Chinese Economics Thread

[escobar]

Please, Log in or Register to view URLs content!

Kent John Krizman has spent 13 years as a co-pilot at American Airlines. For a chance to move across the cockpit, he’s ready to take a job in China.

“I should be flying as a captain,” said the 52-year-old San Francisco resident, who has 20,000 hours’ experience in jet planes. Promotion won’t happen for at least five more years at American, while in China it could occur straightaway, he said. He and his wife “are all set to go,” he said.

Krizman was one of about 550 pilots who attended a China job fair in Miami last week, as first officers find fewer chances for promotion in the U.S. because of slower airline growth and captains retiring later. There are jobs available in China, where a surging economy and a fleet expected to grow 11 percent a year through 2015, according to government forecasts, is creating a need for experienced crewmembers.

“Everyone is facing a pilot shortage,” said Shen Wei, head of pilot recruitment at Shanghai-based budget carrier Spring Airlines (TPRINZ). “Foreign pilots are the quickest option.”

To help lure overseas crew members, Spring Air pays foreign pilots 30 percent more than domestic staff, Shen said, without elaboration.

Air China Ltd. (753), the nation’s largest international carrier, was offering $198,000 a year net plus bonuses for Airbus SAS A330 pilots, according to an advertisement on the website of Wasinc International, the recruitment company that helped run the job fair. During the two-day Miami event, which featured about a dozen Chinese airlines, about 70 pilots got provisional job offers, said Scott Snow, a spokesman.

Doubled Pay

Roger Grant, an American Airlines co-pilot, said in Miami that he may be able to about double his salary by moving to China and becoming a captain. He also said a move may offer better long-term prospects.

“I’ve been worried about the direction that the pilot career has been taking,” said the 45-year-old, who lives in Boynton Beach, Florida, with his wife and 7-year-old daughter. Workers across the industry are “getting punished” for mistakes made by major airlines, he said.

It’s easier for first officers to become captains in China than the U.S. because of demand rather than lower requirements, said Li Yanhua, an associate professor at Tianjin-based Civil Aviation University of China. Air-traffic controllers in China are already required to speak English, in line with global standards.

China Demand

Nationwide, the number of pilots in China needs to rise to 40,000 from 24,000 in the five years ending 2015, according to a statement posted on the website of the Civil Aviation Administration of China. There are about 1,700 foreign pilots working in the country, according to Spring Air’s Shen. Calls to the CAAC went unanswered.

China Southern Airlines Co. (1055), the nation’s biggest carrier, is looking to hire 725 pilots this year, including 100 from overseas, it said by e-mail. It employs 4,400 pilots. Air China intends to recruit 600 pilots this year, including as many foreigners as possible, it said. The Beijing-based airline has 46 foreign pilots, or less than 2 percent of its roster.

In the U.S., first officers are finding it more difficult to get promotions as an increase in the mandatory retirement age for captains to 65 from 60 creates a logjam at the top of chain, said Kit Darby, who runs a pilot-hiring and compensation consulting firm in Peachtree City, Georgia.

Pilots who have been promoted at major U.S. carriers are unlikely to leave as even junior captains earn $12,700 per month on average, plus benefits such as pensions that can boost the package by 40 percent, he said. Moving to China may appeal to the 4 percent of the country’s 90,000 pilots that are on furloughs, he said.

“To the furloughed or unemployed pilot an overseas job looks pretty good,” he said.

Regional Carriers

Pilots at U.S. regional carriers, which fly smaller planes on short-haul routes, have also been caught by the retirement slowdown as they lose opportunities to move to better-paid positions flying larger models at a major airline.

Tony Giraldo, 51, for instance, said he has spent 15 years flying “numerous hours on the same equipment with no chance for an upgrade” at American Eagle, which ferries passengers from smaller cities to American Airlines’ airport hubs. He was considering a move to China as it offers “bigger aircraft and new possibilities,” he said.

Some American Airlines pilots recently were promoted to captain, 14 years after being hired, the carrier said. The wait for advancement was five years in the growth period of the 1980s and as long as two decades a few years ago, said Sam Mayer, spokesman for the Allied Pilots Association union.
AMR Bankruptcy

The November bankruptcy filing by AMR Corp., the Fort Worth, Texas-based parent of American Airlines and American Eagle, also spurred Giraldo to consider opportunities elsewhere, he said. Krizman, the American co-pilot, similarly said that concerns about Chapter 11 had “refocused my efforts” to look overseas.

