Chinese Economics Thread

[bd popeye]

An oil rig of the Great Wall Drilling Company, a subsidiary of China National Petroleum Corp (CNPC), is seen near Varadero, around 140 kilometres (86 miles) east of Havana, September 4, 2011. China has signed an agreement to play a major role in increasing Cuban oil production both onshore and offshore, although details were not disclosed. State-owned CNPC is said to be considering leasing exploration blocks in Cuban waters. China also committed to negotiations of contracts for a $6 billion expansion of Cuba's Cienfuegos refinery and a liquefied natural gas project. Picture taken September 4, 2011.

 

[Red___Sword]

An oil rig of the Great Wall Drilling Company, a subsidiary of China National Petroleum Corp (CNPC), is seen near Varadero, around 140 kilometres (86 miles) east of Havana, September 4, 2011. China has signed an agreement to play a major role in increasing Cuban oil production both onshore and offshore, although details were not disclosed. State-owned CNPC is said to be considering leasing exploration blocks in Cuban waters. China also committed to negotiations of contracts for a $6 billion expansion of Cuba's Cienfuegos refinery and a liquefied natural gas project. Picture taken September 4, 2011.

That's a good way to write - The REDs tried to erect rockets at Cuba and they failed; now they manage to erect oil rigs there. LET'S VOTE FOR THE OTHER GUY!!!

I am sorry, I read things with subtle, just thoughts across my mind when I read it.

 

[delft]

An article in Christian Science Monitor about Nigeria exchanging 10 % of its foreign reserves for RMBs:

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.
A citation from the article:
"We, rather conservatively, anticipate that around 40 percent of [Chinese]-African trade would be settled in renminbi by 2015,” Mr. Freemantle wrote in an e-mailed statement. That 40 percent would represent $100 billion worth of trade, more than China's entire trade with Africa last year.
Mr. Freemantle is a researcher with Standard Bank.

 

[bd popeye]

I'd like for Martian , A.Mace or any member to comment on this article. No bashing please. How much truth is here? Or is it just speculation and a twisting of facts??

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BEIJING (AP) — Chinese millionaire Su builds skyscrapers in Beijing and is one of the people powering China's economy on its path to becoming the world's biggest.

He sits at the top of a country — economy booming, influence spreading, military swelling — widely expected to dominate the 21st century.

Yet the property developer shares something surprising with many newly rich in China: he's looking forward to the day he can leave.

Su's reasons: He wants to protect his assets, he has to watch what he says in China and wants a second child, something against the law for many Chinese.

The millionaire spoke to The Associated Press on condition that only his surname was used because of fears of government reprisals that could damage his business.

China's richest are increasingly investing abroad to get a foreign passport, to make international business and travel easier but also to give them a way out of China.

The United States is the most popular destination for Chinese emigrants, with rich Chinese praising its education and healthcare systems. Last year, nearly 68,000 Chinese-born people became legal permanent residents of the U.S., seven percent of the total and second only to those born in Mexico. Canada and Australia are also popular.

It is a bothersome trend for China's communist leaders who've pinned the legitimacy of one-party rule on delivering rapid economic growth and a rising standard of living. They've succeeded in lifting tens of millions of ordinary Chinese out of poverty while also creating a new class of super rich. Yet affluence alone seems a poor bargain to those with the means to live elsewhere.

Despite more economic freedom, the communist government has kept its tight grip on many other aspects of daily life. China's leaders punish, sometimes harshly, public dissent and any perceived challenges to their power, and censor what can be read online and in print. Authoritarian rule, meanwhile, has proved ineffective in addressing long standing problems of pollution, contaminated food and a creaking health care system.

"In China, nothing belongs to you. Like buying a house. You buy it but it will belong to the country 70 years later," said Su, lamenting the government's land leasing system.

"But abroad, if you buy a house, it belongs to you forever," he said. "Both businessmen and government officials are like this. They worry about the security of their assets."

Leo Liu, marketing manager at Beijing emigration consultants Goldlink, said the company has noticed an increasing trend of rich Chinese wanting to emigrate, particularly to Canada, in the 15 years since it was founded.

The main reasons people want to move abroad, he said, are their children's education and for better healthcare. Some want to leave because they got their money illegally, such as corrupt government officials and businesspeople, while others are inspired by friends who have already emigrated to the U.S.

"They want to get a green card even though they may still do business here in China," Liu said. "They might have sent their wife and children abroad.

"And some of them just love life in a foreign country, the Western style," he said.

There is also a yawning gap between rich and poor in China, which feeds a resentment that makes some of the wealthy uncomfortable. The country's uneven jump to capitalism over the last three decades has created dozens of billionaires, but China barely ranks in the top 100 on a World Bank list of countries by income per person.

