, ING Groep NV said March 11.

Rio ships most of its ore from the Pilbara region of Western Australia. In a 2008 presentation, the company estimated Simandou could produce 170 million tons a year. Rio’s 2009 global iron ore output was 217 million tons, returning sales of $12.6 billion.

A venture with Chinalco “could make sense for Rio Tinto in leveraging China’s geopolitical influence in Africa, ability to build and control infrastructure in sensitive regions and the country’s appetite for iron ore,” Liberum Capital Ltd. analysts wrote in a note before Rio’s statement today.

To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Jason Scott in Perth at jscott14@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601116&sid=a4Y612Pi6gxk

^^ And unlike Wikipedia, I bet it hasn't over 1 million of stupid articles about every monster in the Half Life games, every secondary character in The Simpsons, etc.

I bet it doesn`t have an article about the Tiananmen Square Massacre either... :)

I bet it doesn`t have an article about the Tiananmen Square Massacre either... :)

Hmmm well if thats how it works .This company does have future in China unlike some other rejects :D. If it gets listed on hong kong i will be sure to buy some stake in it.

Hmmm well if thats how it works .This company does have future in China unlike some other rejects :D. If it gets listed on hong kong i will be sure to buy some stake in it.

Sure it got a future - right to the point where Chinese will have access to the real wikipedia. Then it will die.

China May Be Among World’s Top Gas Markets by 2020, Shell Says
March 20 (Bloomberg) -- China may become of the world’s biggest natural gas markets by 2020 as the country seeks to reduce its carbon intensity by increasing the use of cleaner burning fuel, Royal Dutch Shell Plc Chief Executive Officer Peter Voser said today at a forum in Beijing.

Shell is working together with PetroChina Co., the nation’s largest oil producer, to seek new energy sources in China, Voser said, according to a Web cast of the conference on the Web site of the official People’s Daily in the Chinese language. http://www.bloomberg.com/apps/news?pid=20601080&sid=ai8AhJ3t72Po

Sure it got a future - right to the point where Chinese will have access to the real wikipedia. Then it will die.

We do have access to the real Wiki, the site looks like shit though.:ohno:

State Owned Enterprises barred from realty

March 19 2010

By Qiu Wei

More than 70 State-owned enterprises will be withdrawn from the real estate sector once their current development projects are complete, China's State-owned Assets Supervision and Administration Com-mission said Thursday.

The latest attempt to cool the red-hot real estate sector would be of little use, analysts say.

The super-wealthy centrally administered enterprises are blamed for a land-acquisition frenzy that is seen as having further pushed up soaring housing prices.

The latest such lavish purchases were made in Beijing at a record price of around 11 billion yuan ($1.6 billion) by three State enterprises Monday, a day after Chinese lawmakers closed their annual assembly, which intensively discussed how to contain property prices.

One tract of the land, located in Wangjing, inside the northeast fifth ring road, sold for 27,000 yuan ($3,970) per square meter, even higher than the price of finished apartments in the area. It reportedly instantly drove up the resale prices of homes nearby.

Average wage earners in the nation complain that home prices have been rising out of their reach, despite a set of government policies meant to rein in speculation and asset bubbles. The National Bureau of Statistics said housing prices increased by 10.7 percent last month from a year earlier.

Without specifying a date, the commission, the governing body of more than 100 enterprises run by the central government, said 78 state companies, whose main businesses were not property development, will be put under "adjustment and restructuring as soon as projects including developments on land in their possession and on existing commercial developments are complete," said commission spokesman Du Yuanquan at a press conference Thursday.

A total of 16 enterprises approved by the commission in 2003 to mainly operate in the real estate sector, will remain in the business, Du said. The 16 companies' net profit was 18.8 billion yuan in 2009, accounting for 94 percent of the real estate earnings of all central government enterprises.

Property sales by State-owned enterprises last year totaled 220 billion yuan, accounting for 5 percent of the national total, while the total area of property sold by those enterprises was 28 million square meters, 3 percent of the entire commercial space sold in China, the commission said in an online statement.

The commission declined to give details on the fate of the 78 outgoing companies, whose contribution to net profits of all State property developers was only 4 percent.

In a new regulation passed last week, the Ministry of Land and Resources demands developers pay a 50 percent down payment on land acquisitions within a month of signing the contract. To participate in auctions, buyers are also ordered to pay a deposit that equals 20 percent of the minimum price for the land.

Wang Zhongfu, of the Central University of Finance and Economics, said the withdrawal of State-owned enterprises wouldn't help to trim prices.

"It doesn't stop the remaining firms from spending hugely on land. Instead, it only leads to the concentration of capital, making them even richer," Wang said, urging such property developers to commit to offering more affordable housing rather than cashing in.

Liu Weixin, of the China Society of Urban Economy, said a large proportion of the 4-trillion-yuan government stimulus investment went to State-owned enterprises, many of which poured the money back into the property market.

"Speculation in the real estate market with stimulus money is detrimental to the development of the sector," Liu said. "These large enterprises would corner their privately owned counterparts, which make up 70 to 80 percent of property developers."

Revenue from land sales is a major source of local government fiscal income and developers prefer to construct large-sized residential apartments as well as high-end realty projects in a bid for greater profit, Liu noted.

That view was echoed by Yin Kunhua, president of the Shanghai Real Estate Management Institute, who called on Stated-owned enterprises not to enter into sectors that require full market competition.

"Some SOEs grabbed enormous profits in the property sector because their official background makes it much easier for them to obtain land and credit," Yin said.

A rise in property prices has fueled concerns that an asset bubble is building that could eventually burst and hurt the wider economy.

Governments unveiled a series of measures to dampen the overheated property market, including re-imposing a sales tax on homes sold within five years of their purchase and raising the down payment for a second house or more with bank loans.

Beijing Municipal Government said it will allot at least 25 million square meters of land for housing, half of which will be used for affordable housing

The People's Bank of China, the central bank, raised the deposit reserve requirement ratio in January, and in February.

http://business.globaltimes.cn/china-economy/2010-03/514268.html

Shell, PetroChina to Acquire Arrow for A$3.5 Billion

Source: Bloomberg By Ben Sharples

Royal Dutch Shell Plc and PetroChina Co. agreed to acquire Arrow Energy Ltd. after raising their offer to A$3.5 billion ($3.2 billion), gaining access to the reserves of the Australian coal-seam gas producer.

Shell and PetroChina will pay A$4.70 a share for Arrow’s Australian business, the Brisbane-based company said in a statement filed to the Australian stock exchange today. The bid is 5.6 percent more than A$4.45 offer made on March 8. Arrow’s international assets will be housed in a new company called Dart Energy Ltd., which may be worth as much as A$400 million, according to analysts. Arrow stock holders will get one share in Dart for every Arrow share they own.

Shell and PetroChina join BG Plc and Malaysia’s Petroliam Nasional Bhd. in snapping up coal-seam gas assets in Queensland to feed planned liquefied natural gas projects. The deal is the biggest since ConocoPhillips paid $5 billion for a stake in Origin Energy Ltd’s gas assets in 2008. Still, Shell and PetroChina are paying less for Arrow’s gas reserves than similar deals in the past, according to John Young, an analyst at Wilson HTM Investment Group in Melbourne.

“I’m a little disappointed,” Young said today by telephone. “I thought the assets were worth more than that. If one looks at it on a comparative reserves multiple basis it’s not a particularly full price.”

Arrow shares slipped as much as 21 cents, or 4 percent, to A$5.08 in Sydney and were trading at $5.11 at 11:26 a.m. local time, having climbed 52 percent to a record A$5.29 since the takeover offer as investors bet PetroChina and Shell would sweeten their initial A$3.26 billion bid.

PetroChina Loan

PetroChina’s parent, China National Petroleum Corp, got a discounted $30 billion loan last year to fund overseas expansion as the country steps up its hunt for resources. The Arrow deal gives Shell reserves to feed its Curtis Island liquefied natural gas project, one of more than a dozen planned LNG ventures in Australia aimed at tapping rising Asian demand.

“Australia is becoming more of a regional focus” for Shell, Nik Burns, a Melbourne-based analyst for RBS Morgans, said by phone March 19. “It’s going to be one of their key growth areas, and the company as a whole is looking to move more upstream and move away from their downstream side.”

Coal-seam gas is mostly methane found on the surface of coal. The gas can be extracted when pressure on the seams is reduced, usually by removing water. LNG is natural gas chilled to liquid form for transport by ship to destinations not connected by pipeline.

Higher Bid?

Shell and PetroChina would have had to bid A$6.10 a share for Arrow if the gas reserves were valued at the same price as BG paid for Queensland Gas Co. in 2008, Young said. “Shell and PetroChina are gaining control of the company and there is no significant premium being paid to the value for the minority interests,” he said.

Buying Arrow would give Shell gas to feed multiple LNG production units.

Shell plans an LNG project on Curtis Island off the central Queensland coast that is expected to produce as much as 16 million metric tons of LNG a year and have four processing units, the company said in a document lodged with the state government last year. Arrow has said that its added reserves may help feed Shell’s LNG venture.

Arrow has agreed to acquire 100 percent of the A$2.2 billion Fisherman’s Landing project in Queensland, one of more than a dozen proposed LNG ventures in Australia aiming to tap rising demand for the cleaner-burning fuel. Arrow said last month it’s considering selling a stake and taking on debt or offering shares to help finance the Fisherman’s Landing project.

International Business

The company’s international business is worth about A$400 million, or 55 Australian cents a share, RBS Morgans’ Burns said. That means Shell and PetroChina’s A$4.45-a-share offer for Arrow, excluding its international business, values the entire company at A$5 a share, he said.

The unit is drilling in India, China, Indonesia and Vietnam, and Arrow aims to boost gas production tenfold by 2015. As much as 20 percent of that division may be offered in a share sale in the second half of 2010, Arrow said Feb. 17.

Arrow said Aug. 13 that talks with companies about its coal-seam gas assets included discussions of a possible takeover, but that it hadn’t received an offer. Speculation of an offer contributed to a 55 percent rise in Arrow’s shares last year.

Shell, which has a 30 percent stake in Arrow’s coal-seam gas holdings in Queensland and a 10 percent interest in its international unit, made a A$3 billion offer for Arrow last year, with talks ending in stalemate, London’s Sunday Telegraph reported in August.

Queensland’s government is expecting as much as A$50 billion of investment in the state’s coal-seam gas resources as companies including U.K.-based BG Group and ConocoPhillips vie to export the fuel to Asia.


http://www.bloomberg.com/apps/news?pid=20601089&sid=ahYh6KdwR1WQ

Trade deficit likely in March

Minister warns China will fight back if declared currency manipulator

BEIJING - The country will probably see a "record trade deficit" in March thanks to surging imports, Minister of Commerce Chen Deming said on Sunday, while warning that Beijing will "fight back" if Washington labels China a currency manipulator.

Speaking at the three-day China Development Forum that ends on Monday, Chen said: "I believe there will be a trade deficit in March" - which will be the first since May 2004.

After China's exports rebounded in December, US legislators and economists have been demanding the Barack Obama administration label China a currency manipulator in a US Treasury report due out in mid-April, which will make it possible for Washington to slap duties on Chinese imports.

"China's trade surplus with the US has been turned into a key excuse by American economists to pressurize the Chinese government to revalue the yuan," but, ironically, the calls have been growing stronger even as the "surplus keeps falling", Chen said.

"It's not rational (for China) to revalue the yuan, as it would hurt both Chinese exporters and American consumers."

In the three decades up to the 2008 global financial crisis, China's exports registered annual growth of 20 percent but the surplus with the US contributed a big chunk to China's total. Last year, China had a surplus of $143.38 billion with the US, accounting for a hefty 73 percent of the total.

"The impact of currency revaluation on trade is limited," said Chen.

From July 2005 to July 2008, the yuan gained a cumulative 21 percent against the dollar, but China's trade surplus with the US kept rising. When the yuan was steady against the dollar from 2009, the trade surplus dropped 34 percent.

Chinese analysts said the Obama administration, under increasing pressure as mid-term Congressional elections draw near, is trying desperate measures to create more jobs and expand exports to placate voters, and the Chinese currency has been made a target.

"If the (trade) issue is taken to the WTO, China will respond actively," Chen added.

"China, of course, wants to buy more to balance trade, but it is a pity there are so many things that we cannot buy from the US. The US has set restrictions on exports three times, and it added several categories in 2007, such as computers, aerospace technology and digital machine tools," said Chen.

Nobel laureate and economist Joseph Stiglitz told China Daily on the sidelines of the forum that many other factors, such as restrictions on high-tech products, rather than the exchange rate contribute to the US deficit with China. He called on Washington to relax the curbs to balance trade.

The ministry also said on Friday that Washington's method of evaluating trade figures magnifies the deficit with China.

"The deficit has been vastly overestimated based on American statistics," and according to the latest report prepared by both sides, the US deficit for 2006 is "26 percent higher than it should have been," Chen said.

http://www.chinadaily.com.cn/china/2010-03/22/content_9619515.htm

^^ What's driving imports up so drastically?

A Sino-American trade war on the way?

More foreign firms feel unwelcome in China

BEIJING -- A growing number of foreign businesses in China feel shut out under new government policies promoting homegrown technology, according a survey released Monday.

Fully 38 percent of foreign firms questioned by the American Chamber of Commerce say they feel increasingly unwelcome to participate and compete in the Chinese market.

That marks a 12 percentage point rise from the last survey taken just a few months before. Over that period, the government has increasingly steered business toward state-owned companies, ostensibly as part of efforts to boost innovation among Chinese firms.

The chamber said it strongly supports promoting indigenous innovation, but believes current policies give an unfair advantage to domestic companies that enjoy strong government backing and political connections.

"Domestic innovation creates the potential for more partnerships between U.S. and Chinese firms in China and globally. However, limiting market participants and reducing competition does not encourage innovation," AmCham China President Michael Barbalas said.

The chamber's data, gathered earlier this year from 203 companies, portrays a steadily worsening environment for foreign companies in China over the past three years. Only 23 percent said they felt unwelcome in the chamber's 2008 survey.

The disquiet was most pronounced among foreign firms specializing in high-tech and information technology, with 57 percent saying they felt negatively affected by government policies. In that sector, 37 percent of foreign companies said they were losing sales as a result of Chinese government policies.

The chamber asked for confirmation from the government that state-owned companies were not being given preferential treatment in government purchasing orders - a key stipulation of China's agreement to join the World Trade Organization.

Beijing agreed when it joined the WTO in 2001 to treat foreign and domestic companies equally. But foreign companies in a range of industries have long complained that they face barriers to imports and investment.

Such sentiment has increased following the government's launch of a 4 trillion yuan ($586 billion) stimulus package in late 2008 designed to help China rebound quickly from the global crisis.

Foreign direct investment in China rose at its slowest rate in seven months in February, totaling just $6 billion, up 1.1 percent from a year earlier.

The chamber's report comes amid a sharpening dispute over China's currency controls. Some U.S. lawmakers have demanded to have China be declared a currency manipulator by the Treasury Department, possibly mandating trade sanctions.

Chinese Commerce Minister Chen Deming warned last week that China would retaliate against any such measures, again denying that the yuan was deliberately undervalued to give Chinese exports a competitive advantage in world markets.

Business groups say China's currency controls keep the yuan undervalued by up to 40 percent, swelling its trade surplus.

The Commerce Ministry had no immediate comment on the report Monday.

http://www.forbes.com/feeds/ap/2010/03/21/business-as-china-foreign-business_7452903.html?boxes=Homepagebusinessnews

I think trade deficit will be temporary if there is one as it's the first time when domestic and overseas orders are rising fast simultaneously which prompts companies to increase stockpile. It's also a sign that Chinese currency is not as underestimated as before after sharp depreciation of some currencies versus the US dollar during the recession.

It's quite risky to be dependent too much on the US market thus it needs to diversify overseas market particularly off the US as much as possible and then China will have a much better position and could skew the US by selling US debts massively while China will not be affected too much no matter how bad the US becomes.

^^ The share of exports to US has been declining for years I think, the share of exports to the EU on the other hand has kept stable around 30%, too high. Fast growing exports to ASEAN+3 FTA plus second tier markets (Africa, Latam, India, etc) should reduce the importanc of the EU and USA soon anyway.

President Hu calls for greater development in China's west
http://news.xinhuanet.com/english2010/china/2010-03/23/13222101_21n.jpg

YINCHUAN, March 23 (Xinhua) -- Chinese President Hu Jintao has called for more efforts to promote social, economic development in the underdeveloped western areas of the country.

Hu made the call during his three-day visit to northwestern Ningxia Hui Autonomous Region from Sunday to Tuesday.

This year marks the tenth anniversary of China's campaign to develop the west.

Hu said the past decade witnessed a good beginning of and laid a solid foundation for the "West Development" drive and the next decade would be a crucial period for pushing forward the campaign.

To develop the west would remain one of the priorities in the 12th five-year plan starting 2011, during which the central government would provide more favorable policies and greater funds to western areas, Hu said.

He called for transforming the economic growth pattern, and improving people's livelihood, as he visited local factories, farms, renovated shanty-towns and new villages housing farmers that had migrated to from virtually uninhabitable areas.

In his visit to a successful company which manufactures rare metal products, Hu said the central government attached strategic importance to developing the new material industry. He called on companies to innovate technology, produce new products and implement new management practices.http://news.xinhuanet.com/english2010/china/2010-03/23/c_13222101.htm

China's future powerhouses
(China Daily)
Updated: 2010-03-22 10:02


Regions set to be new driving force for the national economy

http://www.chinadaily.com.cn/bizchina/images/attachement/jpg/site1/20100322/002170192c4e0d110d7919.jpg


Xinjiang Uygur autonomous region

Xinjiang literally means "New Frontier", and it is promising to be a new economic frontier in China's northwestern areas. Xinjiang Uygur autonomous region has abundant oil reserves and it is the largest natural gas-producing region in China. An economic development plan for Xinjiang is expected to come out soon. It will emphasize use of Xinjiang's advantageous resources, including petrochemicals, coal, non-ferrous metals and agriculture. The investment is likely to rise steadily over the next three years, driven by increased financial support from central government and neighboring provinces, and large-scale investment for key projects from State-owned companies. The rising tourism industry will also be a contributor to Xinjiang's economic growth.


Tibet autonomous region

The Tibet autonomous region is becoming another hotspot in China's regional economic development. The plateau region was traditionally dependent on farming and herding. Recently Tibet laid out a plan to explore its mineral resources, while pledging to stick to rational exploitation and minimizing the damage to the natural environment. The government announced plans to achieve "leapfrog development" in Tibet in January, including building the region into a "strategic reserve of natural resources" with the aim of reducing poverty among the Tibetan people. Tibet has more than 3,000 proven mineral reserves and it has China's biggest proven chromium and copper deposits. According to the plan, mineral resources will contribute at least 30 percent to the regional GDP over the next 10 years. Tourism will continue to play a significant role in supporting the economy.


Chengdu-Chongqing Economic Zone

Chengdu, capital city Southwest China's Sichuan province, and Chongqing, one of China's four municipalities, is becoming another economic driving force and will be one of the major national economic zones as part of China's efforts to develop the less developed western areas. The National Development and Reform Commission has drafted development plans for the Chengdu-Chongqing Economic Zone, which includes 15 cities in Sichuan province and 31 districts and counties in Chongqing and covers a total area of about 200,000 square kilometers. China's first inland bonded port is under construction in Chongqing.


Beibu Gulf Economic Zone

China and the Association of Southeast Asian Nations (ASEAN) have established the world's largest free trade area of developing countries. The Beibu Gulf Economic Zone in Southwest China's Guangxi Zhuang autonomous region has been underlined as a critical area for regional economic cooperation thanks to its geographic proximity to ASEAN countries. It consists of six cities, Nanning, Beihai, Qinzhou, Fangchenggang, Chongzuo and Yulin, with a landmass of 42,500 square kilometers and a population of more than 12 million. Guangxi is located in the core of Beibu Gulf. The State-approved zone will be a hub with ASEAN economies.


Wanjiang River Urban Belt

The Wanjiang River Urban Belt of Anhui province is the first and only area that has been approved by the central government as a national-level industrial transfer demonstration zone. It has been given priority to "act first and try first" by central government and was positioned as an important driving force for central China's economic growth and a base for advanced manufacturing and services. With its geographical advantages and comprehensive competitiveness in cost and industrial base, the area is a good choice for companies based in the Yangtze River Delta that want to transfer or expand to other areas. Equipment manufacturing, raw material industry, textiles, high technologies, modern services and modern agriculture have been highlighted as six pillar industries. The zone includes nine cities and two counties, and Hefei and Wuhu will be two core leaders. It's expected that by 2015 the area's gross domestic product (GDP) will double that of 2008.


Economic Zone on the West Coast of the Taiwan Straits

Centered on Fujian province, the Economic Zone on the West Coast of the Taiwan Straits faces Taiwan province to the east, adjoins the Yangtze River Delta to the north, and neighbors the Pearl River Delta to the south. Fujian province will initially be the
major center but it will also include a few neighboring provinces including Guangdong and Zhejiang. As well as geographic proximity, the region shares the same ancestral origins, languages, culture and traditions with Taiwan province. The zone is expected to be a new channel to promote cross-Straits cooperation on a larger scale. Besides furthering its business ties with Taiwan, the zone will enable the construction of a national center for tourism and allow full enjoyment of its scenic spots, such as Wuyi Mountain, Gulang Islet, and also further the common cultures across the Straits including Min Nan (southern Fujian), Hakka and Mazu.

http://www.chinadaily.com.cn/bizchina/2010-03/22/content_9622056.htm

^^ How come they didn't include Tianjin/Binhai and Shenyang?

EYE ON CHINA: The rising RMB
(chinadaily.com.cn)
Updated: 2010-03-22 17:40


In the shops, banks and stalls around Mong Kok it is clear from the traders I spoke to that the use of the Chinese Renmibi in Hong Kong is on the increase. One year ago the city introduced a new trade settlement that allowed Hong Kong business’ to use the RMB as a trading currency which has affected both small traders and large financial institutions alike. Over the last ten years the RMB has been slowly gaining influence in the markets that surround mainland China and no more so than in Hong Kong, a Chinese city that retained its own currency as part of the one country two policies system.

With the rapid development of China's foreign trade, the RMB is increasing its flow out of China's mainland, which leads to overseas circulation and exchange of the currency in neighboring areas. Although the percentage of international trade that uses the RMB is still very small, many analysts believe it is only a matter of time before the RMB becomes a major international trading currency in the region. Dr. Billy Mak, Associate Professor in Finance at Hong Kong Baptist University believes this will happen in three phases,

The first phase the RMB should be used as a pricing currency and a settlement currency for the international trade because right now China is one of the biggest partner in international trade so its quite natural to make the RMB as a key currency for the pricing and the settlement for the trading.

The second step will be using the RMB as an investment vehicle so you can invest in RMB and get the interest from the RMB and also you can enjoy the appreciating of the RMB as well just like you invest your money into the Euro or US dollar in the Swiss fund etc.

Then the third step will be the RMB as an international foreign currency reserve just like the US dollar and the other key currencies so the foreign countries may need to consider to keep a portion of foreign currency reserve in terms of RMB. Then that gives the RMB to be internationalised.

Right now we are in the phase of the earlier stage, we just started using the RMB as a trade settlement currency last year.

The RMB still has a long way to go to become an international currency that can be freely exchanged but it is clear in Hong Kong the benefits of using the RMB for trading are substantial.

http://www.chinadaily.com.cn/video/2010-03/22/content_9616194.htm

Actually this is a video, but I can't attach the video here. So I recommend to watch the video by clicking the link above.

Citigroup’s Buiter Warns China Facing ‘Boom, Bubble and Bust’
March 25 (Bloomberg) -- China appears on track for an “asset boom, bubble and bust” that may take three years to play out and probably won’t be thwarted by tighter economic policy, Citigroup Inc. economists said.

The process will begin in the residential property market before spreading to commercial real estate and ultimately to stocks, the Citigroup economists led by former Bank of England policy maker Willem Buiter said in a report. It may take as long as two years for the asset bubble to form and at least three years for it to burst, London-based Buiter and Shen Minggao in Hong Kong estimated.

Citigroup joins hedge fund manager Jim Chanos, Gloom, Boom & Doom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China. The country has yet to raise interest rates or allow its exchange rate to appreciate, keeping in place some of the extraordinary measures implemented during the financial crisis even as inflation and asset prices accelerate.

“What is policy in China doing about the threat of overheating in the financial and real economy?” Buiter and Shen said. “The short answer is: not much, and not enough to prevent the creation of what could become a major asset boom, bubble and bust.”

Chinese central bank Governor Zhou Xiaochuan said in a March 23 interview that the country’s government needs evidence of a “very certain” recovery before it can roll back stimulus policies adopted during the crisis.

Growth Accelerates

The country’s economic growth quickened to 10.7 percent last quarter, helped by a 4 trillion yuan, ($586 billion) two- year stimulus plan for railways, airports and homes. Property prices in 70 cities climbed 10.7 percent from a year earlier in February.

The Shanghai Composite Index of stocks gained 80 percent last year and is valued at 32 times reported earnings, compared with 52 times at its peak in October 2007 and the Standard & Poor’s 500 Index’s 19 times.

Higher interest rates and an appreciation in the yuan are necessary to prevent the economy from overheating further, while regulatory steps should be taken to limit the booms and busts in the land, property and stock markets, Citigroup said. China has raised banks’ reserve requirements twice this year.

The Citigroup economists said they were “quite confident” assets would boom and later go bust in China because that would mirror the experience of other countries where credit conditions had eased against the backdrop of strong fundamentals, frenetic financial innovation and untested economic policy making.

No Different

“This time is unlikely to be different unless the authorities in China act differently from the authorities in China and elsewhere in the past,” Buiter and Shen said.

Policy makers probably won’t temper investors’ exuberance because they don’t want to lose political support or hurt the investment growth they view as necessary to ensuring the economy maintains an 8 percent growth rate and spurs employment, Citigroup said.

“Few politicians have been successful running against asset booms and bubbles,” the report said.

When the asset bubble does break, the impact will be painful for China and its trading partners, Buiter and Shen said. It may still not derail China’s economic expansion so long as the nation’s leaders seek to make the economy more reliant on domestic demand, they said. http://www.bloomberg.com/apps/news?pid=20601068&sid=ad8Pq89Z_Z3A

Chinese, U.S. officials vow to promote healthy bilateral economic, trade ties
WASHINGTON, March 26 (PNA/Xinhua) -- Senior Chinese and U.S. officials have vowed to promote healthy economic and trade relations between two countries, saying the ties are the basis of steady development of the bilateral overall relationship, according to a news release on Thursday from the Chinese side.

Chinese Vice Commerce Minister Zhong Shan, who held talks with his American counterparts in the past two days, said that sound and stable China-U.S. economic and trade relations are in line with the fundamental interests of both sides.

As to the Chinese currency Renminbi issue, Zhong noted that the China-U.S. trade imbalance is caused by the shift in international division of labor and of industries against the backdrop of globalization, and the appreciation of the RMB will not solve the problem, said the news release.

Zhong called on the U.S. side to take joint efforts with China to deal with the imbalance.

China will take measures to import more products from the U.S., while the U.S. should also take concrete actions to change its export control measures against China, Zhong said.

During the meetings with Zhong, U.S. officials also agreed that the two countries should maintain the communications and make efforts to fight against the protectionism. (PNA/Xinhua)http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=266505

China's Geely set to sign Volvo takeover
Chinese carmaker Zhejiang Geely Holding is set to imminently seal a deal to buy troubled Volvo from US auto giant as Volvo unions Saturday gave a thumbs up following earlier fears of job losses. If there are no 11th-hour glitches, the signing will take place on Sunday afternoon when a press conference is scheduled or on Monday, a Volvo spokesman told AFP. "A press conference has been scheduled for Sunday afternoon with officials from Ford and Geely but this does not mean that it will be signed on Sunday, it could be Monday," Per-Aake Froeberg said Saturday. The deal will be signed by Ford's chief financial officer Lewis Booth and Geely chairman Li Shufu at Volvo's headquarters in Torslanda in the country's south. Volvo unions had earlier voiced opposition to the deal on grounds that it was vague on expansion plans and possible layoffs. Three Volvo unions this week pressed for details "on the capital that will finance Volvo's daily activities, investment on future projects and the production target of 600,000 vehicles by 2015." But on Saturday they pronounced themselves satisfied. "We have received all the information that we were looking for," Glenn Magnusson, head of the Ledarnas union, told Sweden's TT news agency after two meetings with US-based Ford and Geely management in Gothenburg on Saturday. "As far as the unions are concerned, we are in favour of the agreement." Magnusson did not provide details on the talks with management, saying he and his colleagues from other unions had signed a confidentiality agreement. Asked whether the Chinese company had given a guarantee that jobs would remain in Sweden, Magnusson said, "we have obtained a response to our questions." Volvo has 22,000 employees worldwide, including 16,000 in Sweden. Ford Motor Company announced in December that it had agreed on the main terms of the sale of its loss-making Swedish subsidiary Volvo Cars to Geely, one of China's largest private automakers, for a reported two billion dollars. If completed, the deal will bring to an end Ford's decade-long association with the premium Swedish brand, known for its sturdy, family-friendly cars. Ford had said it anticipated "a definitive sale agreement will be signed in the first quarter of 2010, subject to appropriate regulatory approvals". Geely reportedly secured the financing needed for the purchase earlier this month, which the Financial Times valued at about 1.8 billion dollars. The newspaper said more than a billion would be loaned by the European Investment Bank and the Swedish and Belgian governments. The Swedish media had questioned the ability of Geely, a relatively young player, to finance the takeover. The deal was a "leap in the dark," said the Dagens Nyheter newspaper, the day after the accord was announced. But Svenska Dagbladet said Saturday that Geely's chairman had given guarantees that all research and development activities would remain in Sweden and that production would first be assured by plants in Sweden. Chinese Vice President Xi Jinping is due in Sweden this weekend but according to the Volvo spokesman, there are no plans for him at the moment to visit the company headquarters. Geely boss Li earlier told China's Xinhua news agency that the Volvo bid was related to a "new energy powered vehicle," which he described as "the future of the world's auto industry. If the deal succeeds, nothing will change for Volvo, except the boss turns to Li Shufu," Li said. "Volvo and Geely will be two independently-managed brands." http://sg.biz.yahoo.com/100327/1/4t4yo.html

China's Chalco sinks into red in 2009
China's largest aluminium producer Chalco said it swung into the red in 2009 with a loss of 4.65 billion yuan (680 million dollars) as the financial crisis took its toll. "In 2009, (Chalco) was hit by the global financial crisis, demand for aluminium plummeted, and aluminium prices were low for a relatively long period of time," the company said in a statement on the Shanghai stock exchange. "The firm's production and operations suffered unprecedented difficulties and challenges," it said in Saturday's statement. The loss compared to a net profit of 9.2 million yuan in 2008, although this too was a signifant drop from the previous year due to higher energy prices, falling demand and inventory devaluations as metal prices sank. Chalco -- which posted sales of 70.3 billion yuan in 2009 -- is the listed unit of Chinalco, which struck a 1.35 billion dollar deal with mining giant Rio Tinto earlier in March to develop a huge African iron ore field. Last June, Chinalco suffered a blow when its 19.5 billion dollar bid to effectively double its stake in Rio Tinto to about 18 percent collapsed. The following month, four employees of the Anglo-Australian miner were arrested on charges of accepting bribes and stealing trade secrets, during fraught iron ore contract talks between top mining firms and the Chinese steel industry. The four were tried this week and the verdict is due Monday. Chinalco has distanced itself from the case, saying it has no connection to the failed deal. http://sg.biz.yahoo.com/100328/1/4t54o.html

Economic News in Brief: China's natural gas market on fast track
QINGDAO, March 29 (PNA/Xinhua) -- China would need 200 billion cubic meters of natural gas in 2015, doubling the 2008 level, Liu Xiaoli, a senior researcher with the energy research institute under the National Development and Reform Commission, predicted Monday.

The nation's annual demand for the clean energy will grow to 300 billion cu m by 2020, according to Liu.

Between 2000 and 2008, China's annual consumption of natural gas grew 16.2 percent on average, 9.7 percentage points higher than the annual growth rate for oil consumption, or 6.6 percentage points higher than the annual growth rate for coal consumption.

Last year, China produced 82.99 billion cu m of natural gas, and the growth rate in production averaged at 13.2 percent for each of the years between 2000 and 2009.

By the end of 2008, China verified workable natural gas deposits of 6.34 trillion cu m. (PNA/Xinhua)http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=267050

U.S. group says China's business environment optimistic
BEIJING, March 31 (PNA/Xinhua) -- The majority of foreign-invested enterprises in China are still optimistic about the country's business environment, a U.S. business group leader said in Beijing Tuesday.

Harley Seyedin, president of the American Chamber of Commerce in South China, told Xinhua in an exclusive interview that most of the foreign enterprises represented by the chamber considered the business environment in the country favorable, and were planning to invest 44 percent more in 2010 than they did last year in southern China.

"China's economic recovery is well on its way," Seyedin said. "The investment prospect here is very optimistic."

He was speaking just weeks after the American Chamber of Commerce in South China released its 2010 Special Report on the State of Business in South China earlier this month.

The American Chamber of Commerce in South China represents more than 1,650 enterprise and individual members, and has conducted its special report study annually since 2006.

According to the special report, more than 90 percent of enterprises that took part in a study by the chamber considered China's business environment to be good, very good or outstanding.

It also said 90 percent of the respondents believed China's business environment had improved compared with 12 months ago.

"These optimistic figures show that foreign-invested enterprises participated in our study are very confident of China's business environment," Seyedin said.

The chamber estimated that its members would invest a minimum of 9.4 billion U.S. dollars this year.

"The enterprises are increasing their investment budget in China because it has a favorable investment environment, and because they can profit in China," Seyedin said.

According to the special report, close to 79 percent of respondents said their companies had already reported profits, whereas another 15.7 percent expected profitability within two years.

Wang Yukui, head of the communications department of Boeing China, on Tuesday told Xinhua the investment environment for foreign businesses on the Chinese mainland had seen continuous improvement since Boeing entered the market 38 years ago.

"We have good cooperation with the Chinese aviation industry," he said.

Zhu Jiming, president of the China branch of Caterpillar, the world's largest manufacturer of construction and mining equipment, said in an email statement that China's investment environment for foreign businesses had seen remarkable progress since China joined the WTO in 2001.

"Since China's entry into the WTO, a lot of laws and regulations had been revised, enabling foreign enterprises to set foot in fields they had been not allowed to in the past," Zhu said.

He said Caterpillar's business in China only included sales and production when it first entered the country in 1996.

"But now, our business scope has expanded to research and development, production, sales, service, financing, and logistics, ... thanks to China's open and supportive policies in those fields," Zhu said.

Commenting on China-U.S. trade frictions, Seyedin said trade disputes between the U.S. and Canada by far outnumbered those between the U.S. and China.

"For reasons I don't know, China-U.S. trade disputes have been constantly exaggerated by the press, leading people to dismiss U.S. disputes with other countries, or even with the Europe," he said.

He suggested the Chinese and U.S. governments conduct friendly negotiations and dialogue, to resort to the WTO and avoid unilateral actions when facing trade disputes between the two countries.

David Hon, CEO of one of the world's biggest manufacturers of folding bicycles and accessories, Dahon, also urged the Chinese and U.S. governments to resist protectionism, in order to provide a favorable investment environment.

Both domestic and foreign funded enterprises in China were hoping for an environment of fair competition, Hon said.

He said China's laws and regulations on labor, taxation, and work safety among others were reasonable, and that the U.S. enterprises should abide by the laws like their Chinese counterparts. (PNA/Xinhua) http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=267342

Balancing act in U.S.-China currency dispute
BEIJING —
As China is facing pressure from the United States to appreciate the yuan to balance U.S. trade deficit with Beijing, analysts are urging Japan to play the role of mediator in a currency dispute between the two countries.

Japan, which has advised China to make a ‘‘sensible judgment’’ in reforming its dollar-pegged currency policy, can help the two countries narrow the gap in the next three months, which U.S. Treasury Secretary Timothy Geithner calls a ‘‘crucial’’ period in ‘‘advancing U.S. interests,’’ the analysts say.

Geithner has said that the United States will conduct currency diplomacy with China at venues such as the meeting of finance ministers and central bank governors of the Group of 20 major economies later this month in Washington, a U.S.-China strategic and economic dialogue in China in May, another meeting of G-20 finance ministers and central bank chiefs in June in South Korea and a G-20 leaders summit from June 26 to 27 in Canada.

While U.S. manufacturers say the yuan is undervalued by as much as 40% to give Chinese products an unfair trade advantage, U.S. lawmakers are threatening to slap duties on Chinese imports unless Beijing raises the value of the currency, also known as the renminbi.

‘‘A move by China to a more market-oriented exchange rate will make an essential contribution to global rebalancing,’’ Geithner said in a statement. ‘‘China’s inflexible exchange rate has made it difficult for other emerging market economies to let their currencies appreciate.’‘

But Chinese Premier Wen Jiabao has dismissed claims that the yuan is undervalued and Commerce Minister Chen Deming said the yuan’s exchange rate alone will not address the U.S.-China trade imbalance.

‘‘Japan should stand between the United States and China, and tell Washington not to employ protectionist measures and China to revalue the yuan for its own interest,’’ especially when the Chinese economy shows signs of overheating, said Masahiro Kawai, dean of the Asian Development Bank Institute in Tokyo.

‘‘China should tighten credits further because signs of a bubble have emerged in the economy,’’ said Kawai, a former Japanese deputy vice finance minister for international affairs. ‘‘Currency revaluation should be carried out as part of monetary-tightening steps.’‘

A recent World Bank report shows that inflation is likely to increase in China in 2010, forecasting that the consumer price index will rise 3.7% this year, higher than the government’s target of capping it at a 3% increase.

Kawai said China can learn from Japan’s experience when a sharp rise in the yen in the 1985 Plaza Accord, a currency realignment accord aimed at addressing the U.S. external imbalance, resulted in the creation of an asset-inflated economic bubble in the late 1980s.

‘‘If a country maintained exchange rates at low levels, it would eventually need to make considerably big adjustments in the future,’’ Kawai said, referring to the dollar’s fall from 240 yen to 120 yen after the accord took effect.

At that time, Japan eased credit grips and injected fiscal stimulus to prevent a rising yen from hurting the economy. This led to the creation of a bubble, which burst in the early 1990s and was followed by a decade-long economic slump.

‘‘So I would advise China to make adjustments as smoothly as possible,’’ Kawai said.

When Japanese Finance Minister Naoto Kan met Wen in Beijing last Saturday, he did not join the U.S. call to appreciate the yuan, but expressed hope for China’s voluntarily action to reform the currency system.

‘‘I did not tell Wen what China should do,’’ Kan told reporters after the meeting. ‘‘I told Wen that we expect China to make a sensible judgment.’‘

Behind such an approach is that Japan does not want the yuan to appreciate sharply as it could slow growth in the Chinese economy—an engine for global economic growth—and that Tokyo does not want to incur a large trade deficit with Beijing as Washington, according to a Japanese Finance Ministry official.

‘‘Unlike the United States and Europe, Japan sees no urgency in demanding a revaluation of the yuan because Japan’s trade with China is almost balanced,’’ the official said, requesting anonymity.

The official also quoted concerns by industry and market players that a stronger yuan may lead to a firmer yen, which could affect Japan’s exports and the economic recovery.

But as a member of the Group of Seven industrialized nations, Japan is united with the United States and Europe in urging China to pursue a more flexible exchange rate as part of efforts to address the ‘‘global’’ current-account imbalance, the official said.

‘‘So Japan is already in a position to serve as a mediator between the United States and China,’’ the official said. ‘‘But it will require a delicate balancing act to match the interests of the three countries.’’

http://www.japantoday.com/category/commentary/view/japan-needs-balancing-act-in-us-china-currency-dispute

Experimental economic zone created in China's northeast
SHENYANG, April 6 (PNA/Xinhua) -- The Shenyang experimental economic zone plan has been approved by the State Council for northeast China's Liaoning Province, making the Shenyang economic zone the eighth experimental reform region in China, the governor of Liaoning Province announced here Tuesday.

The theme of the zone's reform plan is "new industrialization," emphasizing information technology in the region's industrial upgrading.

The Shenyang economic zone, centered on Shenyang city, covers an area of 75,000 square kilometers and includes seven other cities, namely Anshan, Fushun, Benxi, Yingkou, Fuxin, Liaoyang and Tieling.

