Need2LearnChinese Blog

The Shanghai Stock Exchange (SSE), which marked its 20th anniversary of trading on Friday, is planning to boost the market of Exchange-Traded Funds (ETF), a relatively new breed in China's securities market, to cater for the growing appetite of Chinese investors.

Zhou Qinye, vice-president of the SSE, recently said that the bourse is planning to introduce more cross-market and cross-border ETF products. It recently signed agreements on index authorization with nine international index companies and five exchanges.

Industry players and analysts are positive about the outlook for ETFs in China, saying that their introduction will offer investors more asset allocation products, given the current shortage of investment tools in China.

"The potential of the Chinese ETF market is huge," said Zhang Qi, an analyst at Haitong Securities. "The trend is that ETF-related products will also expand to the commodities market, providing fund companies with more products to sell and giving investors wider investment choices."

The indexation investment market on the Shanghai bourse has seen remarkable growth over the past few years. Twelve ETFs are currently traded in Shanghai, boasting an asset size of up to 50 billion yuan ($7.5 billion).

The bourse is also vigorously promoting the innovation of indexation investment, and will launch a new index, the SSE 380 Index, on Nov 29.

It will target emerging and growing blue chips to mirror the overall performance of an array of medium-sized listed companies. The index, in conjunction with the SSE 180 and SSE 50, will constitute the major blue-chip indices of the Shanghai market.

The rapidly growing ETF industry in China has also helped fund managers rise as significant players.

Continue reading "Shanghai Stock Exchange to expand ETF trading" »

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Partly as a response to the global climate challenge, China's booming green industry has become the engine that boosts global economic cooperation and encourages investment into the country.

"We are vigorously seeking international cooperation in various fields of green technology," said Jiang Yaoping, vice-minister of commerce.

So far, China has signed Memoranda of Understanding with many countries, including the United Kingdom, Switzerland, Italy, Finland, Canada and Germany, to co-develop the country's green economy, Jiang said.

He said the ministry is working with relevant government agencies on the revision of the catalog for the encouragement of foreign investment industries, so that overseas investments will be encouraged to flow into emerging and energy-conserving industries, such as the advanced manufacturing sector, and participate in the transformation and upgrading of China's traditional industries.

"We can see China is taking very serious steps in developing clean technologies. The prospect for China's (green technology) market will be very bright and Finnish companies' know-how will be quite profitable," said Erkki Virtanen, permanent secretary of Finland's Ministry of Employment and Economy.

Continue reading "China's green industry boosts inward investment" »

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Especially here in Shanghai, one look out onto any main street and you'll see luxury car after luxury car roll by. Anyone with half a brain could deduce that the Chinese have money and love to show it off by their choice of ride; that's certainly not rocket science. That the top three luxury car brands are all German--Audi, BMW, followed by Mercedes-Benz -- is not news either. We could've guessed that one too. However, where the market research from J.D. Power & Associates becomes interesting is its demographic breakdowns on who's buying these cars.

According to their data, Audi buyers tend to be government officials who incidentally are the leading consumers of luxury cars in China. BMW, of which the most popular model is the 5 series, attracts young business people, usually entrepreneurs who have hit the pay dirt. Good ol' Mercedes-Benz is the preferred choice of senior (in age and rank) businessmen and government officials.

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The fixing marked the fourth straight record high for the Chinese unit against the greenback, beating Tuesday's 6.7378. The string of new highs comes as the United States has increased pressure on Beijing in the last week to allow the yuan to rise faster.

The yuan finished at 6.7463 against the U.S. dollar on the over-the-counter (OTC) market Tuesday, higher than Monday's close of 6.7618.

The yuan has seen increased volatility in the trading days since the PBOC's June 19 pledge to increase exchange rate flexibility. The yuan has risen by 1.48% since that pledge was made.

Based on today's parity, the yuan is up 1.52% from a year earlier against the dollar, according to Market News International calculations.

