Chinese Economics Thread

[SamuraiBlue]

T
To put into perspective, Japanese locomotives sold to foreign countries in the 70's also gave problems.

Have any links for people actually verify those claims.

 

[broadsword]

Do you have a link that says that Japan won the Bangkok-Chiangmai high speed rail contract that includes the building of the track and the supply of the Shinkansen train. Actually, I don't doubt that Japan will eventually secure the deal even if nothing is finalized yet because Thailand favors the Japanese system and has awarded them the deal to conduct studies and other ground work. That is something that even China has acknowledged.

 

[shen]

Do you have a link that says that Japan won the Bangkok-Chiangmai high speed rail contract that includes the building of the track and the supply of the Shinkansen train. Actually, I don't doubt that Japan will eventually secure the deal even if nothing is finalized yet because Thailand favors the Japanese system and has awarded them the deal to conduct studies and other ground work. That is something that even China has acknowledged.

The signed agreement between Thailand and Japan is for a feasibility study, not a construction contract. As the railway deal with Indonesia shows, a feasibility study by no means guarantees a contract.

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According to Reuters in Jakarta, Japan initially believed it had won the contract after it spending USD 3 million on a feasibility study, but in March the Indonesian president decided to invite competitive offers.

The latest development in Indonesia is that it decided to reject both high speed proposal from China and Japan and may decide to go for a medium speed railway instead.

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One thing is certain, with more players in the field, the customers get a better deal.

 

[advill]

Latest news as t2 contra reported, is Indonesia will depend on its own funding for this rail project. The major shareholders will be Indonesian Corporations, while foreigners can be minority share holders. This is a good move by Indonesia, as neither China or Japan will be offended or accuse Indonesia of favouritism. This is, and should be the ASEAN Way. Interesting to observe which "train" would be used, as a medium speed railway seems to be the preference now.

 

[Equation]

Latest news as t2 contra reported, is Indonesia will depend on its own funding for this rail project. The major shareholders will be Indonesian Corporations, while foreigners can be minority share holders. This is a good move by Indonesia, as neither China or Japan will be offended or accuse Indonesia of favouritism. This is, and should be the ASEAN Way. Interesting to observe which "train" would be used, as a medium speed railway seems to be the preference now.

Yeah but China can offer lower interests borrowing rates and credits than Japan to provide a stable flow of capital for the project.

 

[advill]

You have a point Equation. My hunch is that there will be competition where foreign participants are concerned, maybe from AIIB, ADB etc. getting involved. May the "best attractive terms" win, for the good of Indonesia.

 

[broadsword]

As usual, for the medium speed trains, Japan still has the edge in technology while China has it in cost. Hitachi's medium speed trains are used in England and China's are used in Macedonia and Malaysia.

For the sake of prudence, we should just accept that cost is not a major catalyst in deciding the purchase of a long term asset that serves millions of people; safety is. China's older technology trains that use mostly local components can be as low as 35% of the cost of Western designs. But those are the ones that tend to break.

China's modern trains still use imported components from Bombardier, Japan, etc. Even the high tech machines used in their making have to be imported, a good example being stir friction welding machines.

 

[Blackstone]

And the beat goes on.

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Japan was left isolated among Group of 20 nations after Finance Minister Taro Aso criticized a Chinese plan to stabilize its financial markets.

While most policy makers at a two-day meeting in Ankara publicly welcomed China’s explanation of how it plans to minimize the disruption from its economic transition, Japanese Finance Minister Taro Aso said the presentation was too short on detail to be useful. Aso was the only delegate to complain about the plan, according to two officials at the talks who asked not to be named.

“The issue with China is overblown,” Saudi Arabia’s central bank Governor Fahad Al-Mubarak said in an interview with Bloomberg Television in Ankara. “We’re confident that China is on the path of reform.”

China came into the talks on the defensive after the bursting of an equity bubble and a currency devaluation had roiled emerging markets around the world last month. Central bank governor, Zhou Xiaochuan, explained to his counterparts that Chinese officials were taking action to stabilize the country’s financial system and said he saw no reason for the currency to fall further in the long term.

That wasn’t good enough for Aso.