The population of the economic zone is 23.59 million, with 65 percent residing in urban areas. The area's gross domestic product in 2009 was estimated at 998.47 billion yuan. (PNA/Xinhua)http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=268231

^^ What's driving imports up so drastically?

May be because of China-ASEAN Free Trade Area (CAFTA), it start since 1 January 2010. My country suddenly has a lot of products from China in the market. I buy T-Shirt for only USD 1.20, the quality is very good.

Sharp increase in China's imports benefits world
09:45, March 31, 2010

The world economy is now showing an upward trend and China will continue to lead to world in economic recovery, according to data on the world's major economies released by the Organization for Economic Co-operation and Development (OECD) on March 5.


Engine of the world economy

The continuous upward trend of China's economy, huge domestic market and low customs duties have given a push to the sharp increase in China's imports and have greatly benefited neighboring countries.

In January and February of this year, nearly 44,000 tons of fruits worth around 50 million U.S. dollars from ASEAN member countries were imported into China via Shenzhen Customs, up almost 21 percent and 39 percent compared to the same periods of last year. Yao Jian, spokesperson for the Ministry of Commerce (MOFCOM) pointed out on March 16 that the goods China imported from the six ASEAN member countries is much more than the goods China has exported to them since the establishment of the ASEAN Free Trade Area on Jan. 1, 2010.

Countries in other parts of the world have also benefited from China. Data released by the National Bureau of Statistics (NBS) shows that China's import value for February reached nearly 87 billion U.S. dollars, up nearly 45 percent, propping up the recovery of the world economy.

Yao added that for many countries, China has now become an important export market. In 2009, China was the largest export market for Japan, Australia, South Korea, the ASEAN member countries, Brazil and South Africa, as well as the third largest export market for the United States, the EU and India. The proportion of the export value which the above-mentioned countries reaped from China to the total export value of these countries increased at different paces in 2009.

"This shows that the stimulus package which the Chinese government adopted to handle the international financial crisis and to promote rapid and smooth economic growth has not only benefited China's economy, but also played an important role in helping the world economy recover. China has become the engine of the global economy," Yao said.

Klaus Schwab, president of the World Economic Forum, said that the rapid growth of China's economy has played a vital role in the current world economic environment. "China's economy will grow rapidly even if the world economy slows down, and China will become a major driving force behind the world economy."


The "new normal" - changes and opportunities

The global economy is entering an era of the "new normal" after the financial crisis. The "New normal" features the further drop of potential growth rates, adjustments of economic structures, transformation economic growth modes, rebalancing the global economy, restrictions on financial globalization, more attention to the industrial development and even the revival of "reindustrialization," said Zhang Xiaojing, director of the Macro Economic Research Institute under the Chinese Academy of Social Sciences.

The Chinese government is taking timely and strong macroeconomic control measures to recover from the financial crisis. China's GDP rose by almost 9 percent in 2009, exceeding the benchmark of ensuring at least 8 percent of GDP growth.

"In 2010, the government should continue to consolidate the achievements of macroeconomic control in order to maintain stable and rapid economic growth and also be alert to the possible inflation," said Jin Mengqin, an associate professor from the Department of National Economic Management at Renmin University. "Moreover, the country should pay much more attention to economic structural adjustments."

So how do we maintain rapid economic growth in 2010? The answer is self-evident now that it is the right time for China to transform its economic growth mode.


Priority for transforming the development mode

China's retail sales of consumer goods totaled 2.5 trillion yuan in the first two months of 2010, an increase of 18 percent from the previous year. The growth rate was 2.7 percentage points higher than that in the same period of the previous year, and 2.4 percentage points higher than that in the entire previous year, according to the newest statistics from the NBS. China already has the economic foundation to transform the economic development mode after becoming a major importer.

"To maintain a sustained and stable growth in consumer demand, it is essential to enhance the incomes of ordinary people. After taking the first step of making the people more wealthy, government policies should also give attention to the investment in medical care, education and social security systems in order to alleviate their economic burdens, which is a fundamental way to boost consumption and return wealth to the people," said Li Yiping, a professor from the School of Economics under Renmin University.

Against the backdrop of a new round of adjustments in industrial structure, the worldwide competition in new energy has already started. Although China has achieved significant results in the development of the low-carbon industry represented by new energy, there is still a gap between itself and developed countries in key green technologies.

Huang Qili, an academician from the Chinese Academy of Engineering, stressed that renewable energy is not only the focus of China's energy strategy, but is a major force in implementing energy localization, clean energy and sustainable development strategies. It is necessary to actively support and guide the sound and rapid development of renewable energy by means such as technological advancement, policy guidance, market economy and management innovation, as well as by formulating pragmatic incentive policies under the principles of adjusting energy structure and reducing greenhouse gas emissions.

By People's Daily Online

http://english.peopledaily.com.cn/90001/90778/90861/6935808.html

China's business climate index up in first quarter
China's business climate index, a major measure of macro-economic outlook, rose slightly by 2.3 points in the first quarter, the National Bureau of Statistics (NBS) said Friday.

The quarterly business climate index, based on a survey of 19,500 Chinese firms, climbed to 132.9 points from 130.6 in the fourth quarter last year, the highest level since the second quarter of 2008, the NBS said in a statement on its website.

The index ranges from zero to 200. A reading above 100 shows economic expansion, while a reading below 100 indicates contraction. The survey began in 1998.

All sectors reported business indices above 100 for the fourth straight quarter, which indicated expansion, said the statement.

The index for the industrial sector rose from 128.1 in the previous quarter to 130.1, while for the tertiary sector, the index was back to growth by rising 11.8 points to 130.8 after declining in the fourth quarter last year.

The business climate index for the real estate sector increased just 2.2 points to 147.4 in the first three months this year as the government promised to cool the property market and check the skyrocketing home prices.

The entrepreneur confidence index, a gauge of the understanding, views and projections of business people, rose 7.8 points from three months ago to 135.5 in the first quarter, said the NBS. http://english.people.com.cn/90001/90778/90862/6945776.html

^^ What's driving imports up so drastically?

car import from Japan and Korea.

China posts first trade deficit in six years
BEIJING, April 10 (PNA/Kyodo) - China posted a trade deficit of US$ 7.24 billion in March, the first deficit since April 2004, due to surging imports and rising commodity prices, government data showed Saturday.

The figure compared with a surplus of US$ 7.61 billion in February.

Imports jumped 66.0 percent in March to US$ 119.35 billion from those registered a year earlier while exports grew 24.3 percent to US$ 112.11 billion only, the General Administration of Customs said.

Chinese Commerce Minister Chen Deming is optimistic the trade deficit will be a "short-lived phenomenon" only.

However, he said the country must stay vigilant about high prices of oil and other commodities which inflate the value of Chinese imports.

He also said China must be on guard against uncertainty in the U.S. and European economies.

"There are still concerns over surging prices for commodities imported by China along with the high unemployment rates and weak consumption power within the U.S. and the EU," Chen was quoted as saying by the Friday issue of China Daily. (PNA/Kyodo)http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=268987

Ayala's IMI opens new plant in China
MANILA, April 12 (PNA) - Integrated Micro-Electronics Inc. (IMI), a leading electronics manufacturing services (EMS) provider to the world’s key original equipment manufacturers (OEMs) and a member of the Ayala group of companies, officially announced the opening of its new factory in Chengdu, Sichuan Province in southwestern China.

Key members of IMI’s board of directors and management committee, led by chairman Jaime Augusto Zobel de Ayala, president Arthur Tan, and board member Gerardo Ablaza Jr., attended the official opening of the factory in Xindu District’s Muwei Industrial Park.

Zobel de Ayala said IMI’s expansion to Chengdu is part of their strategy to bring IMI’s services closer to OEMs which increasingly require greater capacity in China to supply a large domestic market as well as to manufacture for export markets.

"We believe China will remain at the center of the global electronics manufacturing industry and will be a significant driver of the world economy as it regains its growth momentum. Having this strategic position in the region will allow us to capture a greater share of volume orders as demand turns in step with the economic cycle,” he said.

The Chengdu factory brings the number of IMI’s manufacturing sites in China to six. The other plants of IMI are located in Shenzhen (in Liantang, Kuichong, Fuyong); Jiaxing; and Chongqing.

IMI’s 7,500-square-meter Chengdu plant offers a wide variety of electronics manufacturing solutions from printed circuit board assembly to full product assembly for OEMs in various markets such as those in the industrial, automotive, medical and telecommunications infrastructure industries.

Contract design services are also offered to OEMs in collaboration with IMI’s design and engineering centers in Shenzhen, Singapore, the Philippines, and the United States.

It is also a vertically integrated electronics manufacturing services (EMS) provider to leading global original equipment manufacturers (OEMs) in diversified markets that include those in the automotive, industrial, medical, solar energy, telecommunications infrastructure, storage device and consumer electronics industries.

Committed to cost-effective and top-quality customized solutions, IMI’s comprehensive EMS capabilities, broad geographic reach and strong Asian manufacturing presence allow it to take on specific outsourcing needs.

IMI’s flexible solutions encompass design and product development, manufacturing, and order fulfillment.

IMI is consistently ranked among the top 30 EMS providers in the world.(PNA) http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=269210

China's social security fund to expand to $300 bln in 2015: fund chairman
BOAO, Hainan, April 11 (Xinhua) -- China's national Social Security Fund (SSF) will be more than doubled to 300 billion U.S. dollars in 2015, the SSF chief Dai Xianglong said Sunday.

The fund's current size is 130 billion U.S. dollars, Dai said at the annual conference of Boao Forum for Asia in south China's island province of Hainan.

The SSF is ready to buy into unlisted companies and invest more in private equity funds this year, said Dai, chairman of the National Council for Social Security Fund.

The agency has invested 6 billion to 7 billion yuan (1.02 billion U.S. dollars) in five local PE funds, he said. The cap of investment in PE funds is 10 percent of its total capital.

Dai, also the former central bank governor, said China needs not only to attract foreign investment but also to expand channels for Chinese investment overseas as the country's foreign exchange reserves has risen to 2.4 trillion U.S. dollars.

But the central bank should not buy a huge amount of foreign currency and inject equivalent yuan into the financial system, as it could lead to capital bubbles, he stated.

"The move is no good for us. We need to increase overseas investment," he said.

The SSF will also work to promote cooperation between the emerging economies, he said.

The emerging economies will contribute more to global economic growth in the next 10 to 20 years, but they also face growth challenges, including inflation, transformation of economic growth pattern and volatile international capital flows, Dai said.

The emerging economies face pressure on inflation after explosive growth in lending last year aimed at reviving growth amid the financial crisis, Dai said.

The export-driven growth in countries like China not only costs a huge amount of resources, but also leads to many trade frictions, he said, adding that the future growth should stress more on consumption.

He also expressed the worry over international capital volatility faced by the emerging economies. He said inflows of hot money had inflated asset bubbles in China. http://news.xinhuanet.com/english2010/china/2010-04/11/c_13246097.htm

Premier encourages spring farming efforts to ensure good harvest
http://news.xinhuanet.com/english2010/china/2010-04/11/13246212_301n.jpg
Chinese Premier Wen Jiabao (C) inspects a cole field in Chizhou, east China's Anhui Province, April 10, 2010. Chinese Premier Wen Jiabao has called for enhanced efforts during the country's spring ploughing season to ensure a good harvest, during his inspection tour of Anhui Province from April 9 to 11.

HEFEI, April 11 (Xinhua) -- Chinese Premier Wen Jiabao has called for enhanced efforts during the country's spring ploughing season to ensure a good harvest.

Wen made the remarks during an inspection tour of east China's Anhui Province from April 9 to 11.

He said good work in the agriculture sector, especially in ensuring grain production, was significant for stabilizing the country's economy and prices.

He urged governments at various levels to take every possible measure to ensure spring farming was done well.

Wen visited farmland, villages, processing companies, farm supply centers, and irrigation projects in rural areas of Bangfu and Chizhou cities.

He also held seminars to solicit opinions from farmers and local officials.

Wen urged the authorities to guarantee the farm supplies, including chemical fertilizers, seeds, pesticides, and fuel for spring planting.

At a water control project on Huaihe River, China's third longest river, Wen called for coordinated control efforts by provinces through which the river runs.

Nineteen key water control projects under the Huaihe River management program have been completed, which improved greatly the ability to combat floods and droughts.

The 1,000-km-long river, one of the most flood-prone rivers in China, flows through four central and east China provinces including Henan, Anhui, Shandong and Jiangsu. http://news.xinhuanet.com/english2010/china/2010-04/11/c_13246212.htm

Finally an article on China's real estate situation written with a minimum degree of common sense and decency.

No Housing Bubble in China

* April 12, 2010

This is a special commentary on China housing from director of research John Derrick and senior china analyst Michael Ding.

China’s housing market is hot, but it’s not a bubble on the verge of bursting, as many contend.

Before we can discuss why it’s not a bubble, a little background on the Chinese housing market is needed.

Prior to the early 1990s, urban dwellers in China were provided an apartment by their employers or the government, with rent set at less than 5 percent of their salary (utilities included). Starting in the early 1990s, the government began to privatize housing by selling apartments to their residents at a low price. Almost overnight it created a private home ownership rate of about 70 percent.

http://www.usfunds.com/media/images/investor-alert/2010-04-09/RisingPropertyPricesBubble.gif

This policy change was also a vast redistribution of wealth from the government to the people – those apartments typically occupied prime downtown locations, and thus are worth at least the price of a new luxury apartment.

The price of housing in China has risen as the economy has expanded, but the chart from BCA Research shows that housing price growth has been significantly slower than GDP growth since the late 1980s.

The price of housing has roughly doubled since the late 1990s, but it’s important to remember that China’s prices have risen from a much lower base than in the developed countries (among them, Britain, Ireland and Spain) in which bubbles were created. It’s also relevant to point out that household disposable income in China more than doubled during the period. The rise of the Chinese middle class is a major global economic phenomenon – tens of millions of people are added each year.

Leverage is also an important indicator in judging how susceptible a housing market is to growing into a bubble. The chart below, also from BCA Research, shows debt as a percentage of disposable income in China and in a number of developed-market countries. More than half of the developed countries had debt in excess of income, with Denmark and Ireland pushing 200 percent.

http://www.usfunds.com/media/images/investor-alert/2010-04-09/COMM%2DChinaHouseholdLev%2D040910.gif

China is at the far other end, with debt totaling just 44 percent of disposable income. Furthermore, homebuyers in China put down at least 20 percent as a down payment (30 percent for a first-time buyer and 40 percent for a second-home buyer to damp down speculation). These buyers rarely fall behind on their mortgage payments.

It’s obviously true that there has been rapid price appreciation in major cities like Shanghai and Beijing. Prices have risen above the affordability level for most families in these cities, and that is why the government is acting to let some air out of those markets before dangerous bubbles form.

http://www.usfunds.com/media/images/investor-alert/2010-04-09/ResidentialPropertyInventories.gif

For example, the government's "second mortgage rule" requiring much higher down payments is having some effect – in January, price appreciation rose less than 1 percent month-over-month, down from a 2.1 percent jump in December. The government has also ordered that developers build more economical homes.

Where does the China housing market go from here? Home inventories are low in major cities – at the current sales pace, there are only a few months worth of inventory in Shanghai, and the situation isn’t much better in Beijing or Shenzhen.

But demand is still strong. A recent survey by the Hong Kong-based brokerage CLSA found that 56 percent of China’s middle-class families are considering buying a new home – despite the higher prices many families can pay a 30 percent down payment because of their higher savings.

Our own research shows that property developers, coming off a good 2009, are expanding into second- and third-tier cities, where housing markets are also growing and prices are more affordable.

This widening of opportunity, combined with the government’s early recognition that decisive measures were needed, together will raise the probability that it will achieve its goal of slowing down home price increases without causing the market to collapse.

Senior China analyst Michael Ding contributed to this commentary.

http://www.usfunds.com/investor-resources/frank-talk/Our-Commentaries/No-Housing-Bubble-in-China-2712/

China stresses market supply in drought-hit areas
BEIJING, April 13 (PNA/Xinhua) -- Local governments should step up efforts to ensure market supplies in the drought-stricken southwestern areas, China's Ministry of Commerce said here Monday.

Local authorities in drought-hit provincial localities should enhance their awareness of the importance to ensure market supplies of daily necessity and production material for local residents, and beef up market supply supervision, the ministry said in a statement on its website.

The first priority in these areas is to help drought victims and livestock to get access to drinking water.

Local governments must work out effective drought-relief emergency plans, Fang Aiqing, China's assistant commerce minister, said in the statement.

Since last autumn, the southwest Chinese provinces of Yunnan, Sichuan and Guizhou, Guangxi Zhuang Autonomous Region and Chongqing Municipality, were hit by a lingering drought, the worst one in decades. (PNA/Xinhua) http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=269410

China Focus: A new era of global iron ore pricing?
BEIJING, April 12 (PNA/Xinhua) -- Although China repeatedly voiced support for the iron ore benchmark system, analysts believe that a more flexible pricing system seemed unavoidable.

The world's three iron ore giants -- Vale of Brazil, Rio Tinto and BHP Billiton, which accounted for 68.5 percent of the global iron ore shipments in total -- have all announced their initiatives to shorten the long-term agreements in international iron ore prices, indicating the end of the decades-old annual benchmark pricing system.

Although details for the new system was not clear yet, analysts said quarterly-based, indexed or spot pricing would all be possible.

The development trend was a shorter-term-based pricing system, and it seemed China could not avert it, said Zhang Lin, an analyst with the Beijing-based Lange Steel Information Research Center.

What does this mean for China's steel industry?

Analysts said the change would lead to a price hike in iron ore market, maximize short-run profits of iron ore suppliers and largely squeeze profit margin at China's steel mills, exacerbating the already meager profit.

"If China follows the new pricing model, it means we have to accept a nearly doubled iron ore price," said Wu Jun, marketing manager with Jiangyin Xingcheng Special Steel Corp. "We can only pass on part of the price increase to consumers."

"We are still waiting for the result of iron ore price negotiation," he said. Iron ore under benchmark pricing accounts for 20 percent of the company's total imports.

The China Iron and Steel Association, which heads the price negotiation on behalf of domestic steel companies, said the negotiation was still underway. No information about the progress was available.

Hu Kai, an analyst with Umetal, an online steel information provider, said some private steel companies that seldom had access to benchmark pricing might welcome the new system, which would put them at an equal footing with major domestic rivals.

China has around 800 steel mills nationwide, but only 112 steel mills and ore traders have iron ore import licenses, enabling them to buy iron ore under the pricing negotiation mechanism.

As the world's largest iron ore importer, China imported a record of 630 million tonnes of iron ore in 2009, or 68 percent of the world's total shipments. Imports from Australia and Brazil mines accounted for 64.4 percent of the total, according to customs statistics.

Rising iron ore price would not only hurt the steel industry, but also affect the whole industrial sector, said Shi Chenyu, senior researcher at the investment department of Industrial and Commercial Bank of China.

"A more serious consequence is the new pricing system is likely to fuel speculative trading of iron ore, which would make more price volatility inevitable," said Zhang.

However, Zhang said the change would help avoid similar experience in 2008 when Chinese steel industry suffered overall losses after iron ore spot prices fell sharply because of the global financial crisis.

Since China joined the iron ore price negotiation in 2003, prices have been rising as suppliers bet on the growth in China's huge demand. In 2000, China accounted for just 16 percent of the sea-borne iron ore market, which surged to 68 percent last year.

Spot prices now climb to 166.67 U.S. dollar per tonne, nearly tripled from the same period last year.

Zhang said the Chinese government should further push forward the development of domestic iron ore mines and encourage steel enterprises to increase input in research and development to improve iron ore utilization efficiency. (PNA/Xinhua)http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=269366

China real estate overheated, says Nomura Asset
China’s real-estate market is overheating and investors should stay cautious on developers after the shares fell the most in the main equities index this year, according to Nomura Asset Management Hong Kong Ltd.

“In the first-tier cities, property markets are obviously overheating,” Shen Xiaomin, portfolio manager at Nomura Asset, said on Bloomberg Television in Hong Kong. “There is too much money in the economy.”

Property prices in China rose at the fastest pace in almost two years in February, spurring warnings of asset bubbles. Hedge-fund manager James Chanos said last week that China is “on a treadmill to hell” and that the land market is a bubble that may burst as early as this year. Pan Shiyi, chairman of Soho China Ltd., said April 10 excess capital has driven rapid gains in auction prices paid for land and fueled a bubble.

The SE Shang Property Index has declined 9 percent this year, the worst-performer among the five industry groups on the Shanghai Composite Index, after officials reimposed a tax on homes sold within five years of their purchase to curb speculation and directed banks to set aside more funds as reserves to cool lending. The measure dropped 1.5 percent on Monday, compared with a 0.1-percent gain for the Shanghai Composite.

Kenny Tang, a Hong Kong-based analyst at Redford Assets Management Ltd., said the real-estate industry is a key part of the economy and predicted tightening measures by the government won’t be “too strong.”

“The government won’t kill the property market,” he told Bloomberg Television.

China housing prices will increase 11.4 percent in March, according to a Bloomberg survey. The monthly data is due to be released this week.

Shanghai and Beijing are among the cities that are affected by so-called “hot money” and speculation, Liu Mingkang, chairman of the China Banking Regulatory Commission, said. Hot money generally refers to speculative funds flowing into a country to take advantage of higher returns.

The regulator told lenders to reassess their risk exposures and submit reports by the end of June. This follows an order in March to banks not to lend to developers holding land without building houses in a March 26 statement.

“Overall we still need to be very cautious on the property sector,” Nomura’s Shen said. http://businessmirror.com.ph/index.php?option=com_content&view=article&id=24061:china-real-estate-overheated-says-nomura-asset-&catid=51:world&Itemid=67

China's Economy Soars, But Rebound Comes With Risks
By ANDREW BATSON And ESTHER FUNG


China's economy expanded 11.9% from a year earlier in the first quarter of 2010, the government said Thursday, a strong result that highlighted both the strength of the recovery in the world's third-largest economy and the increasing risks of overheating.

In a statement issued before the latest data were published, China's State Council said the nation's economic recovery has been further consolidated in recent months, but there are still prominent problems and risks to deal with. Top of the list is an increasingly frothy real-estate market: property prices in China grew at the fastest pace in nearly five years in March, according to official figures issued Wednesday.

The national property-price index rose 11.7% in March from a year earlier, accelerating from February's 10.7% rise, the National Bureau of Statistics said. The increase was the largest since July 2005, when the bureau switched to an index based on data in 70 cities, rather than 35.

The State Council repeated its promise to "resolutely curb" excessive property price rises by restricting speculative purchases while increasing the supply of land for housing and government supports for low-income housing. But analysts said the measures taken so far appear to be insufficient, and the latest economic data will likely reinforce official resolve to take further measures to cool down growth, economists said.

The real-estate sector has become an increasingly important driver of China's economy as the government seeks to promote home ownership, and was given a huge boost by the flood of bank lending unleashed by the leadership's stimulus program. The surge prices in major cities also threatens to make property unaffordable for many, and Beijing has for several months sought to contain prices and ward off an asset bubble.

The growth in the first quarter's gross domestic product accelerated from the 10.7% gain reported in the fourth quarter of 2009, and was faster than the 11.5% median forecast of economists surveyed by Dow Jones Newswires. But the State Council cautioned against excessive optimism, noting that the fast rate of growth in the first quarter is largely due to the low base of comparison a year earlier, when the impact of the global financial crisis led to China's slowest quarterly expansion in nearly two decades.

"A number of factors driving up prices are appearing, strengthening expectations of inflation. The problem of excessive increases in housing prices in some cities is particularly acute," the State Council said in its statement issued after a quarterly meeting on the economy, headed by Premier Wen Jiabao.

The fastest housing-price increases in March were in the southern island province of Hainan, a popular tourist destination. Prices in the provincial capital Haikou rose an average 64.8% from a year earlier, while those in the resort city of Sanya jumped 57.5% during the period. Prices in Guangzhou, the capital of the southern province of Guangdong, rose 20.3%.

Broader inflation risks have been subdued so far, with the consumer price index rising 2.4% in March from a year earlier, down from February's 2.7% rise which was boosted by seasonal factors. Still, inflation is close to Beijing's 3% target, so additional measures may yet be needed to keep price rises in an acceptable range.

To cope with those issues, China's government has in recent months been moving to dial back the amount of new lending the banking system delivers to the economy, though officials still want to make sure financing remains supportive. Economists expect the central bank will soon start raising interest rates for the first time in two years to combat rising inflationary pressures.

Banks started to shrink their new lending significantly in February and March of this year, after the government set a smaller target for new loans this year. Fixed-asset investment in urban areas, an important measure of capital spending, has also been slowing from over 30% growth last year. Investment was up 26.4% in the January-March period, down from 26.6% in the January-February period.

Source (http://online.wsj.com/article/SB10001424052702303348504575184821917609494.html?mod=WSJASIA_hpp_LEFTTopWhatNews)

^^

This is the issue. When the real estate market inflates in a big bubble, there is no concrete solution to address such growth and the only result was the "burst". After the Great Depression, John Maynard Keynes wrote a book that will prevent another Great Depression. However, everyone knows that this theory only works once it started. There is no such theory made to "avoid" a recession. I haven't seen one yet. The Chinese government is praying for one because they know it is coming but even them could not "avoid" such issue. Even countries such as United States, EU and many other countries could not "avoid" it.

Everyone knows the theory we are using to spur the growth is always leading to a recession. That's the problem. We are using the same system again and again and it will always lead to a big downfall. And that's when we used another system to prevent a bigger downfall and keep the economy from falling. I wonder if a theory can be made to address and prevent an incoming economic disaster and keep the economy stabilize so it will lead to a "soft" fall or no fall at all? The only one I know was the theory made by Muhammad Yunus but that was not even close.

The Chinese already did it before with inflation yet they were affected by the outside influence such as currency revaluation and export bubble growth that lead to the recession in early 2009. I guess the world needs to follow Chinese economic system in order to prevent another disaster. And probably China needs to make a theory that will curb this incoming "unstoppable" disaster. Oh well, I guess back to the old drawing board.

Good thing Milton Friedman's theory and his Chicago University colleagues is in shamble. Remember, their theories leads to this downfall.

Seems like China already overtook Japan to be the second largest economy last year. The GDP for 2009 we've seen so far was the number before adjustment due to economic census. The newest number after adjustment for 2009 will be released later this year or early next year. It is expected to be around 35 trillion yuan.

Seems like China already overtook Japan to be the second largest economy last year. The GDP for 2009 we've seen so far was the number before adjustment due to economic census. The newest number after adjustment for 2009 will be released later this year or early next year. It is expected to be around 35 trillion yuan.

Well, there was a news article in WSJ (Source (http://online.wsj.com/article/SB10001424052748704543804575065951016006886.html)) that guarantees Japan with higher GDP than China. However, even if Japan got less than 3% GDP increase this 1st. quarter, it's still not enough to lead with the 11.9% China's GDP increase. It's actually a remarkable increase but I'm hoping its accurate. Well, GDP calculations in any country is not accurate anyway so why bother.

I'm hoping my calculation is accurate enough but I'm not sure if I got the right numbers either. However, I can guarantee you that China will beat Japan this year in terms of real GDP but it may take China 40 - 60 years before they will beat Japan in GDP per capita, or never.

it may take China 40 - 60 years before they will beat Japan in GDP per capita, or never.

Never? Anything is possible nowadays. Besides, GDP is numbers which is affected by currency. The per capita living standard too, can be drastically decreased with hyper inflation.

Never? Anything is possible nowadays. Besides, GDP is numbers which is affected by currency. The per capita living standard too, can be drastically decreased with hyper inflation.

It's not about that. It's actually a long and probably more complicated story. The country itself needs cheap labor no matter what. They needed it. That's the only way to learn foreign investments. Their system is simple unlike in India where there is too much bureaucracy. Plus, the currency, which you mentioned, will not revaluate. Besides that, they can live with cheap standard of living. They do and they will teach their children how to do. Besides, China need cheap labor for domestic purpose too. (Unless someone invent a "robot"). The demand of good and services is still increasing with globalisation. More population are becoming middle class and once it approach more than 2 billion, then food supply will be in peril. And again China will take advantage of that (and of course, Africa and South America). Global standards is increasing rapidly and demands are getting higher. And of course, China will always take advantage of that.

Seems like China already overtook Japan to be the second largest economy last year. The GDP for 2009 we've seen so far was the number before adjustment due to economic census. The newest number after adjustment for 2009 will be released later this year or early next year. It is expected to be around 35 trillion yuan.

Are they releasing this in December or earlier?

Japan will probably fiscally collapse soon because of the terrible Hatoyama government so China can pass Japan in GDP per capita in probably 10 years :lol:

^^ Hey, at least the over-the-top government spending means your roads and highways are always in pristine condition. A lot of the highways in China built in the late 80s and early 90s are in bad bad shape because maintenance is almost never carried out. It's common for these old highways to have a 20-30cm vertical difference at the bridge deck's joints.

China's small exporters still worried despite world economic recovery
GUANGZHOU, April 16 (PNA/Xinhua) - Although exports were improving with the world economy recovering from the global financial crisis, Yu Zuhong, director of a small machinery manufacturer in China, was still worried.

"There are too many hidden problems and pressure and I dare not be too optimistic about this year' s trade outlook," Yu said at the 107th China Export and Import Trade Fair, or Canton Fair, which opened Thursday in the southern city of Guangzhou.

Yu runs the Hangzhou Xiaoshan Transwell Building Instrument Factory, which employs 70 workers and exports welding machines and equipment for PE, PPR, PB pipes to the European Union, United States and African countries.

Yu said the appreciation of yuan, or China' s currency renminbi, and soaring costs of raw materials and labors would all squeeze the already meager profit margin.

"I' m afraid hard time will hit again in the second half of this year," he said. Because of the concern, the company' s previous 60-million-yuan (8.8 million U.S. dollars) planned investment for this year was halved, he said.

The company suffered a heavy blow last year with exports plunging 38 percent from 2008 level because of falling demand in the E.U. and U.S. markets, which accounted for 40 percent of the company' s total exports.

Ci Peng, sales director of the Shandong-based Bantal Electrical Appliances Co., Ltd., had similar concerns. "Actually, trade improvement does not look like what customs figures suggest at the beginning of the year and I don' t think we can return to the pre-crisis level in such a short period."

Ci's company, with more than 1,000 employees, churns out 500,000 energy-saving lamps every month but the capacity cannot meet rising orders at present.

However, based on the feedback from his clients from countries such as Russia and Iran, Ci said orders might drop slightly in the second half this year.

As the world' s largest exporter, China' s exports grew by 24.3 percent from March last year to 112.11 billion U.S. dollars, while imports jumped 66 percent to 119.35 billion U.S. dollars, leaving a 7.24 billion U.S. dollar deficit, China' s first since May 2004.

Economists played down concerns that a trade deficit would hamper the country' s strong economic growth, saying the deficit is a temporary phase, considering the robust overseas economic recovery and slowdown in China's imports.

Combined the first three months, China still reported a trade surplus of 14.49 billion U.S. dollars n the first quarter, a fall of 76.7 percent from the same period of last year, according to customs statistics.

However, unlike small exporters, some large-scale companies were quite optimistic about the future and made aggressive plans. Haier, China' s largest home appliance manufacturer, forecast a more encouraging sales this year because of the global economic recovery. The company now sells products to more than 160 countries and regions around the world.

Zhang Qingfu, Haier' s managing director for overseas business division in Middle East and Africa, expected sales in the regions to increase more than 50 percent this year from a year earlier as the company strove to promote expansion and marketing.

"Despite some challenges, the overall business climate is improving this year," he said.

Domestic export enterprises must improve quality and services to enhance comprehensive competitiveness on the global market, he said.

Yu, who had spent 35 years on research and development, said the Chinese government must enhance the protection of intellectual property right to encourage enterprises' technology innovation. (PNA/Xinhua) http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=270120

China works toward balancing foreign trade
BEIJING, April 16 (PNA/Xinhua) -- The goal of China's foreign trade policy in 2010 was to improve its trade balance while maintaining steady export growth, said the Ministry of Commerce (MOC) spokesman Thursday.

The country's trade surplus was expected to shrink by another 100 billion U.S. dollars in 2010, said Yao Jian, the MOC spokesman, at a press conference.

The statement came less than a week after the country posted its first monthly trade deficit for March in six years, which was valued at 7.24 billion U.S. dollars, according to the General Administration of Customs (GAC) last Saturday.

The GAC said the March deficit mainly stemmed from shrinking exports of labor intensive products, surging imports volumes and rising commodity prices, and predicted the country's trade surplus might continue decrease for the rest of the year.

Echoing the GAC, Yao said the country's foreign trade was likely to keep heading toward a more balanced state, while some experts predicted China's trade would soon return to surplus.

"The trade deficit registered in March demonstrated expanding domestic demand accompanied by lukewarm demand in the international market," Yao said.

"Because such a situation would continue, the monthly trade deficit seen in March would remain, at least in the first half of 2010," he said.

The deficit also proved that, in an era of economic globalization, it was market supply and demand, and other factors that decided trade balance rather than exchange rates, said Yao.

Yao portrayed the deficit in March as the continuation of a shrinking trade surplus that started to appear in 2008, and also as a result of the central government's macroeconomic policy in balancing the economy.

In recent years, China has worked hard to restructure its economy away from excessive dependence on exports and the manufacturing sector, while a whole range of measures have been taken to expand domestic demand.

The goal of China's foreign trade policy was to further balance trade while maintaining stable growth in exports, he said.

Yao expected the ratio of China's trade surplus to its gross domestic product (GDP) to fall to 3 to 4 percent from last year's 5.7 percent.

When an economy's ratio stays between 5 percent and minus 5 percent, its trade can be considered as more or less balanced, said Yao Jian, citing a commonly accepted standard adopted in the economics field.

The conclusion coincides with another set of data provided by the GAC chief Sheng Guangzu in an exclusive interview with Xinhua on Wednesday.

Sheng said the ratio of China's trade surplus to its total trade volume declined to 2.3 percent in the first quarter this year from more than 10 percent registered between 2006 and 2008.

"When the ratio is below 10 percent, it means the country's foreign trade can be deemed as balanced," said Sheng citing an international standard.

Sheng also said that China never worked towards having a trade surplus and the country was committed to making its foreign trade more balanced.

China's trade surplus would continue to shrink as a result of the country's efforts to restructure and balance its foreign trade, he said, echoing the views of Yao. (PNA/Xinhua) http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=270119

Chinese cities economic power rating 2009.

http://i069.radikal.ru/1004/8d/2de322b98e67.jpg (http://www.radikal.ru)

..

^

Wrong and outdated numbers. Totally crap.

Sinopec to pay $4.65 billion in oil sands deal

(Reuters) - China's state-owned Sinopec plans to buy ConocoPhillips' stake in the huge Syncrude project in Canada's oil sands for $4.65 billion, marking one of the Asian country's largest investments ever in North America.

ConocoPhillips, the U.S.-based oil major, said on Monday it will sell its 9.03 percent interest in the Syncrude Canada Ltd project to China's top refiner in a deal set to close in the third quarter.

The acquisition is not the first investment by a Chinese company in Canada's oil sands but it is the largest.

It underlines a resurgence in interest in the vast but difficult-to-extract energy resource located in the province of Alberta. Investment in the oil sands has jumped since crude prices shot past $80 a barrel with the global economic recovery gaining traction.

The price "is more than the market was expecting -- they were expecting about $4 billion," said Phil Skolnick, an analyst with Genuity Capital Markets. "It just shows that the Chinese are a different kind of buyer."

Indeed, the state companies can take a longer-term view of major investments in sectors such as energy, where they have outbid many domestic players in recently years, having no need to tap public markets for financing.

China has spent billions of dollars acquiring energy and mining assets around the world to help feed its fast-growing economy.

The deal differs from other Chinese oil sands acquisitions, which involved early-stage projects, FirstEnergy Capital Corp analyst Mike Dunn said. Syncrude, the largest project in the oil sands, has operated since 1978, and can now pump out 350,000 barrels a day, roughly 13 percent of Canada's overall oil output.

For ConocoPhillips, the deal is part of a two-year, $10 billion disposition program. When it first said it was putting the stake on the block last October, analysts pegged the value at $3.6 billion to $4 billion.

After Monday's announcement, ConocoPhillips shares climbed 64 cents, or 1 percent, to $55.96 on the New York Stock Exchange.

"This deal goes a long way in helping them reach their $10 billion asset-sale goal. It's probably a bigger chunk than they had anticipated," said Allen Good, analyst with Morningstar.

The oil sands make up the largest crude deposit outside the Middle East, a resource attracting a Who's Who of the global oil industry willing to pay extra in development costs in exchange for a secure supply in a politically stable country.

Sinopec already has an oil sands stake. Last April, it bought an additional 10 percent interest in Total's planned Northern Lights project for an undisclosed sum. Also in 2009, PetroChina acquired a majority stake in leases held by Athabasca Oil Sands Corp for $1.9 billion.

Sinopec's latest deal requires approvals from governments in Canada and China. Canada recently subjected deals involving foreign state-owned enterprises to more regulatory scrutiny, but has not rejected any oil sands transactions.

Analysts said they do not see regulators blocking the deal, especially with Sinopec buying a minority stake in Syncrude.

"We've already seen a number of oil sands transactions that have been applauded by both the Alberta and federal governments, and there's basically a green light given to foreign entities," Skolnick said.

Syncrude's largest owner, Canadian Oil Sands Trust, was seen as a prospective buyer of ConocoPhillips' Syncrude stake. Officials at the trust, which has a 37 percent interest, were not immediately available for comment.

Its trust units jumped 5 percent to C$32.22 on the Toronto Stock Exchange. The value of the deal showed the trust is likely worth more than the market had been affording it, although not the price Sinopec was paying, Skolnick said.

Syncrude's other owners are Imperial Oil Ltd, Suncor Energy Inc, Nexen Inc, Murphy Oil Corp and Nippon Oil Corp unit Mocal Energy.

($1=$1 Canadian)

(Additional reporting by Mike Erman in New York, Anna Driver in Houston, Louise Egan in Ottawa and Pav Jordan in Toronto; editing by Frank McGurty)

http://www.reuters.com/article/idUSTRE63B4BU20100412

^

Wrong and outdated numbers. Totally crap.

Outdated??? 2009???:bash:

As regards Chongqing. GDP 507,6 mlrd yuan - it is just for One-hour economic circle, not for the whole Chongqing!

Outdated??? 2009???:bash:

As regards Chongqing. GDP 507,6 mlrd yuan - it is just for One-hour economic circle, not for the whole Chongqing!
Nice chart, can you give me the source which you got the chart from? :)

Outdated??? 2009???:bash:

^The GDP number for provincial capital cities is meaningless because it more or less contains a portion of GDP within the province but outta the city border. It's called HQ economy that is not created by the provincial capitals. That's why when you combine GDP number of all the cities in a province, it's always higher than the GDP of the province. In other words, provincial capitals are usually very overestimated. For example, Changsha's GDP contains the whole Hunan tobacco group but infact there's no such activities in Changsha itself. Provincial GDP makes more sense but sometimes even provincial GDP has obvious flaws. Take a province in the north. It has lower urban average salary, lower rural average revenue, lower urbanization rate, lower everything, but only higher GDP per capita than a southern province. I don't want to name it. What I want to say is that GDP of provinces or cities is not credible at all. Outdated figures I said is your population numbers.

NOT TO MENTION THE BETTER METHOD IS POSSIBLY PPS.

Amazing work, Yurist, but a little meaningless since the yuan is artificially undervaluated.

Even so you can see that several Chinese cities have a nominal GDP larger than some middle sized countries. The GDP of Shanghai larger than Nigeria. Beijing > Pakistan, Philippines or Egypt. Guangzhou > Peru. Shenzhen, Suzhou and Tianjin each have a GDP larger than Vietnam. Etc.

Chinese cities economic power rating 2009.

..........

This is a good table. Did you make it by yourself?

There are a lot of cities with 3-8 millions population that I never heard it before. There are still many room for another big cities.

Actually I don't know the image of how big GDP number in real life, but the GDP growth is amazing, each of them more than 11% each year.

GDP growth rate of some cities in Q1

City realgrowth nominalgrowth

Beijing 16.9% 24.1%
Chongqing 19.3% 64.6%:rock::eek::nocrook:
Tianjin 18.1% 30%
Chengdu 18.3% 21.6%
Ningpo 18.8% 26.4%
Xiamen 19.5% 20.1%

^^ What do you mean with nominal/real there?

Well, real GDP growth actually measures the growth of the economy in terms of the actual value of goods produced (as in Purchasing Power Parity). Therefore, one haircut session in Beijing is recorded as similar in "real" value to one haircut session in Chongqing despite the price differences.