American, which has a hub in Miami, wants to cut 400 pilot jobs as part of bankruptcy restructuring, as well as terminating pensions and outsourcing more flying to other carriers.

The carrier’s pilots “will remain highly compensated” even after the proposed changes, said Bruce Hicks, a company spokesman. American crew members “have long been among the best compensated in the industry,” he said.

China is stepping up pilot training to help meet demand. The Civil Aviation Flight University of China, the country’s biggest training provider, plans to accept 2,400 cadets this year, 33 percent more than last year, it said in e-mailed reply to questions.

Using domestic pilots is simpler for Chinese airlines as there are some restrictions on foreigners flying domestic services, largely because the military controls much of the airspace, said Spring Air’s Shen.

“The boom in foreign pilots coming to China may only last a few years,” he said. “When we have more choice in the future, I will prefer our own pilots.”

---------- Post added at 02:41 PM ---------- Previous post was at 02:23 PM ----------

Please, Log in or Register to view URLs content!

Premium Incomes Total ¥189b in Jan
China's premium incomes amounted to ¥189.18 billion in January, including ¥139.71 billion from life and casualty insurance and ¥49.47 billion from property insurance, the insurance regulator said.

China Rules Out Foreign Brands for Govt Car Purchases
China's government procurement of vehicles has excluded foreign brands, according to a sourcing catalog. Land Rover, Audi, BMW, Mercedes-Benz, Toyota and Honda have all disappeared from the list. It is estimated that China spent $12.7 billion on government procurement of vehicles in 2010.

4.3m Second-Hand Autos Sold in China in 2011
The number of second-hand vehicle transactions in China rose to a record 4.33 million units valued at ¥210.88 billion in 2011, up 12.5% and 18.6% respectively from the year before, according to the China Automobile Dealers Association. Transactions of passenger cars totaled 2.35 million units valued at ¥118 billion last year.

China's Economy Urged to Adopt 'Sweeping Changes'
A report by the World Bank and a prominent Chinese think tank recommends sweeping changes in the Chinese economy, including reducing the power of state-owned enterprises (SOEs) and breaking up monopolies, the Wall Street Journal reported. Other recommended changes include raising bank deposit rates and increasing dividends paid by SOEs as a way to boost government revenue for social spending.

Shanghai Hikes Minimum Wage by 13%
Shanghai raised its minimum wage 13% to ¥1,450/month. If the city's compulsory employer's contribution to social welfare is considered, which is not compulsory elsewhere in the country when calculating the minimum wage, Shanghai's minimum wage will actually be equivalent to ¥1,850/ month, the highest nationwide.

State Grid to Spend ¥100b Developing Renewable Energy in Yunnan
State Grid Corp of China, the nation's biggest power producer, said it plans to invest ¥100 billion developing renewable energy in Yunnan province between 2011 and 2020, with ¥35 billion to phase in by the end of 2015.

$1 = ¥6.3

 

[Equation]

Wow...I never knew there was such a long wait for American passenger plane co-pilots to become captains.

 

[escobar]

Please, Log in or Register to view URLs content!

Before getting to the policy debate, I want to mention that in late January Caixin, one of my favorite magazines, had an interview with Liu Mingkang, former China Banking Regulation Commission chairman. In it Liu says:

I’ve said in the past that this economic crisis will spread from the United States to Europe and finally land in Asia. Now we can see that it’s already begun influencing Asia.

In 2008 and 2009 I argued that the crisis we were undergoing would affect every major economy in the world, but not necessarily at the same pace. I suggested that the US typically is quick to adjust and, given the pace of deleveraging that was already taking place, I expected that it would be the first major economy out of the crisis, probably in the next two to three years, as private debt levels continue to decline and public debt growth slows.

China had an even bigger adjustment to make, but I worried that there were institutional factors that would slow down the adjustment process, especially with the expected change in leadership this year. Although I did not expect to see a serious contraction in growth until after 2013, I said that China would be the last major economy to emerge from the crisis. Why? Because the huge increase in investment it engineered to postpone the domestic impact of the global crisis exacerbated the imbalances within the economy and increased its already-excessive reliance on debt and investment to generate growth.

