Chinese Economics Thread

[A.Man]

China, On The Road To High Income Country Status

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China is expected to join the club of high income nations like Japan within the next 15 years. But to get there successfully, a number of things have to happen first with the government and the economy it manages.

China is currently turning itself inside out. It’s an arduous process of switching from an export driven economy of low wages, to a middle class society driven by local consumer spending power. That shift is still in its early stages. But as it unfolds, China has already become a middle income nation, according to World Bank standards. This is most evident along the highly populated eastern seaboard cities, from Guangzhou to Beijing, where incomes are well over the $12,000 a year needed to be classified by the World Bank as middle income. In those cities, incomes are well over $25,000.



Emerging Nations Realizing It's Not Easy Getting Rich Kenneth RapozaKenneth Rapoza Contributor

The long-awaited structural shift in China is now under way and may have been underappreciated, says Yiping Huang, an economist for Barclays Capital in Hong Kong. “The Chinese economy is breaking away from its past imbalanced, uncoordinated, inefficient and unsustainable growth model,” Yiping said in his report China: Beyond the Miracle, published last week in its final nine-part installment.

One key trigger of this change is rapid wage growth stemming from the emerging labor shortage. This not only redistributes income from corporations back to households but also improves equality among households in a society that is seeing inequality run amok.

Although rebalancing has so far been driven mainly by changes in Western markets, economic reforms will be critical for furthering change in China, says Yiping. These reforms include removing remaining cost distortions, liberalizing the financial sector and improving China’s very weak safety net.

China is aging much like the United States, but the vast majority of Chinese do not have any sort of livable government pension to count on, let alone health care.

Meanwhile, privatization of government owned entities is probably not feasible in the near term, but the government likely will move steadily toward the creation of a level-playing field by removing input cost subsidies and reducing the monopoly power, allowing for newcomers in the market that can address these gaps.

While it is unlikely that China will adopt Western-style democracy any time soon, Yiping says to expect China’s leaders to implement some political reforms in the years ahead. Such steps may be necessary to ease social economic tensions and facilitate continuous economic growth and could include the gradual extension of direct election to higher levels of government, having more candidates than posts in high-level internal elections, increased tolerance of social media, stepped-up efforts against corruption, and improvements in the transparency of budgetary and other decision processes.

“We don’t think Chinese political institutions have exhausted their potential to foster growth,” says Yiping Huang. “We think political reforms are likely in the coming years.”

Then there is the increased investment in science and technology in China, which has occurred earlier than international experience would suggest. This is probably because of China’s high literacy rate, large market size and proximity to dynamic economies. In fact, China is already among the world’s leaders in research and development spending despite its middle-income status, Yiping notes, despite the fact that a lot of its patents leave little to meet the eye. China is notorious for copying old technology, making minor changes, and calling it a new patent.

However, private enterprises are playing an increasingly important role in China’s R&D activities now than ever before. As China invests more in new products and becomes more entrepreneurial, hitting the high road to high income status becomes more plausible.

Currently, China’s GDP per capita is $6,000. The World Bank’s criterion for high income is per capita above $12,000. China needs to double its real per capita income to get there.

“We think this could happen before 2020 if we assume growth potential at 7% to 8% and modest currency appreciation of, say, 3% a year,” says Yiping.

By then, the Chinese economy would be at least as large as that of the United States. And per capita income will be more like $22,000, putting it on par with Korea’s current income level.