Meanwhile, nominal GDP growth measures the monetary value of the economy. This means that if one haircut session in Beijing costs RMB100 and one haircut session in Chongqing costs RMB50, then Beijing added RMB100 to the gross value of its economy while Chongqing only added RMB50.

^^ Then the Chongqing figure posted by tiger makes nosense unless they suffer skyrocketing inflation there, right?

^^ Then the Chongqing figure posted by tiger makes nosense unless they suffer skyrocketing inflation there, right?

You forgot upward revision after economic census. As I said before, the adjusted quarterly GDP number for 2009 after economic census has not released yet. That's the main reason why we see that high nominal growth this year for CQ, meanwhile rapid growth is another big contributor.

The IMF has released new GDP forecasts.

China nominal GDP in billions of USD.
2009: 4.908
2010: 5.364
2011: 5.987
2012: 6.698
2013: 7.504
2014: 8.414
2015: 9.436

PPP
2009: 8.765
2010: 9.711
2011: 10.828
2012: 12.101
2013: 13.521
2014: 15.106
2015: 16.854

USA GDP
2009: 14.256
2010: 14.799
2011: 15.397
2012: 16.048
2013: 16.761
2014: 17.490
2015: 18.249

http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weorept.aspx?pr.x=52&pr.y=8&sy=2008&ey=2015&scsm=1&ssd=1&sort=country&ds=.&br=1&c=924%2C111&s=NGDPD%2CPPPGDP&grp=0&a=

Notice that these forecasts exclude both CPI and currency fluctuations, therefore these figures are undoubtly very conservative. Past reports missed the actual trend by far either. For example, just a couple of years ago the IMF forecasted that China's GDP would be just around 3.5 trillion dollars today.

Unless China suffers a huge crisis or some kind of unexpected stagnation, its nominal GDP should reach 20 trillion dollars within 2020 quite easily even if the Yuan appreciates just around 2% a year.

Besides, these forecasts ignore other aspects too, such as coming GDP revisions. You know China's services sector is dramatically undercounted. Morgan Stanley estimates that China's actual nominal GDP was around 30% larger than official in 2008. See the link below.
http://www.businessspectator.com.au/bs.nsf/Article/China-GDP-economy-emerging-markets-pd20100215-2P8WC?OpenDocument&src=mp

China is working hard to improve the quality of its macroeconomic statistics, large revisions are very likely in a short-mid term. In 2003 they revised the GDP more than 16% upwards.

Seems quite feasible that China will become the world's largest economy in nominal terms around 2018-2020, and even earlier in case the Yuan revaluates sharply matching its natural value.

Forbes releases its Global 2000 list, a ranking of the top 2000 public (listed) companies. Again, Mainland China registers a huge leap, jumping from 91 to 113 companies.

http://www.forbes.com/2010/04/20/global-2000-dropoffs-merger-business-global-2000-10-drop-offs.html

^The effect of the revaluation of Yuan might also be a set back to China's economy, don't you think? Nobody knows exactly the size of China's economy... even China's provincial officials like to blow up the numbers to show that they are successful economically!?

^^ Not necessarily. A higher yuan will make raw goods cheaper for China, cooling inflation pressure and overheating in general.

China revaluated the yuan a lot in 2007 and that year it registered a record growth. Then 2008-2009 proved that exports aren't that important, the wieght of both exports and trade surplus as a percentage of GDP collapsed, but the GDP growth itself didn't suffer much because of this.

On the other hand China needs cheaper raw materials in order to make goods more accessible to its rural population, boosting a consumption oriented economy. A tiny trade surplus, even a minor deficit, is worth the trouble. Hey, it's almost gone now and even so the GDP is registering double digit growth. In a mid term, as China starts mass production of high ended goods a high valued Yuan wont make a big trouble anymore to run large trade surplus. See Germany.

I'm checking the Forbes Global 2000 (http://www.forbes.com/2010/04/20/global-2000-dropoffs-merger-business-global-2000-10-drop-offs.html) list. The shift is impressive, China Mainland had 19 companies in this ranking back in 2005, jumped to 28 in 2006, 42 in 2007, 70 in 2008, 91 in 2009 and 113 in 2010. It's 155 if you include HK. Only Japan and USA have more than 120 companies. Banks have climbed the most, as expected.

It is especially stunning after noticing that Chinese stocks have kept stable since Summer 2009 while most global indices have skyrocketed over the last 6 months, and this has obviously slowed the performing of the Chinese companies in the ranking (many of which have scored lower than last year despite of the many newcomers). There're many large IPOs ahead for this year, most noticeably the Agricultural Bank of China around June this year, expected to become the world's largest IPO ever. We'll see in 2011.

Stunning interactive map showing China's largest investment operations abroad in the last 5 years.
http://www.forbes.com/2010/04/20/oil-energy-minerals-business-global-2000-10-china-investment-tracker.html

Full list
http://www.forbes.com/2010/04/20/china-overseas-investment-heritage-energy-minerals-metals-us-global-2000-10-australia.html?partner=contextstory

^^Thanks for sharing. It would be better if they didn't add those construction contracts.

I'm checking the Forbes Global 2000 (http://www.forbes.com/2010/04/20/global-2000-dropoffs-merger-business-global-2000-10-drop-offs.html) list. The shift is impressive, China Mainland had 19 companies in this ranking back in 2005, jumped to 28 in 2006, 42 in 2007, 70 in 2008, 91 in 2009 and 113 in 2010. It's 155 if you include HK. Only Japan and USA have more than 120 companies. Banks have climbed the most, as expected.

It is especially stunning after noticing that Chinese stocks have kept stable since Summer 2009 while most global indices have skyrocketed over the last 6 months, and this has obviously slowed the performing of the Chinese companies in the ranking (many of which have scored lower than last year despite of the many newcomers). There're many large IPOs ahead for this year, most noticeably the Agricultural Bank of China around June this year, expected to become the world's largest IPO ever. We'll see in 2011.
China is actually under reporting their GDP, like someone said above, their service sector is under reported.

IN US, the health care and insurance GDP are very huge, but china very under reported in these fields.

China is actually under reporting their GDP, like someone said above, their service sector is under reported.

Actually I a bit confuse too.

We heard people say China GDP is undervalue. But at the same time we also heard China GDP actually is not as high as what they report, because the local government increase the number so they will look good by central government.

Some also said the number is right because it's in the middle between undervalued by service sector and overvalued by the local government.

China is actually under reporting their GDP, like someone said above, their service sector is under reported.

I also agree China is under reporting their GDP because they don't want to show a image of China over heating.

Actually I a bit confuse too.

We heard people say China GDP is undervalue. But at the same time we also heard China GDP actually is not as high as what they report, because the local government increase the number so they will look good by central government.

Some also said the number is right because it's in the middle between undervalued by service sector and overvalued by the local government.

Statistic or data aren't always 100% accurate

Leonid Rudenko-Destination

Nice music xD

@tiger, any estimation about the national GD revision? Around 20% upwards?

@tiger, any estimation about the national GD revision? Around 20% upwards?

Most expect 35 trillion yuan.

is IMF data and prediction too conservative or China is having a field day full of errors as usual? So if the GDP numbers is revised, then the GDP hit the 5t mark? Can someone clarify?

^^ If you check old IMF reports you'll find that they always miss the actual evolution of the Chinese GDP by far as it always grows far faster than they expect. Look at this:
http://i245.photobucket.com/albums/gg64/z0rgggg/others2/others3/Chinanomnalgdpforecasts.jpg

If they start revaluating the Yuan, the gap will become even wider. Notice that the GDP for 2008 was almost one trillion larger than they forecasted just 1 year earlier partialy thanks to the revaluation. Plus they forecast 6 years now instead of 2, lol. I set in grey the year prior to each forecast/latest non forecasted data, sorry for the mistake in the April 2008 line.

Latest GDP (PPP) forecasts. China to catch up within 2016.
http://i245.photobucket.com/albums/gg64/z0rgggg/others2/others3/PPP.jpg

Latest GDP (PPP) forecasts. China to catch up within 2016.
http://i245.photobucket.com/albums/gg64/z0rgggg/others2/others3/PPP.jpg

zorg this figure looks dubious coz in 2009 the chinese gdp ppp was 7.9 trlllion usd and definitely not close to 10 trillion usd shown in the figure

zorg this figure looks dubious coz in 2009 the chinese gdp ppp was 7.9 trlllion usd and definitely not close to 10 trillion usd shown in the figure

you mean it was 7.9 tri in 2008.

Anyway notice how they have kept downgrading Chinese GDP in PPP year after year, stagnating it around 8-10 trillion since 2005 or so. I know they revised it downwards a few years ago, but even so they keep revisining it in every report, so does the CIA Factbook, etc. As a result, GDP in PPP doesn't even double the nominal figure anymore.

Commerce minister cautious on export recovery
GUANGZHOU - Chinese Commerce Minister Chen Deming Friday said he remained cautious about growth of exports this year as recovery in demand for China-made goods in the United States and Europe was still very slow.

Chen made the remarks in an exclusive interview with Xinhua in a tour to the 107th China Import and Export Fair, or Canton Fair, in Guangzhou, capital of southern Guangdong province.

China's exports were on track for recovery, but it was hard for the growth to reach pre-financial crisis levels this year due to uncertainties on the global market, Chen said.

"This fair is better than the spring and autumn sessions last year. A majority of exporters reported growth in orders from overseas customers," he said.

Chen, however, warned against blind optimism about trade recovery.

The growth in orders came mainly after overseas customers sought to replenish their stocks amid worries that trade protectionism would hurt global trade in the second half of this year, he said.

The number of total overseas customers had grown this year, but those from the US and Europe were fewer, Chen said.

The recovery in demand in major markets like the US and Europe remained very slow, a sign that global demand had not recovered to pre-crisis levels, Chen said.

"Chinese exports are expected to achieve better results than last year, but the growth pace won't be very fast," he said.

Chen added that Chinese exporters were urged to speed the transformation of the growth pattern and adjust products structure for more healthy growth.

China's exports rose 28.7 percent year-on-year in the first quarter of 2010 after declining 16 percent last year amid the global economic downturn, according to the General Administration of Customs.

The People's Bank of China, the central bank, said in a report on its website Friday that an increase in orders would push up export growth to more than 20 percent in the second quarter.

The report said China still faced deteriorating trade conditions with rising trade protectionism and the unstable global economic recovery.http://www.chinadaily.com.cn/china/2010-04/24/content_9769578.htm

Anyway notice how they have kept downgrading Chinese GDP in PPP year after year, stagnating it around 8-10 trillion since 2005 or so. I know they revised it downwards a few years ago, but even so they keep revisining it in every report, so does the CIA Factbook, etc. As a result, GDP in PPP doesn't even double the nominal figure anymore.

infact it was almost 6 trillion usd before 2005 somehow over the last 5 years they kept reducing the ppp value so that chinese gdp including ppp never reaches any high figure that might project its true economic might . Just frustrating !! .

Whatever. The nominal GDP is catching up in less than 10 years, much earlier in case the yuan appreciates more than 3% a year on the average.

Whatever. The nominal GDP is catching up in less than 10 years, much earlier in case the yuan appreciates more than 3% a year on the average.
Don't forget, they still have like 2 trillion in foreign reserves.

Chinese entrepreneurs think longer term on investing overseas
BEIJING, April 27 (PNA/Xinhua) -- Chinese investors are unlikely to spend large amounts overseas in the short term despite improved global investment environment.

The conclusion has been reached by China Council for the Promotion of International Trade (CCPIT) in a report that was scheduled to be published Tuesday, said "China Daily".

The newspaper cited the CCPIT report by saying that 26 percent of corporate interviewees had plans to invest overseas in the next 12 months, while 30 percent said they had no plans to do so.

Their outlook was more bullish in the medium term, with 61 percent of companies saying that they would increase their overseas investment over the next two to five years.

However, the investment volume is unlikely to be large, with 33 percent predicting they will inject funds of less than 1 million U.S. dollars in the medium-term, and 36 percent planning to invest between 1 million U.S. dollars and 5 million U.S. dollars.

Despite the global economic tsunami, China's outbound direct investment in non-financial sectors surged 6.5 percent from a year earlier to 43.3 billion U.S. dollars in 2009. (PNA/Xinhua) http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=272119

The biggest failure of the economic management is the incapability of not foreseeing the huge price increases in ore and other metals that China would drive up by increased demand. Tens of billions of dollars are now being drained from the system and eating up large portions of the economic growth, exports have to increase greatly just to stay even with these extreme price increases from imports. China should have done more to increase the global supply of iron ore and not be taken for a ride.

The biggest failure of the economic management is the incapability of not foreseeing the huge price increases in ore and other metals that China would drive up by increased demand. Tens of billions of dollars are now being drained from the system and eating up large portions of the economic growth, exports have to increase greatly just to stay even with these extreme price increases from imports. China should have done more to increase the global supply of iron ore and not be taken for a ride.

A price increase for "one" commodity will not cause any concern for an inflation rise in China. China does not need it. They have their own market for it plus they can get cheaper natural resources from other developing countries like Indonesia, India and developed countries such as Australia and Russia. The demand is still high though but it will never affect the inflation at all.

Chinese entrepreneurs think longer term on investing overseas
http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=272119

Let's have a hint. AFRICA. This continent is the new "resource capital of the world" and everyone is digging for one.

A price increase for "one" commodity will not cause any concern for an inflation rise in China. China does not need it. They have their own market for it plus they can get cheaper natural resources from other developing countries like Indonesia, India and developed countries such as Australia and Russia. The demand is still high though but it will never affect the inflation at all.

It certainly drains the Chinese economy. China imports iron ore for around 90 billion USD now with the price double of what it was last year. That's 40 billion USD in extra cash given to Australia and Brazil for their ore. The terms of trade is rapidly deteriorating and is eating up the economic growth. China needs to be more proactive to prevent bottlenecks in global supply of certain commodities that causes huge extra expenses for the Chinese economy.

The only solution is innovation. Either replace iron ore by another much more abundant natural resource or exploit iron ore on other planets like Mars. To be allied with Japan, EU and South Korea to put bigger pressure on iron ore producers will only take effect in a short term but that's what Chinese government needs to do right now.

CHINA TO IMPROVE SOCIAL SERVICES FOR MIGRANT RURAL WORKERS
BEIJING, April 29 (NNN-Xinhua) -- China's human resource official said Wednesday the country will step up efforts to improve social services for migrant rural workers in a report on protecting migrant rural workers' interests.

In a report to the Standing Committee of the National People' s Congress, Yang Zhiming, vice minister of the Ministry of Human Resources and Social Security, said relevant efforts will be listed in the next five-year plan,

Yang said the ministry would increase the coverage of labor contract for migrant rural workers, improve their working conditions and realize the portability of old-age insurance for them.

Yang said in the report that currently, many migrant rural workers still face difficulty in getting payment in time, signing labor contracts with their employers, and suffer from poor working conditions.

The report also noted progress in protecting the rights and interests of migrant rural workers, such as more legal assistance to migrant rural workers.

According to the National Bureau of Statistics, the number of farmers who worked away from their farmland for over six months reached 229.78 million in the year 2009. http://www.namnewsnetwork.org/v2/read.php?id=118564

CHINA MUST MAINTAIN LEVEL PLAYING FIELD IN IPR: US
WASHINGTON, May 1 (NNN-PTI) -- Expressing concerns on China's "indigenous innovation" policy, the US has said this may disadvantage its Intellectual Property Rights holders and added that Beijing must maintain a level playing field in this regard.

"We are seriously concerned about China's implementation of 'indigenous innovation' policies that may unfairly disadvantage US Intellectual Property Rights (IPR) holders," US Trade Representative Ron Kirk said after releasing the annual report on adequacy and effectiveness of US trading partners' protection of IPR on Friday.

The report said the US is deeply troubled by the development of policies that may unfairly disadvantage US rights holders by promoting "indigenous innovation" including, among other things, preferential government procurement and other measures that could severely restrict market access for foreign technology and products.

"Procurement preferences and other measures favouring 'indigenous innovation' could severely restrict market access for American technology and products...http://www.namnewsnetwork.org/v2/read.php?id=118818

The only solution is innovation. Either replace iron ore by another much more abundant natural resource or exploit iron ore on other planets like Mars. To be allied with Japan, EU and South Korea to put bigger pressure on iron ore producers will only take effect in a short term but that's what Chinese government needs to do right now.


Innovation is always have been not the reason for anything. You always have to rely on "Old" Economy to build a "New" Economy. Plus, they need all those resources to maintain their energy-hunger population. Innovation is always key to anything but don't be like Japan. Japan transformed from manufacture industry to innovative industry. It went well in the short term but it choke their economy in the long term. It's probably accidental. However, China need to worry of industry transformation. It's always the source of economic downfall / turmoil or positive economic turnaround.

CHINA MUST MAINTAIN LEVEL PLAYING FIELD IN IPR: US
http://www.namnewsnetwork.org/v2/read.php?id=118818

BS! China should create an IPR that protects the interest of the consumers, not the interest of the corporations. An IPR that promotes open source development and innovation, not an unnatural monopoly that hinders real progress.

BS! China should create an IPR that protects the interest of the consumers, not the interest of the corporations. An IPR that promotes open source development and innovation, not an unnatural monopoly that hinders real progress.

Of course, the US did the same in the 19th century with British innovation or German, and the US ignored Brits and Germans crying foul. Patents and IPR is something that is only important when it suits one's interests. Same with "free trade". When the British found it hard to compete against Japanese manufacturing in the 1920s, they used protectionism, just like the US did in the 1980s against Japanese. The talk of "importance of patent protection and IPR and free trade" is nothing but empty rhetoric used to promote one's interests.

Innovation is always have been not the reason for anything. You always have to rely on "Old" Economy to build a "New" Economy. Plus, they need all those resources to maintain their energy-hunger population.

True

Innovation is always key to anything but don't be like Japan. Japan transformed from manufacture industry to innovative industry. It went well in the short term but it choke their economy in the long term. It's probably accidental. However, China need to worry of industry transformation. It's always the source of economic downfall / turmoil or positive economic turnaround.

That depends on how you make use of your innovations. America's innovation always translates into new business and better profitability. As for Japan, regarding number of scientific papers, it is good, and patents applications, it's good too, but I don't see how those innovations are improving the profitability of Japanese companies. I think that is the real problem for Japan.

True



That depends on how you make use of your innovations. America's innovation always translates into new business and better profitability. As for Japan, regarding number of scientific papers, it is good, and patents applications, it's good too, but I don't see how those innovations are improving the profitability of Japanese companies. I think that is the real problem for Japan.

The problem with Japan is not due to how they work with their innovation but using the innovation into a strategy. For example, Sony. Sony in the 1980s was one of the most innovative companies in the world on that decade. They made the walkman and CD players that won the hearts and minds of the youths that time. However, they fell on their strategy when the Internet came in. They lost their innovative competitiveness from a this new Internet Industry to some inferior companies like Google, Apple, eBay, Dell, Cisco and HP. That's because of many issues they did not tackle. They could have find a way to put some influence on the MP3 Player market. They could have had an edge with the LapTop / Notebook market. Their cellphones could have been way better even before the merge with Ericcson. They could have done something to gain a share on telecommunications. They could have done some innovation with just their communication equipment.

The problem with Sony is they did not explore the new trends. They have some winners like the PS3s, Blu-Rays and probably the LED-TV market but they still need to dig in the real resources which is the technologies behind those technologies. They did not so right now they are the laughing stuffs of the society. I'm hoping Chinese companies will not follow what Sony did. Sony lost its influence and never gain. I guess influence is the key to everything. Probably?

China's Multinational Future

http://www.cibmagazine.com.cn/W_img/Edit/2010-4/20100405091252486.jpg

The path towards globalization has never seemed easier than in the recent past. It all started 60 years ago when American companies conquered the world with their superior business power. They were followed by the Japanese, who brought consumer electronics, watches and cars to the world consumer. In the 1990s, Korean brands appeared not only in America and Europe, but also in Japan, confirming the globalization of the business market.

Now, in the new century, Chinese companies are on the move. In recent years they have shown that despite their late start, they are catching up at an amazing speed. First, in their home market Chinese companies showed impressive double-digit growth, as the large state-owned enterprises and many private firms established their positions. Their competitive advantage is foremost based on low-cost production through cheap labor. Many of these companies are not yet known to consumers outside China, but from Ming Zeng and Peter Williamson's publication Dragons at Your Door, we know that they also have management skills and technologies that can measure up to their rate of production.

The most recent Fortune 500 list demonstrated that China's enterprises have established themselves. Forty-three Chinese corporations are listed (9%), whereas ten years ago there were only eight. In 2010, more than 20% of the Fortune 500 companies are expected to come from China. But while their fast growth rate and revenue development are impressive, their profits are low and their global brand recognition is poor. Interbrand does not recognize a single Chinese brand in their Top 100 Global Brands list, though Millward Brown identifies five Chinese brands in theirs: China Mobile and four banks: ICBC, CCB, BOC, and CMB.

However, many consumers outside of China are increasingly experiencing products from companies such as Lenovo and Haier. Since their 2005 acquisition of IBM's PC division, Lenovo has used the IBM brand to bring the American company's strong image to Lenovo's products. Haier has been concentrating on their own brand development by focusing on niche products and quality improvements. In 2010 the company is expected to become the largest household appliance manufacturer in the world, with estimated global sales of over USD 20 billion.

While other Chinese appliance brands like Midea and Gree may not be known in industrialized countries, they swamp the markets in the Middle East, Africa, and Latin America. The same target markets have been selected by Chinese television manufacturers like Hisense, Changhong, Konka, Skyworth. Similar situations can be found in the mobile phone arena. Bird, Panda, Amoi and TCL are fighting hard with Nokia and Samsung across these markets and Motorola has already given up the low-end market in Africa and Latin America due to competition from China.

Most of the Chinese durable goods firms started as OEMs (original equipment manufacturers) — production bases for foreign brands — and had in 2008 between 20-30% of their sales abroad. But there is also a group of companies that have decided not to brand their products and simply concentrate on manufacturing for foreign parties. An example would be Galanz, which has more than 60% of the global microwave ovens market but with China the only country it sells to under its own brand.

Thousands of these kinds of companies exist in China across a spectrum of product categories. For example, Foxconn and Quanta, two companies headquartered in Taiwan but which do most of their manufacturing in the Chinese mainland, draw their competitiveness from low-cost production and have no intention to build a brand. They have been successful to the tune of USD 55.4 billion and USD 24.8 billion in revenues respectively as of 2008.

There is another growing group of companies that have decided to use low-cost manufacturing and branding to achieve market success outside of China, often through the acquisition of foreign brands. These days, foreign acquisitions are being announced one right after another. The most well-discussed case was TCL, which acquired television manufacturer Thompson and mobile phone brand Alcatel from France. The company also acquired German brands Schneider and Dual, and bought the iconic US-founded RCA.

TCL chooses to sell its China-produced products under these local brand logos across various regional markets. A similar example is Techtronic Industries (TTI). They specialize in power tools and vacuum cleaners sold under the brand names VAC, Homelite, AEG, Milwaukee, and Ryobi. Efficient production and channel management combined with a brand portfolio make these companies successful.

Similar pragmatism can be seen across many different industries, and the next high-profile deal we see originating in China may be automaker Geely's acquisition of Volvo. The deal has not been finalized yet, but if and when it goes through it would join an impressive list of purchases that illustrate Chinese companies' eagerness to acquire technologies and brands to expand into outside markets.

The most impressive success story regarding Chinese brands is Huawei. In 2009 they sold telecommunication systems in foreign markets against established competitors like Ericsson, Nokia-Siemens, and Alcatel-Lucent. They continue to increase their market share and drive innovation, and now have 17 R&D centers operating around the world in places such as Bangalore, Stockholm, Moscow, Dallas and in Silicon Valley.

Huawei's average annual growth rate has been approximately 40% over the last five years, with the company involved in key technologies such as 3G, IP, IPTV, etc. Hundreds of patents have been made possible through R&D spending that is always in excess of 10% of sales. Huawei has continuously invested in the brand through a clear customer focus and use their logo as a metaphor for the company's open-minded attitude and partnership strategy. In 2008, they reached a brand value of $7 billion according to World Brand Lab.

Are there more to come? In the consumer market, brands like BYD, Wahaha, Li Ning and Youngor are the ones to watch. In the B2B industries, brands like CIMC (containers), ZPMC (port machinery), Sany (heavy construction machinery), Wanxiang (auto components), and COMAC (aircrafts), could be the titans of the years to come. As globalization spreads further into all corners of the world, China's business influence has far to go.

http://www.cibmagazine.com.cn/Features/Corporate_Insight.asp?id=1278&china_s_multinational_future.html

Iraq to sign Maysan oilfield deal with CNOOC, TPAO

BAGHDAD, May 13 (Reuters) - Iraq will sign a final deal with China's CNOOC and state-run Turkish Petroleum Corporation (TPAO) to develop the 2.5-bilion-barrel Maysan oilfield complex on Monday, a senior oil official said.

China's Sinochem is no longer a part of the deal, Abdul-Mahdy al-Ameedi, director of the Oil Ministry's licensing and contracting office, told Reuters on Thursday.

"Sinochem was not interested in the deal," he said.

CNOOC, together with Sinochem, made an unsuccessful bid for the three Maysan fields in Iraq's first auction of oilfield contracts last year. Since then CNOOC had decided to accept the government's proposed remuneration fee of $2.30 for every additional barrel of oil produced.

CNOOC and its new partner TPAO set a plateau target for the oilfields at 450,000 barrels per day (bpd) after six years and agreed on the same remuneration fee of $2.30 a barrel, said Ameedi.

CNOOC will hold an 85 percent stake in the foreign companies' part of the venture, while TPAO will have 15 percent, he added. An Iraqi state oil company will hold a 25 percent stake in the total partnership.

The deal would be the 11th of a series of contracts that Iraq has signed in a bid to boost its output capacity to 12 million barrels per day, rivalling top producer Saudi Arabia, from around 2.5 million bpd now.

The Iraqi government is hoping the deals will generate petrodollars to rebuild its shattered economy after decades of war and sanctions. (Writing by Rania El Gamal; Editing by Michael Christie)

http://cn.reuters.com/article/companyNews/idUKLDE64C0V920100513?symbol=0883.HK

China to collect more earnings from SOEs

Beijing - China is planning to raise the proportion of profits it collects from major State-owned enterprises (SOEs) in a move to balance income distribution, but analysts said the move should be bolder and the collected profits used to improve public well-being.
The Ministry of Finance said on Tuesday that it might raise the ratio of profits of SOEs to be submitted to the State coffers.

According to existing rules, monopoly enterprises under the administration of the central government in sectors like tobacco, oil, petrochemicals, power, telecommunications and coal mining should submit 10 percent of their post-tax profits, while the ratio for those in the iron and steel, transportation, electronics and trade sectors should be 5 percent.

Financial corporations and companies in sectors like railways, transportation, education, culture, science and technology and agriculture are not included in the profit submission framework.

The Ministry of Finance did not reveal by how much the ratio would be raised.

"It should be raised properly, and even if it were raised by 10 percentage points, it doesn't matter too much for those central enterprises, given their high profit level," said Zhang Wenkui, researcher with the State Council's Development Research Center.

Central enterprises have been criticized by the public for having taken advantage of their monopoly or market predominance to make excessive profits. Some of them have further fueled public anger as they bid to purchase land at high prices, which is believed to have pushed up home prices.

The central government collected profits of 14 billion yuan ($2 billion), 44.4 billion yuan and 98.9 billion yuan respectively in 2007, 2008 and last year from SOEs. In 2009 alone, however, the enterprises made profits totaling 965.6 billion yuan.

"Even if all the profits were collected, it is reasonable," said Zhong Jiyin, economist with the Chinese Academy of Social Sciences. The monopoly status of those enterprises has barred entry of private firms and jeopardize the health of the overall economy, he said.

"The collection of their profits should weaken their ability of monopolizing the market," he said.

But the most crucial matter is how to use the collected money, Zhong said.

The money must be used to improve the well being of the public, for example, in subsidizing tax cuts and increasing income of the poor to promote social equality, said Zhong.

http://www.chinadaily.com.cn/china/2010-05/15/content_9852920.htm

http://www.economist.com/images/ecdc_125x34.gif (http://www.economist.com/index.cfm)

They Might Be Giants

May 13th 2010




Emerging-market banks have raced ahead despite the financial crisis as their Western colleagues have languished. Patrick Foulis (interviewed here (http://audiovideo.economist.com/?fr_story=7c085acd0bd7831f642ee311d3d5c1bb9d737abd&rf=bm)) asks how they will use their new-found strength


http://www.economist.com/images/images-magazine/2010/20/sr/201020srd001.jpg


ALONG the breezy three-kilometre stretch of Mumbai’s Marine Drive you pass cricket pitches, destitute people, luxury hotels, plump joggers and advertisements for Indian multinational companies, but almost no bank branches or cash machines. That absence, suggests O.P. Bhatt, chairman of State Bank of India, the country’s biggest lender, gives the visitor a hint of the potential for the banking industry. Marine Drive has been underbanked since it was built in the 1930s. But now there is a palpable sense in India, as in most other emerging economies, that banking is thriving—just as it has fallen into disrepute in many Western countries.

The emerging world has a history of volatility and of bad-debt problems—indeed China is grappling with such a problem at the moment. But developing-country banks now have got things right on a number of fronts. Anti-poverty campaigners can admire their efforts to offer banking services to the illiterate. Technology gurus can see new mobile applications and low-cost IT platforms, and industrialists can count on banks that actually want to lend to their firms. Regulation buffs see an industry that is both armour-plated and wrapped in cotton wool after the crises of the late 1990s and early 2000s. In most emerging economies banks are viewed as engines of development rather than as rent-seeking parasites.

But it is by the hard stuff, money, that banks in the developing world now measure up. Not only are they well capitalised and well funded, they are really big—and are enjoying rapid growth. By profits, Tier-1 capital, dividends and market value they now account for a quarter to half of the global banking industry. China’s lenders head the list of banks by market value, and Brazilian and Russian banks are among the world’s top 25. At current growth rates India’s banks will catch up in a decade. The crisis in Western banking, still reverberating in southern Europe, seems to have accelerated the shift in banking muscle from rich countries to the developing world.

This special report will argue that most of that muscle will be needed at home. To support the fast credit growth their populations and politicians demand, and the bad debts it may cause, emerging-market banks will need more capital than they can generate from retained profits. They are the pre-eminent gatherers of savings in the world, a mirror image of Western banks that became huge borrowers. But they will struggle to use those excess deposits abroad without taking dangerous currency risks, so the job of recycling excess savings abroad will remain with central banks and sovereign-wealth funds. The managers of emerging-market banks have plenty to do as it is. Some of them already run organisations that are far bigger than the biggest Western banks. Most also expect to lose corporate customers to local bond markets and to have to build up their consumer- and investment-banking operations to compensate. Many, too, are finding innovative ways to offer banking services to poor people without losing money.

If the crisis has transformed the status of emerging-market banks, it has also transformed the role of the state in banking. In China, which had been relaxing its grip on the industry for a decade, the government directed the banks to continue lending during 2008 and 2009—the main reason why the economy continued to grow fast. In Brazil, India and Russia the state banks have seen a sharp improvement in their fortunes, gaining market share at the expense of private banks. Some Western banks operating in developing countries have lived up to their reputation as unreliable partners. That is likely to have long-term consequences. The banking system most emerging economies now want is a mix of entrepreneurial private firms and state banks, with a few well-run foreign ones to keep the locals honest.

That has big implications for the long list of Western firms desperate to gain more exposure to emerging economies. The crisis has underscored the attractions of two business models. The network banks, such as Citigroup or HSBC, have a presence in lots of countries to make life easier for their customers. The “gone native” ones, such as Santander, have big retail operations with large market shares in just a few countries where they act like, and by and large are treated as, local firms. Both these models involve gathering deposits and operating branches on a large scale. The big investment banks are also active in emerging economies but may find the going increasingly tough as local banks get better.

Both those models are almost impossible to replicate now. The network banks are the products of a century of expansion. They are sufficiently entrenched for Citigroup’s near-collapse in New York, for instance, to cause minimal damage to its emerging-market business. The “gone native” banks seized unique opportunities in the 1990s and early 2000s as Latin America sold off banks after bad-debt crises and eastern Europe privatised after communism’s fall. No such sell-off looks remotely likely soon in China, India or Russia. Even the traditional last-resort technique for banks that want to become more international—setting up a few branches overseas and borrowing from headquarters or wholesale markets to fund lending there—has become much harder as regulators are clamping down on it.


The difficulty is mutual

The only consolation for Western firms that cannot get in is that emerging-market banks are facing exactly the same set of problems as they try to expand abroad. For them the crisis came too soon. With another decade under their belt they might have had the size, excess capital and skills to seize the moment and buy big bombed-out banks at the peak of the crisis. As it is, most are having to embrace gradualist strategies. All are building “strings of pearls”—branches in big partner countries to help service customers at home. Some are also offering banking services to diaspora populations in rich countries.

The Western banks have found that establishing a light presence in lots of countries is a great way to lose money. The same is likely to be true for emerging-market banks, so the smarter firms are trying to develop a competitive advantage that they can export. For the Indians that may be low-cost technology; for the Brazilians, investment-banking savvy. Some of the biggest emerging-market banks are experimenting with small acquisitions in their “near abroad”. Going global requires the successful integration of lots of acquisitions, which Western banks have found hard to do.

This special report will show that the globalisation of banking, which has driven the industry for two decades, is in many ways on hold. If emerging economies are much more sceptical about unfettered finance and the role of foreign banks, Western societies are much more hostile to banks in general, let alone those run by foreigners or, worse still, foreign governments. Although emerging-market banks have far healthier business models than Western firms do, many of them will face a difficult trade-off. They will need access to foreign countries in order to build the sort of large-scale operations that make money. To get it, they may have to show that they are at arm’s length, or even entirely detached, from their governments. Yet the crisis has pushed most banks in the developing world the other way.

These banks have been pitched into the big league rather suddenly, helped by the woes of Western banks and the continued strong growth in their own economies. It seems inevitable that Mumbai’s Marine Drive will soon be decked with ATM machines, its joggers will be stabbing mobile-banking screens, the firms on the billboards will be going on buying sprees overseas and even the destitute will have some access to finance. Whether emerging-market banks will soon punch their weight in global banking, let alone dominate it, is another question.

Source (http://www.economist.com/specialreports/displayStory.cfm?story_id=16078490)

Gaeus, please don't post articles that include bullshit like this:

The emerging world has a history of volatility and of bad-debt problems—indeed China is grappling with such a problem at the moment.

Infact the non performing loan ratio of Chinese banks is among the lowest at only 1.58% as for 2009 and further down to 1.48% in the beginning of this year while that ratio of US banks is 5%. The figure for US banks even doesn't contain junk bonds, swaps and off balance sheet activities.

We should make a list of myths every article about the Chinese economy must quote.

1) The bad loan ratio of the Chinese banks is huge, making their future performing very dubious. No matter if the actual ratio is among the lowest in the world.

2) China is an export based economy, and we can randomly claim that 30, 40 or even 50% of the GDP is based on exports. It doesn't matter if the weight of both trade surplus and exports as as share of the GDP is actually low for Asian standards. And for example even countries like Germany have a larger share of both things, we'll never say Germany is an export based economy.

3) China is suffering a monster property bubble, even if it is one of the very few countries where real estate prices have climbed much slower than personal income over the last 10 years.

May somebody add more points?

Yeah sometimes I have problem with those stating too but at least export is important for every major economy and I hope the property price to dive so that I can buy cheap:lol:. So I rarely pointed out their exaggerations, in contrast, the more exaggerated the better. Plus they did say Germany was an export-driven economy, dear;).

Hmm more like "Germany is export oriented and it'll be the Eurozone's saviour" and "China is export oriented and it'll be the most spectacular collapse of the 21st century"

Senior CPC official stresses innovation ability, calls for faster economic growth pattern transformation
GUANGZHOU, May 17 (PNA/Xinhua) -- A senior official of the Communist Party of China (CPC) has called for more efforts in improving the country's innovation capabilities to accelerate the transformation of economic growth pattern.

Li Changchun, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, made the remarks while making an inspection tour to south China's Guangdong Province from Thursday to Sunday.

"Indigenous innovation is the way out for an expedited transformation of the economic growth pattern," said Li, who told the local government officials to persist in the transformation of the economic growth pattern as a key element and strategic step in implementing the scientific outlook on development.

Li called on the local authorities to make great efforts in expanding the culture sector and get inspiration from doing so to keep improving quality and efficiency of economic development, trying hard to find new ways for China's sound and fast development of economy and society in the post-crisis era after the global financial downturn.

Li hoped Guangdong to pay equal emphasis on construction of iconic cultural projects and on building of cultural life at grassroots level. Efforts should be made to explore new ways for advancing administration of public cultural organizations and ways of service, to greatly enrich spiritual life of the broad masses of the people, he said.

Li stressed that it is imperative to improve mechanism of cultural market and establish platforms for evaluation of cultural assets, trading of property rights and venture capital investment in areas where conditions become mature.

"Pricing of cultural products should also be perfected so that more social funds are attracted to the cultural sector," said Li.

During his inspection tour in Guangdong, Li visited places including Guangzhou, the provincial capital, Yangjiang and Shenzhen, and inspected enterprises, units of publicity and culture, as well as construction sites of venues for the 16th Asian Games scheduled for Nov.12-27. http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=276082

We should make a list of myths every article about the Chinese economy must quote.

1) The bad loan ratio of the Chinese banks is huge, making their future performing very dubious. No matter if the actual ratio is among the lowest in the world.

2) China is an export based economy, and we can randomly claim that 30, 40 or even 50% of the GDP is based on exports. It doesn't matter if the weight of both trade surplus and exports as as share of the GDP is actually low for Asian standards. And for example even countries like Germany have a larger share of both things, we'll never say Germany is an export based economy.

3) China is suffering a monster property bubble, even if it is one of the very few countries where real estate prices have climbed much slower than personal income over the last 10 years.

May somebody add more points?


I have little doubt on this Chinese economy. First of all, the domestic market is growing in a faster pace. The export market is still around yet the percentage is still lower than anyone knows. Plus, most of their exports are cheap products that still relied upon by many Developed countries especially United States.

But everyone knows a second recession is coming. The recession we have is a "W" type recession. The second crisis is coming and everyone knows the new culprit will the European Union. United States finally recovered. Now, it's time for Europe to experience the big crash. Yet, I believe this will be short term.

Everyone still doesn't know how Social Capitalism works. China definitely got ways on how to deal with the Global Economic Crisis and I believe they will do it again. They have to keep on doing it and don't do anything aggressive until the last "W" recession is gone. The Obama Administration finally found the key of these Chinese Economy and they have no choice but to join the enemy. However, they have to do something to minimize the big growth just like they did for the past 10 years.

My opinion about China economy bubble prediction, what most of economy experts said about China economy in danger of bubble is TRUE.

But we should take notice, this is called as "bubble prediction", "foreseen of bubble" or "potentially bubble in the near future". We should know that China has some kind of "economy forum" where China invite a lot of economy experts from China and the world to discuss China economy. Everyone here give their opinion, calculating the economy, predicting near future economy including any potentially crash, and create a future plan to sustain growth.

Most of them agree that in the near future China economy "might" get a bubble from real estate. It "might" happen years later even 10 years later. This is normal, just like driving a car, most of the experts agree that we should turn left because if we keep straight, we may fall into a cliff.......10 kilometers in front of us.

Including all the prediction of China economy collapse. It will happen. But the good news is it already been told now and there's a lot of time to prevent it. Of course media didn't tell the whole story, they just want making money by publishing a bombastic news. So all of us think that China economy will collapse soon, instead it just a prediction to prevent any crash. I can said China economy is very controlled, any bubble and crash prediction already been told years before, so China can avoid it.


I read about investment in BRIC countries when the topic of China bubble is still hot. I forget the link, but it said among BRIC countries, in the last 10 years (2000-2010), China is the most unattractive country to invest money including in stock and real estate. Statistic show that in India, Brazil and Russia, the stock and real estate price soared far higher than China in the last 10 years. Even China most attractive stock and real estate, the value rise are still far lower than other BRIC countries main stock and real estate.

Other BRIC countries has bigger change of bubble than China, unlike China, no one told them.


I also read a book "When China rules the world", it said China is a continental country, what happen in Beijing and Shanghai, it will not affecting other places. If Beijing and Shanghai real estate market collapse, whole China is still strongly standing. Although Beijing and Shanghai real estate price rise about 25% a year, but whole country real estate price just rise about less than 1%. All of us deceived by the situation in the east coast, while we forget that the rest of China is far far bigger.