“They may have tried to be constructive,” the Japanese finance chief told reporters on Friday night after the first day of talks. “But they weren’t detailed enough.”

Asked on Saturday if he felt lonely in his view, Aso said, “Not at all.”

Aso said he’d had a detailed discussion with China’s central bank governor on the second day of the meeting. This is the first time that China has been questioned so thoroughly over its economic policy and a “good opportunity” for China to learn just how much interest there was in the market meltdown, he added.

Aso’s comments reflect the often-strained nature of Sino-Japanese relations since President Xi Jinping and Prime Minister Shinzo Abe both came to power in 2012, with a territorial dispute in the East China Sea and differences over Japan’s wartime past fueling tensions. Last week Xi oversaw a military parade to mark the 70th anniversary of the end of World War II held on a holiday that China called Victory of the Chinese People’s Resistance Against Japanese Aggression.

Still, there have been some signs of improving relations in recent months, with Xi meeting Abe on the sidelines of a conference in April and the countries making progress on holding a trilateral summit with South Korea as soon as next month.

The Chinese delegation was left puzzled by Aso’s carping.

“The atmosphere was very good,” Zhu Jun, head of the international department of the Chinese central bank, said in an interview Saturday. “I think most of the participants had very frank and constructive discussions with us. Not only with us but also with each other.”

Following the talks, China joined a pledge by all 20 members to avoid getting dragged into tit-for-tat currency devaluations and shift toward a more market-based exchange rate system. Aso said that although the G-20 statement didn’t mention China by name it was clear that the group’s concerns about market volatility were directed at officials in Beijing.

The last time the G-20 made such a pledge, in 2013, Japan’s currency declines were in the spotlight.

The surprise decision to revalue the yuan caused China’s currency to drop the most in 21 years last month, triggering exchange rates to fall elsewhere in the emerging world on concern that a weaker yuan will hurt countries exporting to China.

Capital flows into such emerging-market economies dropped in August by the most since 2013, according to the Institute of International Finance. Meantime, Morgan Stanley this week cut its growth forecast for emerging markets in 2015 to 4.1 percent from 4.8 percent amid downgrades for China, Brazil and India.

“China is definitely trying to play a constructive role,” Canadian Finance Minister Joe Oliver said in an interview Friday. “It is the second-largest economy in the world and so when it slows down it has global implications. That is I think what we are dealing with.”

 

[Blackstone]

China could benefit greatly by adopting US and Singapore food security standards, process, and procedures.

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In many parts of the world, food security is emerging as a serious threat. Increasing population, land and water constraints, changes in dietary habits with increasing affluence, the impact on global food production of floods and droughts in major food producing areas, falling food exports, and a rising number of importing countries – all are contributing to these uncertainties. The problem is likely to be compounded in the future by climate change.

In the years to come, food security in most countries will become more complex than ever. For Singapore, among the world’s most open economies and one that is highly dependent on international trade, the situation is likely to be even more complex. The city-state’s volume of external trade is about 3.5 times its annual gross domestic product. A decline in the economies of its major trading partners is therefore likely to have an impact on Singapore’s own economy, including its food security.

Economist Intelligence Unit recently ranked Singapore as the

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, behind only the United States. The Unit’s Global Food Security Index is based on three factors, affordability, availability, and quality and safety. Singapore ranks 1st, 11th and 13th on these three criteria, respectively. That puts it ahead of major food-producing countries like Malaysia (34), Brazil (36) and Australia (9). This achievement is largely attributable to the Agri-Food and Veterinary Authority (AVA), and comes despite a heavy dependency on food imports. At present, Singapore imports almost 90 percent of its food, and less than 1 percent of its land area is used for agriculture.

Through its Food Security Roadmap, AVA has diversified sources of food and optimization of local production. These policies, especially those that seek to diversify the source of food imports, are important as they help to spread the risks associated with Singapore’s high levels of food imports.

The Sino-Singapore food zone established in Jilin Province, China, in 2010, is just one example of food diversification efforts. The Jilin food zone has been designed as a foot-and-mouth disease-free-zone so that it can be an important source of pork. Not without its challenges, it is meant to enhance the city-state’s food security. This will provide further resilience against food supply disruptions.