The yuan fell 0.06% in 2009 as the government continued to hold the Chinese unit virtually pegged to the U.S. dollar, despite growing international criticism about its exchange rate policy. It fell 0.48% in August and has risen 1.49% so far this year.

Last year marked the first that the yuan has fallen against the dollar since being depegged in 2005. The paltry move against the dollar last year compares with the 7.05% rise in 2008 and the 6.86% jump seen in 2007.

Today's fixing brings the yuan's gains against the greenback to 23.06% since currency reforms were announced on July 21, 2005, including that day's one-off 2.1% revaluation.

The yuan was set weaker against the euro and the yen today.

The PBOC set the yuan parity against the euro at 8.7499 today, down from the 8.6561 fixing the previous trading day. The yuan is up 12.47% y/y against the euro based on today's fixing.

The yuan depreciated 1.41% against the euro last year, a dramatic shift from its 10.43% jump in 2008.

The yuan was also fixed at 8.0941 to the Japanese yen, down from the previous session's 8.0833. The yuan is down 7.92% y/y against the yen based on today's fixing.

The Chinese currency rose 2.53% against the Japanese yen in 2009, a turnaround from 2008's 15.32% depreciation.

The People's Bank of China started setting a daily central parity rate on Jan. 4, 2007.

On July 21, 2005, China freed the yuan from its longstanding peg to the dollar in favor of a managed float with reference to a basket of currencies.

On May 21, 2007, the PBOC widened the daily fluctuation band for the yuan-dollar exchange rate to 0.5% from 0.3% on either side of the central parity rate.

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China issued a new anti-corruption regulation Sunday to require officials to report changes in their marital status, the whereabouts of their spouses and children if they have moved abroad, personal incomes, housing as well as their family' s investments.

The new regulation was issued by the General Office of China's State Council and the General Office of the Communist Party of China (CPC) Central Committee.

The regulation defines "officials" as those leaders holding official ranks of and above county level in government agencies, democratic parties, public institutions, state owned enterprises and state holding enterprises.

The new regulation requires officials to report changes in their marital status and the location of their spouses and children if they have moved abroad, within 30 days after such a change takes place.

Specifically, officials should report their ownership of passports or visas and their children's marital status if they are married to foreigners or residents of Hong Kong, Macau, and Taiwan.

Officials should also report any businesses their spouses and children are involved in, both within China and abroad.

The new regulation also requires officials to report their ownership of property, including property in their spouses' or children's names, their family's investment in financial assets and in enterprises.

According to the regulation, if officials fail to report honestly or in a timely fashion, they would face punishment to various degrees, even as harsh as removal of official ranks.

The regulation also ordered party organizations at all levels to strengthen management and supervision over officials to guarantee the implementation of the regulation.

This regulation is considered an important measure to ensure strict self-discipline for Party and government officials and to improve the intra-Party supervision system.

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Continue reading "China's housing market makes moving abroad cheaper than buying at home" »

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Around this time of year, the topic of social unrest in China is never far from the fore. The recent spate of strikes at the Honda plant in Foshan and slew of suicides at Foxconn's Shenzhen factory has provided recent evidence that not only disenfranchised sections of society are willing to show their defiant colours, but also the greater need for the government to address China's wealth distribution.

The Foxconn saga, in which at least twelve workers jumped to their deaths, has raised questions over the nature of factory life in China. The Guardian and The Telegraph have both looked into why the spate occurred. The seven-day weeks and 15-hour days of silent and repetitive manufacturing of products these workers may never be able to afford has taken its toll. Chinese paper Southern Weekend also sent one of its interns to work in Foxconn's factory for one month, who said,

If you have no links, other than on the production line, then you become one single and unconnected knot. Then you get suicidal facing a machine all day and with no way of releasing your anxiety like normal people.

Continue reading "What to make of the strikes in China?" »

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China could regret setting its first carbon target. Even if the impact on the economy proves manageable, the country's negotiators have now condemned the world's most populous nation to jargon-filled number crunching and climate geekery for decades to come.