It is good if China develop each province economy separately and independently, not everything focusing in east coast to support the whole country economy. When one place economy is collapse, it will not affecting the others.

Statoil Sells 40% Stake in Brazil Field to Sinochem

By Vibeke Laroi and Meera Bhatia

May 21 (Bloomberg) -- Statoil ASA, Norway’s largest oil and natural gas company, agreed to sell a 40 percent stake in the Brazilian offshore Peregrino field to China’s Sinochem Group for $3.07 billion in cash.

The two companies also agreed to jointly seek more opportunities in Brazil and elsewhere, Statoil Chief Executive Officer Helge Lund said today. “Both companies see many opportunities for value creation through increased recovery and exploration for additional resources in the decades to come.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=azu6pMGbOjO0&pos=3

Chinese commerce minister says too early to exit fiscal stimulus
BRUSSELS, May 22 (PNA/Xinhua) -- It remains too early for China to carry out an exit strategy by phasing out fiscal stimulus, Chinese Minister of Commerce Chen Deming said here on Friday.

"There are still a lot of uncertainties in the world economy. Therefore we believe it is too early for us to talk about an exit strategy from our stimulus package," Chen told reporters after a meeting with European Union (EU) Trade Commissioner Karel De Gucht.

"The Chinese government will continue to implement a proactive fiscal policy and a moderately easy monetary policy," he added.

Chen said the current debt crisis spreading in the euro zone just highlighted how fragile the global economic recovery is and world governments should remain alert to trade protectionism.

"There is still uncertainties and tough way ahead. As the world is going through an economic recovery, countries across the world need to make concerted efforts to stand against protectionism and support liberalization of trade and investment," he said. (PNA/Xinhua)http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=277142

Chinese commerce minister says too early to exit fiscal stimulus
http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=277142


He is totally right with that. With the incoming global economic crisis originated from Euro Area, there is a possibility that another stimulus package maybe in work to fight the incoming turmoil. With European continent as the #1 costumers in the world, there is no other choice but to prepare for the inevitable. I'm hoping this European crisis will be short lived. And I'm hoping United States and Asia will do something to help.

My opinion about China economy bubble prediction, what most of economy experts said about China economy in danger of bubble is TRUE.

But we should take notice, this is called as "bubble prediction", "foreseen of bubble" or "potentially bubble in the near future". We should know that China has some kind of "economy forum" where China invite a lot of economy experts from China and the world to discuss China economy. Everyone here give their opinion, calculating the economy, predicting near future economy including any potentially crash, and create a future plan to sustain growth.

Most of them agree that in the near future China economy "might" get a bubble from real estate. It "might" happen years later even 10 years later. This is normal, just like driving a car, most of the experts agree that we should turn left because if we keep straight, we may fall into a cliff.......10 kilometers in front of us.

Including all the prediction of China economy collapse. It will happen. But the good news is it already been told now and there's a lot of time to prevent it. Of course media didn't tell the whole story, they just want making money by publishing a bombastic news. So all of us think that China economy will collapse soon, instead it just a prediction to prevent any crash. I can said China economy is very controlled, any bubble and crash prediction already been told years before, so China can avoid it.


I read about investment in BRIC countries when the topic of China bubble is still hot. I forget the link, but it said among BRIC countries, in the last 10 years (2000-2010), China is the most unattractive country to invest money including in stock and real estate. Statistic show that in India, Brazil and Russia, the stock and real estate price soared far higher than China in the last 10 years. Even China most attractive stock and real estate, the value rise are still far lower than other BRIC countries main stock and real estate.

Other BRIC countries has bigger change of bubble than China, unlike China, no one told them.


I also read a book "When China rules the world", it said China is a continental country, what happen in Beijing and Shanghai, it will not affecting other places. If Beijing and Shanghai real estate market collapse, whole China is still strongly standing. Although Beijing and Shanghai real estate price rise about 25% a year, but whole country real estate price just rise about less than 1%. All of us deceived by the situation in the east coast, while we forget that the rest of China is far far bigger.

It is good if China develop each province economy separately and independently, not everything focusing in east coast to support the whole country economy. When one place economy is collapse, it will not affecting the others.

You are true with the economic BUBBLE but it never bursts. Actually, the only time when the Chinese economy burst was on its exports market on 2009 and that is due to global economic crisis and yuan revaluation. However, the recovery was amazing that the world now depends on Chinese economy.

You are totally right with the market investment. Their market is still full of aggressive, short-termed investors that is still not good in market strategy and prediction. However, the Chinese economy never depens on the market unlike United States and Europe. The market was actually made for that.

However, you are not quite right with the real estate investment. Probably, you are right now because that particular sector is on its peak. but for the last 10 years, it has been the best investment in this country. However, prediction of a burst is still in doubt. The government is doing its can to prevent it and they will probably win. Thanks to the "CONTROLLED ECONOMY".

So let's see how this Chinese economy face another global crisis coming from Europe. This crisis will be short term though due to the small influence by the countries affected such as Greece and Portugal. As predicted, they always survived and even thrived.

China's May manufacturing expands at slower pace

Chinese manufacturing expanded at a slower pace in May, adding to signs that growth may moderate in the world's third-biggest economy.

The Purchasing Managers' Index fell to 53.9 from 55.7 in April, seasonally adjusted, the Federation of Logistics and Purchasing said in an e-mailed statement today. That was less than the median 54.5 estimate in a Bloomberg News survey of 18 economists. Readings above 50 indicate an expansion.

A government crackdown on property speculation is cooling the economy by damping sales and construction, while Europe's sovereign-debt crisis could exacerbate a slowdown by cutting demand for exports. China's policy makers may delay raising benchmark interest rates or letting the yuan appreciate against the dollar even after the economy grew 11.9 percent in the first quarter.

The "chances of further policy tightening are fading as a result of events in Europe and a still unfolding correction in the property market," Ben Simpfendorfer, a Hong Kong-based economist at Royal Bank of Scotland, said before today's data. He forecasts rates to stay unchanged this year and the yuan's peg to the dollar to remain until at least the end of the third quarter.

Premier Wen Jiabao said yesterday in Tokyo that the world needs to guard against the possibility of a second economic slump. China will continue its proactive fiscal policy to consolidate its recovery, Finance Minister Xie Xuren said May 28.

Global Growth Peaks

Comparable indicators in manufacturing around the world in May are forecast to indicate global output growth has peaked. Australia manufacturing growth slowed in May and economists say reports due today in the US will show manufacturing cooled while activity in Europe was unchanged.

The central bank has kept the key one-year lending rate at 5.31 percent and the deposit rate at 2.25 percent since December 2008 after cuts to counter the financial crisis. The yuan is trading at about 6.83 per dollar.

The Shanghai Composite Index fell 9.7 percent in May, the biggest monthly decline since August, on concern the European debt crisis is worsening and the government will step up property measures. The benchmark has declined more than 20 percent this year. In contrast with investors' pessimism, Capital Economics Ltd said this week that the Chinese economy is "gliding to a soft landing."

Slow Growth

"The economy may continue to maintain relatively fast growth, but the growth rate may slow," Zhang Liqun, a researcher at the State Council's Development and Research Center, said in the statement from the logistics federation. "The May PMI may be an indication that the economic rebound is stabilizing."

An output index fell to 58.2 from 59.1 in April, today's report showed. The new-order index slid to 54.8 from 59.3 and an export-order index dropped to 53.8 from 54.5. The input-price index decreased to 58.9 from 72.6.

While year-on-year economic indicators for May are likely to show slower growth, "all this is telling us is that it is now a year since China's stimulus started to be felt," said Mark Williams, a London-based economist for the firm. Economic momentum "remains strong."

Williams also said that the official PMI normally falls in May, "a sign that the seasonal adjustment applied is not particularly effective." Nomura Holdings Inc and Bank of America-Merrill Lynch expressed similar views ahead of today's data.

Manufacturing Index

The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, covers more than 730 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics.

Chinese policy makers are trimming stimulus this year after the $1.4 trillion lending binge that revived growth in 2009. Officials are targeting a 22 percent reduction in new loans and have sold bills and raised banks' reserve requirements to suck money out of the financial system.

Restraining inflation expectations and keeping housing affordable are two of the government's key goals after urban property prices jumped a record 12.8 percent in April from a year earlier. Wuhan Iron & Steel Group, the nation's third-biggest steelmaker, said May 26 that demand for steel is declining, partly because of curbs on property loans.

http://www.chinadaily.com.cn/bizchina/2010-06/01/content_9917150.htm

http://www.newsweek.com/etc/designs/newsweek/img/logo/print-logo.png (http://www.newsweek.com)

The New State Capitalists


What they learn from China is that you can force the markets to serve the state.

by Ian Bremmer (http://www.newsweek.com/authors/ian-bremmer.html)
May 28, 2010

In May 2009, as the worst of the global financial crisis appeared to be passing, I joined a small group of economists and scholars to discuss the fallout with China’s Vice Foreign Minister He Yafei at the Chinese Consulate in Manhattan. He began the meeting with a blunt question: “Now that the free market has failed,” he asked, “what do you think is the proper role for the state in the economy?”

His mischievously matter-of-fact tone almost drew a laugh, but the question was a serious one—and a glance at the headlines offered him plenty of corroborating evidence. The bankruptcy of Lehman Brothers and other Wall Street giants had underlined the historic scale of the financial crisis. Political officials in Washington had assumed responsibility for decisions normally made by markets in New York, a momentous shift in economic and financial power from America’s capital of finance to its capital of politics. President Bush had created the $700 billion Troubled Asset Relief Program, only to see the recession gain speed. His successor, Barack Obama, warned that if Washington didn’t move quickly, America faced a catastrophe. Lawmakers responded with a $787 billion rescue plan.

He Yafei waited patiently for an answer. Over the next 90 minutes, my colleagues and I made our case for free-market capitalism, and Mr. He made his for a capitalism driven by the state. We found some limited common ground, but as the meeting ended, it was clear we had argued the respective merits of two fundamentally incompatible sets of political and economic principles.

In meetings of much greater consequence now taking place around the world, this inability to agree on the proper role for the state will change the way we live. It’s now a G20 world, in which China, Russia, Saudi Arabia, and other state-centric players wield growing influence. When leaders of free-market democracies diagnose the global meltdown, they now face the skeptical smiles of those who believe that the free market has failed and that the state should play the leading role in guiding national economies.

How did we get here?

The collapse of communism did not mark the final triumph of free-market capitalism because it did not put an end to authoritarian government. Chinese state officials watched Russia’s post-Soviet upheaval and learned some important lessons. They accepted that if they failed to generate prosperity, their days were numbered, but that the state can’t simply order up economic growth. Only by releasing the entrepreneurial energies of its vast population could China thrive and the party survive. The Communist Party needed to embrace market capitalism while protecting its monopoly on power by ensuring that the state controlled the lion’s share of the wealth that markets generate.

Authoritarian governments everywhere have learned to compete by embracing capitalism. But they know that if they leave it entirely to market forces to decide winners and losers from economic growth, they risk enabling those who might use the new wealth to challenge their political power. State capitalism allows governments to use various kinds of state-owned companies to manage the exploitation of resources like oil and natural gas to create and maintain large numbers of jobs. National oil companies now own more than three quarters of the world’s crude oil reserves. Governments also use both state-owned and politically loyal private companies to dominate strategic sectors like aviation, power generation, arms production, and telecommunications. To finance these companies, governments often use sovereign wealth funds, state-managed pools of foreign cash that allow them to protect their currencies, control price inflation, spread their economic risks, and project political power. Sovereign wealth funds draw capital from various sources. For Russia, the Persian Gulf Arab states, and several North African countries, there is the revenue earned from oil and gas exports. For China, there is the cash earned from the export of manufactured goods to the United States, Europe, and Japan. What makes the funds different—and poses challenges for free markets—is that their managers answer to political officials, not shareholders.

Through the use of state-owned companies, privately owned national champions, and sovereign wealth funds, the state uses markets to create wealth that can be directed as political officials see fit. In all three cases, the ultimate motive is not maximizing growth but maximizing state power and the leadership’s chances of survival. The state doesn’t always exert day-to-day control over these institutions, but it has considerable direct influence. The main characters in this story are the men who rule China, Russia, and the Arab monarchies of the Persian Gulf. But the apparent success of this new model has attracted imitators throughout much of the developing world.

There is nothing new about state-owned companies and investment funds. China has had state-owned companies for decades. OPEC was generating international headlines in the early 1970s. Sovereign wealth funds began appearing in the 1950s. The difference is not in the institutions themselves but in their importance for international politics and the global economy. Until the end of the Cold War, the communist world’s isolation imposed sharp limits on the global economy’s production capacity, but economic trends within it had little negative impact west of the Iron Curtain. Today, we’re wired together as never before.

The financial crisis and market meltdowns in America and Europe have given state capitalism a big boost. In part, that’s because Western economies are still struggling to their feet while China is again off to the races. It’s now much harder for Westerners to champion a free-market system and easier for China and Russia to argue that only governments can save economies on the brink. After all, government spending has been essential for recovery in both America and China. In China, that spending has reinforced state capitalism, because most of the money went to state firms. In all of its dimensions, including construction of roads, bridges, and power grids, the reconstruction of earthquake-ravaged Sichuan province, and the purchase of shares in troubled banks, Beijing’s recovery effort favored state over private firms. Now, many state-owned enterprises with newly strengthened balance sheets are buying private-sector rivals. Beijing is using its financial muscle to build state-owned oil and gas companies into global players, by allowing them to borrow directly from the state’s massive foreign-exchange reserves, at a moment when cash-strapped multinationals can least afford to compete.

For now, the financial crisis has provided Beijing with new evidence that enlightened state management will protect them from the natural excesses of free markets. This experiment will likely expand, and continue to exert a growing influence on the shape of the global economy, until it generates a new crisis of its own.



Excerpted from The End of the Free Market: Who Wins The War Between States And Corporations? By Ian Bremmer by arrangement with Portfolio, a member of Penguin Group (USA), Inc. Copyright © Ian Bremmer, 2010.



Source (http://www.newsweek.com/2010/05/28/the-new-state-capitalists.html)

^^

I like that topic. It really focus on how state capitalism defeated free capitalism. It seems SOEs is the new trend for countries today. Not only China is doing it, even Russia, Brazil and Saudi Arabia is doing it as well. It is working on them so well due to the state sponsorship.

^^I think they already recognised that too much control by the state is not good, contrary to what Newsweek perceived that the state is enhancing its role.

China unveils private investment support plan

China's government has opened a new range of government-run industries to the private sector, either through investment in existing companies or establishment of new firms.

The government also announced Thursday that it would improve financing services and simplify administrative procedures for private sector involvement in those industries.

Water projects, power generation, mining, and logistics -- currently mainly state controlled -- would be opened to the private sector, said a statement on the central government website, www.gov.cn.

The statement also reiterated the opening of sectors announced at a State Council executive meeting in March, including education, welfare, transport infrastructure, telecommunications and energy, public utilities, scientific and technological programs for national defense, affordable housing construction and cultural industries.

Private investors could also participate in the establishment of financial institutions by investing in commercial financial institutions and establishing rural banks, credit companies, credit guarantee companies, and rural fund cooperatives.

Private companies were welcomed to participate in the reform of state firms through assets acquisitions or increasing their holdings in them, the statement said.

The government also restated its support for independent innovation in the private sector, encouraging the development of new products and investment in emerging industries, such as bio-medicine, new energy, environment protection and recycling.

Private companies were encouraged to increase overseas investment by conducting international operations outside China, establishing multinational corporations and developing leading brands.

The government would improve financing services for private companies by strengthening the venture capital investment system, and helping with the financing of private firms through equities and bonds.

The government would simplify administrative procedures by making them more efficient and cutting fees.

It promised to step up efforts to create a good environment for private investment by setting up a sound administrative service system and amending unfavorable laws and regulations in its March statement.

The government would also provide guidance for private investors by reporting industrial trends and latest policies. It also instructed industry associations and chambers of commerce to help with finance, technologies, management, and legal affairs.

Private investment played an important role in creating jobs, boosting domestic consumption and providing impetus for economic development, which would help the country maintain sustainable economic growth, it said.

"State capital should focus on 'key industries' that are crucial to the development of national economy, and government investment focus on sectors important to the national security......while the other sectors should be wide open to private investment," said the statement.

http://www.china.org.cn/business/2010-05/14/content_20039644.htm

-edit-

^^I think they already recognised that too much control by the state is not good, contrary to what Newsweek perceived that the state is enhancing its role.

Too much is not good...none, or worse, when the economic power dictates the agenda and "buy" the political (as in USA or other places), is as much dangerous, if not worse.
The answer, as always, is in the middle..let free energies and initiative, but keep the control in the end, so that the economy and its growth will serve the community and the society, not only single companies and their officials. The autoregolating market is a false and dangerous tale...

http://www.newsweek.com/etc/designs/newsweek/img/logo/print-logo.png (http://www.newsweek.com)

The New State Capitalists


What they learn from China is that you can force the markets to serve the state.

by Ian Bremmer (http://www.newsweek.com/authors/ian-bremmer.html)
May 28, 2010

In May 2009, as the worst of the global financial crisis appeared to be passing, I joined a small group of economists and scholars to discuss the fallout with China’s Vice Foreign Minister He Yafei at the Chinese Consulate in Manhattan. He began the meeting with a blunt question: “Now that the free market has failed,” he asked, “what do you think is the proper role for the state in the economy?”

His mischievously matter-of-fact tone almost drew a laugh, but the question was a serious one—and a glance at the headlines offered him plenty of corroborating evidence. The bankruptcy of Lehman Brothers and other Wall Street giants had underlined the historic scale of the financial crisis. Political officials in Washington had assumed responsibility for decisions normally made by markets in New York, a momentous shift in economic and financial power from America’s capital of finance to its capital of politics. President Bush had created the $700 billion Troubled Asset Relief Program, only to see the recession gain speed. His successor, Barack Obama, warned that if Washington didn’t move quickly, America faced a catastrophe. Lawmakers responded with a $787 billion rescue plan.

He Yafei waited patiently for an answer. Over the next 90 minutes, my colleagues and I made our case for free-market capitalism, and Mr. He made his for a capitalism driven by the state. We found some limited common ground, but as the meeting ended, it was clear we had argued the respective merits of two fundamentally incompatible sets of political and economic principles.

In meetings of much greater consequence now taking place around the world, this inability to agree on the proper role for the state will change the way we live. It’s now a G20 world, in which China, Russia, Saudi Arabia, and other state-centric players wield growing influence. When leaders of free-market democracies diagnose the global meltdown, they now face the skeptical smiles of those who believe that the free market has failed and that the state should play the leading role in guiding national economies.

How did we get here?

The collapse of communism did not mark the final triumph of free-market capitalism because it did not put an end to authoritarian government. Chinese state officials watched Russia’s post-Soviet upheaval and learned some important lessons. They accepted that if they failed to generate prosperity, their days were numbered, but that the state can’t simply order up economic growth. Only by releasing the entrepreneurial energies of its vast population could China thrive and the party survive. The Communist Party needed to embrace market capitalism while protecting its monopoly on power by ensuring that the state controlled the lion’s share of the wealth that markets generate.

Authoritarian governments everywhere have learned to compete by embracing capitalism. But they know that if they leave it entirely to market forces to decide winners and losers from economic growth, they risk enabling those who might use the new wealth to challenge their political power. State capitalism allows governments to use various kinds of state-owned companies to manage the exploitation of resources like oil and natural gas to create and maintain large numbers of jobs. National oil companies now own more than three quarters of the world’s crude oil reserves. Governments also use both state-owned and politically loyal private companies to dominate strategic sectors like aviation, power generation, arms production, and telecommunications. To finance these companies, governments often use sovereign wealth funds, state-managed pools of foreign cash that allow them to protect their currencies, control price inflation, spread their economic risks, and project political power. Sovereign wealth funds draw capital from various sources. For Russia, the Persian Gulf Arab states, and several North African countries, there is the revenue earned from oil and gas exports. For China, there is the cash earned from the export of manufactured goods to the United States, Europe, and Japan. What makes the funds different—and poses challenges for free markets—is that their managers answer to political officials, not shareholders.

Through the use of state-owned companies, privately owned national champions, and sovereign wealth funds, the state uses markets to create wealth that can be directed as political officials see fit. In all three cases, the ultimate motive is not maximizing growth but maximizing state power and the leadership’s chances of survival. The state doesn’t always exert day-to-day control over these institutions, but it has considerable direct influence. The main characters in this story are the men who rule China, Russia, and the Arab monarchies of the Persian Gulf. But the apparent success of this new model has attracted imitators throughout much of the developing world.

There is nothing new about state-owned companies and investment funds. China has had state-owned companies for decades. OPEC was generating international headlines in the early 1970s. Sovereign wealth funds began appearing in the 1950s. The difference is not in the institutions themselves but in their importance for international politics and the global economy. Until the end of the Cold War, the communist world’s isolation imposed sharp limits on the global economy’s production capacity, but economic trends within it had little negative impact west of the Iron Curtain. Today, we’re wired together as never before.

The financial crisis and market meltdowns in America and Europe have given state capitalism a big boost. In part, that’s because Western economies are still struggling to their feet while China is again off to the races. It’s now much harder for Westerners to champion a free-market system and easier for China and Russia to argue that only governments can save economies on the brink. After all, government spending has been essential for recovery in both America and China. In China, that spending has reinforced state capitalism, because most of the money went to state firms. In all of its dimensions, including construction of roads, bridges, and power grids, the reconstruction of earthquake-ravaged Sichuan province, and the purchase of shares in troubled banks, Beijing’s recovery effort favored state over private firms. Now, many state-owned enterprises with newly strengthened balance sheets are buying private-sector rivals. Beijing is using its financial muscle to build state-owned oil and gas companies into global players, by allowing them to borrow directly from the state’s massive foreign-exchange reserves, at a moment when cash-strapped multinationals can least afford to compete.

For now, the financial crisis has provided Beijing with new evidence that enlightened state management will protect them from the natural excesses of free markets. This experiment will likely expand, and continue to exert a growing influence on the shape of the global economy, until it generates a new crisis of its own.



Excerpted from The End of the Free Market: Who Wins The War Between States And Corporations? By Ian Bremmer by arrangement with Portfolio, a member of Penguin Group (USA), Inc. Copyright © Ian Bremmer, 2010.



Source (http://www.newsweek.com/2010/05/28/the-new-state-capitalists.html)

I don't understand one thing..in the vision of Bremmer (which is also the vision of many in the west)..He says that the authoritarian state understood that if it would not have assured prosperity, it's days would have been numbered...Does it mean that, on the other hand, western democracies do not have this problem and they can let the economy go to hell, with the prosperity of their citizens destroyed and the sacrifices of previous generations reduced to ashes..just cause they're "democracies"? This is hilarious. Do not government in the western democracies try to solve economic problems (also lying), or just pretending to do so, in order not to lose the power and be reelected? Every government in the world cares about power, and go to great lengths not to lose it.
The role of the state is to ensure the prosperity and the well being of the society it represents and governs, that is a simple truth which western democracies cannot escape. If western democracies fail to ensure prosperity and the well being of their citizens, their days will be numbered too. It happened and it can happen again as well.

^^May be what Bremmer and many people in the West mean is failure in authoritarian country is far more dramatic than in democratic country. Which the biggest possibility is the end of authoritarian era and switched to democracy.

In my observation, there are some democratic country fail or trapped in low-income condition for decades but there's nothing happen. They never questioning about the system and why the system always producing bad leaders. People just sit and calmly wait forever until miracle happen. Or may be there are protest on the street decade by decade, the new leader always make promises but always under-performance, again-and-again. They just blame the whole nation society is bad rather than questioning the system.

Socialism is a very beautiful concept, but it doesn't work. Either economic (communism) or politic (democracy). Hitherto China has become the first country to escape both (I mean roughly, since China is still a rather commie country in some aspects), becoming the world's most advanced nation from a historicist point of view. Of course it has a 'beta' version of the coming paradigm, with countless failures, but it is still under development. Ironically China keeps calling itself a socialist country, lol.

Another article about this issue today in The Economist
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=478048&story_id=16270962

I'm reading China's Megatrends by John Naisbitt these days. Great book for China bulls, especially for those who don't expect China to become a cheap copy of Western democracy.

EDIT

the idea of state capitalism do not start with china, during the 19th century, germany adapted state capitalism.so do japan in the late 19th century.
when karl marx written "Das kapital' , germany is not uet united as a single state, overall economy particular the entire german state is way behind britain,by the time of his death, germany overtake UK as the biggest economy in the entire europe.
taiwan,singapore and south korea also adapted state capitalism.

the idea of state capitalism do not start with china, during the 19th century, germany adapted state capitalism.so do japan in the late 19th century.
when karl marx written "Das kapital' , germany is not uet united as a single state, overall economy particular the entire german state is way behind britain,by the time of his death, germany overtake UK as the biggest economy in the entire europe.
taiwan,singapore and south korea also adapted state capitalism.

State Capitalism greatly improvised competition from big corporations or other very influential companies due to the expenditures coming from the host government. The success to failure ratio is is usually higher depends on what market sector it incorporated. Due to the fact that established business has greatly influence and with major stockholders holding it, the amateur companies have no choice but to depend upon government expenditures / subsidies. This is how business is made if you want to compete globally. There is no other way because your competition will have greater influence and longer experience than your company. We can't work anything else like in the trick of the book.

Some articles I found in internet. It's already almost a year old. But good for knowledge.

The Secrets of China's Economy: The Government Owns the Banks rather than the Reverse
by Ellen Brown
Global Research, August 18, 2009


“The banks -- hard to believe in a time when we’re facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. They frankly own the place.” -- U.S. Senator Dick Durbin, Democratic Party Whip, April 30, 2009


While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a “miracle economy” that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Economist Richard Wolff skeptically observes:

We now have a situation in the world where we have a global capitalist crisis. Everywhere, consumption is down. Everywhere, people are buying fewer goods, including goods from China. How is it possible that in that society, so dependent on the world economy, they could now have an explosive growth? Their stock market is now 100 percent higher than at its low -- nothing remotely like that hardly anywhere in the world, certainly not in the United States or Europe. How is that possible? In order to believe what the Chinese are saying, you would have to agree that in a matter of months, at most a year, no more, they have been able to transform their economy from an export-based powerhouse to a domestically focused industrial engine. Nowhere in the world has that ever taken less than decades.”

How can China’s stimulus plan be working so well, when ours is barely working at all? The answer may be simple: China has not let its banking system run roughshod over its productive economy. Chinese banks work for the people rather than the reverse. So says Samah El-Shahat, a presenter for Al Jazeera English who has a doctorate in economics from the University of London. In an August 10 article titled “China Puts People Before Banks,” she writes:

“China is the one leading economy where the divide – the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit – doesn’t exist. Both worlds are booming again and this is due to the way the government handled its banks. China hasn’t allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers.”

What Wolff calls a “global capitalist crisis” is actually a credit crisis; and in China, unlike in the U.S., credit has been flowing freely, not just to the financial sector but to industry and local government. State-owned banks have massively increased lending, with local governments and state enterprises borrowing on a huge scale. The People’s Bank of China estimates that total loans for the first half of 2009 were $1.08 trillion, 50% more than the amount of loans Chinese banks issued in all of 2008. The U.S. Federal Reserve has also engaged in record levels of lending, but its loans have gone chiefly to bail out the financial sector itself, leaving Main Street high and dry. Writes El-Shahat:

“In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place. Wall Street and Main Street might as well be existing on different planets. And this is in large part because banks are still not lending money to the people. In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up, and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen.”


Cracks in the Chinese Wall?

The Chinese economy is not perfect. The push to make profits, particularly from foreign investment capital, has encouraged speculative ventures, with a great deal of money going into high-rise apartments and other real estate developments that most people cannot afford. Chinese workers are now complaining of too much capitalism, since they are having to pay for housing, health care and higher education formerly picked up by the State. And while efforts are being made to make more loans available to medium-sized and small businesses, state-owned businesses and large corporations are still getting most of the loans. This is because the banks have been told to tighten their lending standards, and these larger entities are safer credit risks.

Wolff thinks China’s “miracle” is a bubble that is about to burst, with catastrophic consequences. Historically, however, when bubbles have collapsed suddenly it has been because they were punctured by speculators. When the Japanese stock market bubble burst in 1990, and when other Asian countries followed in 1998, it was because foreign speculators were able to attack their currencies with exotic derivatives. The victims tried to defend by buying up their own national currencies with their foreign currency reserves, but the reserves were soon exhausted. Today, China has accumulated so much in the way of dollar reserves that it would be very difficult for speculators to do the same thing to the Chinese stock market. A gradual stock market decline due to natural market forces is something an economy can take in stride.


Economic Role Reversal?

For the time being, at least, China’s stimulus plan is clearly working better than those of the U.S. and the U.K.; and a chief reason it is working better is that the government has a grip on its banking sector. The government can operate the banks’ credit mechanisms in a way that serves public enterprise and trade, because it actually owns the banks, or most of them. Ironically, that feature of China’s economy may have allowed it to get closer to the original American capitalist ideal than the United States itself. China is often referred to as communist, but it has never really been communist as defined in the textbooks, and it is far less so now than formerly. Communist Party leader Deng Xiaoping, who opened China to foreign investment after 1978, famously said that it doesn’t matter what color the cat is, so long as it catches mice. Whatever the Chinese economy is called, today it provides a framework that effectively encourages entrepreneurs.

Jim Rogers is an expatriate American investor and financial commentator based in Singapore. He wrote in a 2004 article titled “The Rise of Red Capitalism”:

“Some of the best capitalists in the world live and work in Communist China. . . . No matter how long China’s leaders persist in calling themselves Communists, they seem quite intent on creating the world’s dominant capitalist economy.”

Meanwhile, the U.S. has sunk into what Rogers calls “socialism for the rich.” When ordinary U.S. businesses go bankrupt, they are left to deal with the asphalt jungle on their own; but when banks considered “too big to fail” go bankrupt, we the taxpayers pay the losses while the banks’ owners keep the profits and are allowed to continue speculating with them. The bailout of Wall Street with taxpayer money represents a radical departure from capitalist principles, one that has changed the face of the American economy. The capitalism we were taught in school involved Mom and Pop stores, single-family farms, and small entrepreneurs competing on a level playing field. The government’s role was to set the rules and make sure everyone played fair. But that is not the sort of capitalism we have today. The Mom and Pop stores have been squeezed out by giant chain stores and mega-industries; the small private farms have been bought up by multinational agribusinesses; and Wall Street banks have gotten so powerful that Congressmen are complaining that the banks now own Congress. Giant banks and corporations have rewritten the rules for their own ends. Healthy competition has been replaced by a form of predator capitalism in which small fish are systematically swallowed up by sharks. The result has been an ever-widening gap between rich and poor that represents the greatest transfer of wealth in history.


The Best of Both Worlds

The Chinese solution to a failed banking system would be to nationalize the banks themselves, not just their bad debts. If the U.S. were to adopt that approach, we the people would actually get something of value for our investment – a stable and accountable banking system that belongs to the people. If the word “nationalize” sounds un-American, think “publicly-owned and operated for the benefit of the public,” like public libraries, public parks, and public courts. We need to get our dollars out of Wall Street and back on Main Street, and we can do that only by and we can do that only by breaking up our out-of-control private banking monopoly and returning control over money and credit to the people themselves. If the Chinese can have the best of both worlds, so can we.

http://www.globalresearch.ca/index.php?context=va&aid=14819


The original article by Samah El-Shahat, why China stimulus package work better than US stimulus package.

China puts people before banks
UPDATED ON:
Friday, August 14, 2009
14:25 Mecca time, 11:25 GMT


http://english.aljazeera.net/mritems/Images//2009/8/10/200981010248517734_8.jpg

Samah El-Shahat, Al Jazeera's resident economist, writes a regular column analysing key elements that have contributed to the global financial downturn and its impact across the world.


China hasn't allowed its banking sector to become so powerful

The one question that isn't going away this global recession, is whether China can save the world.

But before we go running to Beijing, hat in hand, demanding assistance or else, there are some home truths that need to be considered first.

China is a developing country, with a per capita income of $4,000, which is much closer to those of African economies than to the US per capita income at $39,000, and $33,000 in Europe.

China has 130 million people who still live in absolute poverty, and even electricity hasn't made it every household yet.

So why should China be asked to save anyone but itself right now?

In fact, as Michael Pettis, a professor at Peking University's Guanghua School of Management says, China's consumption was about the equivalent of France's last year, but no one is calling on Paris to save the world.

The crisis, though, has exposed and clearly magnified the fault lines in China's emerging economy of 1.3 billion people.

The Asian giant needs to nurture its own domestic demand, so that when the export market goes sick, like it has in this Great Recession, it doesn't drag China down with it.

But making her people spend more than they save is harder said than done. After all, less than a generation ago the Chinese were so poor that hunger was the accepted norm in their daily lives.


Tiger has risen

Speak to Chinese officials in their late 40s onward and they will tell you that thinking about food was a major preoccupation as they were growing up - it was so scarce and many had to collect food coupons.

Yes, this Asian tiger has risen despite a recent past of malnutrition. So getting the Chinese to move away from the "survivors'" mentality of savers to one of spenders will not be easy.

Economists believe it takes a whole generation before people can change their ways and habits. But such a change can be overwhelmingly helped by the establishment of social welfare and safety nets such as health care provision, and other forms of social security.

This might encourage the Chinese to loosen their purse strings.

So why do we assume China can save the global economy?

Is this not a warped sense of economic prioritising to ask a developing country with pressing economic and social problems of its own to come in and sacrifice herself for the rest of the world?

Lending the US

This could have something to do with China's $2tn in denominated securities, and bonds it has acquired from the US. It is after all the US's biggest lender.

Yet, take that two trillion-dollar sum and divide it by 1.3 billion - the Chinese population - and I assure you not much would be left for your average Chinese citizen.

However, I feel this basic misunderstanding of China and her position in the world, has to do with our negative bias toward that country - we are much tougher and harder when it comes to the way we report our economic stories on China.

We are not telling enough stories of how we can in fact learn from China, particularly in the way its keeps the power of its banks in check.

Something we have been unable to do.

China is the one leading economy where the divide - the disconnect between its financial sector and the world normal Chinese people and their businesses inhabit - doesn't exist.

Both worlds are booming again and this is due to the way the government handled its banks.

China hasn't allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout.

In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group.

And that is why Chinese banks are lending to the people and their businesses in record numbers. Why don't we hear more about that in the media?


Different planets

In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place.

Wall Street and Main Street might as well be existing on different planets.

And this is in large part because banks are still not lending money to the people.

In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks.

They are using it to shore up, and clean up their balance sheets rather than lend it to the people.

The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen.

I asked Costas Lapavitas from the School of Oriental and African Studies (SOAS) whether governments had put the interests of banks before the interests of their wider populations.

"Yes I think you can say that. I think governments will probably come out and say that we helped rescue the banks, and we prevented generalised collapse. And to a certain extent that is true of course," he said.

"However there were so many ways in which banks could have been rescued and this particular way has been done in such a way that the banks have no incentive to change the ways they operate ... It is as if the banks have written the policies that the state adopted."

Interests of shareholders

The US and British governments have allowed banks to solve their own crises in the interests of their own mangers, and shareholders – they are after all private business.

Governments should have made it conditional for banks to lend to us, before they are given access to so much of our money and the Federal Reserve's cheap credit.

So the Western hemisphere is suffering the consequences of government failure, while the Asian Giant is celebrating government getting it right.

Funny, how our seemingly democratic governments have been taken over by vested interests.

So, lay off China. It is the one country that is putting the interests of its people above that of the banks.

And in these pressing times I say Hallelujah to that.

Samah El-Shahat also presents Al Jazeera's People & Power programme.

The views expressed in the above column are the author's own and do not necessarily reflect Al Jazeera's editorial policy

http://english.aljazeera.net/focus/chinabuystheworld/2009/08/200981084418740760.html

Both SOE and private companies has good and bad side, as we all know.

^^

This is what I don't like about United States. It's obvious the one that need help is the people and not the banks. The government knows that and should gave it a priority. However, It doesn't make any sense why the government bailed out the banks and not the people who are suffering from credit crisis. If the Government helped the people first then it's obvious that people can afford the payments from any expenses. I wonder why the Government did not see that? It doesn't make any sense. The only thing I can assume is the lobbyist who definitely knows how to convince the government to bail out the financial companies and not the people. It's too late now. Millions lost their homes and there is nothing we can do. The damage was done. It is now the time to heal from it.

I'm just hoping this will not happened again.

^^

This is what I don't like about United States. It's obvious the one that need help is the people and not the banks. The government knows that and should gave it a priority. However, It doesn't make any sense why the government bailed out the banks and not the people who are suffering from credit crisis. If the Government helped the people first then it's obvious that people can afford the payments from any expenses. I wonder why the Government did not see that? It doesn't make any sense. The only thing I can assume is the lobbyist who definitely knows how to convince the government to bail out the financial companies and not the people. It's too late now. Millions lost their homes and there is nothing we can do. The damage was done. It is now the time to heal from it.

I'm just hoping this will not happened again.
Put the blame on George W Bush

^The elite, the wall street, the rich, rule over the people. When comes to debt, they try to make it public but when comes to profit, they will take it private!? The President is doing the agenda of those that have money, and the lobbyist. So really is not the will and voice of the people.

Socialism is a very beautiful concept, but it doesn't work. Either economic (communism) or politic (democracy). Hitherto China has become the first country to escape both (I mean roughly, since China is still a rather commie country in some aspects), becoming the world's most advanced nation from a historicist point of view. Of course it has a 'beta' version of the coming paradigm, with countless failures, but it is still under development. Ironically China keeps calling itself a socialist country, lol.

Another article about this issue today in The Economist
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=478048&story_id=16270962

I'm reading China's Megatrends by John Naisbitt these days. Great book for China bulls, especially for those who don't expect China to become a cheap copy of Western democracy.

Finally, I found the book. :banana:

I just read the first pages. It look good. Thanks for the recommendation.

I never read the Megatrends 1982, because at that time I was too small to read it. Based on the reputation, China's Megatrends is a very interesting book.

I read the book now. If I found any interesting and opinion, may be I will share with you guys. :)

Quote from the book:
The misunderstanding lies in the interpretation of his most famous aphorism: “It doesn’t matter if the cat is black or white, so long as it
catches mice.”

To Deng Xiaoping the question was not whether communism or capitalism would be best for the enterprise; the real question was what works and what doesn’t work to enable the country to achieve its potential for the future.

So the question whether China is a capitalist country with a communist coat or a communist country with capitalist coat is the wrong question.

^^This is very interesting. No ideology, just what works and not. A lot of leaders around the world too focus in ideology and they forget the true knowledge, including mine. Probably this is because of Cold War.

I wonder why the Government did not see that?

Because it would convince people that gov't as the last resort will help them as long as there's a collective over-indebtedness that cannot be repaid which will be very disastrous 'cause it may promote over-indebtedness even worse.

China's New Middle Class: Constants and Variables
Tom Doctoroff
North Asia Area Director of JWT advertising firm
Posted: May 29, 2010 08:26 PM


China's middle class, a modern force with timeless cultural imperatives, will reshape the world. To harness its spending power, marketers must realize that becoming modern and international is not tantamount to becoming "Western." The following discussion outlines the core motivations and conflicts that drive middle class consumption in China.

How would you define the Chinese Middle Class, who are they, where are they and when did they emerge?
Nobody has yet to really come up with a suitable definition, but for our purposes, if we define the lower edges of the middle classes as households earning 5,000 RMB a month (around USD 1,400 on an adjusted Purchasing Power Parity (PPP) basis) and the core middle classes as those earning 20,000 RMB a month (about USD 5,700 on an adjusted PPP basis), then we see that this is a very penny pinched middle class. There are around 125 million people that probably fall within the category, basically, anyone that is not struggling for day to day survival. It is certainly a fallacy that this class exists in the primary cities only; they are to be found in every city across China, as can be seen in the growth of car ownership across all the cities. The question is, however, what proportion of them exist in each city?

The middle classes as a demographic only really came about at the start of this decade. In 1992, Deng Xiaoping made his famous tour of the south, uttering his famous catchphrase "to get rich is glorious", his economic reforms unleashed capital, but the impact on people's lives was not really felt until the late 90's, making the Chinese middle classes a very new phenomenon. The sheer scale and magnitude of this transformation and in the context of the Chinese world view, marks a spectacular inflection point for China and the world today.


