Chinese Economics Thread

[Rising China]

:china::china::china:

Lunar new year spending up strongly
Source: Xinhua | 02-01-2009 10:50
Special Report: 2009 Spring Festival

Shanghai -- China's consumer spending rose strongly during the week-long Lunar New Year holiday period which just ended, the Ministry of Commerce said on Saturday.

Retail sales climbed to 290 billion yuan ($42.5 billion) in the week through Saturday, up 13.8 percent from the equivalent holiday week in 2008, the ministry estimated.

That is a slowdown from the 19.0 percent pace at which retail sales grew in December, but may indicate China's consumer sector is holding up fairly well despite a decline in overall economic growth.

Gross domestic product growth slumped to 6.8 percent last quarter, dragging the pace of expansion for all of 2008 down to a seven-year low of 9.0 percent.

Retail spending during the Lunar New Year holiday week of 2008 was disrupted by fierce snowstorms which snarled rail and air traffic, stranding millions of passengers. Holiday travel was much smoother this year.

Nationwide sales of food at major stores during the past week jumped 23 percent in value terms, while beverage sales gained 17.5 percent and sales of tobacco and alcohol rose 14.7 percent, the ministry estimated.

Sales of household electric appliances, aided by a government programme to subsidize purchases in rural areas, gained 17.8 percent.

Over the past 20 days, the Chinese made an average 4.40 million railway trips every day as many crossed the country for holiday reunions with their families, Xinhua news agency quoted the railway ministry as saying. That was up 15.6 percent from the same holiday period last year.

A total of 248 million people traveled by road in the week through Saturday, up 5.6 percent from the same period last year, the transport ministry said.


Editor:Liu Anqi

 

[Schumacher]

I wonder if the retail growth rate is raw number or adjusted for inflation. If it's raw number, then it should be even more impressive in reality given inflation has fallen a lot since last year.

But I guess that has to take into account the lower base due to the snow storm last year, maybe they balance out somewhat.

 

[crobato]

Wen sees signs of chinese economy picking up again

By Daisy Ku and Sumeet Desai

LONDON, Feb 1 (Reuters) - Chinese Premier Wen Jiabao said on Sunday he saw signs of recovery in the final days of 2008 after growth in the world's third largest economy slowed abruptly but indicated that further stimulus measures might be needed.

The global financial crisis has hit demand for Chinese exports, fanning fears of social unrest as factories are closed and millions of migrant workers lose their jobs.

"During the last 10 days of December it started to get better. The goods piled up in port started to decrease and the price of industrial products started to rise," Wen told a business audience at a dinner during a visit to London.

The government has already pledged 4 trillion yuan ($585 billion) over the next two years to help boost domestic demand. Work on projects including rebuilding the earthquake-hit southwest and improving road and rail links is under way.

Wen told the Financial Times that more might be needed.

"We may take further new, timely and decisive measures. All these measures have to be taken pre-emptively before an economic retreat," he said in an interview published late on Sunday.

China's economic growth slowed to 6.8 percent in the last quarter of 2008, dragging down the annual rate of expansion to a seven-year low of 9.0 percent as the world's most populous country felt the impact of the global financial crisis.

China targets annual growth of eight percent or above in order to support its 1.3 billion population. Wen told his business audience that he would unveil stimulus measures for shipbuilding and textiles when he returns home.

Underlining his positive comments, he said 900 billion yuan in aggregate loans had been added to the Chinese economy in the first 20 days of January, more than double the figure for last November as a whole.

MARKETS AND MORALITY

Wen said China's financial sector remained in good health.

"The financial sector in China has in the face of this crisis been affected to a certain extent, but generally speaking remains sound, healthy and stable," he told an audience of business figures at London's Natural History Museum.

China will inject $30 billion into Agricultural Bank of China [AGBKC.UL], Wen told the Financial Times.

"The China Agricultural Bank is the last among five national banks which is now undertaking a banking reform ... Our decision for this recapitalisation is around $30bn," the paper quoted Wen as saying. Continued...

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[crobato]

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Big Chinese firms squeeze payroll of top executives to cope with crisis

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2009-02-01 13:00:13 Print

Special Report: Global Financial Crisis

BEIJING, Feb. 1 (Xinhua) -- More Chinese firms are slashing executive pay and practicing tighter budgets to get through the economic crisis, the State-owned Assets Supervision and Administration Commission of Shanghai said Saturday.