In 2009 (and even in 2010) I think some people thought these predictions were eccentric at best. This was mainly because they did not understand the relationship between the global trade imbalances and the crisis, and that the uneven adjustment process could extend over many years. I used the LDC Debt Crisis of the 1908s as an example of how this can happen. In the late 1970s, a surge of capital inflow (recycled petrodollars) spurred frenzied investment into LDCs, especially in Latin America, that made it seem that they had managed to avoid altogether the economic crisis suffered by the US and Europe in the mid-1970s. These inflows, however, only left the region with a huge amount of debt and a more difficult adjustment once borrowing capacity ran out in the early 1980s.

I expected something similar to happen again, with the crisis hitting developing countries much later than it hit the US and Europe. According to my view China’s investment surge would allow it to postpone the impact of the contraction in global demand and would also carry with it countries that relied on commodity exports. But ultimately – since the purpose of investment today is to serve higher consumption tomorrow – this would only make the ultimate adjustment all the more difficult when China would have to adjust anyway with higher debt and a less accommodating global environment.

By now I think the prediction that the US will be among the first and China among the last to escape the crisis no longer seems as eccentric. Others are making similar predictions. There is growing awareness that China has not yet addressed the changes forced upon it by the global crisis, and will have to do so soon. It has certainly become easier to see how the crisis has spread, as Liu points out, first from the US and then to Europe and now to Asia.

The debate over reform

In the interview he explains further how this is happening:

First, domestic and external demands have taken a sharp drop, especially in the second half of 2011 and first half of 2012. I think that the pressure to increase domestic demand is picking up. That is because domestic demand is driven by business productivity.

…But the consumption capacity of low-income citizens is limited. Demand on the part of middle- and upper-classes is dropping, especially in middle-class families. Everybody’s attitude is “let’s wait and see.”

Second, there will be even more pressure to change our development path in 2012…We urgently need to transform our business development models. It has become a choice between life and death.

Third, it’s hard to be optimistic about employment and stability. If some businesses evaluate market conditions and choose to close up shop or cut half of production, especially in the first half of 2012, there will be employment problems for migrant workers after Chinese New Year.

Fourth, after ten years in the WTO, China’s reliance on exports is relatively high. China is greatly affected by changes in the global economy. Commodity prices fluctuate rapidly, impacting China’s economy directly. It’s also worth paying attention to capital flow trends. In the third quarter, net inbound capital flow became capital outflow. It’s possible that such an exodus will continue into the first half of 2012.

Liu’s claim, that the need to change the business development model has become a choice between life and death, is pretty dramatic, but I think his point is an important one and is being increasingly heard within China. For example Saturday’s South China Morning Post has an article by Edward Ding An Hua, the chief economist of China Merchants Securities, in which he says:

There are two clearly opposing camps in China’s economic circle regarding the role of government. The first objects to government intervention and stresses the role of free- market mechanisms. The second believes in the unique advantage of a strong government in driving growth.

…What is strange, however, is that the two don’t actually fiercely disagree but, rather, appear to be in remarkable accord over long-term economic issues. Both adopt the same language; such as “adjust the structure” and “change the economic growth model”.

However, regrettably, the Chinese language is a concise but not precise language that often omits the subject in a sentence. In this way, a key subject can be omitted or “harmonised”. The free-market camp unilaterally interprets the subject as the market mechanism, while the strong-government camp quietly furthers their viewpoint of strengthening the role of government in the economy.

Reforming corporate governance

It is important to note, as Ding points out, that it is not just Liu who is thinking along these lines. There were for example two other interesting articles last week in Caixin which I think are useful in understanding China. The first article, by Wang Lan, addresses the problem of SOEs in China.

Before discussing the article, I should note that last week’s issue of The Economist has a special section on state capitalism. This includes a debate on state capitalism. There was nothing especially new in the debate, and I suspect that a relatively uncontroversial claim might be that state-directed investment can be a very useful way to overcome failures of the domestic financial markets to allocate capital to projects that, especially when you include externalities, have positive returns for the economy. This was Alexander Gerschenkron’s argument back in the 1940s and 1950s.

At some point however it becomes very to identify such projects, but given pricing distortions and political imperatives it is also hard to pull back, in which case we typically see wasted investment and misallocated capital. This is when the process becomes value destroying rather than value enhancing, and it can occur over many years before it is finally reined in, typically by the unsustainable debt levels that accompany state-directed wasted investment.

Wang’s article addresses one consequence of state investment in his Caixin article. He says:

In recent years, the enormous profits of state-owned enterprises (SOEs), once widely considered a good thing, have come under public scrutiny. The core of the problem is monopoly. SOE bigwigs are rapidly expanding their monopolies, relying on growing scale and rising prices to extract huge profits. But these companies bring little technical or organizational innovation to the table.