Getting a foreign passport is like "taking out an insurance policy," said Rupert Hoogewerf, who compiles the Hurun Rich List, China's version of the Forbes list.

"If there is political unrest or suddenly things change in China — because it's a big country, something could go wrong — they already have a passport to go overseas. It's an additional safety net."

Among the 20,000 Chinese with at least 100 million yuan ($15 million) in individual investment assets, 27 percent have already emigrated and 47 percent are considering it, according to a report by China Merchants Bank and U.S. consultants Bain & Co. published in April.

Nearly 60 percent of the people surveyed said worries over their children's education are a reason for wanting to leave.

A millionaire who works in the coal industry, who also spoke on condition of anonymity, said the main push behind his plans to emigrate is China's test-centric school system, often criticized for producing students who can pass exams but who lack skills for the world of work.

He will take his 7-year-old to the U.S. as soon as the child graduates from junior high at an international school in Beijing where pupils are instructed in English.

"The U.S. has a good educational system and excellent health care," said the 39-year-old, who has three homes in China and assets worth $5 million. "That's why we look forward to going there."

Other top motivations cited in the Merchants Bank study are to protect assets and to prepare for retirement. Also cited as reasons for leaving: having more children and making it easier to develop an overseas business.

Alongside increased emigration there has also been a massive outflow of private money from China despite its strict currency controls. The report estimates that rich Chinese — those with assets of more than 10 million yuan — have about 3.6 trillion yuan ($564 billion) invested overseas.

"The Chinese economy now looks like a massive funnel," said Zhong Dajun, director of the non-governmental Dajun Center for Economic Observation & Studies in Beijing.

Zhong said it is mostly corrupt government officials who transfer entire fortunes overseas because they have been illegally acquired and "they have fears and feel guilty."

Wealthy Russians have also been establishing footholds abroad for the past decade, seeking a safe haven both for their money and their children. In recent years, the trend has extended to Russia's emerging middle class. They cannot afford to invest in London, a favorite destination for Russia's billionaires and millionaires, so have been setting up second homes in less expensive European countries, including those like the Czech Republic that were once part of the Soviet bloc.

Su, the property developer, intends to stay in China and continue building residential high-rises and office buildings for another 10 years because he fears it would be too difficult for him to replicate his mainland business success abroad.

His wife is already in the U.S., expecting their second child. Under China's one-child policy in place for the last three decades to control population growth, couples can be penalized for having more than one child. In Beijing, the penalty is a one-off fee 3-10 times the city's average income, a maximum of 250,000 yuan ($40,000).

"The living conditions abroad are better, like residential conditions, food safety and education," said the millionaire as he dined in the VIP room of a Beijing restaurant. Lowering his voice, he said for many rich there are worries about the authoritarian government. "This is a very sensitive topic. Everyone knows this. It's freer and more just abroad," he said.

 

[Equation]

I'd like for Martian , A.Mace or any member to comment on this article. No bashing please. How much truth is here? Or is it just speculation and a twisting of facts??

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Thanks for the interesting article Popeye. I have a question on this rich guy Su, if he has that kind of money why not just pay the $40,000 to have a second child in the urban area of China? Sounds to me he is paranoid cheap when he worries about protecting his assets, yet continue to thrive by building residential high rises and office buildings.

 

[AssassinsMace]

I was just about to post that article...

Well it's full of illogic and smells of propaganda. Is it hard to find a real estate guy named Su who is so powerful that he pushes China's economy forward as the article mentions. He's a millionaire not a billionaire and he's a power elite when it comes to China's economy? They're trying hide his identity... why don't they just give him a completely fake name? So they want to make money off of China but want to leave. So I guess they'll expect protection that they want to become foreign citizens yet make their millions off of China still. They ain't going to be able to do what they did in a Western country with all its laws and regulations in their way and unable to bribe government officials. Su can leave now. He just can't take his money with him because that's money made from the backs of the Chinese. The article just makes generalizations and relies on stereotypes and is just another sign of the downfall of the Western media and their facade of credibility. I don't find it hard to believe that some want to leave. What I do find it hard to believe is the bull about seeking protection from the rule of law. You don't become that rich in China without government connections or you skirted the law to get there and especially dealing in real estate where you have to deal with the government. So why would they want to leave the things that make them rich in the first place? They think they're going to find it easier in a Western country where they have their own well-established elites with their connections to government that beat theirs. That's just naive to think they can. Which means they're stupid in the first place and they don't know this about Western countries?

