Chinese Economics Thread

Blitzo

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We'll see how it goes, most of his points from investment and the housing market can be debated upon (if not said by previous analysts already) and the stats aren't fully convincing (mentioning HSR again makes me wonder just whether claims of them being empty are true). I'm not saying we won't see a china crash or slow down ever (we're already starting to see a "slow down"), but I'm not sure if china's developed to the stage where they can have a japan-esque slow down.

From the other top read time article on the chinese economy it sounds like popular notion is that a slightly slower chinese economy might be better for it long term. Who knows, I at least am not very knowledgeable about these matters.

---------- Post added at 05:36 PM ---------- Previous post was at 05:35 PM ----------

On a less controversial note... WSJ writing on huawei

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arch 7, 2012, 6:24 p.m. ET
Huawei's Handset Progress Could Squeeze Big Players
By BEN ROONE

You may not be able to pronounce its name but you could not miss the Chinese giant Huawei at this year's Mobile World Congress in Barcelona.

While its closest rival, ZTE, was emblazoned on the lanyards of everyone of the more than 60,000 delegates, Huawei's branding around the show was ubiquitous.

Pride of place was a 19 foot statue of Pegasus, the winged horse, crafted from 3,500 of the company's latest mobile phones, gazing down across the sprawling Fira complex. As a statement of its international aspirations it was no coincidence that Huawei, a Chinese company, chose a figure from Western culture, made by London's Machine Shop studio.

This year Huawei had on display its Ascend range, which the company claims features both the fastest, and the thinnest, mobile devices available today. In a very crowded field of hard-to differentiate, high-end phones, all of which are powered by Google's Android operating system, the range holds its own against the likes of well-established mainstream brands Samsung, HTC and LG. Interestingly, the phone's quad-core processor is an "in house" design by Huawei Hisilicon rather than a commercially available product from makers like NVIDIA or Qualcomm. Given Huawei has 140,000 employees, of which 44% are in R&D, perhaps we should not be surprised.

But what a difference a year makes. Going back to the same conference in 2011, it is hard to overstate the huge leap this Shenzhen giant has made.

In 2011 the only smartphone the company launched at MWC was the IDEOS X3, a run-of-the-mill budget handset that did little to impress. With ranges like the Ascend, Huawei—ranked eight in world-wide mobile-device sales—aims to be one of the top three mobile-phone brands by 2015. In the year ended Feb. 12, its global market share grew from 1.5% to 2.3%, according to research firm Gartner, still pretty small compared to the likes of Nokia and Apple.

But behind Apple, ZTE and Huawei were the fastest-growing vendors in the fourth quarter of 2011.

Huawei aims to sell 50 million to 60 million smartphones this year, up from 20 million in 2011, the chief executive of its devices unit Wan Biao told Dow Jones Newswires in Barcelona.

If you want to understand what the arrival of this Chinese giant means to the handset business, take a look at what it did to other parts of the industry.

"Anyone who has studied the infrastructure market and seen what Huawei did to the equipment market should see that as a very cautionary tale for its aspirations," said Ben Wood, who leads analysts CCS Insight. "They took no prisoners. There are companies that don't exist anymore because of that, like Nortel and others and there are other companies that are still under immense pressure, like Nokia Siemens Networks, like Alcatel-Lucent."

Even Sweden's Ericsson, the world's top-selling telecoms equipment maker with a market cap of around $32 billion, is feeling the heat. In January it released disappointing fourth-quarter net profit figures. It has led the mobile telecom equipment market for many years, but when Huawei releases its numbers in April some commentators are expecting to see it overtake Ericsson. A spokesman for Huawei would not comment on the speculation.

If Huawei repeats its success in the handset sector, who is going to be the loser? Nokia should be worried, but perhaps not as much as many have predicted, says Carolina Milanesi of analysts Gartner. "Nokia commands much better brand presence in the market despite the issues they have had over the last few years. The quality is still superior," she said.

According to Mr. Wood it is the likes of LG and HTC that will find themselves being squeezed. "If you don't have the scale of Samsung and the ability to throw millions of marketing dollars at a phone it is going to be hard to compete."