The vitality of the Chinese economy is being stifled by SOEs, especially central-level, or top, SOEs, and this is borne out by research. In October 2011, the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) released a breakdown of state-owned assets and earnings information for 102 for-profit SOEs. This showed that in 2010, the capital of 102 central-level SOEs was equivalent to 61.4 percent of GDP, and their earnings equaled 42.2 percent of GDP… The second national economic census taken in 2008 reported profits of nearly 900 billion yuan by finance industry central-level SOEs. Banks accounted for 64 percent of that profit.

These gargantuan SOEs have not only failed to lead us toward a new stage of development, but they have actually inhibited the vitality of the Chinese economy by distorting resource allocation.

Wang recommends that Beijing begin a privatization process to wean SOEs from their addiction to excessively cheap capital, monopoly power, and distorted governance. This, he says, will force the SOEs to address and resolve their role in wasting capital, stifling innovation, and concentrating wealth. It will also allow China to grow in a much healthier and balanced way.

I have always thought that the least painful way for China to rebalance its economy requires that it radically redistribute income and wealth away from the state sector and to the household sector. There are many ways this can happen, some better and some worse, but privatizing SOEs and using the proceeds to clean up the banks (whose NPLs are a future claim on households), to shore up the social safety net, and to permit SME’s more scope in which to compete is, in my opinion, the most efficient ways to do so. It would also weaken sectors that are able to restrain change in the economy.

Returning to the system

Of course for that very reason there are likely to political impediments to such a solution, and for many years we were told that privatization was pretty much out of the question in China. I disagree, and have argued often that within two or three years the constraints imposed by the current growth model will ensure that policymakers and their advisors in Beijing will be discussing privatization much more actively.

In that light it is interesting to see that in the past year or two the topic has come up more and more regularly in domestic debates. Wang Lan’s article seems to be part of this debate. This discussion actually ties into the second Caixin article, by Tsinghua University sociology professor Guo Yuhua. Guo starts by referring to a deep malaise in the country:

What is the most common feeling in China today? I think many people would say disappointment. This feeling comes from the insufficient improvement in their lives that people are achieving amid rapid economic growth. It also comes from the contrast between the degree to which individual social status is rising and the idea of the “rise of a great and powerful nation.”

Guo goes on to argue that a main source of the problem is the limited and declining opportunities arising outside the state system:

The disappointment of being unable to extricate oneself from difficulty is, of course, not restricted to college graduates. In opportunities for education, employment, promotions and overall improvement of their lives, people are discovering that society’s resources and opportunities are increasingly concentrated in the hands of a few. People in the middle and lower strata of society are becoming increasingly marginalized and are finding that improving their lives is getting harder.

The 2004 China Social Mobility Report published by China Academy of Social Sciences said that people whose fathers have power or capital have an easier time becoming party cadres than people in general. Research into the changes in private businesses ownership after 1993 showed that the elite in non-business fields were more likely to own businesses today. Thus, opportunities for common people to start private businesses are fewer and fewer. It is exceedingly difficult for farmers moving to a city to find success. The registered permanent residence system and economic factors conspire to make this move very difficult.

A social trend has been captured by the phrase “returning to the system,” which refers to resorting to traditional means of advancement. The number people signing up for the national civil service examination was 600,000 in 2007, 800,000 in 2008, 1.1 million in 2009, and 1.5 million in 2010, a clearly rising trend. “Returning to the system” has become the main method for members of society to climb the social ladder.

Guo asks for a more robust social system in which the benefits of economic growth are not so heavily skewed towards a political elite and in which members of the various strata below the elite have increased opportunities of participating in the economic process:

Power is becoming too formidable and cruel. It is out of control, and without limits. It has kidnapped society and strangled reform. Facing this, finding a solution is a matter of vital importance. In a situation where special interest groups have choked off the possibility of various types of progress, building a just society and enacting reform is difficult. Moreover, there is not a ready-made civil society waiting to settle into the void.

We need to realize several things. The impetus for reform comes from society, not from authority, and reform within the system is produced under the force of social strength. Fair and just rules are formed by interaction between various forces. Civil society is produced by the participation of citizens. Extrication from stagnation and the restoration of social vitality can only come from the start of civil consciousness and civil action. Only by empowering society and enlightening citizens can the strength to reform be developed.