The Club of High Income Nations

Andorra Italy
Aruba Japan
Australia Korea
Austria Kuwait
Bahamas Latvia
Bahrain Liechtenstein
Barbados Luxembourg
Belgium Macao, China
Bermuda Malta
Brunei Darussalam Monaco
Canada Netherlands
Cayman Islands Netherlands Antilles
Channel Islands New Caledonia
Croatia New Zealand
Cyprus Northern Mariana Islands
Czech Republic Norway
Denmark Oman
Equatorial Guinea Poland
Estonia Portugal
Faeroe Islands Puerto Rico
Finland Qatar
France San Marino
French Polynesia Saudi Arabia
Germany Singapore
Gibraltar Slovak Republic
Greece Slovenia
Greenland Spain
Guam Sweden
Hong Kong Switzerland
Hungary Trinidad and Tobago
Iceland Turks and Caicos Islands
Ireland United Arab Emirates
Isle of Man United Kingdom
Israel United States
Virgin Islands

 

[ABC78]

China's economy slowing down is good and bad. China's slowing growth is what all industrializing nations go through as they move into the post industrial phase of growth that all the fully developed countries went through.

[video=youtube;Qf70cawWAec]http://www.youtube.com/watch?v=Qf70cawWAec&list=FLm-3OAJldt4_f-JJA31cQWQ[/video]

[video=youtube;SQui-B1UhKk]https://www.youtube.com/watch?v=SQui-B1UhKk[/video]

 

[A.Man]

China smartphone shipments to rise to 460 million by 2017 - IDC



HONG KONG (Reuters) - China's smartphone shipments are expected to rise sharply to 460 million by 2017 and will make up nearly all mobile phone sales, research firm IDC said, as increasingly wealthy consumers opt for more feature-filled phones.

China has more than 1 billion mobile phone subscribers, with many switching from low-end feature phones to smartphones in the past few years as prices become more affordable with some smartphones selling for less than 1,000 yuan apiece.

Handset vendors, such as Samsung Electronics Co Ltd , Apple Inc (NSQ:AAPL), ZTE Corp , Huawei Technologies Co Ltd and others, shipped a total of 213 million smartphones in 2012, more than double 2011 figures, according to IDC.

No rankings of top smartphone vendors in China were immediately available from IDC analysts.

Smartphones made up almost 58.8 percent of total handsets shipped in China in 2012, with the figure expected to rise to 78.4 percent in 2013 and 90.1 percent in 2017, IDC said.

(Reporting by Lee Chyen Yee; Editing by Matt Driskill)

 

[AssassinsMace]

This is something not going to be widely reported just as you can see there are still congressmen trying to pass currency legislation against China. And China is suppose to take relations with the US seriously?

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Analysis: U.S. concern on China currency fades as yuan grinds higher
By Doug Palmer | Reuters – 3 hrs ago


WASHINGTON (Reuters) - After years of grabbing the spotlight in U.S.-China economic relations, U.S. concerns over the value of Beijing's currency appear to be fading, giving ground to newer issues like cyber-security and trade secret theft.

Some lawmakers continue to argue a weak Chinese yuan is robbing jobs from the United States. But action to force a change is unlikely and the issue will probably remain on the back burner as long as the U.S. economy continues to improve.

An increase in the value of the yuan, a big drop in China's global trade surplus and a rise in labour costs that has made Chinese products less competitive have conspired with a pickup in U.S. job growth to take the wind out of Washington's sails.

On top of that, the United States has faced fury from other countries for an aggressive easing of monetary policy that critics contend seeks to drive down the dollar, a charge that puts Washington in a tough spot to criticize China.

"China's currency regime has ceased to be a flash-point in U.S.-China economic relations," said Eswar Prasad, senior professor of trade policy at Cornell University and a former International Monetary Fund official.

Prasad says the U.S. administration has shifted its attention to issues such as increased market access for U.S. manufacturing firms and financial institutions that want to do business in China, and better protection of intellectual property rights.

U.S. President Barack Obama, attacked during the presidential campaign by challenger Mitt Romney for failing to label China a currency manipulator, did not even address the issue in his recent State of the Union speech.

But he came out swinging on cyber-security concerns in remarks seen directed at China.

"We know hackers steal people's identities and infiltrate private e-mail. We know foreign countries and companies swipe our corporate secrets ... We cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy," Obama said.