How is the Middle Class growing in China and where is growth strongest?
We are seeing two different curves emerging here, growth in the primary cities, where a critical mass has been reached already and growth in lower tier cities, which has barely even begun, but where growth is by far the strongest due to targeted government policies. Every year more and more people will join the rank and file of the middle classes, being able to afford their lifestyles. It's important to note, however, that China is still far away from being a middle class society.


How do the Chinese Middle Classes view themselves?
As a quick aside, there is a bit of a labelling issue here as 'middle class' is not really a politically correct term, very few would want to classify themselves as middle class. But back to the question at hand, the Chinese middle classes believe that with the right competitive tools, an opportunity will come by which will allow them to transform their lives, in contrast to a blue-collar labourer, who will see his social and economic status as more or less fixed.

The middle classes believe in social mobility, their environment can now offer them the chance to change and improve their lives. This is what being middle class is really all about, to transform lives and improve physical wellbeing, it's a move beyond the already satisfied lower levels of Maslow's hierarchy of needs of survival and physical safety requirements towards a need to satisfy social status requirements. The middle class engages with society to get recognition for their (financial) successes. It's important to note though that this is not about arrival, it's about being on the right journey, they see theirs as an arduous, perilous, continuous struggle upwards and there is an acute awareness of the precarious and unpredictable slipperiness of this journey, that all could be lost and taken away in the bat of an eyelid. There is a need to project how high you have climbed, but also to protect that ascent. Insecurity abounds. Insecurity based on cultural, economic and political factors. The Chinese have an understanding with their ruling classes that government must be responsive to people's needs, the middle classes trust that their government will protect their interests, otherwise the contract they have with them will unravel. People are not protected by civic institutions, there is no political representation, and wealth is not protected institutionally. The middle classes are wracked with anxiety, it's a very tough world out there and unless they carry on generating, it is all too easy to slip back to the bottom. What goes up can and often will come down.


What are the challenges facing the Chinese Middle Classes?
On an economic level, there is a sense that wealth is not protected and that individuals need to fend for themselves as they will not be provided for otherwise. More subtly, on an emotional level, there is a sense that there are certain, essential rites of passage to middle classdom, such as homes, diamond rings, education, car ownership and other expenditures that are needed in order to cross that threshold. But these items are expensive, incomes are limited and disposable incomes remain low, yet these are necessities and need to somehow be paid for, so what to buy? As we said earlier, this is a very penny pinched middle class, who do not have much flexibility on how they spend their money. There is a very rigid, set way of how you become middle class; you will be required to posses certain hallmarks, but which ones to choose as incomes are so limited?

There is a lot of anxiety about how to make progress up the mountain, the question is, how to arrive at something more sustainable, particularly for men who carry a great burden as the person responsible for the family; men do not feel in control of their destiny, there is great anxiety, how do you defuse that sense of loss of control? In Confucian society the burden on men to be the providers is very absolute and very heavy, its not just a question of providing, society will judge you on whether you are an upstanding member of society by your ability to provide; your value is derived from whether you have lived up to your masculine obligations to provide and here, its not the individual who is the productive unit, but the clan and as a man, you are responsible for the overall wellbeing of your clan, this places an enormous burden on men.

Individualism in the western sense, although aspired to, does not exist in China. In the west we admire those who have transgressed the constraints of societal norms and broken free of its shackles and rules, thriving beyond and independently of these, achieving success on ones own terms. In China, what is big are egos, it's the opposite of western individualism that no longer cares about how they are judged by society, in China, individuals are incredibly conservative and conventional and derive all their value from how they are perceived by society. The individual is looking for society's endorsement and qualified stamp of approval that they have mastered the rules and have been able to climb society's predefined hierarchy. This yearning to be recognised as having conformed exactly to society's expectations puts an enormous pressure on individuals. This stifling need to conform can be seen in how a child is raised, the education system and the relationship between teachers and parents. We see this all the time in advertising, we have to work so hard to get creativity and individualism, individual initiative is seen as a high risk threat and is discouraged here.

Very tellingly, a westerner's typical fantasy of escape is usually very horizontal, being on an island for example, whereas the Chinese transcendence is vertical, flying, or being on a mountain, being in total control of what is beneath you, i.e. the definition of success is to master your surroundings, or really, to master society's rules and hierarchy.


How are the Chinese Middle Classes evolving?
Historically, the Chinese are incredibly price sensitive when it comes to products for the home, these items will not be seen by outside society and given the need for conspicuous consumption outside the home, cost savings for items within it are required, as the home is rarely visited by outsiders and is considered to be a private sanctuary. As incomes are increasing, this is changing, people do now place more value on quality and are prepared to pay a bit more for the home, but predominantly even these more expensive home items are still used as markers for success.

Travel is now also a marker of success and is a new dimension of what it means to be middle class, showing that you are on the journey, literally and figuratively!

The range of goods that will be consumed are changing as the middle class evolves. There is now much more of a need and a growing desire for self-expression and to liberate oneself, which is one reason why digital has become so fundamental, the new generation is using digital to have a more expressive life. These outlets, seeing the need for self-expression, will become more pervasive as time goes on.

Individualism is eve's apple, the allure is intoxicating, but if you bite into it you will be banished. Companies will need to decide how to play with the aspiration of individualism and the reality of social conformity. But, what is absolutely not happening, is the Chinese middle class becoming western, they are becoming modern, they are becoming internationalised, but they are not becoming western. The structure of Chinese society is very different than western society. There is one underlying truth in Chinese society that says the only absolute evil is chaos and the only absolute good is stability and order, this is a prerequisite for progress on a national and individual level and why the unit remains the clan and not the individual. Every strand of Chinese thinking reinforces the supremacy of stability and order, this is inculcated from a young age; China is unique for its conflict between ambition and conformity, from abiding to the hierarchy to pulling yourself up the hierarchy, this only exists in the Confucian footprint, in Japan this conflict is not nearly as severe, but in China this conflict defines the topography of the Chinese heart.


What are the aspirations of the Chinese Middle Classes, what do they want?
A key insight here is that Chinese people will say that all they want is to be happy and to be in control of their destiny, but actually, this ideal is not truly practical for them. People will talk about it, it's an ambition, but it's important not to oversimplify. The Chinese know how tough it is out there and they know that they will need to struggle to advance; therefore their practical goals are to keep on struggling up the hierarchy, the Chinese are not truly interested in taking it easy. 'All I want is to be happy', is a dreamt escapist desire, as opposed to a concrete aspiration.


How does the State view the Middle Classes and how is the State providing for them, are they hindering or helping them?
The Chinese have an extraordinary ambivalent relationship with the State; they see the central government as there for them to advance and to make order from chaos. They would never trade in the Chinese system for democracy. On the other hand there is a frustration with the slow pace of reform and evolution of the structure that should protect the interests of society. Everyone wants institutional reform, but no one wants rebellion, they want a continuation of the status quo, the State is the lynchpin that holds society together. People do expect that government will become more responsive to their needs and they also see the enormous progress that has been made and are content that things are getting better. Corruption, however, is a problem and is very dangerous for the government, people see corruption as the government not being responsive to their needs. But people need their strong government as they still have an underlying fear that things could fall apart at any moment.

The Chinese culture increases tolerance for a government that has continued power to frame the current issues of the day and to issue top-down commands. Due to cultural imperatives, the tolerance is far greater than we would like to admit to in the west. The speed of reform compared to what people can tolerate is merely a question of degree. Because per capita incomes are still at such low levels and because urbanisation still has such a long way to go, it will be decades before the basic current structures of power become a critical contradiction. When China has moved from low level manufacturing to service based economic growth, if by that stage society does not advance, once there is a solid middle class base, then there might be problems, but this is still decades away from happening.


How can companies reach out to the Chinese Middle Classes and connect with them? Examples of successes and failures?
Success in China is rooted in having insights that uncover fundamental motivations and bringing your product in alignment with these. Every product that charges a premium needs to be a tool for social advancement.

Examples of success would be De Beers diamonds, in ten years of entering the market, the penetration of diamond engagement rings has gone from 8% to 80%. They were able to do this by understanding the motivations; marriage in China is different then it is in the west, in the west we like to believe that passion and romance will last forever, in China, however, it is commitment that lasts forever, not love as such. De Beers sold themselves as giving the Chinese man a tool to demonstrate his reliability.

Ford is another example that is doing better than everyone expected. It does not sell itself on how good it is to drive its cars, but by how they can transform people's lives. Of course it depends on the model and which societal class you belong to, but fundamentally the allure is how the cars will help you to advance up the hierarchy in some shape or form, this in fact is why China has overtaken the US in the growth of automobile ownership, not because the Chinese need cars, but because it's a threshold of middle classness - companies who want to succeed in China need to bring their products in line with the Chinese world view and structure of Chinese society.

Rejoice Shampoo, from P&G, has also done a very good job at maintaining its position within the market, it has done this through its 'confidence through softness' advertising, i.e. that the beauty of your hair will be noticed by other people.

Häagen-Dazs moved to outdoor consumption as they knew this was the only way to get people to pay the premium on their ice cream, it's a great way for a boy to impress a girl by taking her to eat at such an exclusively expensive indulgent venue. Starbucks is doing much the same thing.

In China the product is a means to an end, the message driver has to be that this product will make you noticed and help you on your journey upwards.

The Chinese have no excuse to be buying luxury goods, given their level of income, but luxury is so externalised it enables inconspicuously conspicuous consumption, i.e. to show off without being seen to do so. There is a craftsmanship to selling products in China, it's communicating how your product will help the owner solidify their status, but avoiding clichés.


Is there a difference in how Middle Classes live at home and in Public and if so, why?Home is a retreat, your private castle; Chinese do not throw dinner parties, home is a private domain and needs to be respected as such. You will not see people spending money on expensive bedspreads. However, comfort is important and the willingness to indulge is growing, but not fast, foreign, premium priced items for the home are still going to struggle a lot more with their lower priced, domestic counterparts. Chinese consumers are becoming more educated about quality and are ruthless quality hunters; they are becoming much more demanding about quality, which is normal as the middle class evolves.

The digital revolution is also becoming so fundamental to the way the Chinese express themselves and define their identity. In the west, digital is functional, we use it to make transactions and find things, in China it is much more emotional, they use it to chat and for entertainment.


What products and services do the Middles Classes aspire to have? Growth in home ownership, DIY, car ownership etc
Service industries will explode in China over the next few years, from Banking, to Investments, to Healthcare. There is a dearth of good service here, which is often very unpredictable. On the one hand the Chinese have been conditioned not to demand service, but needs are needs and they are now starting to demand better quality services. However, there seems to be an ever widening gap of what's available and what is being demanded. The time is absolutely ripe for foreign companies, with more knowledge and experience than their domestic counterparts, to enter the market. The question is though, will the government recognise the need for foreign competition and that domestic companies are simply not equipped to meet expectations? Will they allow sectors to liberalise and open up? If not, resentment will surely grow and there could be a real struggle ahead.

Originally published in Chamber Eye, the magazine of the British Chamber of Commerce of Guangzhou

http://www.huffingtonpost.com/tom-doctoroff/chinas-new-middle-class-c_b_594579.html

^The elite, the wall street, the rich, rule over the people. When comes to debt, they try to make it public but when comes to profit, they will take it private!? The President is doing the agenda of those that have money, and the lobbyist. So really is not the will and voice of the people.

The concept that Abraham Lincoln said in "Speech in Gettysburg" has been deprived, harassed and neglected. The elites lost the will, the ways, the making of a nation that it was, where blood of those who sacrifice from it will be washed away by greed and corruption carried due to money and power. This is not what our forefathers wants us to be, will want us to be and want our generation to become. The concept of a "True" Free Nation where millions believed and sacrificed did not matter after 200 years of history. So, are we loosing it?

I hope not.

Yuan is overvalued, not undervalued: report
(Agencies)
Updated: 2010-06-17 15:22

China's currency is probably overvalued, not undervalued as Washington complains, a state-run Chinese newspaper said on Thursday, advancing Beijing's push against US demands to loosen up the yuan.

China has come under renewed pressure from Washington to free up controls on the yuan's exchange rate, which many in the US Congress contend is grossly undervalued, unfairly squeezing out competition against cheaper Chinese goods.

A commentary in the overseas edition of the People's Daily, the chief newspaper of the ruling Communist Party, took the opposite view.

"Currently, the renminbi exchange rate does not have a problem of being undervalued; on the contrary, it may be overvalued," said the commentary by Xie Taifeng, an economist at the Capital University of Economics and Business in Beijing.

China's consumer prices have risen by 68.8 percent since 1994, when the government brought in a single yuan currency, wrote Xie. Until then, China operated a separate system of yuan specifically for foreign exchange and use by foreigners.

Over the same time, Xie wrote, China's inexpensive exports helped to hold down inflationary pressures in the United States.

"Therefore, according to purchasing power parity theory, the exchange rate of the renminbi against the dollar should not appreciate, and instead it should depreciate."

Xie's argument is unlikely to win many backers in Washington.

Beijing is facing international calls to let the yuan resume rising after effectively repegging the currency at about 6.83 to the dollar to help its exporters ride out the global credit crunch.

Complaints eased over the last two months as the euro zone debt crisis took center stage. But US Treasury Secretary Timothy Geithner said last week that the yuan was an impediment to global rebalancing, suggesting that US patience with China's currency policy was wearing thin.

http://www.chinadaily.com.cn/bizchina/2010-06/17/content_9985152.htm

China's consumer prices have risen by 68.8 percent since 1994, when the government brought in a single yuan currency, wrote Xie.
Have the consumer prices of most other countries risen by a bigger amount? If not, how could the RMB be overvalued compared to other currencies?

FERTILIZER COMPANY AIMS FOR 100 SUPERSTORES IN CHINA BY 2012
QINGDAO, June 18 (NNN-Bernama) -- Sinofert Holdings Limited, China's biggest fertilizer company, on Friday opened its first one-stop superstore selling agricultural production materials and technological and financial services to farmers in Pingdu city, east China's Shandong Province.

The new agricultural superstore, with an investment of 30 million yuan (US$4.4 million), integrated retail, distribution, technology and finance services, Xinhua quoted the company as saying.

Farmers could buy all agricultural materials, including fertilizers, pesticides, seed and farm machinery, and obtain small loans and other financial or technological services in one go, said Feng Mingwei, deputy general manager of Sinofert.

He said Sinofert would expand the number of agricultural superstores to 100 across the country by the end of 2012.

With an annual production capacity of 10 million tonnes of fertilizer, Sinofert now has more than 2,000 distribution centres.http://namnewsnetwork.org/v2/read.php?id=124149

WORLD BANK PREDICTS 9.5 PERCENT GROWTH FOR CHINESE ECONOMY
TOKYO, June 19 (NNN-KUNA) -- The World Bank said Friday it continues to forecast Chinese economic growth of 9.5 percent in 2010 but warned growth is likely to ease because of the partial normalization of macro policy and measures to cool the property market, state press reported.

Leading indicators and industrial production data suggests China's economic growth will moderate in the second quarter of the year, although it will still be a strong growth, the bank said in China Quarterly Update, a regular assessment of the Chinese economy, according to Xinhua News Agency.

China's gross domestic product (GDP) jumped 11.9 percent year-on-year in the first quarter of the year, up from 10.7 percent in the last quarter of 2009. But the report said there were still uncertainties concerning China's economic growth, including a declining trade surplus, rising inflation and soaring property prices.

The bank forecasts Chinese GDP growth of 8.5 percent in 2011.

The bank remains upbeat about growth prospects of the world's third-biggest economy.

A slowdown in government-led investment after China's massive stimulus package last year has been partly offset by strong investment in the real estate sector, the report said, adding that growth in household consumption has held up well.

"Growth should be less investment-driven this year and benefit from more favorable external trade, while consumption is likely to remain supported by a strong labor market," said Ardo Hansson, the World Bank's chief economist for China.http://namnewsnetwork.org/v2/read.php?id=124186

China to further reform RMB exchange rate regime

BEIJING - The People's Bank of China, China's central bank, has decided to proceed further with the reform of the Renminbi exchange rate regime to enhance the RMB exchange rate flexibility, a spokesperson of the central bank said Saturday.

The decision was made in view of the recent economic situation and financial market developments at home and abroad, and the balance of payments (BOP) situation in China, the spokesperson said in a statement.


In further proceeding with the reform, continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies. The exchange rate floating bands will remain the same as previously announced in the inter-bank foreign exchange market, the spokesman said.

The spokesperson said China's external trade is becoming more balanced. The ratio of current account surplus to GDP, after a notable reduction in 2009, has been declining since the beginning of 2010.

"With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist," the spokesperson said.

The PBOC will further enable market to play a fundamental role in resource allocation, promote a more balanced BOP account, maintain the RMB exchange rate basically stable at an adaptive and equilibrium level, and achieve the macroeconomic and financial stability in China, the spokesperson said.

China has moved into a managed floating exchange rate regime based on market supply and demand with reference of a basket of currencies since July 1, 2005.

The spokesperson said the reform of the RMB exchange rate regime has been making steady progress since 2005, producing the anticipated results and playing a positive role.

With the current round of international financial crisis was at its worst, the exchange rate of a number of sovereign currencies to the US dollar depreciated by varying margins.

"The stability of the RMB exchange rate has played an important role in mitigating the crisis' impact, contributing significantly to Asian and global recovery, and demonstrating China's efforts in promoting global rebalancing," the spokesperson said.

The gradual recovery of the global economy and upturn of the Chinese economy has become more solid with enhanced economic stability. It is desirable to proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility, said the spokesperson.

http://www.chinadaily.com.cn/china/2010-06/19/content_9993010.htm

Debate: Chinese economy
(China Daily)
Updated: 2010-06-21 07:51


Will China be able to continue its fast economic growth? An economist and a professor of international relations both say there are many challenges ahead.


Mark Williams

System in need of changed climate

The financial crisis has left many reputations looking rather tattered. China's policymakers are among a small group who have emerged with their standing enhanced. Acting boldly and swiftly, they not only insulated China's economy from the worst of the turmoil elsewhere, but also helped stabilize conditions in the rest of the world.

The clearest evidence of the boost China has given the world is the fall in China's trade surplus, which this year will probably be down by a third from its pre-crisis peak. The surplus fell because imports held up better than exports during the global slowdown thanks to the government's loan-fuelled stimulus. Another way of putting that is to say that China became a net source of demand for the rest of the world.

A key question now, for China and the global economy, is how sustainable this will be. The recovery in the US and Europe still looks fragile and the world will be in need of any source of demand it can find in the years ahead. Unfortunately, there are good reasons to think that the fall in China's surplus will be reversed soon unless the government is able to push through significant structural changes.

This is because the source of strength in Chinese imports has been a policy-induced surge in investment. Already strong before the crisis, investment accounted for close to half of all spending in China's economy last year. Some of the investment may encourage more consumption spending - for example better roads and railways could boost domestic tourism. But the main effect will be to raise the volume of goods produced by China's factories.

If there is no equivalent increase in domestic consumption, this added supply of goods will be exported or, failing that, contribute to a build-up in excess capacity and a subsequent investment slowdown. In other words, the recent fall in the trade surplus notwithstanding, China faces either slower growth or the reappearance of a big surplus unless consumption growth accelerates. Neither would be a palatable outcome.

The optimistic view is that, as China puts recent difficulties behind it, the government can focus in earnest on the policy changes needed to support faster growth in consumption. This probably requires raising the share of national income being paid to households. In turn, this demands faster wage growth and job creation. But bringing about such structural reform will be easier said than done. Despite headline-grabbing increases in the last few weeks, wages still account for a smaller share of China's income than a couple of years ago.

Indeed, the share of national income going to households has been falling for well over a decade. One of the most effective means of boosting job growth would be to encourage the proliferation of small and medium-sized businesses.

But such steps are likely to be resisted by the large State-owned enterprises that currently enjoy monopolies. With only a little over two years left in office, it is unclear whether the current government has the authority to challenge those that benefit from the status quo.

Underlining the difficulties the government faces, we cannot simply assume that consumption will continue expanding at a steady pace in the absence of significant reform. Household spending has held up remarkably well over the last two years. But this is at least partly due to government policy support for purchases of cars and domestic appliances. The government now promises to keep such schemes running to the end of next year, but their impact already seems to be starting to fade.

The upshot is that while China has emerged from the global economic crisis in a far stronger position than most other economies and with confidence in the capacity of its policymakers riding high, it faces significant challenges in sustaining rapid growth in the years ahead.

Perhaps the worst outcome would be a sharp resurgence in the trade surplus which would be seen as sucking demand from an already demand-starved world and, rightly or wrongly, could trigger a protectionist response. China won great praise for doing its share to prevent the global economy from sliding into depression 18 months ago. It will have to demonstrate great leadership to sustain that reputation in the years ahead.

The author is senior China economist at Capital Economics, one of the world's leading independent macroeconomic consultancies.

http://www.chinadaily.com.cn/opinion/2010-06/21/content_9994813.htm



Pang Zhongying

Economic weather getting stormy

Some Western observers are unrealistically optimistic about China's economic growth in the post-global economic crisis era, and have concluded with geopolitical implications that "the world power is further shifting East". These arguments on China's economic and political perspective are improper and irresponsible, and if governments in Western countries endorse them they may end up misjudging China's strategic position.

China has indeed experienced fast economic growth during the past three decades. But its superb performance doesn't necessarily mean a "trouble-free" future because it is unlikely to sustain that growth momentum. In fact, its economic growth faces tremendous challenges both at home and abroad.

At home, hundreds of millions of Chinese still work for low wages. They may have powered China's economic development, but they can hardly meet all their needs and prepare their next generation for a better future. More than anyone else, it is they who deserve higher wages. Indeed, some of them have already started demanding higher pay. With more and more workers set to follow their example, labor cost is set to rise across the country.

The country's irrational income distribution system is widening the gap between the rich and the poor further. To let more workers share the fruits of economic growth and maintain social stability, the authorities have intensified their efforts to adjust the income distribution system, so that a greater part of the national income flows to the workers.

China achieved an unprecedented growth rate because it had huge amounts of natural resources to fuel its reform and opening up. But by the end of the last century and beginning of this century, China had begun facing a shortage of natural resources. Slowly, China has become a resource-poor country in terms of per capita share of resources.

Added to that is the challenge of environmental degradation and climate change. It's highly unlikely that China will enjoy fast economic growth rate without checking its environmental deterioration.

In fact, Chinese leaders realized the country's disadvantage in resources and its fragile ecosystem even before the global financial crisis. That's why at the 17th National Congress of the Communist Party of China they decided to make "economic growth pattern transformation" a serious strategic task. China's sustainable development depends on whether it can persist with its "scientific development" and "economic restructuring".

On the overseas front, China's largest markets have been the US and the European Union (EU), the world's two major economies. But in the post-crisis era, the US can hardly continue to drive China's growth. The Barack Obama administration has made it clear to major exporting countries that the US is unwilling to become "the ultimate consumer" again and Washington has been complaining of "global economic imbalance" and trying to counterbalance this by exerting pressure on its trade partners. The US is trying to not only expedite the yuan's revaluation, but also stimulate its domestic demand, and even devise a fresh industrial strategy.

Similarly, the crisis in the eurozone is changing the EU's role as "the ultimate consumer". And because of the resultant competition trade frictions between the EU and China have increased.

The robust growth momentum of the world economy and the Chinese market both over the past two decades brought out the best in each other, forming a virtuous circle. The world economy prospered after the Cold War largely because its growth potential was realized by global marketization, new techniques, such as the Internet, and booming financial markets. The collapse of the Soviet Union and China's reform and opening up powered globalization, making it the most powerful economic driving force. China has been a major contributor to the fast growing world economy for the past 20 years, with the majority profit of many of the world's top multinationals coming from the Chinese market.

But the world economy has now entered a phase of slow growth and there are indications that the period may last long. This scenario adds to China difficulties in restructuring its economic strategy in the next five years (12th Five-Year Plan period). And a possible economic slowdown in China will leave a less powerful engine for the world economy. China has been part of a major part of the globalization process, and the relationship between China and the rest of the world embodies "one honors all and one dams all", that is, "interdependence", as claimed by some US experts. So it is unlikely that China can outshine others if the world economy gets into trouble and the global power balance shifts. Because of the internal and external factors China, in fact, faces more severe challenges than the West, and is likely to do so in the near future.

The author is professor of international relations at Renmin University of China.

http://www.chinadaily.com.cn/opinion/2010-06/21/content_9994813_2.htm

Here are the various forecasts made by Wall Street Journal (http://www.wsj.com) regarding Yuan's impact (http://blogs.wsj.com/chinarealtime/tag/yuan-impact/) to various industries.

Check it out.



Commodities and Metals (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-commodities-metals/)

Banks (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-banks/)

Property (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-property/)

Transportation and Tourism (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-transportation-tourism/)

Energy (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-energy/)

Technology (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-technology/)

Consumer Goods and Autos (http://blogs.wsj.com/chinarealtime/2010/06/21/yuan-impact-consumer-goods-an-autos/)

General Manufacturing (http://blogs.wsj.com/chinarealtime/2010/06/21/yuan-impact-general-manufacturing/)

Canada clears Sinopec to buy Syncrude stake

Manitoba, June 25 (Reuters) - Canada's industry minister said on Friday he cleared China's Sinopec Corp (600028.SS) to buy ConocoPhillips' (COP.N) stake in the Syncrude Canada Ltd oil sands project.

The deal, worth $4.65 billion, is the richest yet for Chinese companies looking for a toehold in the oil sands.

China has made a series of investments in the past year into the northern Alberta oil sands, the largest oil reserve outside the Middle East, as the world's third-largest economy seeks to lock up energy reserves to power its booming growth.

"I have approved the application by Sinopec ... to acquire control of the ConocoPhillips Partnership because I am satisfied that the investment is likely to be of net benefit to Canada," Industry Minister Tony Clement said in a statement.

Sinopec, China's second-largest oil producer and top refiner, agreed in April to buy ConocoPhillips' 9.03 percent interest in Syncrude -- the largest oil sands project -- with seven other partners controlling the rest. Canadian ownership of Syncrude remains at nearly 56 percent.

ConocoPhillips' shares on the New York Stock Exchange were down 0.5 percent on Friday

(Reporting by Rod Nickel; Editing by Frank McGurty)

http://www.reuters.com/article/idUSN2516802520100625

Here are the various forecasts made by Wall Street Journal (http://www.wsj.com) regarding Yuan's impact (http://blogs.wsj.com/chinarealtime/tag/yuan-impact/) to various industries.

Check it out.



Commodities and Metals (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-commodities-metals/)

Banks (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-banks/)

Property (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-property/)

Transportation and Tourism (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-transportation-tourism/)

Energy (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-energy/)

Technology (http://blogs.wsj.com/chinarealtime/2010/06/22/yuan-impact-technology/)

Consumer Goods and Autos (http://blogs.wsj.com/chinarealtime/2010/06/21/yuan-impact-consumer-goods-an-autos/)


General Manufacturing (http://blogs.wsj.com/chinarealtime/2010/06/21/yuan-impact-general-manufacturing/)



OK, all of this statements in here are all BS. It doesn't make any sense. They need to study more if they want to find the prediction regarding currency devaluation in a socialist system especially China or Russia.

OK, all of this statements in here are all BS. It doesn't make any sense. They need to study more if they want to find the prediction regarding currency devaluation in a socialist system especially China or Russia.
Is it really surprising, given that a good number of economic and financial analysts think that cheap labour is ABSOLUTELY REQUIRED for cheap products/exports?

http://online.wsj.com/article/SB10001424052748704898504575342342116459542.html?mod=googlenews_wsj

China's economic growth slowed less sharply during the global financial crisis last year than initially reported, according to the nation's statistics bureau, which revised up the country's gross domestic product growth for 2009 to 9.1% from 8.7%.

The revision was due to higher contributions from secondary and tertiary industries, the National Bureau of Statistics said in a statement on its website Friday.

Secondary industries include the mining, manufacturing, and power sectors, while tertiary industries cover services. Primary industries cover farming, forestry, and fishing.

In 2008, China's economy expanded 9.6%.

The bureau said China's nominal GDP, evaluated at current market prices without adjustment for inflation, reached 34 trillion yuan ($5 trillion) in 2009. At last year's average exchange rate, China remained the world's third-largest economy, behind Japan with a 2009 GDP of just over $5 trillion.

http://sg.wsj.net/public/resources/images/OB-JC663_AIBD57_NS_20100702054525.gif

1st : US $ 14.26 trillion
2nd : Japan $ 5.07 trillion
3rd : China $ 4.99 trillion (instead of $ 4.91 trillion)

China will overtake Japan this year.

I have a feeling that number is going to be revised up again later. In a few years we might even find that it actually did overtake Japan last year.

Hmmm. So in this case, then China may have already have tookover Japan in this 2nd quarter. Let's observe what will happened.

Has everyone has forgetten about HK and Macau? Their economies are about $250B

They revised several years.

Before
2005: 10.4%
2006: 11.6%
2007: 13%
2008: 9.6%
2009: 8.7%

Now
2005: 11.3%
2006: 12.7%
2007: 14.2%
2008: Untouched
2009: 9.1%

http://noir.bloomberg.com/apps/news?pid=20601089&sid=aTsv9sp_pGZA

Is this the large GDP revision we were expecting on the economic census data? It is not, right?

They revised several years.

Before
2005: 10.4%
2006: 11.6%
2007: 13%
2008: 9.6%
2009: 8.7%

Now
2005: 11.3%
2006: 12.7%
2007: 14.2%
2008: Untouched
2009: 9.1%

http://noir.bloomberg.com/apps/news?pid=20601089&sid=aTsv9sp_pGZA

Is this the large GDP revision we were expecting on the economic census data? It is not, right?

I don't think so. It will take weeks or probably months to calculate any revisions made years ago especially 5 years or GDP revisions. I'm not sure where they get that numbers and I hope I know.

With those numbers, there is a tendency that China already overtook Japan in 1st quarter alone or even the first half of the 2nd quarter. I am excited to see such data.

However, I am hoping that China's currency will be revise to around 6.69 - 6.75 this year and 6.39 - 6.57 next year. The country already demonstrated its blue-collar manufacturing power. This time, the white collar needs to take over. It's also a big help to Western countries who in need of employment especially to the blue collar workers. The idea of this revision will further established its feat in Domestic market which is really indeed the fruit of the country's economy and not its manufacturing base. The only disadvantage is it may lead to more vulnerability in manufacutring based.

The world indeed is starting to depend on China now even the Western countries. I guess it's time for the country to see what it can do in leading the world economy temporarily while the other country is still struggling. I guess it's really the time for State Capitalism to takeover and let the Free Capitalism downslide to a revised or a reformed based or standard regulation based.

Or it's probably time for that other country to embrace State Capitalism especially in the field of energy and transportation sector. I know he got that attitude. Plus, it can help with that staggering debt and deficit.

So GDP for 2009 is only revised 1.5% while GDP growth is revised 5% from 2005-2009?

The world indeed is starting to depend on China now even the Western countries.
Are you saying that China is starting to lead the world economy, or are you actually saying that the world economy is just starting to depend on China?

These days, a country doesn't have to have many other countries economically depend on it in order to be considered a "leader". (e.g. U.S. "leadership" in economic affairs)

china's economy affects EVERY country. The same can't be said about the US, which intentionally limits its economic impact on countries such as Iran, North Korea, and Cuba.

Are you saying that China is starting to lead the world economy, or are you actually saying that the world economy is just starting to depend on China?

These days, a country doesn't have to have many other countries economically depend on it in order to be considered a "leader". (e.g. U.S. "leadership" in economic affairs)

The Economic growth of many countries always goes to the real source of growth. You have to underline the flow of money to where it goes and how it comes back. You can't just say you can't depend on economic source of growth because you are. China is always been the underline growth of many emerging countries such as Brazil, ASEAN, Africa and even developed countries such as Australia, Singapore and many others. You need to be aware though that a diversified source of income is more flexible than a unique one. Before, we used to depend on Europe for economic needs. Then, we depend on United States. Now, we are starting to depend on China. The problem is the developed countries can't cope the cheap price that it brings and it can't compete except for the very few like Australia. I think it will take awhile for EU and US to adjust on this new kind of economic growth. Given the data, it's probably around 5 years at least.

IMF Sees Rising Risks Slowing Pace of World Recovery
By BOB DAVIS

The slow-motion global recovery is losing steam, with growth over the next 18 months widely expected to fall below the pace of the first half of 2010.

The International Monetary Fund is the latest to forecast slowing growth. Its updated World Economic Outlook, released in Hong Kong on Thursday predicts world expansion will decline to 4.3% next year from 2010's 4.6%, revised up by 0.4 percentage points to reflect faster-than-anticipated growth earlier this year.

"Downside risks have risen sharply amid renewed financial turbulence," the IMF warned, referring mainly to European governments' debt problems.

In recent days, the Institute of International Finance, a bankers' association, as well as J.P. Morgan and IHS Global Insight have forecast steeper 2011 declines than the IMF. The analysts cite a cutback in government stimulus spending next year, slower growth in manufacturing, fiscal consolidation in Europe and falling consumer confidence in the U.S. and Europe.

"The sense of optimism we had for a strong recovery has waned," says Ronald DeFeo, chief executive of Terex Corp, a Westport, Conn., construction-equipment exporter. "There's a sense of reality that rebuilding (global demand) will take many years."

While growth also is slowing in big emerging markets such as India, China and Brazil, it is starting from a faster pace and the declines, so far, are modest. This is deepening the world economy's divide, with rich countries inching along amid worries about a possible return to recession, while emerging nations roar ahead, worried that their engines will overheat.

"The single-most-difficult policy issue governments face" in Latin America is using monetary policy or capital controls to slow the inflow of capital, but not shut it off completely, says Luis Alberto Moreno, president of the Inter-American Development Bank. The IMF forecasts Brazil's growth rate will slow to 4.2% in 2011 from 7.1% this year. Many analysts expect the country's central bank to raise interest rates sharply to limit inflation.

In fast-growing Asia, B.P. Banka, managing director of PT Ispat Indo, an Indonesian steelmaking unit of Arcelor Mittal, worries that China's growth will slow. He has trimmed production over the past three months to 70% capacity from 90% as demand waned.

Now he is ready to ramp up again if orders come in, but "we're not seeing demand pick up yet," he says.

Few forecasters are betting that global worries will translate into a double-dip recession in the U.S. or Europe, let alone a world-wide one. The IMF expects U.S. growth to slip to 2.9% next year from 3.3% in 2010. While the IMF forecasts a gain in euro-zone growth in 2011, it sees a very modest improvement at a still-low level—1.3% in 2011 compared with 1% this year. J.P. Morgan chief economist Bruce Kasman puts the chances of a recession in either the U.S. or globally at less than 15%.

Among the 16 nations that share the euro, Greece has already fallen deeply into recession, Spain and Portugal are struggling to maintain their expansions amid budget austerity, and Germany and France are having very modest upturns. All are trimming government deficits to head off a debt crisis like the one in Greece earlierthis year.

If financial turmoil in Europe stressed financial markets as much as during the worst of the 2008 financial crisis, the IMF estimated, global growth in 2011 would be reduced by 1.5 percentage points through lower global trade and tighter global credit.

One upside for European exporters: a weaker euro, which traded around $1.26 on Wednesday, down about 17% from the end of November. On Wednesday, French car maker PSA Peugeot Citroën SA reported a 17% increase in sales for the first half of 2010, with most growth coming from China and other emerging markets. Peugeot's CEO, Jean-Marc Gales, cautioned that the auto maker expects car markets in Europe to contract by 9% this year, after last year's government subsidies to scrap cars ended.

In Japan, the combination of expiring stimulus measures, a weak stock market and a government proposal to double the national sales tax to 10% to reduce steep deficits has been a drag on growth. The government reported on Tuesday that its index of leading indicators, which includes industrial-output inventories, fell in May at its fastest pace since November 2008. The IMF estimates that Japan's growth will slow to 1.8% next year from 2.4% in 2010.

Angel Gurría, secretary-general of the Organization of Economic Cooperation and Development, talks of the emergence of a "job gap," in the group's 31, mostly wealthy, member nations. OECD nations would need to create 17 million jobs to return to employment levels before the crisis, in December 2007, the OECD estimates.

While the Chinese government also is phasing out stimulus measures, growth there remains robust. Economists generally expect China's growth to slow to about 9% in the second half of the year after the first quarter's expansion hit 11.9%.

Chinese Premier Wen Jiabao said on Sunday that China faces increasing dilemmas”in setting economic policy because the global recovery has been so weak. He reiterated that Beijing will continue policies aimed at strengthening the economy over the longer term—which have included the recent, slow appreciation of the yuan and restrictions on property markets—though investors fear they might cause some short-term slowdown.

In India, the IMF expects growth to decline to 8.4% next year from 9.4% in 2010, although the Indian government expects a return to 9% growth by 2012. Rising living standards have boosted growth in different sectors. Prashant Ruia, chief executive of the industrial conglomerate Essar Group, said demand for steel is up 10% this year as construction ramps up on infrastructure projects. And in a burst of business confidence, merger activity has picked up as well, with a record deal volume of $47.8 billion in the first half of the year. That is 48% higher than the previous six-month high in 2007, according to data provider Dealogic.

Source (http://online.wsj.com/article/SB10001424052748704545004575353340027996282.html?mod=WSJASIA_hpp_LEFTTopWhatNews)

IMF raises China's 2010 GDP projection to 10.5%
(Xinhua)
Updated: 2010-07-08 14:42

HONG KONG - The International Monetary Fund (IMF) lifted China's GDP growth forecast for 2010 to 10.5 percent from the earlier projection of 10 percent, the IMF said in a latest world economic outlook released on Thursday.

The body also revised the country's GDP growth projection for 2011 to 9.6 percent, down 0.3 percentage point from the previous estimate released in April.

With the revised figures, China still ranks first in terms of GDP growth among all economies listed in the World Economic Outlook Projections, followed by India, which is forecast to grow 9.4 percent in 2010 and 8.4 percent in 2011.

The IMF attributed the upward revision of China's 2010 GDP growth to the strong rebound in exports and resilient domestic demand so far this year in the country.

The organization said that China could take further measures to slow credit growth and maintain financial stability, and thus comes the lower growth estimate for 2011.

http://www.chinadaily.com.cn/china/2010-07/08/content_10083044.htm

The Economic growth of many countries always goes to the real source of growth. You have to underline the flow of money to where it goes and how it comes back. You can't just say you can't depend on economic source of growth because you are. China is always been the underline growth of many emerging countries such as Brazil, ASEAN, Africa and even developed countries such as Australia, Singapore and many others. You need to be aware though that a diversified source of income is more flexible than a unique one. Before, we used to depend on Europe for economic needs. Then, we depend on United States. Now, we are starting to depend on China. The problem is the developed countries can't cope the cheap price that it brings and it can't compete except for the very few like Australia. I think it will take awhile for EU and US to adjust on this new kind of economic growth. Given the data, it's probably around 5 years at least.
I'm not saying that the world is not starting to depend on the Chinese economy, but I'm saying that it isn't completely correct to say that the world is JUST starting to depend on Chinese economy (I believe the world has been depending on the Chinese economy, and even more so with the economy of Asian countries, for many years now). I apologize for any misunderstanding.

Chinese score in World Cup sponsorship

July 8 2010

Sponsoring the World Cup might seem an odd proposition for a largely-unheard of Chinese solar manufacturer, particularly one that sells to distributors and developers

Yingli Green Energy thinks otherwise. It has secured, in 20-second bursts, eight minutes of exposure in each of the 64 games on the pitch-side advertising hoardings to reach billions of people worldwide.

Stuart Brannigan, Yingli’s managing director, insisted the cost, which he declined to disclose but is likely to be millions of dollars, was worth it. He said the company wanted to both raise the brand’s profile so that “our customers’ customers’ customers understand what Yingli is” and align it with the tournament’s better-known sponsors such as McDonald’s, Adidas and Emirates.

The $1.4bn (€1.1bn, £923m) company, which listed in New York three years ago, has also partnered with Fifa, football’s world governing body, to provide 20 football centres across Africa with solar systems. It has sponsored Spain’s Osasuna football team since 2007 and provided solar panels for the Kaiserslautern stadium during the 2006 World Cup in Germany.

The Baoding-based company’s push for global recognition is part of a trend of Chinese solar firms focusing more on branding. Trina Solar, a $2.9bn company based in Changzhou, became a sponsor of the Renault Formula One team in May, the sport’s first solar sponsor. Trina’s logo graces the nose of the Renault race car.

These efforts betray a deeper challenge for Chinese solar companies: fighting customer concerns about the quality of Chinese solar panels, a documented effect that keeps the prices of Chinese panels below those of their non-Chinese competitors.

China’s reputation for low-quality products has not been helped in recent years by a series of quality-control scandals, including infant formula poisoned by melamine and children’s toys that contain lead-based paint.