What I find most telling is if the Chinese government is corrupt as charged by the West, then how can there be any rich people who aren't corrupt themselves? How about China has no capital gains tax. Europe is worse than the US when it comes to it. The rich elite in China are the ones that get to send their children overseas for an education. And here's the slip from this author of this article. Chinese already look at Western universities as the best and it's a part of their social standing to send their kids which they do to these schools. So why would a rich elite in China complain about bad education in China when they're already sending their children overseas for an education to show-off their social standing? They wouldn't give a hoot about the quality of education in China. If these people were so honorable in their thinking wouldn't they use their connections to create change at home? No, because the whole theme and point of this article is promoting the West and demeaning China.

Can't have as many children as they want? Why not bribe an official to look the other way? Don't tell me China follows the rule of law now when it suits the purpose of propaganda.

It's all bull and propaganda lacing this story with themes of the American dream and perpetuating stereotypes. Millions leave China on tourism every year. Why don't we hear stories of them seeking asylum every year? They have that opportunity. If it were happening a lot, wouldn't the government stop it and clamp down on tourism just like these rich people can't leave China? We don't see that happening. Billionaires and millionaires can leave China with ease. If it's so oppressive then go and leave the money that you made off from slave labor behind. But then that's the reason why they don't go. Notice now all of the sudden what the Western rich elite are being villified for stashing their riches in other countries to avoid paying taxes somehow makes the Chinese version a Western hero. Ironic when all of the sudden there's a rich elite that wants the American dream, he's a good guy and not one of those who exploits slave and child labor to get where they're at. And Westerners think they're aren't going exploit and cheat when they find out there's an old boy's system and rules and regulations that'll make it harder for them than in China? And what about the Chinese high-rollers that get VIP treatment in the world's casinos. How did they get their money out of China if it's so hard? And what about those arrested going back to China after they stole millions from the government so they can go gamble it away in Macau and Las Vegas?

So many generalizations in that article and anonymity under the guise of the stereotypical Chinese police state smells it's all made up. And remember this is for American consumption. Look at those polls where something like 30%-40% of Americans think China has the number one economy. Don't want Americans being discontent and start some revolution that will make the country worse and ruin the very system where the American rich elite are making so much money now. Think about it. It's not any different from India when they do the same thing. Politicians have to demean China and laud India just so it looks like they're doing their jobs and should stay in office. The West always has stories of the brain drain from China too for the same reasons. And the last decade China has probably made its greatest leap ahead in technological gains. Would there be a J-20 with this crippling supposed brain drain? So either the West was lying with these stories or it had no effect. You don't think it's the same story here? These supposed rich elite want to leave? There's a billion people in China and they think they're so important that they can't be replaced? Something the West won't admit is China is probably the only other country in the world that can say like the US where you can be at the bottom and then be rich through your own hard work. So why would any rich elite tell his tales of woe to an American journalist thinking he or she is a crippling blow to China's economy if they leave? What purpose does it serve when they'd rather move to another country in the first place? Because it's all made up by a Western journalist perpetuating the propaganda of the American dream is alive and well in the richest of the rich in China. So, America, don't complain about how your politicians and corporations are screwing you so they can make every ounce of profit they can. If an elite rich person from China wants the American dream throwing all that made him rich away then you have nothing to complain about. It's not like Americans are going to check the facts because they want to believe in the propaganda that they have it so great, the rich from China would rather live in the US than China.

This is not a new tactic to divert the attention of the discontent. It's very familiar. During WWII, American women had to go to the factories to replace the men that left to go fight the war. When the war was over the men went back to return to their jobs in the factories only to discover many women didn't want to leave their jobs and go back to being a housewife. This started the modern day women's movement. This created quite a controversy back then. So what happen was Hollywood created a lot of war movies depicting an alternative to the American female which was the Asian war bride. The obedient subserviant Asian woman that will love and serve her man and all his wishes. Before this the stereotype of the Asian woman was she was evil and conniving. A dragonlady. Quite a contradiction. Stereotypes for propaganda purposes. Nothing new to this day.

 

[Maggern]

Those who are greedy will always be greedy. Norway too, has lost some of its richest inhabitants to Cyprus and elsewhere for tax evation. It would still be crazy to suggest that big capital is fleeing the country. The fact that more and more Chinese move abroad to study or do business I'd say is only testament to its increasing integration into the global economy and community. From what I've read, some Chinese go to the US and Europe to get their education, start working in a world-class firm for some years to get experience, and then move back to China to start up their own.

And if you're moving for better healthcare, why do you move to the US? My impression is that if you have anough money, then Chinese healthcare is quite ok. Alternatively you could go to Japan. But the US? Since when was the US the yardstick of supreme healthcare? And if this guy really wants another child, just pay the miniscule fine and have a child. It'll still be vastly more cheap than moving to the US and raise your children there.