CONGRESSIONAL ROADBLOCK

In recent years, both the U.S. House of Representatives and Senate have passed bills to give Obama new tools to push China into letting the yuan rise faster in value, but neither made it all way to his desk to sign into law.

The latest legislative effort was stopped dead in its tracks by House Speaker John Boehner, an Ohio Republican, who said he feared it would start a trade war.

Boehner's opposition and the yuan's strengthening has drained energy in Congress to deal with the issue, said one congressional aide who has worked on the issue for years.

U.S. preoccupation with its own fiscal problems also may have helped push China off the U.S. political agenda, said Nicholas Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics.

"But I hope the most important reason is that China has allowed their currency to appreciate a significant amount, and more importantly their (trade) surplus, as measured by the current account, has come down quite dramatically," Lardy said.

Since mid-2010, China's exchange rate, adjusted for inflation rates in the United States and China, has risen 16 percent against the dollar, according to the U.S. Treasury.

At the same time, China's current account surplus, the broadest measure of its trade with the rest of the world, has fallen from a peak of 10.1 percent in 2007 to a preliminary reading of 2.6 percent in 2012.

That makes it hard for Washington to continue to argue the yuan is significantly undervalued, even if the U.S. trade deficit with China grew to a record $315 billion last year.

Phillip Swagel, a former Treasury official now at the American Enterprise Institute, said the U.S. Federal Reserve's extraordinary easing of monetary policy is yet another factor cooling Washington's appetite for criticizing Beijing.

"This makes it harder for American officials to criticize other countries," Swagel said.

During last year's presidential contest, Romney blasted Obama for repeatedly deciding not to label China a currency manipulator in a semi-annual Treasury Department report, and promised if elected he would do that on "day one."

But in one measure of the low temperature in Congress now on China currency, new U.S. Treasury Secretary Jack Lew faced only a couple mild questions on the issue during his Senate Finance Committee confirmation hearing last month.

Lew said he believed the yuan was "still undervalued."

But he sidestepped a question from Senator Sherrod Brown, an Ohio Democrat, on whether the United States should slap anti-subsidy duties on goods from countries with undervalued currencies as a Senate bill passed in 2011 would have done.

Later, in a written response to a question from Senator Orrin Hatch, the Finance Committee's top Republican, Lew said "addressing China's exchange rate would be a top priority" and promised to work with Congress on the issue, but he carefully avoided endorsing the 2011 Senate bill.

CAREFUL APPROACH

That carefully calibrated approach is in keeping with the U.S. tack through the first four years of Obama's administration; it never threatened to veto China currency legislation but also offered little or no public support.

Instead, it preferred to press China diplomatically during presidential summits and other high-level meetings.

After four years, it can point to progress.

The IMF, in its first published estimate in July 2012, said China's yuan was undervalued by 5 percent to 10 percent, much less than 25 percent to 40 percent figures touted by many lawmakers for years.

Critics say that was a politically derived estimate since China is a powerful voice on the IMF board. But since then, the yuan has risen further against the dollar and senior Chinese officials last week promised further reforms to allow more exchange rate flexibility.

Altogether, the yuan has appreciated 31.6 percent on a trade-weighted, priced-adjusted basis against major trading partners since July 2005, when it embarked on currency reforms, according to U.S. Treasury Department calculations.

Also, while China still holds trillions of dollars in U.S. Treasury bonds, bought with proceeds from export sales as part of Beijing's effort to manage its currency, it has dramatically scaled back its purchases.

"They are no longer intervening very much in the foreign exchange market," Lardy said. "The criticism in the past was the intervention prevented the currency from appreciating."

"Now (Other OTC: NWPN - news) the intervention is at such a modest level, you can make the argument the exchange rate is much closer to an equilibrium rate than it was a few years ago."