Mr Brannigan said the most recognisable non-Chinese brands sell for 10 to 15 per cent more than Yingli but insisted that the gap was shrinking as the company’s branding efforts pay off.

In the past several years, Chinese solar panels have largely caught up to their Western counterparts in quality terms thanks to improving technology but not in terms of branding and recognition. Chinese solar products sell at about €1.3 a watt, compared with €1.8 to €1.9 a watt for their German brand counterparts, according to Shishir Singh, an analyst at HSBC.

Chinese companies have rapidly gained market share since the financial crisis and now produce nearly 40 per cent of the world’s solar panels. Thanks to lower prices for polysilicon, a key input, Chinese firms have capitalised on their relative advantage in manufacturing cost. Europe is the world’s largest market for solar panels. Germany constitutes about half of world demand, although this share is falling as emerging markets such as the US pick up.

Branding is becoming even more crucial as Chinese companies open plants overseas. China-based Suntech, the world’s largest solar manufacturer, is building a plant in Arizona, while Yingli is choosing a location for its first plant in the US.

Terry Wang, chief financial officer of Trina Solar, echoed Mr Brannigan, saying the sports sponsorship was aimed at increasing brand awareness.

“Chinese brand names have to go out and reach out to every corner of the globe,” he said, adding that awareness of Chinese brands was already on the rise.

One conundrum for Chinese firms as they move overseas is how to present their Chinese origins to consumers. Trina and Suntech, for example, chose names that sound less Chinese.

Mr Brannigan said that was never a question for Yingli, which has maintained its Chinese name and advertises its hometown on its web page.

“There are very very few [solar] companies who are so openly Chinese,” said Mr Brannigan. “I don’t know of a lot of Chinese brands that are openly Chinese that are coming into Europe.

http://www.ft.com/cms/s/0/0d133b8e-88f2-11df-8925-00144feab49a.html?ftcamp=rss

China exports up 35 percent in June
(Xinhua)
Updated: 2010-07-10

BEIJING: China's trade surplus fell by 42.5 percent in the first six months this year from a year earlier to 55.3 billion U.S. dollars, the General Administration of Customs (GAC) said Saturday.

In the first half of 2010, exports rose 35.2 percent to 705.09 billion dollars while imports were up 52.7 percent to 649.79 billion dollars, the GAC said in a statement posted on its official website.

China's foreign trade in the first half totaled 1.35 trillion dollars, a year-on-year increase of 43.1 percent, after the country saw its June exports and total trade both reach record highs, the GAC said.

In June, exports were up 43.9 percent to 137.4 billion dollars while imports were 117.37 billion dollars, up 34.1 percent year on year, resulting in a total trade value of 254.77 billion dollars, the GAC said.

The June exports increased 4.3 percent from May and the imports were 4.6 percent higher from the last month, according to the statement.

However, the paces of growth in exports and imports were both slower than in May when exports surged 48.5 percent and imports jumped 48.3 percent from a year earlier.

http://www.chinadaily.com.cn/china/2010-07/10/content_10090793.htm

3 Chinese firms in top 10 of Fortune 500

By Zhang Jiawei (chinadaily.com.cn)
Updated: 2010-07-09

A total of 54 Chinese companies are in the Fortune Global 500 companies list by revenue, with three of them in the top 10, chinanews.com.cn reported, citing the newest ranking issued on Thursday.

The three Chinese companies, namely Sinopec, State Grid and China National Petroleum, ranked 7th, 8th and 10th, respectively.

China's private firm Huawei Technologies entered the list for the first time, ranking 397th with $21.8 billion in revenue.

Wal-Mart regained the No 1 spot, with revenue of $408.2 billion, leaving behind oil companies Royal Dutch Shell and Exxon Mobil.

The oil-spilled BP and recall-slapped Toyota didn't seem to be affected by their business troubles, ranking 4th and 5th, respectively.

The full list is posted on www.fortune.com.

http://www.chinadaily.com.cn/china/images/attachement/jpg/site1/20100709/002170196e1c0da1064203.jpg


http://www.chinadaily.com.cn/china/2010-07/09/content_10087858.htm

China's forex reserves reach $2.45 trillion

(Xinhua)
Updated: 2010-07-11

BEIJING - China's foreign exchange reserves reached $2.4543 trillion by the end of June, up 15.1 percent year on year, the People's Bank of China, the central bank announced on Sunday.

Statistics from the central bank show China's foreign exchange reserves increased by $7.2 billion in the second quarter, a drastic decrease compared to the first quarter, when reserves grew by $126.5 billion.

On a monthly basis, reserves increased by $43.4 billion in April followed by a reduction of $51 billion in May, while June saw reserves increase by $14.8 billion.

China's gold reserves stood at 33.89 million ounces at the end of June.

http://www.chinadaily.com.cn/china/2010-07/11/content_10091426.htm

3 Chinese firms in top 10 of Fortune 500

By Zhang Jiawei (chinadaily.com.cn)
Updated: 2010-07-09



http://www.chinadaily.com.cn/china/2010-07/09/content_10087858.htm

Not only that. They got 54 companies in the Global Fortune 500 lists vs. 38 German companies. They are still a long way from Japan which has 71 companies plus the United States which has more than 146 companies. It's interesting that the 3 is in the top 10 while the next ones ranked in 120th plus. I am excited on AgBank's IPO tomorrow though. I hope it's going to be something big like in $22 billion range to break the record.

http://www.newsweek.com/etc/designs/newsweek/img/logo/print-logo.png (http://www.newsweek.com)

China for the Chinese

Why the Chinese themselves, and not outsiders, will cash in on the next big wave of growth.

by Isaac Stone Fish (http://www.newsweek.com/authors/isaac-stone-fish.html)
July 12, 2010
http://www.newsweek.com/content/newsweek/2010/07/12/china-for-the-chinese/_jcr_content/body/mainimage.img.jpg/1279060251147.jpg
Reuters-Landov
New cars in a parking lot of Changan Ford Mazda Automobile Co. Ltd, Ford Motor’s joint venture in China in January.


If there was ever a city that exemplified the economic future of China, it’s the western metropolis of Chongqing. A frenetic sprawl of 32 million people, it’s also a place where you will find surprisingly few foreign visitors, or even non-Chinese firms. At one recent trade show of companies bidding for business in the fast-growing region, some 80 percent of the firms offering everything from heavy machinery to automotives to financial services were Chinese—up-and-coming names like Lifan, BYD, and many others that may one day be global brands. Most of the buyers were Chinese, too—many of them government officials or executives from the state-owned firms that increasingly dominate the Chinese economy.

All this speaks to China’s new growth trajectory, one that is defined by Chinese companies and Chinese demand, rather than outsiders. The epicenter of the new growth is the country’s vast western expanse, rather than its eastern coastline. While economists inside and outside China are bearish on export-oriented coastal cities with worrisome property bubbles, they are extremely bullish on the prospects of western China, which enjoys higher growth rates, more favorable government policy, and the possibility of a huge consumption binge: western Chinese have less than half the number of cars and air conditioners per capita than their counterparts to the east. Western China also happens to be where 68 percent of the country’s natural gas, 53 percent of its coal, and 30 percent of its iron ore are located. But while foreign firms are salivating over the potential gains to be had from all this, it’s the Chinese themselves, rather than outsiders, who will likely tap them.

The shift is a function of China’s new place in the world. When the country began opening itself up to development in the 1980s and ’90s, its economy was 8 percent the size it is today. Beijing knew it needed both income and expertise from foreign players. “The political thrust in the 1990s was to integrate China into global economic relations,” says Hans-Joerg Probst, ERGO Insurance Group Beijing’s chief representative, who was present at the time. Foreign companies, buoyed by favorable policies and weak domestic competition, thrived along with the coast itself.

Now the eastern seaboard has a respectable per capita income, and development policy has shifted west. Just last week the government announced new western infrastructure projects totaling $101 billion, even more than the 2009 figure. But unlike in the late 20th century, China has the financial resources, experience, and confidence it gained to build the west largely on its own. What’s more, the fact that the region is rich in natural resources (largely the purview of state-run energy and power firms in China) and borders politically troublesome areas like Tibet and Xinjiang means that the government is more likely to want to exert greater control in commercial affairs there. “The central government has definitely given the west more investment” than it gave the eastern coast in the 1990s, says Yu Hejun, director of western development at the NDRC, the powerful Chinese government agency tasked with economic reform. While eastern China was more of a private-sector entrepreneurial growth story, the development of the west is a study in state-led capitalism.

Witness this week’s massive IPO of the Agricultural Bank of China, the major commercial bank serving the western part of the country. Unlike the public offerings of other state-owned banks, this IPO was done without a foreign partner, in part because of mistrust toward overseas financial institutions that, post–financial crisis, are increasingly perceived as unreliable. The financial crisis has also exacerbated the transfer of capital from West to East, so that even if U.S. banks weren’t out of political favor in China, the Chinese themselves would simply have more cash on hand, both in the public and private sectors, to fund their own development. “Over the next 10 years, there’s going to be a huge shift in the nature of private investment in China; much more of the money is going to come from Chinese rather than foreigners,” notes one well-known American consultant operating in the region. In fact, it’s a change that’s already well underway. In 1996 foreign investment (not including Hong Kong and Taiwan) represented 8.2 percent of total investment in China. In 2008, the most recent year for which figures are available, it was 4.9 percent, according to Roland Berger Strategy Consultants.

China’s current emphasis on rebalancing its economy toward domestic demand (spurred in part by American pressure for China to resolve its trade imbalance) also means less of a golden handshake for foreign companies. In the ’80s and ’90s local governments in eastern China would attract foreign investment by providing infrastructure parks where firms could put their factories and outsourcing operations, says Ben Simpfendorfer, chief China economist at RBS. “Now, with the focus on domestic consumption, you need to provide things like lower-cost housing, and that’s not something that foreign companies can do,” given that housing markets not only in China but around the world are hyperlocal.

Beyond the sectors such as telecommunications and steel that are explicitly off limits to foreigners, local firms also have a leg up in the fast-growing west, where few multinationals have yet to venture (a Roland Berger study found that only 6 percent of foreign firms registered in China have a western presence). “It was really not sexy to go out west until the economic crisis hit,” says Dan Foa, COO of FairKlima Capital, a Chinese investment company. Foreign firms’ relative lack of business experience in a region where connections, trust, and relationships with the local bureaucracy play an even larger role than they do on the country’s eastern seaboard is a major disadvantage. “The guanxi network gets even thicker when you move to less-developed places,” says a foreign business executive who asked to remain nameless because of business problems involving communication between Beijing and the western regions.

Even if all things were equal, basic geography will always favor Chinese development of the west. Transport costs are much higher for foreign firms than they are on the coast, and the proximity and cultural similarity of countries like Singapore, Taiwan, and South Korea—the so-called Asian tigers—favor regional partnerships dominated by the Chinese, rather than ventures run by Western multinationals. “There’s a good reason why Shanghai isn’t 2,000 miles inland,” says Fraser Howie, an expert on the Chinese stock market. And many good reasons why the next Shanghai will be located inland.

Source (http://www.newsweek.com/2010/07/12/china-for-the-chinese.html)

China GDP up 11.1% in 1st half of 2010

China's economy grew 11.1 percent year-on-year to hit 17.28 trillion yuan ($2.55 trillion) in the first six months, the National Bureau of Statistics (NBS) said Thursday.

The gross domestic product (GDP) rose 10.3 percent in the second quarter over a year earlier, slowing from the 11.9 percent growth in the first three months, according to the NBS.

http://www.chinadaily.com.cn/china/images/attachement/jpg/site1/20100715/002170196e1c0da8ed1438.jpg
A boy walks past a billboard that shows the Central Business District in Beijing, July 15, 2010. China's economy grew 11.1 percent year-on-year to hit 17.28 trillion yuan ($2.55 trillion) in the first half of this year. [Photo/Agencies]

"A slowdown in the growth rate will benefit the economy because it will prevent it from growing too fast and being overheated," said Sheng Laiyun, a NBS spokesman, Thursday.

June CPI rises 2.9%

The consumer price index (CPI), a main gauge of inflation, increased by 2.6 percent year-on-year during the January-June period.

The consumer inflation eased to 2.9 percent in June from May's 3.1 percent.

It was below the 3 percent target ceiling for the year set by the government in March.

In the first six months, consumer prices in China's urban areas increased 2.5 percent and in rural regions by 2.8 percent. Food prices, which account for about a third of the weighting in calculating the CPI, gained 5.5 percent.

In June alone, food prices rose 5.7 percent year on year, according to the NBS.

"China's inflation in the first half was mild and within the range of management," Sheng told a news conference.

China's producer price index (PPI) grew 6.4 percent year on year in June, Sheng said, adding the figure for the first six months was 6.0 percent up from a year ago.

Retail sales up 18.2% in H1

China's retail sales grew 18.2 percent to 7.27 trillion yuan in the first half of the year from a year earlier, according to the NBS.

Urban consumption hit 6.27 trillion yuan in the first six months, up 18.6 percent from a year earlier, while rural residents spent 1 trillion yuan, up 15.6 percent.

China's auto sales in the first half of the year rose 37.1 percent from a year earlier, furniture sales were up 38.5 percent and home appliances sales climbed 28.8 percent.

The government rolled out a series of incentives early 2009 to bolster consumption to counter fallout from the global economic downturn, including subsidies for home appliances in rural areas and tax breaks for auto purchases, among others.

Fixed-asset investment up 25% in H1

China's fixed-asset investment in the first six months rose 25.0 percent year on year to 11.42 trillion yuan.

Urban fixed-asset investment rose to 9.80 trillion yuan in the first six months, up 25.5 percent from a year earlier.

Rural fixed-asset investment expanded to 1.61 trillion yuan in the first six months, up 22.1 percent from a year earlier.

In urban fixed-asset investment, total investment in the primary sector (including farming, fishing and forestry) expanded 17.8 percent from a year earlier.

The industrial sector saw investment up 22.3 percent and investment in the tertiary sector, which covers commerce, finance and services, up 28.4 percent.

In terms of regions, central China rose the most by 28 percent in fixed-asset investment in the first six months from a year earlier, while western China increased 27.3 percent and eastern China climbed 22.4 percent.

Property market investment grew 38.1 percent to 1.97 trillion yuan in the first six months, up 38.1 percent from a year earlier.

Income increases for urban, rural residents in H1

The income of China's urban and rural residents continued to increase in the first half of the year, data from the NBS showed.

In the first six months of the year, per-capita disposable income for urban people reached 9,757 yuan, up 10.2 percent year on year. After deducting inflation, though, actual growth was 7.5 percent, said Sheng.

Per-capita cash income for rural residents stood at 3,078 yuan in the first half of the year, and the actual growth was 9.5 percent after deducting inflation, according to Sheng.

China's economy slows moderately

China's economy slowed in the second quarter as the government steered monetary and fiscal policy back to normal after a record credit surge last year to counter the global crisis.

Annual gross domestic product growth moderated to 10.3 percent from 11.9 percent in the first quarter, the National Bureau of Statistics (NBS) said on Thursday. The reading was slightly below market forecasts of 10.5 percent growth.

Inflation cooled to 2.9 percent in June, the statistics bureau also reported in Beijing today. Industrial output rose a less-than-estimated 13.7 percent.


Economists expect no dramatic policy response to Thursday's data. The government has engineered the slowdown -- markets feared overheating earlier this year -- and Premier Wen Jiabao has said the economy is going in the expected direction.

"The GDP and other activity data are basically in line with expectations, and consistent with our view that China's recovery is slowing from the fast pace set in the first quarter but remains relatively solid so far," said Brian Jackson, strategist at Royal bank of Canada in Hong Kong.

Factory growth slowed to 13.7 percent in the year to June, below forecasts for 15.3 percent and May's 16.5 percent growth.

"The good news is the economy is holding up. The bad news is investment is coming down, hence demand for commodities will fall," said Dong Tao, chief non-Japan Asia economist for Credit Suisse in Hong Kong.

The Shanghai stock market edged up 0.5 percent and stocks in Asia-Pacific outside Japan pared early losses and were broadly steady in a sign of relief that the data brought no major negative surprises.

China's GDP grew 11.1 percent year-on-year in the first half of this year to 17.28 trillion yuan ($2.55 trillion). Consumer price index (CPI), a main gauge of inflation, increased by 2.6 percent in the first half of this year from a year earlier, the National Bureau of Statistics (NBS) announced Thursday.

Unlike many of its Asian peers, most recently Thailand on Wednesday, China has not raised interest rates this year.

But year-on-year growth in the stock of outstanding yuan loans slowed to 18.2 percent at the end of June from 33.8 percent as recently as November. Growth in the M2 measure of money supply moderated to 18.5 percent from 29.7 percent over the same period.

Consumer price inflation fell to 2.9 percent in the year to June from 3.1 percent in May, below forecasts of a 3.3 percent rise. Consumption was resilient, even though annual retail sales growth eased to 18.3 percent in June from 18.7 percent in May.

Export growth has also remained robust, but the tightening measures for the housing market are now having an impact on infrastructure and real-estate spending.

Year-to-date investment in fixed-assets such as flats and factories slowed, growing 25.5 percent against a year ago period after a 25.9 percent rise in May.

A Reuters poll of economists released on Wednesday pointed to full-year growth of 10 percent in 2010, slowing to 9.0 percent in 2011.

Impressive, actually. Didn't expect it would happen that early.

China surpasses India for outsourcing

http://www.chinadaily.com.cn/bizchina/images/attachement/jpg/site1/20100715/0013729e43580da8a33405.jpg
Visitors at the eighth China International Software and Information Services Trading Fair held in Dalian last month. The Ministry of Commerce said that the nation's onshore and offshore outsourcing market hit $20 billion last year. [Wang Xizeng / for China Daily]

KPMG survey shows low labor costs top reason behind location selection

BEIJING - China has replaced India as the primary destination of outsourcing and shared services for Asia-Pacific companies, accounting firm KPMG revealed on Wednesday.

The KPMG survey, which covered 280 senior company executives across Asia, showed that China's outsourcing and shared services are rapidly expanding and winning market share over India and other regional destinations.

"Though at the moment the country has still not reached the level of maturity seen in India, the growth of China's outsourcing market is significant. Many Western companies may still see India as their location of choice, but for executives within Asia Pacific the message is clear - China is now leading the way," said Edge Zarrella, global head, IT Advisory, KPMG China.

According to the survey, 42 percent of the respondents said their companies have set up one of their shared services centers in China. With regard to outsourcing, 41 percent said they have a third-party outsourcing provider in China.

Singapore stands second as a popular location for shared services at 29 percent, followed by India at 25 percent.

Figures from KPMG show that in 2007, China's onshore and offshore outsourcing market stood at only $7.5 billion. That amount nearly tripled to $20 billion last year, according to the Ministry of Commerce. By 2014, KPMG predicts that China's total outsourcing market will stand at $43.9 billion.

Moreover, shared services are also expanding rapidly in China. The survey finds that over 80 percent of senior executives employ an outsourcing strategy, shared services, or a combination of the two.

Senior executives across the Asia-Pacific also view China as the preferred destination for setting up shared services centers.

The survey also revealed low labor costs as one of the reasons for contracting outsourcing providers (51 percent of respondents choose low labor costs as the top factor), although it is clear that this is far from the sole determining factor.

In addition, when asked about key factors used in determining the location of their shared services center, respondents once again cited low labor costs, as well as language capabilities (53 percent each).

According to Alan Fung, partner of performance & technology, KPMG China, senior executives should be careful about making location choices based on cost.

"They should take into consideration the longer term needs of their business and how employing their outsourcing and shared services approach can align with their wider business growth strategy," he said.

The key rationale driving outsourcing strategies, Fung said, is no longer just cost arbitrage.

Equally or even more important is the need to ensure access to a reliable supply of abundant and skilled talent. Language, skills and infrastructure are all critical.

China's economy grew 11.1 percent year-on-year to hit 17.28 trillion yuan ($2.55 trillion) in the first half of this year.

Anybody knows the size of the China's economy on the second semester last year? We can approximately predict China's economy for 2010 (assume for the second semester the growth is about 10-10.5%).

^^ 13.99 trillion yuan. So yes, the 2010 figure is 23.5% higher. And since we are measuring in yuan we don't even include the yuan revaluation factor. How do they measure growth rates? I can't understand. I don't think 3% inflation can subtract 12 points.

On the other hand, that was the 2009 figure released in July 2009, preliminary data, and not the post revised figure, that must be around 2-5% higher. But also the 2010 figure we have now is pre revised.

^23.5% higher? I do not understand the number in terms of yuan. Suppose N is the GDP of China in 2nd semester of 2009 in terms of US$. Then 1.1 x N should be about US$3B. So the overall GDP for 2010 will be about 5.55B. This is my logic. But CMIIW.

Let's just say that it's confusing, and presented in a misleading way. Happens with every country's economic growth.

It's analogous to the concept of "annualized" growth rates that "developed" countries use. They say that they grew "7% at an annualized rate" when the real growth rate is something like 0.5%.

^23.5% higher? I do not understand the number in terms of yuan. Suppose N is the GDP of China in 2nd semester of 2009 in terms of US$. Then 1.1 x N should be about US$3B. So the overall GDP for 2010 will be about 5.55B. This is my logic. But CMIIW.
It's not a matter of currency.

H1 2009: 2.06 trillion U.S. dollars
http://news.xinhuanet.com/english/2009-07/16/content_11716570.htm

H1 2010: 2.55 trillion U.S. dollars
http://news.xinhuanet.com/english2010/china/2010-07/15/c_111958787.htm

+23.8%. And keep on mind that China's H2 GDP is always far higher than H1.

This is why barely every source has always underestimated China's ultrafast climb in the world GDP ranking.

Check these figures. Source: IMF world economic outlook database.

2004: 1.931 trillion U.S. dollars
2005: 2.235 trillion U.S. dollars (+15.7%)
2006: 2.657 trillion U.S. dollars (+18.9%)
2007: 3.382 trillion U.S. dollars (+27.3%)
2008: 4.519 trillion U.S. dollars (+33.6%, and more than double the 2004 figure)

2006 and 2007 were esecially crazy on yuan revaluation and high inflation, but this is the trend. The headline growth is meaningless when predicting how long till China's GDP catches up with whatever.

China GDP up 11.1% in 1st half of 2010

China's economy grew 11.1 percent year-on-year to hit 17.28 trillion yuan ($2.55 trillion) in the first six months, the National Bureau of Statistics (NBS) said Thursday.



Another mistake and now it's only half of the real gdp. When are they going to learn? :ohno:

Source????

So what are the the numbers right now. I can't wait to see Japan's GDP and its probably in a tied up mode right now or Japan in a slight lead. Anyway, China needs to slow it down.

Another mistake and now it's only half of the real gdp. When are they going to learn? :ohno:

Source????

So what are the the numbers right now. I can't wait to see Japan's GDP and its probably in a tied up mode right now or Japan in a slight lead. Anyway, China needs to slow it down.

This is the Chinese GDP figure for the 1st half of 2010, the Growth number of the 2nd half will be revealed at the end of this year; which is estimated to be around 10% I believe :ohno:.

Indeed, it is slowing down thanks to tightening govt. regulations on overheating sectors.

^zorg, I understand your point now. That is why probably GDP is best to be viewed in terms of Yuan, since the exchange rate is fluctuating somewhat.

But yeah, the China's GDP number seems going upward unbelievable fast. I just think with 8% or more growth China's GDP will reach about US$10T from now, within about 8 years. With 10% growth, China's GDP will reach US$6T in 2011.

However, the method of calculating China's economic size and growth is not opened to us. Or there are other factors that we do not realize, in this economic measurement!?

Acer, Asus and Lenovo lead pack as PC sales surge
(AFP) – 2 days ago

WASHINGTON — Taiwan's Acer and Asus and China's Lenovo posted strong growth as personal computer sales surged more than 20 percent in the second quarter over a year ago, market research company Gartner said.

Gartner said worldwide PC sales increased 20.7 percent in the quarter to 82.9 million units. Another research group, the International Data Corporation (IDC), said they rose 22.4 percent over a year ago.

"The preliminary second quarter results indicate ongoing improvement of the PC market," Gartner principal analyst Mikako Kitagawa said.

IDC research analyst Jay Chou said the PC market "remains robust, and in a recovery phase, despite challenges to a broader economic recovery, such as slow job growth and a more conservative outlook in Europe and Asia-Pacific."

IDC vice president Bob O'Donnell said "the surge in consumer activity seen in the past two quarters has started to slow as expected, while commercial replacements continue to grow.

"We expect consumer activity to remain healthy, but gradually slow through the end of the year, while commercial market growth will be more stable," he said.

Gartner said US computer giant Hewlett-Packard remained the worldwide leader in PC sales but its year-on-year growth rate of 12.3 percent came in below the industry average of 20.7 percent.

HP's market share slipped to 17.4 percent from 18.8 percent a year ago.

Acer saw year-on-year growth of 31.6 percent and its market share increased to 13 percent from 12 percent.

Dell notched up 19-percent growth but its market share slipped to 12.4 percent from 12.6 percent and Gartner said the consumer market was "still a challenge" for the Texas-based company.

Lenovo posted year-on-year growth of 47.2 percent and increased its market share to 10 percent from 8.2 percent.

Asus registered the most spectacular growth -- 78.5 percent -- and the company leapfrogged Japan's Toshiba, grabbing a 5.2 percent market share, up from 3.5 percent a year earlier.

Toshiba posted a growth rate of 10.7 percent and slightly increased its market share, to 5.1 percent from 4.8 percent.

Gartner's Kitagawa said sales of mini-notebooks or netbooks -- low-cost, bare-bones laptop computers -- "slowed significantly" in the second quarter, an indication the market was maturing.

"Mini-notebook shipment growth still exceeded growth rates of the overall mobile PC market, but mini-notebook growth slowed to the low 20 percent range compared with more than 70 percent in the last two quarters," Kitagawa said.

"Surging popularity of Apple's iPad temporarily cannibalized mini-notebooks, as well as consumer notebook sales to some degree," she said. "It is not certain at this stage if the cannibalization will continue."
http://www.phim22.com/movie-watch/an_tinh_ho_ly_2010_04_25-29245.html

Let's just say that it's confusing, and presented in a misleading way. Happens with every country's economic growth.

It's analogous to the concept of "annualized" growth rates that "developed" countries use. They say that they grew "7% at an annualized rate" when the real growth rate is something like 0.5%.

Isn't "annualized" growth just the growth in the quarter x 4? To get the growth in the quarter one would just divide by 4, so if it was 7% at an annualized rate the growth in the quarter would be 1.75%

Isn't "annualized" growth just the growth in the quarter x 4? To get the growth in the quarter one would just divide by 4, so if it was 7% at an annualized rate the growth in the quarter would be 1.75%
No, it's not always x4. Usually I see higher than that. The point is, many countries like to multiply their growth by some almost-arbitrary amount to make themselves look like they're booming more.

CHINA'S BAMBOO INDUSTRY BOOMS FOR GREENER ECONOMY
BEIJING, July 18 (NNN-Xinhua) -- China's flourishing bamboo industry is becoming one of the pillar sectors in the country's forestry industry and also a key in the country's efforts to establish a low-carbon economy, an industry leader said in Beijing.

With 5.38 million hectares of bamboo plantations and an annual increase of 100,000 hectares, China is leading the world's bamboo industry in its number of varieties, amount of bamboo reserves, as well as production output, said Jiang Zehui, co-chair of the International Network for Bamboo and Rattan (INBAR)'s board of trustees.

The Chinese government is also working to develop its bamboo industry to meet its goals in environmental protection and green economic development, as planting bamboo is both profitable and environmentally-friendly, Jiang said in an exclusive interview with Xinhua.H

An INBAR report in 2009 suggested that bamboo was proven environmentally-friendly since it draws in carbon dioxide and gives off oxygen as it grows, and grown bamboo can capture and hold more carbon dioxide than equivalent plantation trees.

To promote the development of the bamboo industry, China has encouraged technological innovations. "Nearly 200 patents have been applied to develop more uses of bamboo, which has greatly assisted in the development of the industry," said Jiang.

According to Jiang, new processing techniques have led to a variety of new bamboo products, such as raw bamboo, daily-used goods, artifacts, plates, and bamboo charcoal, which are widely used in different sectors ranging from construction, packaging, transportation, medicine to tourism.

A further opening up of the international market also helped to boost the industry. Health-care products and artificial plates made of bamboo were well received in Southeast Asia, Europe and America, she said.

China's bamboo industry has provided more than 35 million jobs, making the sector part of the new drive in the economic development of the world's largest agricultural country. The bamboo sector chalked up 70 billion yuan (10.33 U.S dollars) in total output value last year.

Jiang admitted that despite all the positive signs, problems and challenges remained in the industry.

"The imbalance of regional development, insufficient use of certain species and low productivity had left many resources untapped," she said.

"Most of the bamboo manufacturers are small-scaled. Those with an annual production of over one million yuan only account for 8 percent of the total industry," she added.

Jiang called for the establishment of a high-tech industrial chain to enhance efficiencies within the bamboo sector with more encouragement for technology innovation and an optimization of the production structure.

"Developing the bamboo industry is of great significance to protecting the environment and developing a greener economy," she said.

The Chinese government promised last November that it would reduce its carbon dioxide emissions per unit of gross domestic product by 40 to 45 percent by 2020 compared with the 2005 level. http://namnewsnetwork.org/v2/read.php?id=127323

Isn't "annualized" growth just the growth in the quarter x 4? To get the growth in the quarter one would just divide by 4, so if it was 7% at an annualized rate the growth in the quarter would be 1.75%

gee, you guys really need to refresh your mathematics. Annualization of a change rate is not done by multiplying but by raising powers. So if 7% is an annualized rate, the quarterly rate R satisfies the equation:

(1+R)^4 = 1 + 0.07

which gives R = (1.07)^(1/4) - 1 = 1.7%

To be sure, for small numbers division by 4 gives good enough approximations. But you see for 7% there is already a significant discrepancy.

China should cut U.S. Treasury holdings: economist (http://www.reuters.com/article/idUSTRE66I05U20100719)
(Reuters) - China should cut its holdings of U.S. Treasury securities when market demand is strong, a prominent economist said in remarks published on Monday.

Beijing reduced its Treasury holdings in May by $32.5 billion to $867.7 billion, but it actually bought a net $3 billion in long-term Treasuries and remained the largest single holder of U.S. government debt, the Treasury reported on Friday.

Yu Yongding, a former academic adviser to the central bank and now a professor with the Chinese Academy of Social Sciences, said Beijing should invest in assets denominated in other currencies as well as other financial instruments and real goods.

"Although assets in other currencies and forms are not an ideal replacement for U.S. Treasury bonds, diversification should be a basic principle," Yu wrote in the China Securities Journal.

"When demand for U.S. Treasury securities is strong, it's a rare opportunity for us to gradually pull back. That way, it will not have a big impact on prices and China will not suffer too much," he said.

Zhang Monan, a researcher with the State Information Center, a think tank under the powerful National Development and Reform Commission, told the paper that China should invest more of its $2.5 trillion of foreign exchange reserves, the world's largest stockpile, in hard assets such as gold.

China should cut U.S. Treasury holdings: economist (http://www.reuters.com/article/idUSTRE66I05U20100719)

Gold is not the right commodity to buy right now. It's just way overpriced. Try something else like Investments in one of the developing countries such as India and Brazil. Indonesia will be a good deal too. Or probably time to open Myanmar and North Korea? People inside are not ready yet?

^^In my opinion currency basket and minerals are the solution.

Investing in world major currency like Euro, Yen, Pound, India Rupee, etc. To create currency basket.

And also buy and stockpiling a lot of minerals like US did.

China to Have World's Second Largest Fiscal Revenue

2010-07-02

China is expected to collect a government revenue of eight trillion yuan this year, giving it the second largest fiscal revenue in the world. America has the largest.

While the growth rates of fiscal revenues of developed countries have been around one percent or even negative in the first five months of this year, China's growth rate has been 30.8 percent.

By June, many provinces had already gained half of their planned annual fiscal revenue, one month ahead of schedule. "China should not have a problem in achieving a revenue growth of 10 percent in the second half of this year," an official with the State Administration of Taxation (SAT) said.

Ensuring that the increasing fiscal revenue will be used to improve the livelihood of ordinary people is an issue the Chinese government must deal with.

Eight Trillion Yuan!

China collected a government revenue of 3.547 trillion yuan in the first five months of this year, 836.2 billion yuan more, a 30.8 percent increase, from that of the same period last year, and 200 billion yuan more than the total amount of the first half of last year. The world has been taken by surprise by the huge amount of fiscal revenue China has managed to gain despite the financial crisis.

The amount of fiscal revenue China earned in June is not known. But, according to an official with the SAT, based on statistics from the first half of June, June's growth rate will decrease, but will not reach zero.

Officials with the Ministry of Finance said fiscal revenue would experience a high growth rate in the first half of this year and growth would slow in the second half.

Based on conservative estimates, China will gain a fiscal revenue of over 4.3 trillion yuan in the first half of this year and its total revenue for the year will exceed eight trillion yuan. Earlier this year, China released its budget which showed its plans to collect 7.4 trillion yuan in fiscal revenue.

Harvest Season

"The four-trillion-yuan stimulus package has brought about huge tax revenues," a local taxation official said. With some big projects beginning to run this year, companies have begun gaining revenue and the income gained from the value-added tax, corporate income tax and other taxes has greatly increased.

For example, 882 billion yuan has been invested into subway systems and inter-city railway projects in 22 cities. The train cars involved in these projects have already been delivered or are in the process of being delivered.

China South Locomotive & Rolling Stock Corporation Limited, China's largest locomotive manufacturer, has paid a monthly tax of over ten million yuan in the first half of this year.

The individual income tax imposed on the sale of restricted shares has also produced a large amount of tax revenue for the government. "This form of revenue did not exist in the past," according to local taxation official.

Since January 1, 2010, China began to collect tax from individuals who sell their restricted shares. According to an official with the SAT, from January to March, the 33 provinces and cities directly under the central government collected 885 million yuan of individual income tax on the sale of restricted shares with a rate of 93,700 yuan per capita and the largest tax payer paying 41.29 million yuan.

"The tax revenue brought about by individual income taxes on property transfers has risen by 70 percent in the first four months this year," an official with the SAT said.

The property industry which had been prosperous since the second half of last year up through the first quarter of this year has also greatly contributed to China's fiscal revenue. According to statistics from the Ministry of Finance, the tax revenue concerning land and property contributed to over 35 percent of the total tax revenue last year.

A report from the Ministry of Finance also indicates that there is a correlation between the fast growth of the corporate income tax, individual income tax, business tax, and contract tax with the prosperity of the property sector. For example, the sales tax has grown by 41 percent in the first quarter of this year, including the real estate industry sales tax which has risen by 118 percent.

In the first half of this year, local taxation officials have been required by the SAT to inspect the value-added tax on land nationwide. The inspection has at least doubled land value-added tax revenue and has possibly increased it by four to five times. The national tax inspection targeted at property companies and key enterprises will also bring about large tax revenues.

Last week, the Ministry of Finance announced that as of July 15, the central government would no longer provide an export tax rebate on 406 products, indicating that fiscal revenue will further increase.

Yet fiscal revenue will slow in the second half of this year; the government's tough position on the property industry will be the main reason for a decrease in tax revenue. A local taxation official said, the influence of the government's regulation on tax revenue from the property industry will begin to be apparent in the second half of this year since those policies were issued in April.

An official with the SAT told the EO, although there are elements that will reduce tax revenue, business investment has recovered and the growth rate of tax revenue should be no less than 10 percent for the second half of this year. In China, according to the government budget which was made public, tax revenue accounts for 95 percent of government fiscal revenue.

But this public budget does not contain government funds nor the income dividends paid by centrally-owned enterprises to the central government. Since last year, the considerable income gained from land transfer fees was contained in the governmental fund budget, but not in the budget made public.

Yang Zhiyong, a researcher with the Chinese Academy of Social Sciences Institute of Finance and Trade Economics, said if China's fiscal revenue was tallied using the same methods of most countries by including government funds of 1.8 trillion yuan and profit from state-owned capital which is 42.1 billion yuan, China's fiscal revenue would far exceed its current level of 8 trillion yuan.

Cutting the Cake

The cake is getting bigger and bigger; there has been continual discussion on how to divide up the slices of China's fiscal revenue. Though the government has been putting more into social security, health care and education, people are still not satisfied with the growth rate of these types of investments.

The first task of the income distribution reform project drafted by the National Development and Reform Commission (NDRC) is to increase the amount of fiscal revenue that is spent on improving China's social security system.

Stephen Green, who heads the Greater China research team at Standard Chartered Bank, stresses China's need to reduce its administrative expenditures while expanding its funds spent on social security. "Based on World Bank data, China only spends 1.2 percent of its GDP on its health care system. That's too little."

Germany spends over 33 percent of its GDP on its social security system, one third of which flows to its old-age pensioners and one fifth of which is spent on its statutory health insurance scheme.

The Blue Paper on Development and Reform released by the China Development and Reform Institute, states that although China has been investing more and more into its health care system, the ratio of the total government funds to the total expenditure on health care has been yearly decreasing. The ratio of government expenditure on the health care system to its fiscal revenue and GDP has also been decreasing over the past 15 years.

Before the development of China's recent stimulus package, Green recommended that the Chinese government take advantage of this opportunity to greatly increase the amount it spends on social security, health care, education and policy-based housing and begin providing insurance for ordinary people which would promote domestic consumption instead of their plan to increase GDP by constructing a large number of infrastructure projects.

Yang Liangchu, director of the Ministry of Finance's research department, said China's expenditure on its social security system only amounts to 12 percent of its GDP while that of developed countries is usually over 30 percent; some developed countries even spend half of their GDP on social security. China needs to invest more in its social security system.

"We cannot become a universal welfare state; that would be a great financial burden and would produce a vicious cycle in which we have to continuously collect more taxes to maintain a high level of social security. However, we do have to increase how much we spend on social security," Yang Liangchu said.

Chinese people have a relatively high tax burden compared with residents of other nations. Green believes that China should reduce the amount individuals and enterprises pay in social security fees and have the government contribute more. According to his understanding, currently the social security fee paid by enterprises and individuals accounts for 42 percent of salary costs; that is more then they should have to bear.

http://www.eeo.com.cn/ens/finance_investment/2010/07/02/174388.shtml

Stephen Green, who heads the Greater China research team at Standard Chartered Bank, stresses China's need to reduce its administrative expenditures while expanding its funds spent on social security. "Based on World Bank data, China only spends 1.2 percent of its GDP on its health care system. That's too little."

Germany spends over 33 percent of its GDP on its social security system, one third of which flows to its old-age pensioners and one fifth of which is spent on its statutory health insurance scheme.

The Blue Paper on Development and Reform released by the China Development and Reform Institute, states that although China has been investing more and more into its health care system, the ratio of the total government funds to the total expenditure on health care has been yearly decreasing. The ratio of government expenditure on the health care system to its fiscal revenue and GDP has also been decreasing over the past 15 years.

Before the development of China's recent stimulus package, Green recommended that the Chinese government take advantage of this opportunity to greatly increase the amount it spends on social security, health care, education and policy-based housing and begin providing insurance for ordinary people which would promote domestic consumption instead of their plan to increase GDP by constructing a large number of infrastructure projects.

Yang Liangchu, director of the Ministry of Finance's research department, said China's expenditure on its social security system only amounts to 12 percent of its GDP while that of developed countries is usually over 30 percent; some developed countries even spend half of their GDP on social security. China needs to invest more in its social security system.

"We cannot become a universal welfare state; that would be a great financial burden and would produce a vicious cycle in which we have to continuously collect more taxes to maintain a high level of social security. However, we do have to increase how much we spend on social security," Yang Liangchu said.

Chinese people have a relatively high tax burden compared with residents of other nations. Green believes that China should reduce the amount individuals and enterprises pay in social security fees and have the government contribute more. According to his understanding, currently the social security fee paid by enterprises and individuals accounts for 42 percent of salary costs; that is more then they should have to bear.

http://www.eeo.com.cn/ens/finance_investment/2010/07/02/174388.shtml

Yeah. They have to be careful on spending the budget on Health Care and Social Security. That's a big burden that will not be able to take back. In order to invest in Health Care system, one must check the percentage rate needed that will not hurt the overal GDP or Economy.

China still needs to reassure that energy, infrastracture, transportation, communication and security will always be prioritize. Education is also a big priority. However, someone needs to assure that the elite students deserves the best scholarship and make sure their future will not come on empty. Social welfare is another one that needs to be considered but like Health Care and Social Security, this one doesn't need to come in high percentage.