Nine state-owned enterprises in Shanghai, including Shanghai Automotive Industry Corporation (SAIC), have pledged to cut the payrolls of top executives. Some enterprises plan to cut executive pay by 15 to 20 percent, or by 40 percent at most, according to the commission.

Shanghai Electric planned to cut down administration expenditure by 10 percent this year. Shanghai Bailian Group said it would cancel more business trips abroad and ask employees to switch from air travel to trains on domestic travels whenever possible.

Such announcements are frequent among big Chinese firms as a result of the economic downturn.

Aluminum Corp. of China, the country's largest aluminum producer, said early last month it would slash payrolls of senior managers by up to 50 percent. To avoid cutting staff, it planned to scale workers' wages down by 15 percent.

Lenovo Group, China's leading computer maker, said last month it would chop the payrolls of top executive by 30 to 50 percent. Wuhan Iron and Steel Group followed suit to cut salaries of senior managers by 50 percent.

Top executives of China Eastern Airlines, one of three major carriers in the nation, will receive 10 to 30 percent less monthly income starting Sunday.

These moves are welcomed by the public as they are considered better alternatives to layoffs and would narrow the income gap between top executives and the general staff.

Yuan Gangming, a researcher with the Center for China in the World Economy at Tsinghua University, said slashing executive pay is a common practice for Western firms in difficult times.

"Such a practice can reduce costs, and is also important to keep valuable human resources for the future development of companies," he said.

Yuan also urged Chinese enterprises to improve pay scales and employee motivation mechanisms.

 

[crobato]

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Merrill Lynch: China's economy likely to rebound in Q2

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2009-01-28 21:38:13 Print

Special Report: Global Financial Crisis

BEIJING, Jan. 28 (Xinhua) -- China's economy may start to rebound in the second quarter of the year as an increase in domestic demand outpaces the fall in exports, Merrill Lynch said in a recent research report.

The economy slowed sharply in the second half of 2008 because of weaker demands for Chinese goods from the U.S. and Europe and a slower investment growth in domestic property sector.

The gross domestic product (GDP) grew 6.8 percent in the fourth quarter from a year earlier, compared to 9 percent in the third quarter and 13 percent in 2007. This dragged down the annual growth rate for 2008 to a seven-year-low of 9 percent.

The economic growth is likely bottoming out in the fourth quarter of 2008 and the first quarter of 2009, the U.S. investment bank said.

In the first quarter, export growth could fall further, but domestic demand is likely to gain some momentum, it said, adding that the two forces will offset each other and lead to a GDP growth similar to the fourth quarter.

"After that, rise in domestic demand will likely outpace the fall in external demand, and we expect growth to pick up from the second quarter and we are quite confident about an 8 percent GDP growth in 2009," the bank said.

Merrill Lynch said almost all major monthly indicators, including industrial production, power output and retail sales, point to a recovery.

Industrial production growth for December rebounded to 5.7 percent year-on-year from 5.4 percent in November. In addition, electricity production was down 7.9 percent, an improvement from the 9.6 percent slump in November.

 

[Quickie]

Not exactly on topic but this may provide us a wider perspective on the possibilities or impossibilities of a country's economy gone haywire possibly under attack from the outside.

Is such a thing even possible? To me, this is the height of human folly.

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Zimbabwe: Yesterday's trillionaires can't afford favourite drink

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2009-02-03 10:20:41 Print


A man holds the new Zimbabwe currency specimen, Feb. 2, 2009. Zimbabwe's central bank revalued its dollar again, lopping another 12 zeros off its battered currency to try to tame hyperinflation and avert total economic collapse Tuesday. (Xinhua/AFP Photo)
Photo Gallery>>>


BEIJING, Feb. 3 (Xinhuanet) -- Zimbabwe's central bank revalued its dollar again, lopping another 12 zeros off its battered currency to try to tame hyperinflation and avert total economic collapse Tuesday.

The crisis has been worsened by political stalemate, but the opposition last week agreed to join a coalition government, raising prospects the economy could be saved from further ruin.

The southern African country is battling the world's highest inflation rate, officially put at 231 million percent, and acute shortages of food and foreign exchange.