Rich people feel themselves resented in the Chinese population? I know the government might be a bit wary of billionaires, but...The only examples I've heard of where rich people have been really resented is when it becomes clear they made the money illegally through scamming or corruption. I'd say at that point China is right to hit down on them. Since when did we show sympathy to people who "stole" millions and then fled abroad with the loot?

 

[kyanges]

"Beijing Plays Blame the Foreigners

In the Soviet Union, citizens guessed that a disaster had occurred when Communist Party-controlled media started running stories about disasters abroad. When the news was released, the public was primed for the message that such things also happen in the West. In today's China something similar is happening—with a somewhat different twist.

Since information is not so tightly controlled in China, the timing is reversed. After a scandal is reported at home, the state-run media develops a sudden interest in stories showing that foreign companies are committing similar crimes in China. The problem is that in the rush to make the facts fit this narrative, companies aren't getting a fair shake.

A case in point is American oil company ConocoPhillips, which formed a joint venture with state oil company CNOOC to exploit the Penglai 19-3 offshore field in Bohai Bay in northeast China near Tianjin. After two oil spills in June, Conoco has been cleaning up and making repairs. But even though it has made a good-faith effort at remediation and has been transparent about the problem, government officials and the state-owned media are accusing it of "negligence." The entire field has been ordered shut down, though only 3,200 barrels have been spilled, and the flow is now at a few liters per day, according to Conoco.

Last year, by contrast, Chinese oil firm CNPC suffered a fire near the city of Dalian in which hundreds of thousands of barrels spilled, polluting popular beaches and harming the fishing industry. Government officials initially underplayed the size of the spill, and the company escaped serious punishment.

Media blackouts of this and other accidents only fed public anger. So the real reason for the criticism of Conoco, as many Chinese citizens realize, is to deflect this anger by showing that environmental concerns are being taken seriously. Conoco is a convenient whipping boy, since foreigners have limited political influence, unlike state companies whose bosses hold high rank in the Communist Party.

And it's not just Conoco. After Chinese food companies adulterated their products and caused multiple deaths in recent years, the media are on a tear uncovering minor infractions by foreign firms such as KFC. Chinese lead battery factories have poisoned whole villages, but local officials have largely hushed that up. Instead, environmental activists garner publicity attacking Western companies such as Apple.

Large multinationals are not about to pull out of China as a result of this unfairness, since such troubles are considered part of the cost of doing business. But tales of subtle discrimination are becoming a recurring refrain in reports from foreign chambers of commerce in Beijing. The cost to China comes when companies decline to invest because profits are not sufficient to make up for the risks.

As long as the Chinese economy continues to thrive, Beijing may not care much about the business environment for foreigners. But then the government shouldn't be surprised if Chinese companies receive similarly unfair treatment as they compete in the global market."

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Lol, subtle discrimination? Sorta like, oh, I dunno, Huawei for no other reason than suspicions of PLA ties? Worry not anonymous WSJ writer, Chinese companies have plenty of experience with unfair treatment of the sort beyond mere media sleights, and they're not the least bit surprised.

On the other hand, I'm not about to pretend that local Chinese officials don't try to cover things up either, lol. Dirty business obeys no national boundaries.

 

[AssassinsMace]

That's pretty hypocritical. When I first heard about this spill, the Western media reported it sounding like China was covering-up a spill and ConocoPhillips leaked the info to the press. Like the Israeli citizen that was in the vincinty of that Long March rocket failure that crashed into the village and reported it to the press. So the media not knowing the facts already made it sound like it was solely a Chinese accident. And does the media report that all these lead toys are a result of American companies demanding the lowest cost possible in making their toys which includes lead paint being the cheapest means to add shine to paint color. Yeah corporations like Mattel didn't know about it. Which is why when the scandal broke in the US, Mattel apologized to the American public for lead being in their toys and then immediately afterwards the President of Mattel flew to China to apologize to the Chinese. Now why would he have to apologize to the Chinese if Mattel were an innocent party?

 

[Quickie]

An article in Christian Science Monitor about Nigeria exchanging 10 % of its foreign reserves for RMBs:

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.
A citation from the article:
"We, rather conservatively, anticipate that around 40 percent of [Chinese]-African trade would be settled in renminbi by 2015,” Mr. Freemantle wrote in an e-mailed statement. That 40 percent would represent $100 billion worth of trade, more than China's entire trade with Africa last year.
Mr. Freemantle is a researcher with Standard Bank.

The article gives the impression that Nigeria is the first country ever to have made arrangement with China to trade in yuan. Not true because China have already had currency swap agreements with a number of countries in recent years long before this.