Reform and rigidity

Large-scale privatization, of course, is not the only, or even the main, “solution” to the problems that Guo identifies, but if done correctly it can be part of the solution by undermining entrenched power and adding flexibility to the country’s governance structure. What is especially interesting, at least to me, is that an increasing number of commentators within China are identifying the social and economic rigidities imposed by the state system as crucially important in constraining China’s future economic and political growth.

This is becoming a pretty contentious debate. Over the past several months, in fact, we have seen a noticeable surge in articles and reports like this one – often by very prominent academics and policy advisors – criticizing the power of special interests in China. Their main concern seems to be over the constraints these special interests impose on further Chinese development, with the entrenched interests that have benefitted over the last decade or two having become so powerful that they are making it increasingly difficult for China to adjust.

A lot of very smart people in China, in other words, seem to be worried that the country’s governance structure and its development model are no longer able to accommodate the needs of the economy and that it is vitally important to confront the entrenched interest that make change difficult. This is sometimes presented in the foreign press as the debate between the “Chongqing” model versus the “Guangdong” model.

I apologize for the rather abstract and dry description in this and the three previous paragraphs of what is actually a gripping and very interesting topic, but for perhaps obvious reasons this is something about which I am reluctant to say too much. Still, anyone trying to predict China’s economic outlook for the next few years should be very aware of this fierce debate.

 

[RedMercury]

Please, Log in or Register to view URLs content!

Kent John Krizman has spent 13 years as a co-pilot at American Airlines. For a chance to move across the cockpit, he’s ready to take a job in China.

“I should be flying as a captain,” said the 52-year-old San Francisco resident, who has 20,000 hours’ experience in jet planes. Promotion won’t happen for at least five more years at American, while in China it could occur straightaway, he said. He and his wife “are all set to go,” he said.

As with lots of generous recruitment programs, they have to be very careful not to hire a bunch of "losers".

 

[no_name]

Please, Log in or Register to view URLs content!

I heard they prefer pilots with flying experience in the military, and there are no shortage of retired military pilots.

 

[antiterror13]

The Bloomberg article seems iffy regarding the 2010 per capita GDP for the PRC, seeing how even the lowest nominal per capita GDP values for 2010 listed by wiki's sources show a value of $4400.

Yes, most reporters are hopeless with numbers, they don't know what they are talking about

 

[escobar]

Please, Log in or Register to view URLs content!

Southern Airlines Buys $3b of Boeing Planes
China Southern Airlines Ltd (NYSE: ZNH, SHA: 600029, HKG: 1055), the nation's biggest airlilne by passenger traffic, said it signed a deal with Boeing Co (NYSE: BA) to buy 10 B777-300ER airplanes. The aircraft valued at $2.98 billion will be delivered between 2013 and 2016.

Sany Sets Up Crane JV with Austria's Palfinger
Sany Heavy Industry Co (SHA: 600031, HKG: 6031), China's largest construction equipment manufacturer, and Palfinger AG, world's biggest maker of truck-mounted cranes, will invest $143 million establishing a 50:50 joint venture to make and sell mobile cranes. Sany Palfinger SPV Equipment Co, the new company, will be based in Changsha, Hunan's provincial capital. The two companies will also invest $5.4 million registering a sales unit in Salzburg, where Palfinger is headquartered.

Baosteel to Strip Loss-Making Stainless Steel Unit
Baoshan Iron & Steel Co (SHA: 600019), China's most profitable steelmaker, said it will sell its stainless steel and special steel division to its parent for ¥9.58 billion. Baosteel said the deal will lock it out of a ¥1.54 billion loss and underscore its focus on carbon steel business for higher profitability.

Suning's Revenue and Profit Up 20%+
Suning Appliance Co (SHE: 002024), China's largest chain store by revenue, posted ¥93.9 billion in revenues and ¥4.82 billion in net profits for 2011, up 24.3% and 20.1% respectively from the year before. It was operating 1,724 stores as of the end of 2011 after having 373 net openings last year, including seven in Hong Kong and two in Japan. The figures were unaudited.

Lenovo Halts Netbook Sales
Lenovo Group Ltd (HKG: 0992), China's biggest personal computer maker, said it has suspended sales of its netbooks as a result of the products' poor performance as opposed to burgeoning demand for tablet computers.

Goldwind Profit Slumps on Lower Prices
Xinjiang Goldwind Science & Technology Co (SHE: 002202, HKG: 2208), China's second largest wind turbine maker, posted ¥12.87 billion in revenues and ¥607 million in net profits for 2011, down 26.9% and 73.5% respectively from the year before. Lower prices in response to slower industry growth were blamed for the decline in profit. The figures were unaudited.

