Chinese Economics Thread

[Martian]

Government plans to impose new tax on idle private land

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"'Idle land tax' speculation weighs down construction shares
2010/10/11 20:17:22

Taipei, Oct. 11 (CNA) Construction shares faced heavy pressure Monday after reports emerged that the government plans to impose a special tax on privately owned land left idle without any plan for immediate development, dealers said.

Construction stocks closed down 2.19 percent, while the benchmark weighted index fell 0.81 percent to 8,176.76.

Cathay Real Estate fell 3.02 percent to NT$17.65, Kindom Construction shed 3.18 percent to NT$24.05 and Prince Housing shed 3.80 percent to NT$24.05.

Media reports on Monday hinted that the government would impose a land value tax (an annual tax on land holdings) that would actually serve as an "idle land tax" to curb property speculation.

Developers have hoarded many prime lots of land in recent years without developing them, waiting for land prices to rise before selling them for a hefty profit.

This is one of the factors driving up property prices, especially in the Greater Taipei area, and the rumored tax was said to be part of a government strategy to put a lid on such practices, scaring investors.

After the reports surfaced, the Ministry of Finance (MOF) clarified that the planned tax adjustment would only be to narrow the scope of land value tax reductions and exemptions on privately owned land used by the general public.

Many developers currently receive land value tax exemptions when they landscape idle land holdings and give the public access to them.

But under the new plan, only private land used for roads or other passage without payment will receive preferential tax status, while companies "greening" their land and opening it to the public will have to pay land value tax beginning next year, the MOF said.

"Despite the clarification, the first idea that came to investors' minds was that the government would tighten measures to cap high flying property prices, " Hua Nan Securities analyst Henry Miao said.

Miao said the construction sector had recently staged a strong showing on a rising Taiwan dollar against the U.S. dollar on hopes that a higher local currency would boost asset prices in the domestic market.

"Regardless of whether investors misunderstood the MOF's plan or intentionally interpreted the plan as a measure to cap property prices, it was time for investors to pocket the recent significant gains," Miao said.

Miao said rapidly rising property prices in the local market have drawn complaints from the public, and he expected that the government would not sit back to allow the situation to get worse.

A recent indication of that was the central bank's 0.125 percentage point rate hike on Sept. 30, which followed a rate boost in late June.

"Investors should stay on the sidelines before adding property holdings to closely watch what further measures the government will come up with to deal with the local property market," he said.

(By Wei Shu and Frances Huang)"

 

[Martian]

World's richest woman

With regard to gender equality and opportunity, China may be considered the most socially-progressive in the world. Chinese society is a meritocracy. If a woman has a better business idea, she can become a billionaire and the world's richest woman.

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"World's three richest women are Chinese
By Patti Waldmeir, FT.com
October 12, 2010 -- Updated 0255 GMT (1055 HKT)

Zhang Yin, founder of Nine Dragon Paper Holdings Limited, speaking in Hong Kong on March 17, 2009. Hurun lists her as the world's richest woman.

(FT) -- More than half the world's richest self-made women are Chinese, thanks in large part to Mao and cheap childcare, according to the Hurun Report, which compiles information on the wealthiest Chinese.

The world's three richest women are Chinese -- as are 11 of the top 20 -- according to the Hurun List of Self-Made Women Billionaires, published on Tuesday.

Zhang Yin, 53, the Chinese head of a recycled paper company, Nine Dragons Paper, ranks as the wealthiest self-made woman on earth with an estimated personal fortune of $5.6bn. Wu Yajun, 46, of Longfor Property, comes in second with $4.1bn and Chen Lihua, 69, of Fuhua International, a Hong Kong conglomerate, ranks third with $4bn.

The richest non-Chinese is Spaniard Rosalia Mera of Zara, the fashion house, with $3.5bn, and two others who made their fortunes in fashion: Doris Fisher for Gap is eighth and Giuliana Benetton of Benetton is 11th.

Oprah Winfrey, the US television show host, ranks ninth with $2.3bn.

Nandani Lynton, of the China Europe International Business School in Shanghai, identified political and social factors for making a scrap paper lady from China richer than the doyennes of Zara, Gap, Benetton and Ebay.

"Mao made an incredible difference when he said women hold up half the sky, since then it has been assumed that all women in China will work," Ms Lynton said.

Chinese women are also among the most ambitious on earth, according to a study from the Centre for Work-Life Policy in New York, which found 76 per cent of women in China aspired to top jobs, compared with 52 per cent in the US.