But the increasing profile of Huawei is forcing this privately owned company, which, according to a spokesman is owned entirely by its employees and was founded by CEO Ren Zhengfei 25 years ago, into a more public stance. An investigation by The Wall Street Journal documented how Huawei's business grew in Iran following a pullback by Western companies after the government's bloody crackdown on its citizens two years ago. The investigation prompted the company to publicly promise that it would "voluntarily restrict its business development there by no longer seeking new customers and limiting its business activities with existing customers." That was a move activists hailed as the first time a major Chinese company had decided to scale back its business in Iran.

And no matter what the company does, it cannot shake off the allegations of links with the People's Liberation Army, or shadowy connections with China's Communist Party. In November last year a U.S. House intelligence committee investigation was announced to look into whether the expansion into the U.S. by Huawei and rival ZTE represented a security threat.

In response Huawei has promised to be more open in is financial reporting.

Although a private company, it produces an annual report, audited by KPMG.

Its next report, due out in April, promises more details on the management board and the financial structures of the company.

To a large extent the problems that Huawei is suffering are the problems that other Chinese companies are going to face as they expand out of their home markets. Huawei looks set to become one of China's first global brands and as such has to shoulder the burden not only of selling its own products but, to an extent, selling the whole country.

By the way, it is a two syllable word, pronounced "WAH-wey".
 

AssassinsMace

Lieutenant General
Who thinks Chinese policy makers are supermen? There has been always a vast majority in West that has been pessimistic about China.

Here's some video pic captures I did of a story just aired on CNN.

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Now how is the US China's bitch militarily when it spends six times more? It's not like China's neighbors where part of the US military budget goes to defending them. In the interview the author of this book mentions how a large part of General Motor's celebration over profits recently is due to China. He also mentions China is Apple's second largest market. These are some of the reasons why he says the US is becoming China's bitch. Don't buy their stuff and they get mad. But now when Chinese buy their stuff making big money for them in China, that's a negative too. So why would they complain about something that will ease their anger over trade with China? Why does having American companies making huge profits off the Chinese upset them? It comes down to the very capitalist system they promote and try to persuade other countries to follow. But the way their capitalist system has evolved, they never imagined where someone else could be the leading market. When China became the largest car market in the world, analysts were saying that car companies would now cater to Chinese tastes and everyone else would have to follow. That's what it basically comes down to. As the Chinese market grows and surpasses Western markets, business caters to where the money is. That doesn't sit well with those who think they're suppose to be number one all the time and everyone has to follow their tastes. China is not number one but they're already showing the angst to a system they want everyone to follow. What does it take to appease them? Everything I can think of flies into the face of everything they say they believe.

This is the whole soft power thing again. Soft power is teased to China as if it doesn't have it. They use India as an example of a country with soft power that China should be envious of with things like yoga. How is yoga soft power? Because it's embraced by people all over the world especially in the West? By that logic isn't Chinese food soft power? The concept of restaurants started in China. Chinese food is like the 2nd ethnic cuisine of choice when Americans eat outside the home. What about kung fu movies and now how Hollywood uses martial arts stunt work as a staple in action movies? What kind power does that give to China? Nothing. So you know yoga is worthless too. Why do they use that as an example of soft power? They try to present soft power as something a culture has to offer that's accepted by them. That's not power at all. The power lies with those that get to decide what's accepted. That's not the soft power they're promoting and that's why business catering to the Chinese market upsets them because it's the Chinese influence that gets to decide what's acceptible. If soft power were what they say it is, wouldn't they be happy drunk with soft power that Chinese people are accepting what they have to offer to China with American cars and electronic gadgets? But then they don't see it that way because to put it in simple terms they see it as "the US is becoming China's bitch."
 

Blitzo

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Lol A mace, I think you're reading a bit much into it.

What an inflammatory book title though rofl
 

AssassinsMace

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Well if you saw the interview, the author wasn't an anti-China hawk. He was promoting cooperation with China. But I find the choice of the title and what reasons he said the US was becoming China's bitch intentionally provocative in order to simply catch people's attention. I'm just returning the favor. :D
 
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Equation

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Here something less controversial to read "China Mega Trends: The 8 Pillars to a New Society" by Dr.John and Doris Naisbitt. Also take a look at the "How China Leaders Think" by Dr. Robert Laurence Kuhn. These titles are more informative and been studied by academia's. I haven't read the new "Kissinger" book on China yet, but planning to sometime when I'm not too busy with work.
 

escobar

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China is planning to extend renminbi loans to other major emerging BRIC countries, in another step toward the expansion of the yuan's role in foreign exchange, the Financial Times reported on Wednesday.