Yili 2011 Net Profit Soars 133%
Inner Mongolia Yili Industrial Group Co (SHA: 600887), a leading Chinese dairy maker, posted ¥37.45 billion in revenues and ¥1.81 billion in net profits for 2011, up 26% and 132.8% respectively from the year before. The sharp increase in its earnings was believed to be ascribed to a safety scandal that hit China Mengniu Dairy Co (HKG: 2319), its major competitor, late last year. The figures were unaudited.

BYD's Earnings Plunge 44% on Increased Rivalry
BYD Co (SHE: 002594, HKG: 1211), the Chinese electric car and battery maker backed by Warren Buffett, posted ¥49.04 billion in revenues and ¥1.4 billion in net profits for 2011, up 1.2% and down 44.4% respectively from the year before. Fiercer competition in the auto market and slack sales of photovoltaic products were blamed for the decline in earnings. The figures were unaudited.

Shanghai Airport Net Profit Up 14%
Shanghai International Airport Co (SHA: 600009), the operator of the city's two airports, posted ¥4.61 billion in revenues and ¥1.5 billion in net profits for 2011, up 10.1% and 14.4% respectively from the year before. The figures were unaudited.

---------- Post added at 11:27 AM ---------- Previous post was at 10:56 AM ----------

china need people like this guy

Please, Log in or Register to view URLs content!

A protester disrupted a World Bank news conference chaired by its president Robert Zoellick in Beijing on Tuesday, claiming the multilateral lender's new report on China's economic future was "poison" and made recommendations that would bring no benefits to the country or its people.

The demonstration came as the World Bank released a 468-page report in conjunction with a Chinese government think tank on Monday that urged a series of market-oriented reforms that would cut state involvement in industry and boost the private sector.

Du Jianguo, describing himself as a self-taught independent researcher, jumped up to the podium during Tuesday's news conference and declared his views seconds after Zoellick began speaking.

Handing out protest papers to some journalists in the front row seats, Du was then thrown out of the conference by World Bank staff.

His statement, which carried the English title "WB, Go Home with Your Poison!" (sic) said the World Bank was trying to sell China "old cliches as a wonderful panacea".

The angry man told Reuters the World Bank's proposals to reform China's banks and state-owned enterprises had ulterior motives.

"They (World Bank) nevertheless sell the plan to China, suggesting Chinese banks learn from the U.S. and learn from the Wall Street, do they want Chinese banks to become cheaters and parasites just like those American banks? Chinese state-owned enterprises are now very powerful and therefore become the competitors of the western countries. You (World Bank) suggest to divide the state-own enterprises, this is in fact helping the American and other western enterprises to ruin their competitors," he said.

The news conference continued after the disruption, with the outgoing World Bank chief saying he wasn't shocked by the unexpected interruption.

"Frankly, this isn't new to me and my work over the public service for the past 30 years. I was a trade representative so I dealt with demonstrations and worse," he said.

"So I'll ask for a translation of this gentleman's paper. We'll look at it as well as other comments." he added calmly.

In face of Du's criticism, Zoellick insisted in the World Bank's stance upon the launch of the report on China's financial future.

"I think many experts have the view that state-owned enterprises have benefited from very inexpensive financing, preferred positions in the market. And they've gained very large retained earnings that have led to China savings but have not necessarily benefited all the Chinese people," he said.

He argued that the changes put forward in newly released report have the interests of the Chinese people at heart.

"So to reduce China's global savings rate and also benefit the Chinese people, if a lot of those dividends are sent back to provide social benefits for China's people, you'll have structural change and help support some of the social security systems," he said.

Zoellick was in Beijing for the release of the report, 'China 2030: Building a Modern, Harmonious and Creative High-Income Society', which was jointly prepared by the World Bank Development Research Centre (DRC) of the State Council of China.

The report examines the country's strategic choices, the risks and opportunities in the next two decades, and makes a series of recommendations for the country's growth model.

Protester Du is not a well-known researcher in China, and his personal blog on Sina.com covers a wide range of topics from banking profits to the economic development of Chongqing, held up by many as a model of potential Chinese economic development.

 

[escobar]

Please, Log in or Register to view URLs content!

China will further boost the use of its currency in cross-border trade and investment settlements in 2012 as it gradually makes the yuan more internationally convertible, the country's central bank said Wednesday.