Working mothers in China and other Bric countries "are able to aim high, in part because they have more shoulders to lean on than their American and European peers when it comes to childcare", the centre noted. With an average work week of 71 hours for Chinese women, cheap childcare is essential, and in China is often provided by grandparents -- four for every only child.

Nandani Lynton noted that it was not just the availability of cheap or free childcare but also the absence of any stigma attached to using it that helped Chinese women dominate the global rich lists.

Still, compared to Chinese men, women still lag behind. According to Hurun, only 11 per cent of the richest people in China are women and the average wealth of China's top 50 richest women is only a third that of the top 50 richest men."

 

[Martian]

China's largest trade fair opens amid yuan appreciation worries

China Import and Export Fair (e.g. Canton Fair) is always held in Guangzhou, China.

Canton Fair Pazhou Complex

Canton Fair 2010

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"China's largest trade fair opens amid yuan appreciation worries
English.news.cn 2010-10-15 17:02:02

GUANGZHOU, Oct. 15 (Xinhua) -- Canton Fair, China's largest trade fair and a key barometer of its trade and economic development, opened Friday amid growing concerns that a stronger yuan would weigh on the nation's exports.

In addition to business opportunities, the multitudes of sellers and buyers at the fair, officially known as China Import and Export Fair, are watching closely the latest developments in the yuan exchange rate dispute.

"We are under great pressure. Should the exchange rate rise rapidly, many of us will be out of business," said Dai Chao, export manager of Wanjiale Gas Appliances, a medium-sized private company that sells gas appliances to east European and south American countries.

Dai's voice was echoed by many small and medium-sized companies at the fair, which make up about 70 percent of all 23,599 registered sellers.

"An abrupt appreciation of the yuan would devastate the smaller exporters whose profit margin mostly ranges from 2 to 5 percent," said Liu Jianjun, spokesman for the 108th Canton Fair.

"We are keeping a close eye on the upcoming U.S. government report on the currency practices of China," said Liu Guizhong, head of the overseas market department of Glanz, a leading Chinese manufacturer of home appliances.

The U.S. Treasury Department's report on exchange rates is due to be published on Oct. 15. The market is worried whether the United States would list China as "currency manipulator".

Analysts say China's currency policy has been stigmatized by some U.S. politicians who are trying to use it as a scapegoat for the weak economy and job losses in the United States as the midterm elections approach.

"Pushing for the appreciation of the yuan for political gains will only hurt the global market. Exchange rate changes should be based on the real conditions of China's economy and the trade market," said Su Jing, a foreign trade official with the Ministry of Commerce.

"China is at a crucial stage of restructuring its economy. Abrupt fluctuations of the yuan would not only hurt the country's economy but also worsen the investment environment in China and disrupt world economic development," Su added.

"As the impact of the global economic crisis is still lingering, currency disputes could cause some countries to reduce export quotas and increase taxes, leading to trade wars that would hurt everybody," said Shi Jianxun, economic professor with Shanghai-based Tongji University.

"The prices are already high. We would no longer be able to afford the goods here if the yuan keeps appreciating," said Barahukwa Mary, manager of a construction company in Uganda.

A total of 23,599 firms at home and abroad are participating as sellers in the 108th Canton Fair in Guangzhou, capital city of south China's Guangdong Province, organizers said.

The figure is 240 more than that at the previous fair in April.

Of the total, domestic Chinese firms made up 23,098, said Liu Jianjun, deputy director of the China Foreign Trade Center (CFTC).

The Canton Fair has been China's largest biannual trade fair since it began in 1957. Exhibits at the fair include mechanical and electrical products, textiles, healthcare products, food, sports supplies and other consumer goods, organizers said.

Editor: Zhang Xiang"

TianHe District, the city center of Guangzhou

Guangzhou map for the Canton Fair

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"Canton Fair contracts up but Chinese exporters remain cautious
English.news.cn 2010-05-05 23:55:53

GUANGZHOU, May 5 (Xinhua) -- Despite a rebound in contracts signed at the world famous Canton Fair, which concluded Wednesday, Chinese exporters still remain cautious about the global trade outlook.

The 107th China Import and Export Fair, or the Canton Fair, saw the value of export contracts up 12.6 percent from its autumn session last year to 34.3 billion U.S. dollars, Chen Chaoren, spokesman for the Fair, told a press conference.