The China Development Bank (CDB) will sign a memorandum of understanding at a meeting with its BRICs counterparts - Russia, South Africa, Brazil and India
- in New Delhi on March 29, the newspaper reported, citing people familiar with the talks.

Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other BRICs nations' development banks will also extend loans denominated in their respective currencies, the FT said in an article published on its website.

The renminbi is the official currency of China and its primary unit is the yuan. Of the six largest economies in the world, China is the only one whose currency does not have reserve status.

The initiative aims to boost trade between the five BRICs nations and promote use of the renminbi, rather than the U.S. dollar, for international trade and cross-border lending, the FT said.

In the past few years Chinese authorities have begun to gradually internationalise the currency before fully liberalising China's capital account.

Much of China's banking system, however, remains regulated, and lending is largely controlled.

BNDES, Brazil's development bank, and South Africa's Finance Ministry were cited by the FT as saying they expected an agreement to be signed at the New Delhi meeting, which would include the lending pledge, with details to be ironed out during a summit.


"We will discuss the creation of structures and mechanisms for lending in local currencies in order to maximise economic and financial transactions between the countries that are members of the accord," BNDES was quoted as saying.

Other signatories would include Russia's Vnesheconombank, the Export-Import Bank of India and the Development Bank of Southern Africa, according to the article.
 

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The number of passenger vehicles sold in China increased by 22.3 percent in February from a year before, the greatest increase in 14 months.

Even so, analysts noted that the good news pertains to only one month and said it should not be taken as a sign that the market is once again booming.

The China Passenger Car Association said on Wednesday that February saw sales of 1.94 million cars, sport-utility vehicles, multi-purpose vehicles and minivans. That came as a contrast to the results from the four previous months, which had all shown decreases.

"The 21 working days that fell in February supported an increase in production and sales," said Rao Da, secretary-general of the association.

"But if we put together the sales that occurred in the first two months, then the figure has still declined by 1.4 percent from last year."

Rao said it's possible the sales figure for March will also show a decline, especially if gasoline prices in China hit a record high.

"China's vehicle sales won't go back to skyrocketing as they did in 2009 and 2010 and as the country's economy continues to make a soft landing," he said.

Rao predicted 19.8 million automobiles will be sold this year, which would be an increase of 7 percent from 2011. He said he expects 15.55 million of those to be passenger vehicles.

Vehicle sales in China increased at a much slower pace in 2011 than in recent years, going up by only 2.45 percent from 2010. That was the lowest rate seen in 13 years.

In 2009, the number of vehicles sold increased by 46 percent from the year before and, in 2010, it went up by 32 percent from 2009. In those years, China overtook the United States to become home to the most vehicle sales in the world.

Mu Qizheng, analyst with the broker dealer UBS Securities LLC, said in a research report this week that the largest vehicle market in the world will make a mild recovery in 2012, saying the number of automobiles sold during the year was expected to increase by 10.6 percent to 20.5 million.

"The effects of the withdrawal of stimulus policies have faded out after a year," Mu said. "Increases in individual earnings and decreases in vehicle prices will also support the market in the future. Moreover, the fact that owning a vehicle in China is still relatively uncommon will lead to market demand maintaining an average annual growth rate of 13 to 14 percent over the next three years."

He also said automakers' profits will continue to shrink in 2012, as increased production capacity will whittle away at earnings that have already been carved out by intense competition.

"Big price cuts are coming," he said. "And domestic and Japanese brands are losing their market shares to German, Korean and US automakers."

General Motors Co said on Tuesday that it sold 240,554 cars and trucks in February in China, setting a new record for the month in the country. Its sales figure increased in February by 30.4 percent year-on-year, which was the third-highest for any month in General Motors' history in China.

In January and February, the US automaker sold a record 487,208 cars and trucks in China, an increase of 7.7 percent from the same period last year.

Kevin Wale, GM president and managing director for China business, said earlier that he predicted that between 5 and 10 percent more automobiles will be sold in China in 2012 than last year
.

Another US automaker, Ford Motors Co, said on Wednesday that its February sales in China had surged by 28 percent from a year earlier, rising to 40,978 units.
 

escobar

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The Chinese may have spent more than ever in their history on overseas purchases in 2011, a year that saw a large increase in the value of the goods they bought using bank cards.