Reserve Bank of Zimbabwe Governor Gideon Gono announced the new currency moves on Monday, adding that some foreign exchange controls will be relaxed and gold producers now can sell bullion directly and not to the central bank as in the past.

"This Monetary Policy Statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeroes, with immediate effect," Gono said in his MPC statement.

"Yesterday's trillionaires, I am sorry, will not be able to buy their favourite drink today," said Gono.

"His statement does contain some positive measures but it does not go far enough. It would appear he is trying to restore the Zimbabwean dollar, but given the choice of multiple currencies, who would want to trade in Zimbabwe dollars?" John Robertson, a leading Harare-based economist said. 　

 

[crobato]

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China central gov't cashes in another $19 bln for stimulus plan

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2009-02-03 17:02:27 Print

Special Report: Global Financial Crisis

Related: Wen says China confident of weathering financial crisis

Related: Wen confident that China to keep growth at about 8% in 2009
·Central gov't has launched a new stimulus plan totaling 130 bln yuan to boost its economy.
·China's economic growth slowed to 6.8 percent in the fourth quarter of 2008.
·The gov't is hoping to bolster the slowing economy with huge investment from central gov't.

BEIJING, Feb. 3 (Xinhua) -- China's central government has launched a new stimulus plan totaling 130 billion yuan (19 billion U.S. dollars) to boost its economy, an official of the National Development and Reform Commission (NDRC) said on Tuesday.

The fund is the second batch of investment from the central budget following a 100 billion yuan allocated in the fourth quarter of 2008. Both were included in the country's 4 trillion yuan economic stimulus package announced in November.

Chinese Premier Wen Jiabao said Tuesday the 130 billion yuan had been put in place in terms of real funds and on what projects the money will be spent during an interview with the London-based Financial Times.

China's economic growth slowed to 6.8 percent in the fourth quarter of 2008, dragging down the annual rate to a seven-year low of 9 percent, as the global financial crisis takes a toll on the national economy.

The government is hoping to bolster the slowing economy with huge investment from central government, followed by more from local governments and non-governmental sectors.

The NDRC official, who spoke to Xinhua Tuesday morning on condition of anonymity, confirmed the latest 130 billion yuan investment, but declined to unveil detailed plans of the investment before the commission's official announcement.

However, Tuesday morning's 21st Century Business Herald rolled out specific plans with 28 billion yuan to provide housing for low-income earners and 31.5 billion yuan for public facilities, such as electricity, water and road construction in rural areas, citing an unidentified source.

The paper also said 17 billion yuan would go to health and education sectors, 11 billion to environmental protection projects, 15 billion to economic restructuring, and the remaining 27.5 billion yuan to unspecified big infrastructure projects.

Of the earlier 100 billion yuan, 10 billion yuan will be spent on housing projects for low-income families, 34 billion on rural infrastructure projects, 25 billion on large infrastructure projects such as railways, roads and airports, 13 billion on grassroots health, education and cultural projects, 12 billion on energy conservation and environment protection projects, and the remaining 6 billion on innovation and industrial restructuring, according to the NDRC.

The commission, or the country's economic planner, said in November that 1.18 trillion yuan would be arranged for investment from the central budget by the end of 2010, which it said would mobilize a total of 4 trillion yuan in investment across the country within two years.

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IMF: China's 8% growth this year challenging but possible

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2009-02-03 11:14:42 Print

Special Report: Global Financial Crisis

WASHINGTON, Feb. 2 (Xinhua) -- China's economy might achieve the 8 percent growth rate this year but it was challenging, said International Monetary Fund (IMF)'s Managing Director Dominique Strauss-Kahn on Monday.

"The growth in China is tremendous important for the world economy." Strauss-Kahn responded to a question raised by Xinhua. "We expect 6.7 percent growth this year (for China), 8 percent will be very challenging but is possible."

"China has showed in the past that it sometimes were able to do much more than expected," said the IMF chief, who will visit Asia late this week.

He also told reporters that China has more room for fiscal stimulus beyond the 4 trillion yuan (584 billion U.S. dollars) fiscal package launched last year, adding China and some other Asian economies might "recover very fast."

"A rapid recovery is possible," Strauss-Kahn said. "Some Asian economies are very good candidates to be the leading economies when things get going."