The central bank will continue expanding the variety and scope of yuan's cross-border businesses based on serving and bolstering the real economy, the People's Bank of China (PBOC) said in a statement on its website.

It will also closely monitor and analyze yuan, or RMB, flows to control risks in the currency's cross-border settlement, the PBOC said.

Meanwhile, the central bank will step up reform of the RMB exchange mechanism and make the yuan convertible under the capital account at a steady pace.

To reduce reliance on the greenback, China has exerted enormous efforts to make the yuan more international over the past few years.

It allowed Hong Kong to establish an offshore yuan market and has signed 1.3-trillion-yuan currency swap contracts with 14 countries and regions to allow the currency to circulate outside the mainland.

Meanwhile, the country introduced a yuan trade settlement scheme in July 2009 in a number of regions and expanded it nationwide in 2011.

According to earlier data released by the central bank, China's overall cross-border trade settlement in yuan under the current account hit 2.58 trillion yuan (409 billion U.S. dollars) by the end of 2011 since the scheme was launched.

The trade settlement in yuan last year increased 3.1 times from a year earlier. The settlement in yuan for goods trade accounted for 6.6 percent of the total cargo imports and exports. The portion rose 4.4 percentage points from 2010, the PBOC said in the Wednesday statement.

China has also approved foreign direct investment in RMB obtained overseas. In 2011, it gave the green light to investing overseas RMB gained by qualified institutional investors in mainland securities markets.

Last year, the yuan-denominated outbound direct investment totaled 20.15 billion yuan while foreign direct investment settled in RMB on the Chinese mainland topped 90.72 billion yuan. Both saw remarkable growth from a year earlier, the central bank said.

The PBOC also said in an earlier report that it will explore ways to allow individuals to carry out yuan settlement in cross-border trade.

However, its Shenzhen branch Wednesday refuted previous media reports that it approved individuals' trade settlement in yuan, saying it had never issued documents relating to the matter.

 

[escobar]

Please, Log in or Register to view URLs content!

China’s manufacturing expanded at a faster pace in February and a gauge for India showed sustained growth, indicating that Asian economies are maintaining momentum even as Europe’s debt crisis caps exports.

In China, the purchasing managers’ index rose for a third month to 51.0 from 50.5 in January, the statistics bureau and logistics federation said in a statement today. In India, a PMI released by HSBC Holdings Plc and Markit Economics was close to an eight-month high.

Today’s data, along with a surprise gain in Japanese companies’ capital spending and South Korea’s biggest increase in exports in six months, add to signs that global growth prospects are improving as the U.S. recovery strengthens and Europe works to contain its debt crisis. Asia’s benchmark index entered a bull market yesterday, led by gains in China Shipping Container Lines Co.

“Pent-up demand will produce an export-led bounce in Asian economic activity” now that Europe’s debt turmoil is receding, said Tim Condon, chief Asia economist at ING Financial Markets in Singapore, which accurately forecast today’s China PMI. result.

In China, the PMI’s level, above the expansion-contraction dividing line of 50, was the highest since September and compares with the 50.9 median estimate in a Bloomberg News survey. Economic data in the first two months are distorted by the weeklong Chinese New Year holiday.

A separate manufacturing index released today by HSBC Holdings Plc and Markit Economics rose to 49.6 in February from 48.8 the prior month, the third straight improvement and the highest since October.
Stocks Fall

Meanwhile, the Indian gauge was at 56.6 in February from 57.5 in January, HSBC and Markit said.

The MSCI Asia Pacific Index slid 0.7 percent as of 3:02 p.m. in Tokyo, poised for the biggest drop since Feb. 16, on speculation that better-than-expected data from China means the government will refrain from more monetary easing.

A fourth-quarter slowdown in exports was probably “transitory” and economic-growth forecasts for Asia “are too low,” said Condon, who previously worked at the International Monetary Fund.

Caterpillar Inc. the world’s biggest maker of construction and mining equipment, said it’s seeing an improvement in the economy.

“China is recovering a little bit and before the end of the year we will see more activity” there, Chief Executive Officer Doug Oberhelman said yesterday in Santiago in comments that were translated from Spanish.

GDP Growth

China’s gross domestic product expanded 8.9 percent in the fourth quarter of 2011, slowing from a 9.1 percent gain in the previous three months, as the government waged a campaign to tame gains in consumer and housing prices.

Australia was an exception today to positive economic data in the Asia Pacific region. Business investment unexpectedly fell in the three months through December, while Australian home-building approvals rose by less than economists forecast in January.