Interview: China economic fundamentals remain strong
by Cundoko Aprilianto/Li Xiaoyu
JAKARTA, July 27 (PNA/Xinhua) -- China's economic fundamentals is expected to remain strong though a soft landing of its economy is underway, due to supply adjustments such as closing of energy- inefficient industrial enterprises and high base effects like rebound in growth that started in second half of 2009, a high- ranking official told Xinhua in an exclusive interview recently.

"Chinese economy's fundamentals remain strong, in my view," said Sundram Pushpanathan, deputy ASEAN secretary-general for ASEAN Economic Community.

For example, he said, to date, growth indicators such as exports and retail sales continue to be robust.

"Recent measures to accelerate social housing projects in the country are also positive for growth," he said.

From a longer perspective, he added, China will continue to be an important force in global economy.

"This robust and positive outlook is driven by China's strong macroeconomic fundamentals, as a result of strong commitment to market reforms, rapid capital accumulation, and significant productivity gains," he said.

According to Pushpanathan, China's macroeconomic indicators have been arguably the healthiest among those emerging market countries.

"China's strong economic performance has positively influenced not just the East Asian region but also the global economy as shown by its strong growth amidst the crisis and its increasingly important role as provider of FDI especially to other developing countries," Pushpanathan said.

Regarding inflation, he said, the underlying inflationary pressure in China has started to ease as recent figures suggest, although the overall inflation outlook will remain benign.

He said that according to Morgan Stanley, year-on-year CPI inflation in China is likely to peak in the third quarter (around 3.4 percent) before edging down below 3 percent by year-end.

"Nonetheless, inflation rate is not likely to decelerate sharply, in my view. This is because some factors are underway to prevent such decline, including the potential increase in food prices, utility price deregulation, and possible appreciation of renminbi," he said.

He added that in light of receding inflationary pressure and moderation in growth, monetary conditions will continue to be supportive of the on-going recovery.

"This implies that the current monetary policy stance will remain for now, with no possibility of a rate hike in the coming months," he said.

Pushpanathan said that as the biggest emerging economy right now, China is doing very well, providing a strong support to global recovery.

"Although China is expected to grow by around 9.6 percent this year, some risks remain, and which implies that domestic policy stance needs to be effectively managed," he said. http://www.pna.gov.ph/index.php?idn=3&sid=&nid=3&rid=290340

This is the Chinese GDP figure for the 1st half of 2010, the Growth number of the 2nd half will be revealed at the end of this year; which is estimated to be around 10% I believe :ohno:.

Indeed, it is slowing down thanks to tightening govt. regulations on overheating sectors.

Huh?

China Overtakes Japan as No.2 Economy: FX Chief


China has overtaken Japan to become the world's second-largest economy, the fruit of three decades of rapid growth that has lifted hundreds of millions of people out of poverty.

Depending on how fast its exchange rate rises, China is on course to overtake the United States and vault into the No.1 spot sometime around 2025, according to projections by the World Bank, Goldman Sachs and others.

China came close to surpassing Japan in 2009 and the disclosure by a senior official that it had now done so comes as no surprise. Indeed, Yi Gang, China's chief currency regulator, mentioned the milestone in passing in remarks published on Friday.

"China, in fact, is now already the world's second-largest economy," he said in an interview with China Reform magazine posted on the website (www.safe.gov.cn) of his agency, the State Administration of Foreign Exchange.

Cruising past Japan might give China bragging rights, but its per-capita income of about $3,800 a year is a fraction of Japan's or America's.

"China is still a developing country, and we should be wise enough to know ourselves," Yi said, when asked whether the time was ripe for the yuan to become an international currency.

CAN IT BE SUSTAINED?

China's economy expanded 11.1 percent in the first half of 2010, from a year earlier, and is likely to log growth of more than 9 percent for the whole year, according to Yi.

China has averaged more than 9.5 percent growth annually since it embarked on market reforms in 1978. But that pace was bound to slow over time as a matter of arithmetic, Yi said.

If China could chalk up growth this decade of 7-8 percent annually, that would still be a strong performance. The issue was whether the pace could be sustained, Yi said, not least because of the environmental constraints China faces.

In an assessment disputed by Beijing, the International Energy Agency said last week that China had surpassed the United States as the world's largest energy user.

http://abcnews.go.com/Business/wirestory?id=11285566&page=1

Is that one confirmed now? I am sure they already overtook Japan as No. 2 but there is no confirmation yet from any big financial institutions.

Is that one confirmed now? I am sure they already overtook Japan as No. 2 but there is no confirmation yet from any big financial institutions.

no it's not confirmed yet, maybe at the end of the year

the rankings will be updated in the IMF list in april 2011

Chinese industrial growth slows again

11 August 2010

Chinese industrial growth slowed again in July, adding to data suggesting that the country's economy is cooling.

Factory output was up 13.4% from July 2009, but this was the fifth consecutive month the annual pace had slowed and the lowest rate of 2010.

Retail sales and factory investment also eased, the National Bureau of Statistics said.

It comes after Beijing has cut stimulus measures, closed inefficient factories and curbed bank lending.

"This tells us economic growth is continuing to slow," said economist Zhu Jianfang of Citic Securities in Beijing.

"If they don't make changes, the economy will see a danger of further sliding."

Separate figures showed that Chinese inflation accelerated in July, as floods destroyed crops and disrupted transport routes, driving up food prices.

Inflation as measured by the consumer price index reached 3.3% last month compared with 2.9% in June, the National Bureau of Statistics said.

Import impact

Earlier this week, figures showed that China's import growth had slowed in July, which economists had seen as a sign that the country's rapid economic expansion was cooling.

However, exports rose by 38.1%, from June's 35.2%, as China's trade surplus increased.

There are worries that if China's demand for imports slows it could hinder the global economic recovery.

Official figures out last month suggested that China's economy grew at an annual pace of 11.9% in the first quarter of 2010, slowing to 10.3% between April and June.

http://www.bbc.co.uk/news/business-10936024

China's Rich Have $1.1 Trillion in Hidden Income, Study Finds

China’s households hide as much as 9.3 trillion yuan ($1.4 trillion) of income that is not reported in official figures, with 80 percent accrued by the wealthiest people, a study showed.

The money, much of it likely “illegal or quasi-illegal,” equates to about 30 percent of China’s gross domestic product, the study, conducted for Credit Suisse AG and published last week by the China Reform Foundation, found. The average urban disposable household income in China is 32,154 yuan, or 90 percent more than official figures, according to the report.

Most of that extra cash is going to the wealthiest families. The top 10 percent of China’s households take in 139,000 yuan a year, more than triple the official figures, according to the Credit Suisse report. In contrast, the bottom 10 percent earns 5,350 yuan, or 13 percent more. The top 20 percent of households account for 81.3 percent of total hidden income, according to the study, written by Wang Xiaolu of the Beijing-based foundation.

The findings indicate China’s wealth gap between rich and poor, already one of the world’s highest, is even wider than official figures show. Reducing income disparities is a top goal of President Hu Jintao and Premier Wen Jiabao, who want to stave off riots, strikes and other social unrest that might threaten the six-decade rule of the Communist Party.

The “grey income” comes from many sources, including gifts to officials at weddings, profits from land transfers, kickbacks from construction projects, and payoffs from state monopolies such as the tobacco industry, the study said.

‘Crony Capitalism’

“Once government power is united with capital, the free competition of the market economy begins to be replaced by a monopoly of crony capitalism, leading to disparity in income and property distribution, lower economic efficiency and acute social conflicts,” Wang wrote in his report’s conclusion.

The study, compiled in 2009, is based on interviews with families in more than 4,000 urban households in 64 cities and 19 provinces, and uses 2008 data.

Its findings suggest that household income is a much higher percentage of GDP than official figures show, helping explain a surge in spending on luxury goods.

Gucci, a subsidiary of Paris-based PPR SA, last year opened a store in Hebei’s provincial capital of Shijiazhuang, selling snakeskin purses for more than $4,000, about twice the city’s official annual per-capita income. Munich-based Bayerische Motoren Werke AG said sales in China surged 82 percent to 13,852 cars last month from a year earlier.

Local Graft

The figures make sense of the wealth accumulated by local officials, often revealed during corruption trials. Hao Pengjun, a former county mine official in northern China’s Shanxi province, was jailed for 20 years in April for taking in 305 million yuan illegally, the People’s Daily reported. Hao owned 35 properties in Beijing including 17 in one development, according to the Shanxi Evening News.

Zhang Yingxiang, a spokeswoman for China’s National Bureau of Statistics in Beijing, said she hadn’t seen the study and said the bureau didn’t track grey income. She wouldn’t say whether China’s households had a substantial amount of hidden wealth.

--Michael Forsythe in Beijing, with assistance from Nerys Avery and Ying Diao in Beijing. Editors: Bill Austin, Paul Tighe

http://www.bloomberg.com/news/2010-08-12/china-s-wealthy-have-as-much-as-1-1-trillion-in-hidden-income-study-says.html

I.H.T. Op-Ed Contributor
Central Asia's New Silk Roads
By PARAG KHANNA
Published: August 12, 2010
ULAANBAATAR, MONGOLIA — The fate of the massive deposits of lithium recently discovered in Afghanistan is destined to be no different from that of landlocked Central Asia’s other natural resources: tapped by the West, and eventually controlled by the East.

Siberian timber, Mongolian iron ore, Kazakh oil, Turkmen natural gas and Afghan copper are already channeled directly to China through a newly built East-bound network that is fueling the rapid development of the world’s largest population.

China’s head-start in building roads, railways and pipelines across Central Asia creates an opportunity for the West — and the region itself. Rather than engaging in a high-stakes competition for Central Asia’s valuable resources — a new round of the 19th century Great Game — the West should support China’s initial steps by coaching local governments on how to expand textile and agricultural exports and avoid the resource curse that blights many developing, one-commodity nations.

China has paved the way to finally open up landlocked Central Asia, and the West should build on its success, creating a new, oil-fueled, East-West Silk Road.

Oil pipelines from the Caspian Sea across Kazakhstan, the recently opened gas pipeline from Turkmenistan via Uzbekistan and Kazakhstan, and other planned roads and railways across Russia as well as down to the deep sea port of Gwadar in Pakistan are all part of China’s effort to turn Central Asia from a region of buffer states into a transit corridor between East and West. Beijing’s leaders have rightfully looked to Eurasia as a rich source of natural resources to fuel their booming economy.

Rather than think of China’s moves into Central Asia — and into Africa — as a suspicious form of neocolonialism, Western countries should focus on how to use Chinese-built roads and railways to make their own floundering regional strategy a success. This means cooperation rather than competition, and it can happen through heavy infrastructure investment, building new lines on the map that transcend arbitrary borders and bring real economic value.

The most essential of these projects are the as-yet unbuilt Turkmen-Afghan-Pakistan-India (TAPI) and Iran-Pakistan-India (IPI) gas pipelines. With respect to the former, the West’s inability to secure Afghanistan has delayed a valuable enterprise that has willing investors and backing from the Asian Development Bank. Yet what greater priority could there be than creating jobs for Afghans in building this energy corridor, thus lowering fuel costs for energy-starved Afghanistan and Pakistan? The military strategy in Afghanistan should include security for economic development projects like this pipeline.

As for IPI, Iran and Pakistan signed a major agreement recently to move ahead with construction — despite U.S. objections.

What Washington must appreciate is that isolating Iran, a central bridge between the Near East and Central Asia, is futile. Europeans and Chinese understand this, and their priorities — such as the European Nabucco pipeline and Chinese-financed roads across northern Afghanistan to Iran — stand a better chance of stabilizing the region while thawing ties with Iran.

Tapping resources that local governments don’t have the wherewithal to extract and managing them well is a win-win for all sides. Afghanistan today has little in the way of a mining sector, but Chinese, Australian and Russian companies can lead the way. That’s what has happened in Mongolia for decades, leading to a mineral export bonanza and rapid economic growth. But Mongolia has also tapped Western knowledge, copying the model of Norway to set up a National Development Fund to distribute shares of mineral profits to the people, and hiring the prominent Peruvian economist Hernando de Soto, an expert on property rights and small-scale development. Mongolia’s place on the new Silk Road is assured.
Neither China nor Russia sees Central Asia as its exclusive backyard anymore. To the contrary, both countries fear that the West is not leading enough in these areas, where it has a strong track record. Remember that it was the far-sighted leadership of Chevron and adventurous American ambassadors who made the Baku-Tblisi-Ceyhan pipeline a reality despite the post-Soviet wreckage of the Caucasus.

Western troops across the region, particularly NATO forces in Afghanistan and the various partnership agreements they have with local countries, should focus ever more on protecting the extractive and infrastructure projects that China is willing to finance. This is already happening at the Aynak copper mine, and should extend to the new lithium deposits that China needs to make mobile phones and electric car batteries.

As Chinese-built infrastructure snakes through Central Asia, the Gulf entrepots like Dubai can serve increasingly as conduits for Central Asian produce, textiles and other goods to Europe and America. If the West drops all tariffs on these exports, it would spark a diversification of the region’s economies away from relying on extractive industries and avoiding the resource curse. It would also boost employment in non-energy areas. The result would be the two things this land-locked region needs most: stability and connectedness.

Enough of the Great Game-esque “strategic triangles” — U.S.-China-India, U.S.-India-Afghanistan, or U.S.-Iran-China — that are nothing more than a vice on a region that in its historical prime had been open to all directions. For centuries the Khyber Pass has been a gateway for invaders and smugglers, and now serves as a supply route for American forces in Afghanistan. But instead of mafias serving militaries, the trucks we should see on these roads should be colorfully painted civilian caravans with musical horns.

This is finally possible, thanks to Chinese investment and the newfound wealth of the Middle East. The Silk Road has always been a two-way street of mutually beneficial exchange. The Durand Line hasn’t delivered any benefits in half a century. The oil-fueled Silk Road could do so tomorrow.

Parag Khanna is a senior research fellow at the New America Foundation and author of “The Second World: Empires and Influence in the New Global Order.”

China overtakes Japan in 2Q as No. 2 economy

Japan lost its place as the world's No. 2 economy to China in the second quarter as receding global growth sapped momentum and stunted a shaky recovery.

Gross domestic product grew at an annualized rate of just 0.4 percent, the government said Monday, far below the annualized 4.4 percent expansion in the first quarter and adding to evidence the global recovery is facing strong headwinds.

The figures underscore China's emergence as an economic power that is changing everything from the global balance of military and financial power to how cars are designed. It is already the biggest exporter, auto buyer and steel producer, and its global influence is expanding.

China has been a major force behind the world's emergence from deep recession, delivering much-needed juice to the U.S., Japan and Europe. Tokyo's latest numbers, however, suggest that Chinese demand alone may not be enough for Japan or other economic giants.

"Japan is the canary in the goldmine because it depends very much on demand in Asia and China, and this demand is cooling quite a bit," said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. "This is a warning sign for all major economies that just focusing on overseas demand won't be sufficient."

China has surpassed Japan in quarterly GDP figures before, but this time it's unlikely to relinquish the lead.

China's economy will almost certainly be bigger than Japan's at the end of 2010 because of the huge difference in each country's growth rates. China is growing at about 10 percent a year, while Japan's economy is forecast to grow between 2 to 3 percent this year. The gap between the size of the two economies at the end of last year was already narrow.

Japan's nominal GDP, which isn't adjusted for price and seasonal variations, was worth $1.286 trillion in the April-to-June quarter compared with $1.335 trillion for China. The figures are converted into dollars based on an average exchange rate for the quarter.

Japan has held the No. 2 spot after the U.S. since 1968, when it overtook West Germany. From the ashes of World War II, the country rose to become a global manufacturing and financial powerhouse. But its so-called "economic miracle" turned into a massive real estate bubble in the 1980s before imploding in 1991.

What followed was a decade of stagnant growth and economic malaise from which the country never really recovered. Prime Minister Naoto Kan now faces a long list of daunting problems: a rapidly aging and shrinking population, persistently weak domestic demand, deflation, a strong yen and slowing growth in key export markets.

In contrast, China's growth has been spectacular, its voracious appetite fueling demand for resources, machinery and products from the developing world as well as rich economies like Japan and Australia. China is Japan's top trading partner.

China's rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world's lowest.

Japan's people still are among the world's richest, with a per capita income of $37,800 last year, compared with China's $3,600. So are Americans at $42,240, their economy still by far the biggest.

"We should be concerned about per capita GDP," said Kyohei Morita, chief economist at Barclays Capital in Tokyo. China overtaking Japan "is just symbolic," he said. "It's nothing more than that."

But the symbolism may be exactly the "wake-up call" Japanese leaders need, said Schulz of the Fujitsu Research Institute. "Japan is always strangely inward looking," he said. "And nobody is doing anything about it."

Japan's people appear resigned to the power shift. A national poll conducted earlier this year by the Asahi, one of Japan's biggest newspapers, showed a roughly equal split between those that believed Japan's fall to No. 3 posed a major problem and those who did not. More than half of the 2,347 respondents said Japan does not need to be a global superpower.

The country's annualized growth in the second quarter was also sharply below expectations of 2.3 percent in a Kyodo news agency survey of analysts. On a quarterly basis, Japan's GDP — or the total value of the nation's goods and services — grew 0.1 percent from the January-March period, the Cabinet Office said.

Consumer spending, which accounts for about 60 percent of GDP, was flat from the previous quarter, the figures showed. Capital spending by companies rose 0.5 percent, while public investment fell 3.4 percent.

The outlook for the third quarter is uncertain. Private consumption appears to be solid so far, helped in part by unusually hot weather, said Masamichi Adachi, senior economist at JP Morgan Securities Japan. But the slowing global economy is weakening exports and production.

A stronger yen, which hit a 15-year high against the dollar last week, also poses a major risk for the country's export-driven economy. Yen appreciation reduces the value of repatriated profits for companies like Toyota Motor Corp. and Sony Corp. and makes their products more expensive abroad.

The currency worries led Finance Minister Yoshihiko Noda to say last week that he is closely monitoring foreign exchange rates. Bank of Japan Gov. Masaaki Shirakawa released a similar statement to try to calm markets.

http://hosted.ap.org/dynamic/stories/A/AS_JAPAN_ECONOMY?SITE=MAFAL&SECTION=HOME&TEMPLATE=DEFAULT

http://graphics8.nytimes.com/images/misc/nyt-global-edition-masthead-logo.gif (http://global.nytimes.com)


August 15, 2010
China Passes Japan as Second-Largest Economy

By DAVID BARBOZA (http://topics.nytimes.com/top/reference/timestopics/people/b/david_barboza/index.html?inline=nyt-per)


SHANGHAI — After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.

The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.
Experts say unseating Japan — and in recent years passing Germany, France and Great Britain — underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030. America’s gross domestic product was about $14 trillion in 2009.

“This has enormous significance,” said Nicholas R. Lardy, an economist at the Peterson Institute for International Economics. “It reconfirms what’s been happening for the better part of a decade: China has been eclipsing Japan economically. For everyone in China’s region, they’re now the biggest trading partner rather than the U.S. or Japan.”

For Japan, whose economy has been stagnating for more than a decade, the figures reflect a decline in economic and political power. Japan has had the world’s second-largest economy for much of the last four decades, according to the World Bank (http://topics.nytimes.com/top/reference/timestopics/organizations/w/world_bank/index.html?inline=nyt-org). And during the 1980s, there was even talk about Japan’s economy some day overtaking that of the United States.

But while Japan’s economy is mature and its population quickly aging, China is in the throes of urbanization and is far from developed, analysts say, meaning it has a much lower standard of living, as well as a lot more room to grow. Just five years ago, China’s gross domestic product was about $2.3 trillion, about half of Japan’s.

This country has roughly the same land mass as the United States, but it is burdened with a fifth of the world’s population and insufficient resources.

Its per capita income is more on a par with those of impoverished nations like Algeria, El Salvador and Albania — which, along with China, are close to $3,600 — than that of the United States, where it is about $46,000.

Yet there is little disputing that under the direction of the Communist Party, China has begun to reshape the way the global economy functions by virtue of its growing dominance of trade, its huge hoard of foreign exchange reserves and United States government debt and its voracious appetite for oil, coal, iron ore and other natural resources.

China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence in Asia, Africa and Latin America, with things like special trade agreements and multibillion dollar resource deals.

“They’re exerting a lot of influence on the global economy and becoming dominant in Asia,” said Eswar S. Prasad, a professor of trade policy at Cornell and former head of the International Monetary Fund (http://topics.nytimes.com/top/reference/timestopics/organizations/i/international_monetary_fund/index.html?inline=nyt-org)’s China division. “A lot of other economies in the region are essentially riding on China’s coat tails, and this is remarkable for an economy with a low per capita income.”

In Japan, the mood was one of resignation. Though increasingly eclipsed by Beijing on the world stage, Japan has benefited from a booming China, initially by businesses moving production there to take advantage of lower wages and, as local incomes have risen, by tapping a large and increasingly lucrative market for Japanese goods.

Beijing is also beginning to shape global dialogues on a range of issues, analysts said; for instance, last year it asserted that the dollar (http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/dollar/index.html?inline=nyt-classifier) must be phased out as the world’s primary reserve currency.

And while the United States and the European Union (http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_union/index.html?inline=nyt-org) are struggling to grow in the wake of the worst economic crisis in decades, China has continued to climb up the economic league tables by investing heavily in infrastructure and backing a $586 billion stimulus plan (http://topics.nytimes.com/top/reference/timestopics/subjects/u/united_states_economy/economic_stimulus/index.html?inline=nyt-classifier).

This year, although growth has begun to moderate a bit, China’s economy is forecast to expand about 10 percent — continuing a remarkable three-decade streak of double-digit growth.

“This is just the beginning,” said Wang Tao, an economist at UBS (http://topics.nytimes.com/top/news/business/companies/ubs_ag/index.html?inline=nyt-org) in Beijing. “China is still a developing country. So it has a lot of room to grow. And China has the biggest impact on commodity prices — in Russia, India, Australia and Latin America.”

There are huge challenges ahead, though. Economists say that China’s economy is too heavily dependent on exports and investment and that it needs to encourage greater domestic consumption — something China has struggled to do.

The country’s largely state-run banks have recently been criticized for lending far too aggressively in the last year while shifting some loans off their balance sheet to disguise lending and evade rules meant to curtail lending growth.

China is also locked in a fierce debate over its currency policy, with the United States, European Union and others accusing Beijing of keeping the Chinese currency, the renminbi (http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/yuan/index.html?inline=nyt-classifier), artificially low to bolster exports — leading to huge trade surpluses for China but major bilateral trade deficits for the United States and the European Union. China says that its currency is not substantially undervalued and that it is moving ahead with currency reform.

Regardless, China’s rapid growth suggests that it will continue to compete fiercely with the United States and Europe for natural resources but also offer big opportunities for companies eager to tap its market.

Although its economy is still only one-third the size of the American economy, China passed the United States last year to become the world’s largest market for passenger vehicles. China also passed Germany last year to become the world’s biggest exporter.

Global companies like Caterpillar, General Electric (http://topics.nytimes.com/top/news/business/companies/general_electric_company/index.html?inline=nyt-org), General Motors (http://topics.nytimes.com/top/news/business/companies/general_motors_corporation/index.html?inline=nyt-org) and Siemens — as well as scores of others — are making a more aggressive push into China, in some cases moving research and development centers here.

Some analysts, though, say that while China is eager to assert itself as a financial and economic power — and to push its state companies to “go global” — it is reluctant to play a greater role in the debate over climate change (http://topics.nytimes.com/top/news/science/topics/globalwarming/index.html?inline=nyt-classifier) or how to slow the growth of greenhouse gases.

China passed the United States in 2006 to become the world’s largest emitter of greenhouse gases, which scientists link to global warming. But China also has an ambitious program to cut the energy it uses for each unit of economic output by 20 percent by the end of 2010, compared to 2006.

Assessing what China’s newfound clout means, though, is complicated. While the country is still relatively poor per capita, it has an authoritarian government that is capable of taking decisive action — to stimulate the economy, build new projects and invest in specific industries.

That, Mr. Lardy at the Peterson Institute said, gives the country unusual power. “China is already the primary determiner of the price of virtually every major commodity,” he said. “And the Chinese government can be much more decisive in allocating resources in a way that other governments of this level of per capita income cannot.”

Hiroko Tabuchi contributed from Tokyo.

Source (http://www.nytimes.com/2010/08/16/business/global/16yuan.html?_r=1&ref=global-home)

^^
I guess that one confirms everything. Another milestone for China! Congratz!

“China is still a developing country. So it has a lot of room to grow. And China has the biggest impact on commodity prices — in Russia, India, Australia and Latin America.”

It seems these countries starts to depends on China's spending. It helps them anyway.

Although its economy is still only one-third the size of the American economy, China passed the United States last year to become the world’s largest market for passenger vehicles. China also passed Germany last year to become the world’s biggest exporter.

This is remarkable yet America's economy is coming back so as the urge of buying fuel efficient vehicles.

I am not surprise if the Chinese Government will one day change the so-called "one child policy" to "two or three child policy" especially to those urban areas that are experiencing big economic gains. They needed that new policy because young generations seems to be a great factor of economic boost for the future. This works well for Japan, South Korea and Germany. And it start to work well in India. I am hoping they will implement that soon.

LOL @ "as early as 2030." Even the most conservative predictions don't predict that late. Realistically, China's economy will pass the US by 2022 at the latest, possibly as early as 2018 if growth is good.

This is remarkable yet America's economy is coming back so as the urge of buying fuel efficient vehicles.
The difference:
The Chinese automobile market is currently fueled by legitimate wealth creation in China. In China, consumer goods are being produced, domestic consumption is increasing (but not at the expense of domestic production), and savings are being accumulated.
The American automobile market is currently being stimulated with borrowed money. American debt is growing faster than American GDP/spending.

I am not surprise if the Chinese Government will one day change the so-called "one child policy" to "two or three child policy" especially to those urban areas that are experiencing big economic gains. They needed that new policy because young generations seems to be a great factor of economic boost for the future. This works well for Japan, South Korea and Germany. And it start to work well in India. I am hoping they will implement that soon.
China should just start removing birth restrictions now. No point in having the current policy continue for another few years.

LOL @ "as early as 2030." Even the most conservative predictions don't predict that late. Realistically, China's economy will pass the US by 2022 at the latest, possibly as early as 2018 if growth is good.
I remember alec74 mentioning that even in 2008 (or something like that), textbooks were claiming that the mainland Chinese GDP would surpass the Japanese GDP in 2016. I wonder if that's going to fly now...
In fact, there was a thread right in the Mainland China forum on SSC a few years ago where people were doubting that mainland Chinese GDP per capita would exceed $1,700 in 2010. It's more than twice that now.

http://i938.photobucket.com/albums/ad223/jfun2010/b55cb94b.jpg

i hope central and west mainland become more prosperous,these area could be the industrial hinderland of mainland, the eastern part could be the financial centers,central and western mainland seriously need more intention from the government

China announces new move to boost yuan's overseas use

BEIJING, Aug. 17 (Xinhua) -- The People's Bank of China (PBOC), the central bank, announced Tuesday it would allow overseas financial institutions to invest in the country's interbank bond market on a trial scheme as an effort to further promote yuan cross-border trade settlement.

Under the trial program, yuan accumulated overseas because of central bank currency swaps, trade settlement or yuan investment could be used to invest in the country's interbank bond market, it said.

Yuan clearing banks in Hong Kong and Macao, overseas banks involved in yuan cross-border trade settlement and foreign central banks or monetary authorities that have signed currency swap agreements with China would be permitted to make the investment, the PBOC said.

China's interbank bond market now trades more than 10 different kinds of bonds, including treasury bonds and bonds issued by the country's policy banks.

The country has been striving to push forward internationalization of the yuan and the latest development is aimed to expand yuan trade settlements.

Cross-border yuan trade settlement is now allowed in all countries and regions of the world, after starting first in Hong Kong, Macao and 10 member states of the Association of Southeast Asian Nations last year.

Since late 2008, China has signed currency swap agreements with Republic of Korea, Malaysia, Belarus, Indonesia, Singapore, Argentina and Iceland, as well as Hong Kong.

http://news.xinhuanet.com/english2010/business/2010-08/17/c_13449391.htm

Special report: World's workshop heads to inland China
By James Pomfret
ZHENGZHOU | Wed Aug 25, 2010

http://www.reuters.com/article/idUSTRE67O19420100825

China (Reuters) - In a vast muddy cornfield scarred with the tracks of heavy vehicles, two young engineers pore over a construction blueprint showing a grid of 100 rectangular factory blocks.

Here on the outskirts of Zhengzhou, the provincial capital of Henan in China's interior, Foxconn, the largest company and exporter in "the workshop of the world" has staked its future on a mammoth new industrial complex.

New powerlines are being erected and roads built to the site under the watchful eye of local farmers who daydream about the entrepreneurial opportunities that up to 200,000 new workers in the area might present.

Taiwan-based Foxconn Technology Group, which includes its flagship Hon Hai Precision Industry (2317.TW), makes gadgets for a constellation of global brands including Apple APPL.O, Dell (DELL.O), Nokia and Hewlett Packard (HPQ.N).

Most of that production comes from its plants in Shenzhen, in the Pearl River Delta area, one of the three major Chinese coastal manufacturing hubs, along with the Yangtze River area around Shanghai and Bohai Bay north of Beijing.

With this leap into Henan province, 1,600 km (1,000 miles) from Shenzhen, Foxconn is expanding aggressively inland, where wages are lower and workers more plentiful, keeping mostly higher-value, engineering, and R&D work in China's coastal areas. It will have as many as 1.3 million workers in China by the end of 2011, up from 920,000 now, company officials say.

Foxconn is by no means alone. Intel (INTC.O), the world's biggest chip maker, opened a $600 million plant this year in Chengdu and Hewlett-Packard built a laptop factory in Chongqing, both cities in the western province of Sichuan.

Cheaper labor is not the only attraction. The worker has become the consumer in China, with the government determined to raise household incomes and reduce wealth disparities. Locating factories nearer to markets makes dollars and sense.

"Most of the villagers here think it's a good thing," said Meng, Xiangting, 46, a farmer prying stones from a wall with a crowbar for use on his own crumbling home. "They've guaranteed jobs for anyone in the area between 18 to 50 years of age. I'm not interested. I'd like to open a small shop for the workers instead."

With factories closer to home, children of farmers like Meng won't have to make the annual trek to distant coastal regions and live desultory lives as migrant workers in factory towns.

A rash of suicides at Foxconn's Shenzhen plant which the company said weren't work-related but which victims' families blamed on tough conditions, helped fuel a wave of labor unrest -- and has become yet another motivation to move operations into the less volatile interior.

Foxconn's move will touch off a mini-boom in an ancient Chinese capital perhaps best known for the 5th-century Shaolin temple that is home to its famous brand of Kung Fu.

Foxconn's suppliers will have to relocate as well. The workers will need housing and places to shop. Some may even be able to afford cars to commute to work on the new highways being built to Foxconn's mega-factory and its satellites.

A foreman supervising a team of men in straw hats working on a road linking to Zhengzhou's highways and the international airport said they had paved 4 km in three weeks. "Foxconn is amazing," he said. "They work extremely fast."

A lot of people are working fast in China's rapidly developing interior.

Manufacturers are building huge factories in the provinces to escape rising costs in the coastal zones that helped China become the world's largest exporter. Big customers such as Wal-Mart (WMT.N) are buying more goods from the new inland factories in a relentless quest to find low-cost suppliers.

New high-speed rail links are shrinking distances for shuttling goods in and out of China's heartland.

The move inland by manufacturers coincides with a parallel trend in urbanization. Local governments are competing ferociously to build and expand cities on farmland to lure back millions of migrants from the coast in a project that could absorb more residents than the entire population of the United States in the coming decades.

The drive is part of a strategic economic shift to rebalance China's economy -- and by extension the rest of the world's -- to rely less on exports for future growth and more on domestic consumption. The Obama administration has been pressing China to do just that.

"Our lives will completely change," said Meng, the farmer. "Next August, they'll be able to bring in over 100,000 workers. With more people, there'll be more businesses."

While a smaller percentage of Chinese coastal manufacturers are moving operations offshore -- garments to Bangladesh, shoes to Vietnam, some experts see a more pronounced move inland.

A recent survey by Hong Kong's Trade Development Council of 2,400 manufacturers found a quarter would choose to set up new factories in inland China, twice that of those who would opt for cheaper alternatives in Asia. Around half said they would stay in China's coastal hubs.

China's industrial model has relied on efficient and nearby supply chains along with good transportation infrastructure that make it more efficient to keep operations onshore.

Factory production in China will continue to move to the interior, said Bruce Rockowitz, president of Li & Fung, one of the world's leading sourcing firms that caters to clients such as Wal-Mart. "That's the future, and maybe we'll get another 20 years out of that."

MASSIVE REDEPLOYMENT

Workers in Foxconn T-shirts, clocking in for the night shift along unlit paths at Foxconn's temporary plant near Zhengzhou, say they are part of the advance guard of what is expected to be a massive redeployment of the company's workforce.

The official Xinhua news agency reported recently that the Foxconn plant under construction would produce mainly Apple iPhones, generate more than $13 billion in annual exports and have a production capacity of 200,000 handsets a day.

Wei Wei, deputy director at Personnel Exchange Center, a major job recruitment center in Zhengzhou, said Foxconn had asked his firm to help recruit 100,000 workers within three months time in preparation for the first phase of the giant factory's expected opening next year.

Factories in coastal China, such as Foxconn's sprawling operations in Shenzen, have been powered by an army of 130 million or so migrant workers streaming in annually from inland Chinese provinces. They are not given permanent resident rights, however, and they often move on.

Labor shortages have begun to be a problem for these traditional export centers as the growth of the working-age population slows. Moreover, a younger generation of migrant workers, better educated, more tech-savvy, and less accepting than their parents were of life in the factories -- low pay, grueling hours and sometimes martial workplace rules -- have launched wildcat strikes and protests. Keywords: CHINA MANUFACTURING/

"To be very frank and open, I think we were caught by surprise by the structural changes in the worker composition," Louis Woo, special assistant to Terry Gou -- Foxconn's reclusive and enigmatic Taiwanese chief executive -- told reporters at a company-sponsored rally last week at its Shenzen plant.

"We haven't changed fast enough to meet the changing needs and new aspirations of this new generation of workers," said the silver-haired and rake-thin Woo, wearing blue suspenders and Prada glasses.

"China is changing and that's why Foxconn is also changing."

Recent strikes at Japanese car assembly plants in China, which resulted in a doubling of wages in some cases, have prompted other multinationals with intensive labor needs to seek a more stable and plentiful workforce inland.

"China has had a very unusual situation for a number of years with just this incredible supply of workers. That is now coming to an end," said Arthur Kroeber of Beijing-based consultancy Dragonomics, who says the number of young Chinese workers aged 15-24 years of age will likely fall by a third in the next 12 years, giving more bargaining power to this younger blue-collar generation.

Labor is plentiful in provinces such as Henan, China's most populous with over 100 million people -- more than the population of Germany.

At a recent Foxconn recruitment fair in Zhengzhou, thousands of hopefuls clamored for places, excited at the prospect of working for the Fortune 500 firm.

Already, a fifth of Foxconn's workers hail from Henan. By moving workers closer to their families it might help ease a problem that plagued the company during the first half of the year -- the dozen suicides mostly involving young workers leaping off buildings at its Shenzhen complex.

Zeng Jundan, one of the workers at Foxconn's temporary plant who previously worked for the company in Shenzhen, said he was happier. "It's not bad here -- my mom and dad can come see me every day if they want to," he said.

LURING A DRAGON HEAD

Like all manufacturers, Foxconn depends on a network of suppliers. Unlike others, Foxconn is big enough to force a new ecosystem to develop around it.

Jackie Ho, a Taiwanese industrialist making TV screens and mobile phone accessories in Luohe town, an hour's drive from Zhengzhou, said the new Foxconn facility would help foster fresh industrial clusters in Henan.

He is hoping to capitalize on what he terms the "Foxconn effect", along with other downstream suppliers that will likely migrate up from the Pearl River Delta.

"Most suppliers to Foxconn have no choice," Ho said. If Foxconn moves they have to follow or it will just buy from another factory. I believe that after two years Foxconn may not have to purchase and transport (its components) from the south anymore. Many firms will be here."

Foxconn is what some supply chain experts describe as a "dragon head" industry. It can nurture and sustain small- and medium-sized firms that otherwise wouldn't have the economies of scale or management mindset to move inland themselves.

"The key manufacturer is the dragon head, and there's always a supply ecosystem that goes along with it," said Edward Tse, the Greater China chairman of consultancy Booz & Co. and author of a book "The China Strategy" detailing the country's business landscape and how multinationals might capitalize.

"Without a dragonhead like Foxconn it's hard to get that kickstart," Tse said.

In several villages ringing Foxconn's Zhengzhou sites, red banners with pithy slogans were hung over roads and painted onto brick walls by local propaganda authorities, hailing the manufacturing giant as an economic savior.

"Welcome Foxconn. Swiftly move toward a well-off society" read one.

The government is clearly hoping that as companies and their "ecosystems" move to the countryside, more of China's 1.3 billion residents will progress from a life of subsistence to one of greater domestic and consumerist comforts in landlocked provinces, perhaps better described as mid-sized nations rather than regions.

"Manufacturing is something that a lot of local cities and regions can relate to because it's hard; people can see that in terms of the plants, the laborers, the products and so on," said Tse, who has advised multinationals on their China production and sourcing strategies.

"So a lot of inland areas see this as a natural area of growth. You need to find jobs for these people who've been urbanized, instead of them continuing to be peasants working on paddy fields. This is usually the first starting point like Shenzhen had done 20 years ago."

Government statistics show industrialization in inland provinces has outpaced established manufacturing hubs such as Guangdong in recent years.

The number of enterprises with annual revenues of over five million yuan ($736,000) in Guangdong province near Hong Kong grew by an average of some 24 percent in 2008 to 52,574 firms. The same figures for Henan were 38 percent and 18, 700 firms. The year before it had only been 13.6 percent.

INLAND CONSUMER CLASS

On the green northern rim of Guangdong, beyond the mountains and into the land-locked region of Ganzhou in Jiangxi province, LED factory owner Kong Xiangzhong is one of the new breed of industrialists who have staked a future away from the cluttered expensive coastal manufacturing regions of China.

A minnow compared with Foxconn with around 100 workers, Kong has nevertheless positioned his inland factory as a potential gateway to the mainland China market, spurning the usual export track. Almost all his energy-efficient LED lighting products will be trucked and sold entirely within China from Ganzhou.

"For us factories doing domestic demand, we hope that we can expand everywhere in China, to the west, the center and the east," said Kong, a self-made businessman who started out as a production line worker in a Guangdong factory nearly 20 years ago.

Around 400 km (250 miles) north of the Pearl River Delta, Ganzhou sits at the crossroads of three of southern China's most economically vibrant provinces; Guangdong, Fujian and Hunan. Besides its relative coastal proximity, Ganzhou's surrounding counties are home to nearly 8 million residents with minimum wage levels around 40 percent cheaper than in Guangdong, making it a natural manufacturing spillover region for factories from the Pearl River Delta.

"The geographic location is good here," said Kong, who recently set up his LED lights factory in Ganzhou. "We can get to the Yantian port (in Shenzhen) for shipping in about four hours. It's also quite close to Shanghai," added Kong, speaking slightly accented Mandarin Chinese in a sign of his provincial roots.

Like many ambitious inland areas, Ganzhou has invested millions in new infrastructure, including a new airport, highways and railways to bolster the transport and logistics infrastructure so crucial to businesses. Keywords: CHINA MANUFACTURING/

This region, too, has attracted a dragon head company -- Nasdaq-listed contract manufacturer Flextronics (FLEX.O). It will soon open a factory employing 11,000 in one of Ganzhou's new industrial estates to make transformers and power adaptors.

Rob Roohparvar, president of the Flextronics unit running the plant, estimates costs will be at least 10 to 15 percent cheaper in Ganzhou than the southern coast where the conglomerate and key rival of Foxconn runs its flagship China facility.

In the next five years, Zeng Weilin, vice director of the Ganzhou Development Zone, expects the region's GDP to quadruple and the number of factories to rise from 300 to over a thousand. Focusing on domestic buyers can help producers mitigate another risk: the appreciating yuan.

"The exchange rate has no effect on us, because our main market is 100 percent focused in mainland China," said Simon Lu Xingping, the head of Maniform, a fast-growing Chinese lingerie manufacturer headquartered in Shenzhen, which is building a 6,000-worker factory in Ganzhou.