 

[AssassinsMace]

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Just saw the program Mad Money. Ironic that the notorious anti-China Jim Cramer is giving so much credit to China. It still remains to be seen. After reading all the news articles from the usual suspects writing stories of the collapse of China in this global downturn in order to cheer themselves up from their own woes, I will not pass up a grin if China happens to be the driver in a global turn around much like what happened with the 1997 Asian Financial Crisis.

 

[crobato]

Just got news from bloomberg that the higher end real estate prices in Hong Kong has stabilized and in January, had a buying binge as tycoons went in to sweep them up.

It might appear that the recovery will begin in the Asian region, centered on China.

 

[bladerunner]

It appears the decades long contention that China inflates its economic data is still there, but if that is the abundant situation, surely a forensic/accountant/economist would have been able to find irrevocable proof of it by now, than relying on insinuations.
The author makes a distinction of the different measuring methods used. Unless Im misreading the article the method used to measure growth was only applied to the last quarter? Nor does it tell us what the new method is or why its more reliable. Does anyone know how the west measure their economic performance.

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It is China's disconcerting secret: Its economic slump is much deeper than official data show.
The government says the economy grew by 6.8 percent in the final quarter of 2008, but that is based on an outdated system that measures growth against the same period a year earlier.
Compared to the previous quarter, the method used by most major economies, growth was about 1 percent at an annual pace and possibly zero, economists say.
"We sharply decelerated in November and December," said Standard Chartered economist Stephen Green. "There are no clear signals we have accelerated."
If China's economy is indeed barely growing, that would dash hopes China, the world's third-largest economy, might drive the world out of recession. It also means communist leaders face a tougher challenge than outsiders might think as they scramble to stem a flood of job losses and ignite a recovery.
Other Asian economies such as Japan and South Korea are already contracting. Beijing says there are signs its 4 trillion yuan ($586 billion) stimulus launched in November is taking effect. But its data might be giving companies and investors an overly positive picture of its current health.
Other countries such as the United States and Japan report gross domestic product growth by comparing each quarter with the previous quarter. That requires more number-crunching to adjust for seasonal differences but quickly reveals changes in performance.
The gap is well known to private sector economists, who try to estimate China's quarter-on-quarter growth based on skimpy government data.
Fourth-quarter expansion from the previous three months was "close to zero," said Ting Lu, a Merrill Lynch economist. Green said his early estimate showed it was "basically zero," though he raised that to 1 percent at an annual pace after more calculation. Still, he said, growth was unlikely to revive in the quarter through March.
That would be more in line with indicators that show China's exports and manufacturing shrinking and weakness in investment and consumer spending. The government says at least 20 million migrant workers have lost their jobs.
JP Morgan gave an estimate of 1.5 percent quarter-on-quarter annualized growth. But its figures also highlight a sharp decline: That rate is just one-tenth of the 15 percent quarter-on-quarter growth the bank says China achieved in early 2007.
Recent numbers suggest that China's economy may be regaining some momentum. A key indicator of manufacturing improved in January, suggesting the slump may be bottoming out.
For decades Chinese economic data was thought to be heavily massaged.
Local leaders were accused of sending Beijing phony growth figures to make themselves look better. The government was accused of manipulating the final numbers to show it was achieving its goals.
Today, the Cabinet's National Statistics Bureau is regarded as professional and honest but is struggling to keep up with China's rapid economic evolution. Its small staff repeatedly revises past growth estimates as new data come in.
It was only in 2005 that booming service industries such as restaurants were counted in economic output. That forced NBS to revise a decade's worth of growth figures. But only annual numbers were revised, not those for each quarter, making it harder for analysts to make historical comparisons.
"China's statistics system is really in a mess," said Lu. "It's extremely difficult and close to impossible to calculate the quarter-on-quarter growth rate in China."
The statistics bureau's boss says it wants to create a reporting system like those of other countries.
"We are doing research right now on setting up this system," Commissioner Ma Jiantang said last month, though he gave no timetable.
Last month, the bureau made the surprise announcement that it was raising 2007's annual growth rate from an already stunning 11.9 percent. That meant China surpassed Germany that year to become the third-largest economy after the United States and Japan -- a milestone that went undetected at the time.
For 2009, forecasts of full-year growth are as low as 5 percent -- the best of any major country but China's weakest in nearly two decades.

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National Bureau of Statistics (in Chinese):

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