Japanese companies’ capital spending excluding software rose 4.9 percent in the fourth quarter from a year earlier, adding to signs that the world’s third-biggest economy is set to return to growth. The gain compared with a median estimate of a 7.4 percent decline in a Bloomberg survey of six economists.

South Korea Exports

South Korea’s overseas shipments rose 22.7 percent in February from a year earlier after falling a revised 7 percent in January. The median estimate in a Bloomberg News survey of 14 economists was for a 16.4 percent increase.

The euro zone’s jobless rate is forecast to remain at 10.4 percent in January, the highest in 14 years, according to the median forecast of 35 economists. Inflation in the region was probably 2.6 percent in February, according to an initial estimate, unchanged from January’s final reading. Both reports are due out later today.

U.S. manufacturing may have accelerated for a fourth month in February. The Institute for Supply Management’s factory index rose to 54.5, the highest since May, from 54.1 in January, according to the median estimate of 78 economists surveyed by Bloomberg News for a report due today.

Initial jobless claims in the U.S. probably rose to 355,000 in the week ended Feb. 25 from a four-year low of 351,000 a week earlier, according to the median projection of 48 economists. Consumer spending may have increased 0.4 percent in January, according to the median of 80 economists, after being little changed in December.

Growth Slowing

In China, slowing overseas sales and Premier Wen Jiabao’s pledge to maintain curbs on the property market may cause growth to drop to 7.5 percent this quarter, according to Nomura Holdings Inc. That would be the least since the global financial crisis.

In contrast, Lu Ting at Bank of America Corp. expects first-quarter expansion of 8.6 percent.

Wen said economic-policy fine-tuning needs to begin this quarter, Xinhua reported on Feb. 12. The central bank cut lenders’ reserve requirements effective Feb. 24, the second reduction in three months, to spur lending and sustain expansion.

Economists combine Chinese data for the first two months to smooth distortions caused by the timing of the weeklong Lunar New Year holiday. The festival fell in January this year and February last year.

 

[escobar]

Please, Log in or Register to view URLs content!

Next Tuesday is a big primary day for Republican White House wanna-bees. As the top contenders all head into Ohio, always a battleground state, one thing is certain: more anti-China rhetoric is likely, especially from leading man Mitt Romney.

Here’s a collection of what the candidates think about China. Romney is the most rhetorical.

“If I’m president of the United States…on Day One, I will declare China a currency manipulator, allowing me to put tariffs on products where they are stealing American jobs unfairly. We can compete when there’s a level playing field and we’d win…. I’m going to insist that China plays by the same rules that everyone in the world plays by.” — Mitt Romney (my humble guess is he can call China chopped liver if he wants, but will do nothing to retaliate other than what Obama has already done. Romney’s the most anti-China of the bunch.)

“I want to beat China. I want to go to war with China and make America the most attractive place in the world to do business.” — Rick Santorum (quite mild; doesn’t want a trade war like Romney says he wants.)

“I think we’re going to have to find ways to dramatically raise the pain level for the Chinese cheating, both in the hacking side, but also on the stealing and intellectual property side. And I don’t think anybody today has a particularly good strategy for doing that.” –Newt Gingrich (he’s mostly come out against Chinese stealing of intellectual property; a legitimate, non-emotional complaint based on facts.)

“To fight with China now? They are our third best partners and are great customers. Why say that they are the problem? We complain that they’ve messed around with their currency. What have we done with the dollar over the last three years?” — Ron Paul (Doesn’t think China is the cause of our problems.)

As the Republicans head into the Buckeye State, Romney may want to note that China is an important business partner there. It’s the state’s third largest export market, with $2.3 billion in revenues last year. Only Mexico ($3.5 billion) and Canada ($17.2 billion) beat them.

In percentage terms, export growth to China outpaced Ohio businesses exports to Mexico, Canada and all other countries. Since 2000, Ohio’s China-bound export volume has increased by 686%, (yes, six hundred and eighty six) while exports from the state to the rest of the world grew by 50%, according to government numbers.

Ohio ranks No. 8 out of the 50 states in terms of exports to China.

Of all the primaries left on the calendar, none carries quite the same symbolic weight as Ohio. Recent polls suggest a two man race between Romney and Santorum. Quinnipiac University has Santorum up by around seven. Private polling conducted for Republicans outside the presidential race, and shared with POLITICO, showed Santorum up by five.