AVA has also ensured increased local food production over time through the provision of the Food Fund. Investments in new farming techniques such as hydroponics have contributed to a 30 percent increase in local vegetable production over the past 10 years. By the end of 2014, some 40 percent of local farms had benefited from this Fund.

Singapore’s net imports for food, beverages and alcohol (clustered in one group) are quite high, at approximately S$15.57 billion ($10.9 billion) in 2014. Some of Singapore’s most important trade partners, like the United States and Australia, place great importance on the city-state’s retail food market. The U.S. sees Singapore as diverse, dynamic, highly developed, extremely competitive, and very strict with its sanitary requirements. Customers in Singapore are considered to be open to a wide range of foreign concept foods, conscious of food safety and health, and aware of sustainable products. However, they are not necessarily willing to pay more for them.

In 2013, the U.S. exported retail food products to Singapore worth approximately $575 million, making tiny Singapore its 13th largest market. Exports were led by dairy, prepared foods, fresh fruits, and pork products. For Australia, Singapore was its 9th largest market for food, beverage and agribusiness products in 2014, with exports of A$1.1 billion ($760 million) the same year, principally animal fats, dairy products, red meats, sugars and sugar confectionery and pork.

Direct imports are not the only reason for Singapore’s international relevance. Its location and trading hub status makes it a vital market for exporters. For example, the percentage of imported food that is re-exported to other countries is approximately 20-25 percent.

Resilience

From a policy perspective, Singapore has managed to accomplish the difficult task of becoming a food secure country by boosting the resilience of its food supply. Policy alternatives such as diversification of sources, the Food Fund, and facilitating food imports are all important components of a well planned and coordinated strategy. Nonetheless, the next 50 years are likely to be more complex as alternative possibilities depend on external forces and are subject to global change over which the city-state will have no control.

Globally, increasing resilience has been acknowledged as an effective strategy against fluctuations in supplies. This encompasses partnerships, financing, trade, technology, and research and development, all of which are already part of Singapore’s strategy.

What else can the city-state do? One alternative is to reduce food waste. Another would be to continue investing in innovative food science and emerging technologies. High-tech, visitor-friendly urban agriculture on the East Coast, or even in very fashionable 50-plus story buildings designed by the nation’s most innovative architects could be very significant options.

Highly sophisticated greenhouses that control their environments (temperature, carbon dioxide levels, air flow and nutrients) and situated on ships adapted for this purpose could be another alternative. Projects as visionary as the Marina Reservoir (with a catchment that is about one-sixth the size of Singapore’s total land area) or as innovative as Pulau Semakau (the world’s first offshore landfill) for highly intensive agriculture could represent additional possibilities.

Agricultural investment or contract farming abroad – something that other countries, financial services, life insurance, and pension schemes have done – is a distinct possibility. Stable nations such as Australia, the United States, or Brazil may provide attractive business possibilities.

Singapore continues to develop its food security strategies, seeking opportunities and addressing risks in an increasingly complex environment. One relevant lesson that other Asian countries could learn from the city-state is the understanding that food security does not mean food self-sufficiency, since no country can be self-sufficient in all food products. National food security depends on both domestic production and imports, and requires effective distribution, in addition to diversification, partnerships, and good long-term planning. These are the reasons why Singapore, which imports most of its food, has become the second-most food secure country in the world.

 

[advill]

Thank you Blackstone for your post on Singapore. We are a small country, and a determined multi-racial & multi-religious but a Secular Society. Ever since we became independent on 9 August 1965, our Founding Father Lee Kuan Yew and his excellent & dedicated multi-racial team led and motivated all Singaporeans to be resilient & to think positively. We continue to survive by our wits. We have been lucky to have continued pragmatic leadership, currently with PM Lee Hsien Loong and his team. We face a robust National General Elections this coming Friday, 11 September. All citizens will vote for the best Members of Parliament & importantly the Team that will lead us for the next 5 years. Our votes are secret & the Elections are transparent, and there are no stuffing of ballot boxes. We, the old & the new generations hope that we will progress during good as well difficult times; and also continue with good ties with all friendly nations & people.