That's what a senior executive at China UnionPay Co Ltd, the only credit card network in the country, said on Tuesday.

Su Ning, the board chairman of the bankcard association China UnionPay and a former deputy governor of People's Bank of China, the country's central bank, said the value of overseas purchases made through its network increased by 66.7 percent to reach 300 billion yuan ($47.5 billion) last year, rising from 180 billion yuan in 2010.


If the account also looked at cash payments, which Chinese consumers prefer to use when buying goods, "the total overseas spending figures would be astonishing", he said.

Su is also a member of the Chinese People's Political Consultative Conference and made his remarks while attending a group discussion held on Tuesday.

He said the government should charge lower import tariffs on goods, especially on luxury products. Doing so, he said, will help move consumption from the overseas market to China.

To boost imports, the second-largest economy in the world has lowered the import tariffs it charges on 730 kinds of goods since Jan 1, said Finance Minister Xie Xuren on Tuesday. But those changes have stopped short of lowering the tariffs charged on luxury goods.


An official at the Ministry of Finance's budget division said on Tuesday that import tariffs and consumption taxes have contributed greatly to the country's fiscal revenue, as have value-added taxes.

Authorities plan to work harder to rebalance the economy and ensure that consumption plays a larger role in supporting economic growth, Premier Wen Jiabao said when he delivered his annual report at the opening of the National People's Congress on Monday.

"Although external imbalances have improved markedly, internal imbalances have deteriorated, thus requiring urgent structural reforms to achieve a shift to consumption-driven growth," said Liu Ligang, head of China economics at Australia and New Zealand Banking Group Ltd.

In 2011, domestic consumption contributed 51.6 percent of the country's GDP growth, according to data from the National Bureau of Statistics. The value of retail sales last year stood at 18.1 trillion yuan. That was an increase of 11.6 percent from the year before if the effect of inflation is excluded from the results.

Despite that apparent increase, the actual rise in consumption was likely much smaller, since the final figure was buoyed by government spending,
said Xu Shanda, former president of the State Administration of Taxation.

"Although the country is promising to stoke domestic demand, we, as local government officials, have very few ways to spur consumption," said Li Yong, director of the management committee of the Tianjin Economic-Technological Development Area.

"And boosting investment is still preferred by officials because it is the most efficient way to shore up GDP growth."
 
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escobar

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A U.S. trade bill targeting Chinese imports goes against international rules and Beijing will not adjust the value of its currency to try to bridge a trade deficit that is Washington's problem to fix, China's commerce minister said on Wednesday.

President Barack Obama is set to sign the bill into law to allow duties to be imposed on subsidized goods from China and Vietnam, which the White House says will protect American jobs.

"We follow the rules of the WTO, but we have no obligation to follow domestic laws or regulations in any specific country that go beyond international rules," Commerce Minister Chen Deming told a news conference on the sidelines of an annual meeting of parliament.

He said China had done a better job of bringing balance to global trade than the United States, bringing its trade surplus down to 2.1 percent of economic output in 2011 while the trade deficit of the United States was 4.8 percent of its gross domestic product (GDP).

Chen said it was clear that the United States had a responsibility to close its own deficit.

"Why did the U.S. have a $700 billion overall trade deficit? Why did China have an overall trade surplus of only $150 billion but a trade surplus of $200 billion with the United States?" Chen responded rhetorically to a journalist's question.
"Every man, free from prejudice and armed with common sense economics can come to the right conclusion," Chen said.


Chen's comments come a day after the U.S. Congress passed the bill that Obama is set to sign into law. A U.S. court ruled in December that the U.S. Commerce Department did not have authority to impose countervailing -- or anti-subsidy -- duties on goods from "non-market economies."

U.S. imports from China were a record $399.3 billion in 2011. Washington said the U.S. deficit with China reached a record $295 billion, but China's data showed only a $202 billion surplus. China says the difference is caused by U.S. statistical methodology which includes part of Hong Kong's trade data in the calculations.

China's total trade surplus shrank 15 percent in 2011 versus 2010 to $155 billion, largely as a result of stalling demand in its two biggest markets with the European Union hobbled by a debt crisis and U.S. consumer spending below par.

China has pledged to balance the trade account and wants to ramp up imports to support an expansion of the domestic economy and drive consumer demand.

Chen said Chinese exports increased by an estimated 7 percent in the first two months of this year from year-ago levels, while import growth was likely above 7 percent.