But the figure is still 10.3 percent lower than the corresponding session in 2008, he said.

Trade resulting from the Fair contributes significantly to China's overall trade volume.

"The rebound (in the Fair contracts) will help consolidate China's recovery in foreign trade, but uncertainties still remain," Chen said.

Exporters were still taking cautious steps. Short-term contracts signed at the Fair were up to 53 percent, according to Chen.

"Chinese exporters remain worried about the complicated trade conditions, such as the unstable global economic recovery, rising trade protectionism and higher production costs," he said.

The recent session of the Fair attracted 203,996 overseas buyers from 212 countries and regions around the world, down 1.3 percent from its spring session in 2007.

As the world's largest exporter, China's exports grew by 24.3 percent in March year on 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, the first one since May 2004.

Editor: yan"

 

[Martian]

China and U.S. cooperation

The United States and China have been able to cooperate for nearly 40 years in the United Nations Security Council. Being two of the five permanent members with veto-power, the U.S. and China have learned to compromise to maintain relative peace in the world.

Similarly, in the economic realm, the U.S. and China usually have a war of words in the newspapers and tend to compromise in the end. A currency war or trade war benefits no one. In economics, it is a win-win situation. As China becomes wealthier, the Chinese buy more American products.

The Sino-American dispute is centered around the speed and timing, not the substance, of the Chinese currency appreciation and market-opening measures (e.g. one example is the terms under which China will join the voluntary WTO guidelines on opening government procurement to foreign bidders).

In sum, the U.S. is pressuring China because of the political elections for Congress on November 2, 2010. The U.S. and China have been engaged in this peculiar dance on many occasions. They express their respective positions and unhappiness with each other. Afterward, they strike compromises that both sides can accept.

I don't expect to ever see a serious clash between the U.S. and China; including in the economics realm. Both sides have too much to lose. A currency war or trade war will plunge the world into a second Great Depression (i.e. repeat of 1929-1930s).

Watching the relationship between the U.S. and China is like watching your parents fight. It makes everyone nervous, but things are straightened out in the end. It is in both countries' interest to cooperate and keep the world economy humming.

 

[kyanges]

I don't believe that it's Earth shattering economic news, but I did feel this was something interesting culturally that impacts the economy. It makes me wonder what other cultural influences of this sort are hidden in the everyday actions of the Chinese economically or otherwise. For example, traditional holidays and such have an obvious impact in terms of when people generally spend, but this was a more unique sort of cultural tick, similar to the occasional western aversion to the number 13 in building levels or important events.

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China Deviates From the Rule of Nine

China’s quarter percentage point increase in its benchmark interest rates on loans and deposits marks the first time the central bank has made a change that isn’t divisible by nine.

The “divisible by nine” rule was largely a function of tradition, and based on the use of an abacus. Former Hong Kong Monetary Authority Chief Executive Joseph Yam explains: “These conversion rules were set based on the assumption that there were 360 days (rather than 365) and 12 months in a year, and always 30 days in a month. The daily rate is therefore the annual rate divided by 360 or the monthly rate divided by 30, and the monthly rate is the annual rate divided by 12… To avoid daily rates with recurring decimals, and the associated rounding complications in calculating the interest, annual interest rates (and any changes) have therefore to be divisible by 360.”

“It is not difficult to see that this would make calculating interest more convenient if one was using an abacus instead of a calculator or computer. Perhaps this is why the tradition was established. Using an abacus to do division is a lot more difficult than to do multiplication, at least according to my own experience, particularly when one number is not divisible by the other. Although abacuses are not commonly used these days, the tradition lives on,” Yam continued.

Nine also is considered a lucky number in China. It is a homophone for the word “forever” in Chinese — making it popular for weddings — and has associations with the emperor. We can only hope China’s deviation from the “divisible by nine” rule isn’t unlucky for the global economy

 

[Martian]

Taiwan`s PPP-based Per-capita GDP to Exceed Japan`s This Year

Taipei 101 view of Taipei city, Taiwan

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"Taiwan`s PPP-based Per-capita GDP to Exceed Japan`s This Year
2010/10/22

Taipei, Oct. 22, 2010 (CENS)--Taiwan`s per-capita GDP, based on purchasing power parity (PPP), is expected to hit a record high of US$34,743 this year to exceed Japan`s US$33,828, according to the International Monetary Fund (IMF).