(Reporting by Doug Palmer; Editing by Tim Ahmann and Tim Dobbyn)

I'm not surprise that since currency is no longer an issue they've moved on to something else to being a roadblack. Are we seriously going to believe with dozens upon dozens of intelligence agencies including the NSA that the US doesn't "hack." They have more sophisticated technology. Is this like the poster that doesn't seem to be around anymore who complained how unfair it was that the Taliban used snipers, which BTW is not a rare sentiment. Not only does the US have snipers but what about using drones or attack helicopters or fighters that drop bombs from a safe distance?

Xi Jinping should not bother with any sort of summit with Obama unless he's going to offer something worth while. It's the "only Nixon can go to China" thing where what can Obama do for China? Don't see anything really because the US is in a period of negotiation is seen as weakness so they expect no less than unconditional surrender.

 

[A.Man]

China’s February Steel Production Gains as Demand Increases

By Bloomberg News - Mar 12, 2013 1:03 AM

Crude-steel production in China, the world’s biggest consumer of the alloy, gained 9.8 percent in February from a year ago as mills raised output to meet demand.

Steel output climbed to 61.83 million metric tons last month, the National Bureau of Statistics said today in an e- mailed statement. January production was a record 63.62 million tons, arrived at by deducting the February number from a two- month figure of 125.45 million tons.

China’s major steelmakers reported an aggregate profit of 1.34 billion yuan ($215 million) in January as demand started to revive, compared with a combined loss of 1.97 billion yuan for the first 11 months of last year, according to a February statement from the China Iron and Steel Association. Better earnings spurred mills to raise production, Custeel.com chief analyst Hu Yanping said.

“Producers of flat steel have managed to record good profits this year,” Hu said from Beijing. “The mills, using using cheaper iron ore stockpiles, boosted output.”

Flat products are steel sheets and plates used in cargo containers, automobiles and home appliances. Baoshan Iron & Steel Co. (600019), which has half of the nation’s market share for automotive steel, raised prices for hot-rolled and cold-rolled products for April delivery by 150 yuan a ton, the company said March 8.

The passenger-vehicle market in China, the world’s most populous nation, had its strongest start this year since 2010. China’s wholesale deliveries of cars, multipurpose and sport- utility vehicles, rose 20 percent to 2.84 million units in January and February, according to the China Association of Automobile Manufacturers.

 

[A.Man]

China Aluminum Output at Record in January on Capacity Additions

By Bloomberg News - Mar 12, 2013 1:41 AM ET


Aluminum production in China, the biggest producer and user, climbed to a record in January on capacity additions, data from the National Bureau of Statistics showed today.

Production was 1.78 million metric tons in January, according to Bloomberg calculations based on the data. The figure exceeded the previous record of 1.75 million tons in August, said Zhang Chenguang, an analyst at SMM Information & Technology Co. The bureau doesn’t release January output data alone and may revise previous data without disclosure.

Rising output will probably weigh on prices and force higher-cost smelters to cut output, affecting their earnings. Inventories tallied by the Shanghai Futures Exchange expanded to 492,267 tons last week, the highest since November 2010, as those in major trading hubs climbed to a record in February.

“The additions of new capacity far exceeded the output cuts,” said SMM’s Zhang from Shanghai. “We’ll probably see further output constraints later this year.”

Output in the first two months jumped 15 percent from a year ago to 3.51 million tons, while February output was 1.73 million tons, the bureau said in an e-mailed statement.

China Power Investment Corp., the nation’s second-largest producer, will eliminate 200,000 tons to 300,000 tons of obsolete capacity, and has no plan to add more, President Lu Qizhou said on March 6. Aluminum Corp. of China Ltd., or Chalco, said in January it will report a “substantial” loss for 2012 on falling prices.

More Cuts
Aluminum for delivery in three months on the London Metal Exchange has declined 12 percent in the past year to $1,953.75 a ton at 1:39 p.m. in Shanghai. The contract for June delivery on the Shanghai Futures Exchange was at 14,875 yuan ($2,391) a ton.