The government's 2012 target is 10 percent growth in both imports and exports. Chen said "trade growth in the second half would be faster than the first half" of the year.

The consensus view of a Reuters poll is that China's annual export and import growth enjoyed a sharp rebound in February from a year earlier, primarily on seasonal factors.

CHINA REJECTS TRADE CRITICISM


Chen said U.S. criticism of China was unfounded.

"The U.S. government had subsidized its companies, like the three big automakers ... but China did not criticize these moves or start massive countervailing actions against such moves," Chen said.

Chen added that China's yuan exchange rate was now close to its fair value, and China had no intention to let the yuan appreciate sharply.

Asked about a World Trade Organization (WTO) Working Group on Trade, Debt and Finance meeting that would discuss the relationship between exchange rates and trade, Chen said the yuan should not be what he called an "academic discussion."

"I have noticed that the U.S. trade representative and treasury secretary have noted to the Congress that they would use the meeting, as well as other events, to push forward yuan reform," Chen said.

"When I heard about this, I thought I heard wrong. They should push the U.S. dollar reform since the U.S. trade deficit is about 4.8 percent (of GDP)," he said.

"China believes all countries should maintain the basic stability of their exchange rates, against the background of global financial crisis," he said. "Any country's measures to devalue its own currencies or force other countries' currencies to appreciate is not appropriate," Chen said.

China's growing manufacturing strength has been coupled with a rising trade surplus that has exacerbated friction with the United States and other trading partners.

The Obama administration recently announced an Interagency Trade Enforcement Unit that will police compliance with trade rules by America's trading partners, including China.

Chen said China was willing to talk to the body.
 

escobar

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China will soon resume the approval and construction of nuclear power plants, senior officials said during the plenary session of the Chinese People's Political Consultative Conference (CPPCC) National Committee on Wednesday.

Wang Yuqing, former director of the National Nuclear Safety Administration, said about 10 approved new nuclear plants, whose construction was put on hold last year after Japan's Fukushima nuclear accident, will soon be given permission to start construction.


"The halt will soon be lifted, as a comprehensive plan on nuclear safety control has been submitted to the State Council," said Wang, who is also the deputy director of the Committee of Population, Resources and Environment of the CPPCC National Committee.

China's nuclear equipment manufacturers are also eager for the suspension to be lifted.

"We hope the government can end the suspension soon because the industry cannot afford such radical changes," said a senior official from Dongfang Electric, one of the three largest nuclear equipment makers in China, who spoke on condition of anonymity.

Dongfang was unable to get any orders in 2011 because of the suspension.

As the world's second-biggest oil consumer, China imported 250 million tons of crude oil, about 55 percent of all the oil it used, in 2011.

The 14 nuclear reactors in service in China now provide less than 2 percent of the country's electricity, much lower than the world's average level, which is 15 percent.

Zhang Guobao, former director of the National Energy Administration, said China needs to put major effort into developing nuclear power and new energy to ensure the country's energy security.

"China should become more self-reliant regarding energy. Wind and solar energy are also very important," Zhang said.

"The tragedy at Fukushima was a pity, but nuclear power's energy intensity is very high," said Zhang, as he stressed nuclear power is "very important" for China.

After the accident at Japan's Fukushima nuclear plant last year, the State Council announced on March 16 that it would suspend approval of nuclear plant construction and ordered safety inspections at all plants.

The authority declared no new programs would be approved until safety checks were made at nuclear plants under construction and in operation, and comprehensive nuclear safety guidelines were passed.

Zhang expressed his trust in the imported third generation nuclear technology AP 1000, developed by Westinghouse Electric in the United States.

"The introduction of AP 1000 has gone through careful review by the most authoritative Chinese nuclear experts. In addition, the US Regulatory Commission approved two nuclear plants in early February, including one in an inland area," he said, stressing that China will not be the testing ground for the AP 1000.

"By setting safety as the priority, making sure of powerful supervision, and improving our technology, China can develop nuclear energy safely," Zhang said. Wang said that the AP 1000 will become a major technology that will be used in China's new nuclear plants.

The central government has set a goal of having China obtain 11.4 percent of its energy from non-fossil-fuel sources by the end of 2015, up from 8 percent now.

And by 2020, the country is to get 15 percent of its energy from non-fossil-fuel sources.
 
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