Maniform is one of a batch of emerging Chinese manufacturers that started off as exporters or producers for overseas brands, picking up skills and know-how until they reached a point where they felt they could develop a brand themselves.

These Chinese competitors, often nimbler, highly entrepreneurial and more flexible than multinationals, have almost all targeted their lucrative home markets and have begun to set up vast retail networks and factories across the country.

Notable examples include those in the sportswear industry including Li Ning (2331.HK), Anta (2020.HK) and Hongxing Sports (CHXS.SI). Global brands like Spanish clothing giant Zara (ITX.MC) -- famed for the success of its rapid product development cycles -- and sportswear firm Puma (PUMD.L) are reportedly planning huge expansion plans to target China's future middle class consumers.

"The internal business of consumption is competing now with the export business for space, for people, and it's driving the costs up in China. So that party (of cheap labor and exports) that we've had in the last 15 years is going away," said Rockowitz of Li & Fung.

POOR INFRASTRUCTURE

But challenges loom for those moving to inland China.

Yifan Hu, chief global economist at Citic Securities, said the inland business environment is hampered by poor infrastructure, high transportation costs and a lack of developed free markets.

Ho, the Henan factory owner is critical of inconsistent and discretionary government policies that make it difficult for businessmen to map out longer term strategies and commit investment to the region, particularly smaller firms without the clout of a Foxconn.

"The legal environment isn't so good and everything is decided face to face with officials. You don't really know what you're getting. Their (preferential) policies need more clarity," Ho said.

Ho's transportation costs are almost double those in the Pearl River Delta, with the nearest port being the Lianyun port in Jiangsu province, almost 600 km (375 miles) away. Still, he says, transportation costs now only make up around 3.5 percent of his overall production costs so it's still manageable.

"There will be some shifting of products away from southern China to both the interior of China and outside of China," said Henry Tan, the CEO of Luen Thai Holdings, one of Hong Kong's largest listed textiles groups.

"However there will still be a portion of products that stay in the Pearl River Delta and the Yangtze River Delta, purely because of the convenience of supply chains, because all the fabrics, all the trims, all the development are there."

The waning of government stimulus efforts, which have done much to spur growth in China's rural areas over the past year or so, could also hamper the move inland. Local governments with shrinking budgets have less scope to scatter sweeteners to attract industry, Hu said.

Zhengzhou like other cities borrowed heavily to bankroll a blitz of marquee infrastructure projects, such as a new convention center, renovation of the business district and high-end property developments.

China's switch to a domestic consumption model will take time, even as exports contribute less and less to China's GDP -- now around 10 percent, Hu estimates.

"Some people think exports will not be the driver of China's economy in the future. I agree," Hu said. "But China's exports are still very strong, accounting for 20 percent of the world's exports. The share may remain the same but the growth may decline." She said the export sector's real contribution was to employment, rather than economic growth.

"No matter if it's high value-added or low-value-added they have to recruit more people … so as exports slow down I think the employment issue will really become quite intensive, maybe in the next one to three years, before they really transform to a domestic consumption-oriented economy."

'TREASURE LIFE'

Back at Foxconn's headquarters in the Shenzhen district of Longhua on a late sunny afternoon last week, tens of thousands of young workers cast off their uniforms and inhibitions, put on costumes, glitzy bikinis and bright wigs for the company-sponsored "Treasure Life" celebration.

At the rally, aimed at mending the company's image and improving worker morale after the suicides, Foxconn unveiled the "transformation" of its human resources management and new industrial strategy in China.

Hosting reporters for a rare visit inside the factory, Woo said the usually secretive Foxconn would now "open up". As China's largest employer, Woo said he hoped this new approach to Chinese industrial management would influence other firms.

Besides pledging to improve the lives of its workers through measures including wage hikes, capping overtime work at 36 hours a month from 80 and setting up 24-hour counseling services, Woo said the future for Foxconn lay in moving its factories closer to China's workers.

"We want to take out the 'migrant' from migrant worker," he said. Besides its Henan plant, Foxconn is also building new factories in Chengdu and Chongqing in Sichuan province, while it is negotiating with several other Chinese provinces about building other industrial campuses.

As the workers wended their way through the 3.3 square kilometer Longhua industrial fortress that pioneered the manufacture of some of Apple's iPhones and iPods, there was the sense of an era coming to an end.

The self-contained industrial city with its banks, bakeries, post offices, restaurants, shops, parks and dormitories catering to more than a quarter of a million workers, will eventually evolve into a higher-end research and development campus.

"Shenzhen will have more engineers than (production) line workers" in the future, said Woo, a development resonating with Shenzhen's overall economic blueprint to upgrade its industrial base and move up the value-added chain.

Some workers in the crowd that gathered for an open-air concert on a large artificial grass sports ground spoke of new hope for the future -- away from the coast.

"Everyone's talking about the new factories. If they move, I definitely want to move with them," said Yang Ning, a chirpy 22-year-old factory girl from Chongqing, one of the sites of a new Foxconn factory.

"Life here in the Pearl River Delta has been tough," she added as workers chanted effusively behind her. "I'll be glad to leave".

(Editing by Bill Tarrant)

i hope central and west mainland become more prosperous,these area could be the industrial hinderland of mainland, the eastern part could be the financial centers,central and western mainland seriously need more intention from the government


Has trade increases with Central Asia and the areas South and West of Central Asia including europe then Western China should see growth. Afterall, it would save on transportation and resources to set up manufacturing plants in Western China then to send them to Eastern China and then ship them back.

China surges to 5th largest global investor

By Ding Qingfen (China Daily)
Updated: 2010-09-06

XIAMEN, Fujian - China bucked international trends in both outbound and inward investment, official figures have revealed.

China now ranks as the fifth largest global investor in outbound direct investment (ODI) with a total volume of $56.5 billion, compared to a ranking of 12th in 2008, the Ministry of Commerce said on Sunday.

http://www.chinadaily.com.cn/china/images/attachement/jpg/site1/20100906/002170196e1c0dee6a4f1e.jpg

On top of this, foreign direct investment (FDI) this year was set to "surpass $100 billion", compared to $90 billion last year, ministry officials predicted.

Globally, foreign investment decreased by almost 40 percent last year amid the financial downturn and is expected to show only marginal growth this year.

The growth in both outbound investment from, and inbound investment to, China reflects the nation's rising economic power and attractiveness as an investment destination.

The ministry made the announcements during a press conference held in Xiamen on the upcoming United Nations Conference on Trade and Development (UNCTAD) World Investment Forum and the 14th China International Fair for Investment and Trade. Both forums will start on Tuesday.

According to the ministry, China's ODI grew by 1.1 percent from a year earlier to $56.53 billion, which includes investment of $47.8 billion in non-financial sectors worldwide, up 14.2 percent year-on-year.

Last year was the eighth consecutive year that the nation's ODI had grown. In this period the average annual growth rate stood at more than 50 percent.

"China is now the fifth largest investing nation worldwide, and the largest among the developing nations," said Shen Danyang, vice-director of the ministry's press department.

In 2009, global ODI volume reached $1.1 trillion, and China contributed about 5.1 percent of the total.

But "this is just a beginning." Although the figure is already "quite amazing," the volume is "not large enough" considering China's economic growth and local companies' expanding demand for international opportunities, Shen said.

"The growth rate (for ODI) in the next few years will be much higher than previous years," Shen said, without elaborating.

China's ODI growth witnessed strong momentum this year. From January to June, the ODI in financial sectors was up by 43.9 percent to $17.84 billion, and in July alone, the ODI recorded $8.91 billion, the highest this year.

Liu Zuozhang, director of the investment promotion agency under the commerce ministry, told China Daily that China's ODI in non-financial sectors would probably grow to $60 billion this year.

But while more Chinese companies were investing overseas, barriers and protectionism against Chinese investment were strengthened as well.

Fan Chunyong, standing deputy chief of the China Industrial Overseas Development and Planning Association, said the challenge would not affect the upward trend of the ODI.

"China's ODI will go up to $100 billion in 2013, and the Chinese accumulative overseas investment will reach $500 billion by then," said Fan.

According to the ministry, by the end of 2009, 13,000 Chinese enterprises had invested in 177 nations and regions worldwide, and the largest volume of funds went to the Asia-Pacific region. Europe and Africa ranked second and third in absorbing Chinese investment.

Figures also revealed that more Chinese enterprises were focused on developed nations and emerging markets. During the first half of the year, China's ODI to the United States and the European Union rocketed by 360 percent and 107.2 percent respectively year-on-year. And investment into ASEAN and Russia grew by 125.7 percent and 58.5 percent.

Jinny Yan, economist from Standard Chartered Shanghai, predicted that the EU would continue to be a hotspot for China's outbound investment in the coming months thanks to the ongoing European debt woes.

As for FDI, Shen predicted it would reach a record high of $100 billion this year as China's consumption capacity gradually picked up and the nation's efforts on creating an open and transparent investment environment paid off.

Responding to recent complaints by foreign businesses on the "worsening" investment environment, he said it "highlights foreign businesses are attaching more importance to the Chinese market".

A report by the European Chamber of Commerce released last Thursday said China had made progress on improving its investment environment, but still needed to do more, especially on market access and the regulatory environment.

While global FDI slumped by almost 40 percent last year, China's FDI was down by a mere 2.6 percent, according to the UNCTAD. China remained the second largest recipient nation of FDI, following the US.

During the first seven months, China's FDI increased by 20.7 percent to $58.35 billion, and FDI in July surged by 29 percent.

Zhan Xiaoning, director of the investment and enterprise division under the UNCTAD, said China was taking the leading role in the FDI recovery worldwide, even though FDI growth was not a cause for optimism globally.

http://www.chinadaily.com.cn/china/2010-09/06/content_11258388.htm

LOL @ "as early as 2030." Even the most conservative predictions don't predict that late. Realistically, China's economy will pass the US by 2022 at the latest, possibly as early as 2018 if growth is good.

What is the annual growth rate and inflation?

Macau’s GDP increased by almost 50 percent

Macau’s Gross Domestic Product (GDP) for the second quarter of 2010 expanded by 49.1 percent in real terms year-on-year, to MOP48.1 billion (US$6 billion).
Meanwhile, economic growth for the first quarter was revised upward from 30.1 percent to 31.4 percent in real terms.
For the first half year of 2010, GDP grew by 40.2 percent in real terms.
The numbers were positively affected by the favourable performance of the gaming and tourism sector, with gross gaming revenue (excluding gratuities) soaring by 76.5 percent year-on-year in nominal terms, and total visitor spending (excluding gaming expenses) rising 30.9 percent.

http://www.macaubusiness.com/news/macau%E2%80%99s-gdp-increased-almost-50-percent/5125/

Lol. Macau could become the economy with the world's highest GDP per capita soon imo.

^^ hopefully Zhuhai would take advantage of this growth nearby.

US Falls, China Rises in Global Competitiveness Rankings :)

The World Economic Forum's Global Competitiveness Report finds the United States has fallen to fourth position behind top-ranked Switzerland, Sweden and Singapore in its competitiveness rankings of 139 countries. The report notes China has moved up in the rankings and sub-Saharan African countries continue to hold the bottom.

The report finds the recent economic crisis is having an impact on its competitiveness rankings. It notes the United States is continuing its decline. After being toppled from first to second position last year, it now has fallen two more places to fourth position.

Despite this, co-author of the Global Competitiveness Report, Thierry Geiger, tells VOA the United States is still among the most competitive economies in the world. And this he says is because the United States remains strong in areas, such as innovation, business sophistication, education and infrastructure.

"Now we see a deterioration in the situation of some macro-economic indicators, including obviously the government budget," said Geiger. "The budget deficit is deepening, the debt level is also rising. The financial market development category is one of the twelve pillars we capture. So, the situation there in the financial market and banking sector is still going down. The assessment is still deteriorating from last year."

The report finds the Nordic countries continue to be well positioned in the rankings, with Sweden, Finland and Denmark among the top 10. It says Germany leads the Euro-zone countries, moving up two places to fifth position. And, the United Kingdom, it says, has moved back up to 12th position after falling in the rankings over recent years.

The report notes China is becoming more competitive. Geiger says the country is making improvements in its financial and banking sectors, areas where it has been historically weak. He says this and other factors have boosted China from 29th to 27th place.

"This is quite remarkable given the level of development of China now," added Geiger. "It is still an emerging economy and now really it is almost at the level of many advanced economies. And, they are actually widening the gap with the other BRICs; namely, India, Russia, and Brazil, which are much lower in the rankings."

The report focuses on, what it calls, two interesting regional trends. It cites the strong, dynamic performances of Asian countries, including China, India, Indonesia, Vietnam and Sri Lanka.

The report notes several countries from the Middle East and North Africa region occupy the upper half of the rankings. It says most of the Gulf States are becoming more competitive because they are diversifying away from oil into other areas of economic pursuit.

In sub-Saharan Africa, 54th and 55th placed South Africa and Mauritius feature in the top half of the rankings. They are followed by Namibia, Botswana and Rwanda, who figure among the best performing countries in the lower half of the rankings.

But the report says Chad, Burundi and Malawi continue to be among the worst performing countries.

http://www.voanews.com/english/news/US-Falls-China-Rises-in-Global-Competitiveness-Rankings-102524789.html

Macau’s GDP increased by almost 50 percent

Macau’s Gross Domestic Product (GDP) for the second quarter of 2010 expanded by 49.1 percent in real terms year-on-year, to MOP48.1 billion (US$6 billion).
Meanwhile, economic growth for the first quarter was revised upward from 30.1 percent to 31.4 percent in real terms.
For the first half year of 2010, GDP grew by 40.2 percent in real terms.
The numbers were positively affected by the favourable performance of the gaming and tourism sector, with gross gaming revenue (excluding gratuities) soaring by 76.5 percent year-on-year in nominal terms, and total visitor spending (excluding gaming expenses) rising 30.9 percent.

http://www.macaubusiness.com/news/macau%E2%80%99s-gdp-increased-almost-50-percent/5125/

Lol. Macau could become the economy with the world's highest GDP per capita soon imo.

Yeah, it probably will, its GDP per capita at PPP was already up there among the top 5 in 2008-2009 and a 35% growth rate or whatever the final figure for 2010 will be, is staggering. But the domestic consumption share of GDP is probably less than 30% (private consumption share pf GDP probably around 20%), far lower than even the mainland. Compare that to the normal developed country where domestic consumption is typically 75-80% of GDP.

Are foreign countries not allowed to buy chinese bonds?

50 percent GDP increases!? Probably it is caused by the amount of casino constructions lately? Like Singapore experiencing large increase in GDP due to construction of casino and new downtown.

China to cut fossil fuel in total energy mix to 85% by 2020: ex-lawmaker
TIANJIN, Sept. 14 (PNA/Xinhua) -- Cheng Siwei, a renowned Chinese economist and a former senior legislator, said China is estimated to reduce the proportion of fossil fuel in total energy mix from the current 91 percent to 85 percent in 2020.

Cheng, chairman of the International Finance Forum and former vice chairman of the Standing Committee of China's National People's Congress, made the remarks at the ongoing World Economic Forum's annual Summer Davos meeting in the northern Chinese city of Tianjin.

China needs to improve fossil energy efficiency and also develop new energy, Cheng said. He cited his research results as saying that pollution cost 34.5 percent of the gross domestic product in 2005.

China is also committed to promoting carbon trade, he said. "The critical problem now is to find the most suitable carbon trading market."

The economist also proposed carbon tax to promote sustainable growth.

"We are suggesting imposing carbon tax on thermal power plants and using the revenue to subsidize solar and wind energy development," Cheng said.http://www.pna.gov.ph/index.php?idn=4&sid=&nid=4&rid=300537

China to keep up targeted energy-efficiency drive
* China eyes targeted energy-efficiency, anti-pollution steps

* Beijing would buy more from U.S. if allowed, planner says

* China confident of keeping rise in CPI below 3 pct in 2010

TIANJIN, China, Sept 14 - China will introduce stricter rules to reduce industrial pollution and increase energy efficiency, which will remain core objectives over the next five years, a senior economic planning official said on Tuesday.

Zhang Xiaoqiang, a vice-chairman of the National Development and Reform Commission, said the drive against sectors that consume a lot of energy and spew out pollution would be targeted.

"We need to avoid one-size-fits-all regulations," he told reporters on the sidelines of a meeting of the World Economic Forum in this northern port city.

Zhang was speaking as the ruling Communist Party completes the draft of China's five-year plan, its twelfth, covering the period 2011-2016.

Cutting the amount of energy needed to produce each unit of GDP by 20 percent was a cornerstone of the current 2005-2010 plan.

Behind on its target, the government has ordered the closure of 2,087 outdated, energy-inefficient plants by the end of this month to try to hit the goal.

"We will continue to impose quotas for eliminating obsolete capacity and emission reductions during the 12th five-year plan period," Zhang said.

He said China was willing to import more from the United States, but chided Washington for curbing the export of certain sensitive goods.

"China does not seek a trade surplus, and we are willing to actively increase imports from the U.S. But it is the U.S. that has set too many restrictions on exports to China," Zhang said.

Political tempers are fraying in Washington over the large U.S. bilateral trade deficit with China.

Lawmakers will grill U.S. Treasury Secretary Timothy Geithner on the issue this week, with some pressing for punitive action against Beijing unless it lets the yuan rise more swiftly.

Turning to domestic inflation, Zhang expressed confidence that full-year inflation would be below the government's target ceiling of 3 percent.

Consumer prices rose 3.5 percent in the year to August. In the first eight months, prices were up 2.8 percent from a year earlier.

"The chances are not great that international commodity prices will push up domestic consumer prices in the coming three to four months," Zhang said. http://ph.news.yahoo.com/rtrs/20100914/tbs-china-economy-ndrc-21231dd.html

IMF seen hiking quotas for China, India

(Reuters) - The International Monetary Fund will likely raise China's membership quota to as much as 6 percent from 3.9 percent now, putting it in line with Japan, the Nikkei business daily reported on Saturday.

The IMF is also set to raise quota subscriptions for other emerging nations such as India, South Korea, Indonesia and Brazil to reflect their enhanced economic standing, while reducing that of some European nations, the paper said.

The IMF's Executive Board is expected to meet by November to reach a broad agreement on specific changes, which will likely be implemented next year, the paper said.

IMF quotas are assigned based on gross domestic product, openness, economic viability, and international reserves. The current quota favours founding members Germany, France and Britain, ranking them third, fourth and fifth behind the United States and Japan. China is expected to surpass Japan as the world's second-biggest economy this year.

A member nation's quota at the IMF determines its share of votes. The top five members also have the power to appoint Executive Board directors.

http://in.reuters.com/article/idINIndia-51585420100918


See
http://en.wikipedia.org/wiki/International_Monetary_Fund

for the current members' quotas

is there a breakdown of the new quotas?

IMF seen hiking quotas for China, India

(Reuters) - The International Monetary Fund will likely raise China's membership quota to as much as 6 percent from 3.9 percent now, putting it in line with Japan, the Nikkei business daily reported on Saturday.

The IMF is also set to raise quota subscriptions for other emerging nations such as India, South Korea, Indonesia and Brazil to reflect their enhanced economic standing, while reducing that of some European nations, the paper said.

The IMF's Executive Board is expected to meet by November to reach a broad agreement on specific changes, which will likely be implemented next year, the paper said.

IMF quotas are assigned based on gross domestic product, openness, economic viability, and international reserves. The current quota favours founding members Germany, France and Britain, ranking them third, fourth and fifth behind the United States and Japan. China is expected to surpass Japan as the world's second-biggest economy this year.

A member nation's quota at the IMF determines its share of votes. The top five members also have the power to appoint Executive Board directors.

http://in.reuters.com/article/idINIndia-51585420100918


See
http://en.wikipedia.org/wiki/International_Monetary_Fund

for the current members' quotas

EU replaces US as the No.1 trade partner of China

China’s New Best Partner

Even as Washington and Beijing slug it out over trade deficits and exchange rates, Europe has quietly overtaken America as China’s No. 1 trade partner. Not only did Chinese trade with the EU soar to $306 billion through July of this year—compared with $243 billion of trade with the U.S.—China has also become far more dependent on Europe for importing the technology and infrastructure that underpin its breakneck development. European companies such as Volkswagen, which will sell some 2 million cars in China this year, have scored some of the greatest successes in serving China’s domestic market. China, in turn, has been busy buying up European companies and seaports. Now, according to a new report by the Council on Foreign Relations, it has even begun to shift part of its estimated $2.7 trillion foreign-currency reserves out of dollars and into euros.

But the Europeans aren’t half as worried as Americans about ending up in China’s economic death grip. Europe’s overall trade has remained roughly balanced, so its deficit with China (1.1 percent of the EU’s 2009 GDP versus 1.6 percent of America’s) is less of a worry. And with so many European jobs dependent on international trade (exports make up 55 percent of the average EU country’s GDP compared with just 11 percent for the U.S.), popular trade fears tend to be lower than in the U.S.

What’s more, EU exports to China are soaring at an annual rate of 49 percent as China sucks in European infrastructure, machinery, and high-end consumer goods. European companies have managed well against the Chinese competition by shifting into higher-end goods instead of shutting their factory doors: take the textile industry, where Italian firms have successfully specialized in luxury products while Germany’s have moved into the fast-growing sector of high-tech nano-fabrics. The same holds for other industries, from chemicals to construction equipment. It’s true Europe’s exporters are getting help from a weaker euro, down by 10 percent against the yuan this year. But many companies did well even when the euro was soaring, because they compete on more than just price. That suggests that while the controversial yuan-dollar peg might play a role, it’s by no means the only factor.

Can Europe translate its economic leverage into political influence? Don’t bet on it. Europe has 27 national capitals without a single foreign policy, and all have been happy to leave it to the U.S. to deal with China’s strategic ambitions. America’s own poor track record in influencing China, even when Beijing was utterly dependent on U.S. consumption for its growth, shows the limits of translating economic ties into political influence.

http://www.newsweek.com/2010/09/18/europe-becomes-china-s-biggest-trade-partner.html

is there a breakdown of the new quotas?


no not yet, we must wait till the next G20 summit

China to meet millennium goals

Beijing - China has had "unprecedented" success in helping millions out of poverty, which has put it on track to meet key development goals set by world leaders for 2015, a UN official said on Tuesday.

The statement came as leaders are gathered in New York for a summit on the Millennium Development Goals (MDGs) - eight targets adopted in 2000 on poverty, education, gender equality, health issues and the environment.

"We are confident that with the right attention and sustained commitment, China will be able to reach all MDG goals by 2015," Renata Dessallien, the UN resident co-ordinator in China, told reporters.

"China is a very good MDG performer. The country has already met several MDG targets ahead of schedule, including reducing poverty and hunger, enrolling children in schools and reducing child and under-five mortality," she said.

"China's success in lifting millions of people out of poverty is unprecedented."

Bernard Coquelin, the representative in China of the UN Population Fund, said the proportion of China's rural population living on less than a dollar a day had dropped from 9.6% in 1990 to 3.8% in 2009

He also said China had made great strides in meeting one of the other goals - slashing the maternal mortality rate.

Dessallien however warned that China still had "a lot of work" to do, notably on guaranteeing environmental sustainability, ensuring gender equality and combating HIV/Aids.

The world's wealthy countries are facing growing pressure at the three-day MDG summit in New York, which began on Monday, to contribute more to the drive to eradicate poverty and improve child and maternal health.

UN Secretary General Ban Ki-moon said the struggling effort to reach eight key development goals by 2015 could still be met if world leaders provide the necessary money and political will.

http://www.news24.com/World/News/China-to-meet-millennium-goals-20100921

China wins WTO backing in chicken fight with US

China won a rare victory at the World Trade Organization against the United States on Wednesday after an arbitration panel ruled that US restrictions on Chinese poultry imports are illegal.

Arbitration panels typically call on offending parties to lift the illegal measure but in this case, the panel said that it would not make any recommendation as the disputed US restrictions have since expired.

It marked the second time that the WTO has ruled on a case brought by Beijing, which is usually the target of disputes rather than a plaintiff.

China welcomed the ruling, stressing that "Chinese poultry products are safe.

"China hopes that the US will ... take steps to completely remove all discriminatory measures targeted against Chinese poultry," it said in a statement.

It also called on Washington to carry out fair assessments on Chinese poultry products and to quickly allow both countries' poultry trade to resume.

Beijing brought the case to the WTO in 2009, accusing Washington of breaching international trade rules with several measures, including an appropriations bill which results in an effective ban on Chinese poultry imports.

It called these measures "naked discriminative protectionism."

China and the United States halted imports of each other's poultry in 2004 over fears about the spread of bird flu.

Imports of some US poultry products to China have since resumed but Chinese officials have complained that the United States continues to hold up reciprocal imports of Chinese poultry.

The United States argued that it had taken "an objective, science-based response" permitted under WTO rules while US authorities examine whether China?s food safety system met their level of health protection.

In the ruling Wednesday, the WTO panel said Washington's measures were illegal as they were "maintained without sufficient scientific evidence" and were "not based on a risk assessment."

It also found that while the United States allowed poultry imports from other WTO members, it had through the appropriations bill "imposed a prohibition on the importation of poultry products from China."

At the same time, since the disputed measure, Section 727, has expired and given that the current appropriations bill "already includes language different from that of Section 727," the panel said it would refrain from making any recommendations.

The WTO's ruling came just days after China said it would levy anti-dumping duties of up to 105 percent on US chicken imports.

China said Sunday it will slap anti-dumping levies of over 50 percent on up to 35 US chicken broiler exporters including Tyson Foods Inc, Keystone Foods LLC, Pilgrim's Pride Corporation and Sanderson Farms Inc.

Levies of over 105 percent would hit imported broilers, a type of chicken raised specifically for meat production, from all other US producers, it said.

http://www.google.com/hostednews/afp/article/ALeqM5hJ34-fQhPeb664Oqq_dtTptniGWA?docId=CNG.5fd9d9aca2e24cbdb73350eb1197d306.d71

China's growth projected to be 10.5% in 2010, 9.6% in 2011

Updated: 2010-10-06

WASHINGTON - China's growth is projected to average 10.5 percent in 2010 and 9.6 percent in 2011, mainly driven by domestic demand, according to a report released by the International Monetary Fund (IMF) on Wednesday.
The Washington-based international institution made the projection in its biannual World Economic Outlook (WEO) before the IMF and its sibling institution World Bank annual meeting to be held this weekend.

"The slight moderation in recent activity is expected to continue through 2011 in light of tighter quantitative limits on credit growth, measures to cool off the property market and limit bank exposure to this, and the planned unwinding of fiscal stimulus in 2011," IMF said in the report.
The report said this year's sustained growth in retail sales and industrial production confirms that private sector activity has advanced beyond the lift from government stimulus.
"On average over 2010-11, private domestic demand is poised to contribute two-thirds of near term growth, and government activity about one third, whereas the contribution from net exports will be close to zero," said the report.
Despite the robustness in domestic demand, the pickup in inflation in 2010 reflected mainly higher food prices rather than core inflation, the report said.


http://www.chinadaily.com.cn/china/2010-10/06/content_11380633.htm

I hope China's GDP can surpass 5.8trillion USD this year.

China, Turkey leaders aim for $100b trade target
By Su Qiang (China Daily)
Updated: 2010-10-09


http://www.chinadaily.com.cn/china/images/attachement/jpg/site1/20101009/0022190dec450e19ea950d.jpg
Chinese Premier Wen Jiabao (L) shakes hands with Turkey's Prime Minister Tayyip Erdogan after addressing the media in Ankara, capital of Turkey, October 8, 2010. [Photo/Xinhua]

ANKARA, Turkey - Visiting Premier Wen Jiabao and his Turkish counterpart, Recep Tayyip Erdogan, agreed on Friday to explore all potential avenues to boost bilateral trade.

The two leaders met in Ankara, the Turkish capital, to sign eight agreements on infrastructure construction, telecommunications and bilateral trade.

Erdogan said his country is seeking cooperation with China in building up to 5,000 km of railways in the coming years, with China already actively involved in a high-speed railway project linking Ankara with Istanbul.

The Turkish prime minister set ambitious goals in increasing bilateral trade volume to $50 billion by 2015 and $100 billion by 2020.

"This is a common target," said Erdogan, who added that concrete measures will be taken by both sides to realize the goals.

Bilateral trade surged from about $1 billion in 2000 to $12.6 billion in 2008, although the figure dropped to about $10 billion in 2009 due to the global recession.

Both sides have now agreed to carry trade in their currencies, Erdogan said.

Facing common tasks of protecting national unification and territorial integrity, the two leaders also pledged to fight the "three evil forces" - terrorism, extremism and separatism.

After the meeting, Wen announced ties between the two countries had been raised to the level of strategic cooperative relationship.

"It's a milestone in the history of our bilateral relations," Wen told reporters during a joint press conference with Erdogan. "It will not only bring substantial benefits to people in our countries but also have profound effects on world peace and development."

Turkey, a member of United Nations Security Council and G20, plays an important role in many international and regional issues, such as Middle East peace process and Iran's nuclear negotiations, the Chinese premier said.

Yin Gang, an expert at the Chinese Academy of Social Sciences, said China and Turkey share a lot in common and have ample room to cooperate.

"Both countries are climbing the global ladder to become economic powerhouses," he said.

Wen flew to Istanbul on Friday, where he met Turkish President Abdullah Gul and representatives from Turkish business and cultural communities before traveling to Ankara.

Turkey is the last stop on Wen's four-nation tour, which has taken him to Greece, Belgium and Italy. He also made an unscheduled stop in Germany.

"We expect Chinese-Turkish ties to leap forward after Wen visits Turkey," Gong Xiaosheng, China's ambassador to Turkey, told reporters in Istanbul days before the premier's arrival.

"As the two nations work more with each other, there will be a great prospect for cooperation," he said.

China and Turkey have seen frequent visits of high-level officials in recent years, including Turkish President Gul's visit to China in June 2009.

Around 50,000 Chinese tourists visited Turkey in 2008, with the number today exceeding 100,000.

Zhou Wa contributed to this story.

China's growth projected to be 10.5% in 2010, 9.6% in 2011

Updated: 2010-10-06



http://www.chinadaily.com.cn/china/2010-10/06/content_11380633.htm

With the RMB moving up more quickly, the GDP growth rate for 2010, including inflation will be more then 16%.

With the RMB moving up more quickly, the GDP growth rate for 2010, including inflation will be more then 16%.

No... 16%+ would be the nominal GDP growth. Whenever you hear reports about Chinese economic expansion, they're always referring to real GPD growth.

A 2010 global wealth report released October 8th can be found here. They measure wealth by savings, property, assets and minus debt (private not government) etc.
https://emagazine.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=291405&coid=284071&lang=EN

Here is china's info.

Wealth per adult in China grew robustly over the past decade tripling from USD 6000 in the year 2000 to USD 18,000 in 2010. Wealth fell by approximately 20% as a result of the financial crisis, but has subsequently recovered to close to the pre-crisis peak. Wealth has risen somewhat more in US dollars than in yuan, due to the slow appreciation of China’s currency, but by far the greatest source of wealth increase is growth in real terms.

China’s total household wealth is now the third highest in the world, about 20% behind Japan and 35% ahead of France (in fourth place). Due to a high savings rate and relatively well developed financial institutions, a high proportion (44%) of Chinese assets are in financial form compared with other major developing or transition countries. At the same time, privatized housing, new construction and rural land are very important forms of wealth in China, accounting for much of the USD 9,600 in real assets per adult. Mean debt is just USD 136, too small to be noticeable in our chart. The extremely low apparent debt is largely due to most loans being netted out against their corresponding assets in the Chinese data.

Although significant wealth inequality is created by the strong urban-rural divide in China alone, overall wealth inequality is low — both by broad international standards and in comparison to other transition countries. This is due to such factors as the virtual absence of inherited fortunes, and relatively equal division of both rural land and privatized housing. Wealth inequality has been rising, however, with the increasing wealth of successful entrepreneurs, professionals, and investors.

China
Mean wealth 17,126 USD per adult
Median wealth 6,327 USD per adult
Total wealth 16.5 trillion USD
Dollar millionaires 805 thousand
Top 10% of global wealth holders 25,815 thousand
Top 1% of global wealth holders 1,580 thousand

No... 16%+ would be the nominal GDP growth. Whenever you hear reports about Chinese economic expansion, they're always referring to real GPD growth.

That's what I said, the GDP growth rate including inflation rate = the nominal rate, will be more than 16%.

China did a great job in reducing hunger and malnutrition during 1990 to 2010, and ranks 9th in developing countries.

Here's the 2010 global hunger index report:

http://www.ifpri.org/sites/default/files/publications/ghi10.pdf

China's expected per person purchasing power parity progress through 2024

China per capita GDP (PPP) from 2010 to 2015 as projected by the IMF


China PPP per cap - Other Country Matched
2010 7,240 - More Algeria 2010, Below Bosnia 2010
2011 8,032 - Ecuador 2010, Ukraine 2013
2012 8,932 - Thailand 2011
2013 9,930 - Thailand 2013
2014 11,039 - Brazil 2010
2015 12,255 - Brazil 2012

Assuming continued 11% per year growth
2016 13,600 - Turkey 2011
2017 15,100 - Argentina 2010
2018 16,760 - Russia 2011
2019 18,600 - Mexico 2015, Poland 2010
2020 20,650 - Trinidad 2010
2021 22,920 - Portugal 2012
2022 25,440 - Czech Republic 2011, Saudi Arabia 2012
2023 28,242 - New Zealand 2011
2024 31,350 - Italy 2013

The per capita GDP growth gets more uncertain 3-5 years out and even more so beyond 6 years. However, even if China starts losing a percentage point or more of growth for every three years, China is likely to get to Russia's 2010 level by 2020 and has a reasonable shot at Italy's current level in 2024-2032.

http://nextbigfuture.com/2010/09/chinas-expected-per-person-purchasing.html#more

With the raise of Yuan value against USD, the number will be higher.

With the raise of Yuan value against USD, the number will be higher.

No it won't. The figures are PPP.

2010 Legatum Prosperity Index

China moved 17 spots up to 58th

Ranking: http://www.prosperity.com/
China's score: http://www.prosperity.com/country.aspx?id=CH

China begins recording of first census in a decade

More than five million census workers will spend 11 days conducting the first census in a decade of China’s approximate 1.3 billion people.

By Peter Foster, Beijing
Published: 12:03PM GMT 01 Nov 2010
http://www.telegraph.co.uk/news/worldnews/asia/china/8102095/China-begins-recording-of-first-census-in-a-decade.html

It is the sixth time China has carried out a national census but the first time it will count people where they live and not where their resident certificate, or hukou, is legally registered

Despite a television advertising blitz and thousands of propaganda banners exhorting residents to co-operate with census-takers, officials have admitted that collecting accurate data is increasingly difficult in the world’s largest autocratic state.

Chief among those avoiding officials are China’s estimated 200 million migrant workers, couples who have had an illegal birth under the one-child policy and property-owning middle classes anxious not to reveal their true assets to the taxman.

The reluctance to co-operate has highlighted changing attitudes to individual privacy in China where a growing percentage of people no longer rely on the government for their housing, healthcare and the education of their children.

An online poll on the popular sina.com website showed that a third of respondents said they were not comfortable letting census-takers into their homes, with other websites and chat forums dispensing tips on how to avoid giving up information.

“Along with China’s development, the people’s awareness of legal, personal and privacy rights has been increasing,” said Ji Lin, the executive vice mayor of Beijing in charge of the census, in the run-up to the count.

“When we were little, it wasn’t this way. If the police wanted to check hukous (Chinese household registration documents), they would just walk in with barely a knock. You can’t do that anymore.” China’s population counts have long been a subject of scepticism. A survey last year put the population at 1.334 billion, although some demographers have estimated the figure to be as high as 1.5 billion. The number of unregistered children is thought to exceed 1m.

However this time the government has taken steps to ensure a more accurate count, including up to a 70 per cent reduction in fines for migrants that fail to register with police when they move to the city or for parents with illegal children who can be fined up to £20,000.

“The census is the basis for making policies on education, medical care, employment and social warfare and aid,” the Communist Party mouthpiece the People’s Daily said in an editorial in an apparent effort to focus on the benign intentions behind the survey.

But at a building site in central Beijing on Monday it was clear that much nervousness remained. “I’ve been here for two months without registering,” said one migrant labourer from the central province of Sichuan during his lunch-break, “we’ll just lie low or go home for a week.” Others, like Jiang Chunyan, a mother and migrant worker who was at home between shifts looking after her rowdy three-year-old son, were happy to co-operate with the survey but sceptical of the government’s pledge that the information would be used to improve her lot.

Mrs Jiang, a department store saleswoman from Hebei province who earns with her husband a joint income of £500 a month, says she still cannot find a kindergarten place for her son despite being able to afford fees of more than £700 a year.

“We’ve lived in Beijing for a decade, but we could live here for 1,000 years and still not get a Beijing 'hukou’ [registration]. I’m not afraid to give them the information, I have my temporary registration, I just don’t have a school place for my child.” Such social stresses are increasingly common in China where wealth inequalities are rising sharply and the success of the one-child policy has raised worrying questions about how China’s labour force, which will begin to shrink from 2015, can its pensioners in the decades to come.

Despite the difficulties, however, Chinese officials say the census will be the most detailed ever, with a margin of error of less than two per cent — or 26.7m people. The preliminary results will be announced in April.

Here's the new 2010 HDI report:
http://www.undp.org/publications/hdr2010/en/HDR_2010_EN_Table1.pdf

China moved two spots up to 89th

China's new HDI figure is 0.663. From 2010, HDI calculation is changed to use geometric mean (instead of arithmetic mean) for the factors , which pulls the numbers down.

http://img703.imageshack.us/img703/9416/88999116.png

IMF Approves China as Third-Biggest Power, Weakening Influence of Europe

By Sandrine Rastello - Nov 6, 2010


The International Monetary Fund’s executive board approved a plan that would make China the third- strongest voice in the organization while weakening Europe’s influence to make room for emerging economies.

Acting on an Oct. 23 deal by finance chiefs of the Group of 20 nations, the IMF agreed to shift more than 6 percent of voting rights to what officials called “dynamic” developing countries. That would give more say to nations such as Brazil and South Korea, while decreasing the clout of European members including Belgium and Germany. “Advanced” European countries are also set to give up two seats on the board under the package.

“We catch up with the reality,” IMF Managing Director Dominique Strauss-Kahn told reporters at a news briefing in Washington today, calling the agreement historical. “The ranking of the countries is really the ranking they have in the global economy.”

The plan now requires the approval of an 85 percent majority of the 187 members’ votes and most countries will then need to go through a legislative process to enable the changes.

The aim is to make the 65-year-old institution a better reflection of a world economy that was pulled out of the recession and is still being driven by growth in emerging markets. The planned changes come at a time when the IMF has been asked to help the G-20 monitor global trade imbalances and exchange rates amid tensions between its members over whose policies are most hurtful to a balanced global recovery.

Increased Responsibilities

Officials including U.S. Treasury Secretary Timothy F. Geithner and Strauss-Kahn have tried to link access to bigger clout at the IMF to increased “responsibilities” in the global economy, a hint at China to accelerate its currency’s appreciation. China has said it’s done enough to deserve more say.

While the governance package is “a big moment” in the history of the fund, it’s unlikely to prompt China, which moved from the sixth rank, to adopt a different stance on the yuan, said Bessma Momani, a professor at the University of Waterloo’s political science department in Canada.

“For people to expect the Chinese to somehow switch gears and become very vocal at the IMF because of its increase in political weight there is very premature,” she said.

After the changes take effect, the fund’s 10 biggest shareholders will comprise the U.S., Japan, Germany, the U.K, France and Italy as well as Brazil, Russia, India and China. A smaller shift in voting rights of 2008 has still not been implemented.

Months of Negotiations

The agreement ends months of negotiations that saw the U.S., Europe and some emerging nations at loggerheads over who should give up power. It also closes a debate unexpectedly forced by the U.S. in August of which countries should sit on the institution’s board of directors, which will now permanently have 24 chairs.

The developed European nations’ plan on how to give up two seats is not yet agreed on, though it will probably be based on having some European countries take turns at the board with emerging economies, according to two European officials who spoke on conditions of anonymity. Turkey and Poland may benefit from the changes, the officials said.

The shift in voting shares will take place through a general increase of quotas, which also determine members’ financial commitment to the fund and access to loans. That means the IMF’s permanent resources will be doubled to about $750 billion, mostly by shifting countries’ contribution from an emergency pool, according to the G-20.

To contact the reporter on this story: Sandrine Rastello in Washington at srastello@bloomberg.net

G-20: The new global economy

There's a lovely GDP chart (http://money.cnn.com/news/economy/g20/interactive/index.html?cnn=yes)

CNNMoney.com