“Our own survey showed 451,000 tons of output capacity closed due to losses, and smelters are considering shutting another 500,000 tons if prices remain low,” Zhang said.

Aluminum demand in China is expected to rise 8.6 percent this year to 23.35 million tons, while output may grow 9.8 percent to 24 million tons, Yao Xizhi, an analyst at Beijing Antaike Information Development Co., said in January.

Production of aluminum products gained 16 percent from a year ago to 4.65 million tons in January-February, while alumina output grew 15 percent to 6.81 million tons in the period, data from the statistics bureau showed.

Companies have delayed new projects as prices are below a break-even level of 16,000 yuan a ton, and there may be “large- scale” output cuts if prices stay low, Zhang Xuexin, chairman of Xinfa Group, said on March 8.

Copper output in the first two months this year rose 12 percent to 975,000 tons, and production in February was 483,000 tons, according to the bureau.

 

[A.Man]

China’s Daily Oil Refining Falls to Four-Month Low in February

By Bloomberg News - Mar 12, 2013 12:58 AM ET


China’s crude processing fell to the lowest level in four months in February as the nation celebrated the week-long Lunar new year holiday.

Daily oil-refining volumes in the world’s second-largest crude user dropped to 9.9 million barrels a day last month, according to figures from the China Federation of Logistics and Purchasing. That’s the lowest since October. January processing was at about 10.1 million, according to a Bloomberg calculation derived from data for the first two months of the year.

Industrial activity slowed or halted during the Lunar new year holiday, which stretched from Feb. 9 to Feb. 15, as Chinese travelers went back to their hometowns to celebrate with their families. Crude processing in the first two months of 2013 rose 3 percent from the same period in 2012.

The nation’s crude output climbed 0.8 percent to 16 million tons last month, while natural gas production gained 5.2 percent to 9.57 billion cubic meters, today’s data show. Gasoline output soared 13 percent to 7.9 million tons, and diesel production fell 2.7 percent to 13.6 million tons.

China’s biggest oil refineries cut operating rates by 4.5 percentage points from two weeks ago to 83.7 percent as of March 7 because of refinery maintenance, Oilchem.net, a Shandong-based industry website, said last week.

 

[lostsoul]

This is something not going to be widely reported just as you can see there are still congressmen trying to pass currency legislation against China. And China is suppose to take relations with the US seriously?

I'm not surprise that since currency is no longer an issue they've moved on to something else to being a roadblack. Are we seriously going to believe with dozens upon dozens of intelligence agencies including the NSA that the US doesn't "hack." They have more sophisticated technology. Is this like the poster that doesn't seem to be around anymore who complained how unfair it was that the Taliban used snipers, which BTW is not a rare sentiment. Not only does the US have snipers but what about using drones or attack helicopters or fighters that drop bombs from a safe distance?

.

When are those dumb ppl of the world going to realise that the BIGGEST "CURRENCY MANIPULATOR" IS THE USA's very own Federal Reserve.
PRINT $$$$ to infinity.

Now to hacking. What do you think the CIA/NSA are doing? Twiddling their thumbs and watching their facebook accounts?
Politicians will be politicians.

 

[lostsoul]

For the first time, a mainland Chinese company has defaulted on its bonds. SunTech Power Holdings has been clinging on by its teeth but after failing to repay $541mm of notes due on March 15th - and following four consecutive quarters of losses through the first quarter of 2012 and since then having failed to report quarterly earnings - owed to Chinese domestic lenders, the firm is restructuring.

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[J-XX]

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This is normal in a market economy like China. The west has thousands of bankruptcies every year. This shows the market is working as viable businesses thrive and the failing businesses go bust. China does not have a credit bubble, China has alot of demand for credit to grow businesses, but its difficult to get financing. This is why China is starting to develop the capital markets so more businesses can get financing from bonds and stocks. This 'China collapse' theory is mental masturbation by the west to divert attention from their own failings in their economies.