Taiwan`s Council for Economic Planning and Development (CEPD) says “PPP” is a theory of long-term equilibrium exchange rates based on relative price levels of two countries. A “PPP” exists when the exchange rates of two currencies equalize their purchasing power in their home countries for a given basket of goods. The theoretical exchange rates are often used to compare the standards of living of two or more countries.

CEPD says that the nominal per-capita GDP of both Japan and South Korea is higher than that of Taiwan, yet higher commodity prices in these two countries dampen purchasing willingness and meanwhile suppress purchasing power, resulting in real purchasing power that is actually weaker than in Taiwan.

In 2001 Taiwan`s PPP-based per-capita GDP was US$20,278, lower than Japan`s by US$5,614 and Germany`s by US$7,006. However, in 2010 such figure for Taiwan has outstripped Japan`s by US$915, but still lags Germany`s by US$1,187. In the same period, the gap between Taiwan and South Korea has widened to US$4,952 from US$2,870.

PPP-based Per-capita GDP of Major Asian Economies Unit: US$

• ....................2001........2010
• Taiwan.......20,278.....34,743
• Japan.........25,892.....33,828
• S. Korea.....17,408.....29,791
• Singapore...32,218.....57,238
• Hong Kong..26,891.....45,277

Source: IMF

(by Judy Li)"

 

[bladerunner]

I came across an interesting question in my cyber surfing but noone seemed to be able to answer it. Its got to do with High speed rail between Shanghai-Hangzhou. Now that its up and running, what is the purpose for approving a competeing Maglev Line

 

[SampanViking]

Thats easy.

1) To perfect the technology over a long and regular run.

2) The Mag Lev would be a fast link between the two cities but the HSR line can of course continue without changing along other parts of the rapidly increasing HSR network.

3) The greatest part of the cost of building a railway is building the actual route, ie the underlying cuttings, embankments, tunnels and bridges which carry the track. Providing that curves and gradients are of the right order, conventional rail can be taken up and replaced with Mag Lev rail at a later date.

"Simples tchk!!"

 

[bladerunner]

Sounds logical, but nowhere in their ongoing debates on whether to continuing to develop the Maglev line do I recall any hint that it would be done in conjuction with the HSR line and follow the same route.

The off and on again approvals centered on the health issues of Electro magnetic exposure and the greater cost of building. and considering that HSR now travels at the same speed of the Maglevs what are their advantages?

 

[Martian]

Full potential of Maglev

The attraction of China's HSRs is that they are far more fuel-efficient than airplanes per passenger-mile. The goal is to transport as many passengers as possible via HSR, instead of by airplane.

China's world's-fastest HSR trains travel at 350 kph, which is 210 mph. There is a problem of increasing air resistance in attempting to significantly push the speed of the Chinese HSRs. To solve the problem of air resistance, a super-fast pressurized train needs to travel in a near-vacuum tunnel.

A HSR generates significant heat/friction where the wheels contact the rails. However, a maglev generates no friction (e.g. no energy loss and heat removal problem) and it is a superior choice for a near-vacuum tunnel.

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"China Developing Maglev Train That Can Go 1000kph
by Brit Liggett, 08/05/10

Get ready for some high speed transport action – Chinese researchers are currently developing a vacuum maglev train that they believe will run at speeds up to 620 miles per hour. This is just a few years after Japan announced their — then totally awe inspiring — plans for a maglev train that would run at 310 mph. The train will run on magnetic levitation tracks built into vacuum tubes underground and will be sucked along at an average speed of almost 400 miles per hour. What’s the cost for this zippy technology, you ask? A mere $2.95 million more than the current high speed rail for each kilometer of track.

Maglev trains utilize a system of very large magnets to lift and propel train cars. The magnetic system is able to move at high speeds while being quieter and smoother than a traditional wheeled mass transit train. The current world record for speed on a maglev train is 361 miles per hour and was set in Japan in 2003. The Chinese plan to blow this record out of the water by coupling their maglev technology with underground tunnels that will act as vacuums.

The most common problem facing high speed transit is air friction that slows train cars down. The Chinese plan to eliminate this problem with their vacuum tunnels and say their trains will not have to compete with air friction while they travel. Researchers say that the trains could be ready for action in ten years. Though this high speed wonder seems like a great idea, the economic cost of the technology is staggering. With the added price tag of the vacuum tunnels to make these trains extra speedy, we’re wondering if the time saved traveling on these record breaking trains will really be worth the impact of their construction.

Via Engadget"