During the past six years in China, I can count the number of times I have heard locals talk about carbon offsetting on one finger. They didn't need to: under the Kyoto protocol, China and other developing nations were not obliged to do anything to reduce emissions. That will all change with yesterday's announcement, which paves the way for China to establish carbon trading, carbon taxing and, perhaps one day, carbon offsetting.

What it will not mean is an overall reduction of greenhouse gases from the world's biggest emitter. The new target is a 40-45% reduction in carbon intensity (emissions per yuan of economic activity) between 2005 and 2020. That means slowing the rate of increase rather than cutting back.

China's emissions will increase by between 90% and 108% between 2005 and 2020 if the economy grows at 8% per year, according to Arthur Kroeber of Dragonomics Research & Advisory.

But it could be a lot worse. According to the Worldwide Fund for Nature, China's new target will prevent more than 4 gigatons of carbon entering the earth's atmosphere between 2010 to 2015, in addition to the 1.5 gigatons already saved by the energy efficiency drive during the current five-year plan.

Continue reading "China means business with first-ever carbon emissions targets" »

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China's outbound tours in 2010 were expected to top 51 million, up seven percent year on year, said Shao Qiwei, director of China's National Tourism Administration (NTA), on Monday.

The 2010 World Expo to be held in Shanghai would attract 3.5 million overseas visitors to the city, Shao said at a national meeting at Nanning, capital of the southern China's Guangxi Zhuang Autonomous Region.

For the whole year, 132 million inbound trips would be made, up five percent year on year and among them, 54.5 million would stay overnight, up seven percent year on year, Shao said.

China's total tourism revenue in 2010 was expected to top 1.44 trillion yuan ($210.83 billion), up 12 percent year on year and about 500,000 new jobs would be created in this sector, Shao said.

Domestic tourism was expected to pocket 1.15 trillion yuan in 2010, up 13 percent year on year as domestic tours to top 2.15 billion, also up 13 percent, Shao said.

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Is the exceptionally booming Chinese economy in the midst of a global financial crisis a bubble? That is a question people ask. Many people believe China's growth is unsustainable. Without the consumption of the western world, Chinese enterprises have nowhere to sell their products. Some people just do not trust data released by the Chinese government. They think the data are fabricated to paint a rosier picture than reality. On the other hand, people like Jim Rogers believe the Chinese are the best free market capitalists in the world; and there is still huge growth potential in China for decades to come.

Among all the naysayers, Mr. Karl Denninger provided the most elegant proof that China is a bubble. He proved that mathematically anything that grows a certain percentage year over year, will reach infinity if the growth is sustained. Since infinity is physically impossible, the growth must be stopped at a certain point. I agree with Mr. Denninger that nothing grows forever. There are always physical limits to growth. I believe we are probably close to the point that the growth of the global economy itself is bouncing against the limited carrying capacity of the the natural resources of this planet itself. China, or any country for that matter, cannot keep growing at high speed forever. But that is NOT the question people are asking. We want to know if China's current growth is real. Can it be sustained for a few decades, or has it reaches the bubble stage?

You can not answer this question without visiting China and making your own observations. Many naysayers have not been to China recently. They probably do read news reports coming from China and then draw their conclusions based on what they hear. The problem is such second hand reports may or may not be true, but they surely do not reflect the whole picture. Drawing conclusions based on a partial picture is dangerous. It is difficult to see a whole picture if you merely read a few internet information source on China. I am visiting China right now and I am struggling to get that whole picture view of China. Fortunately, I can interact with the average folks in China so it is easy to find answers that puzzle most westerners.

Continue reading "Is China's Growth Real?" »

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According to a survey just completed by British firm Evershed, Shanghai may overtake London as the world's second largest financial centre within the next ten years.

More than 90% executives in Shanghai and Mumbai are positive on the economic outlook in 2010, while the figure in London and New York was only 22% and 35%, respectively, said the survey, which however positioned New York as the largest financial centre.

The report:  http://is.gd/5oaDa

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It seems that the Chinese government was just getting started when it arrested employees from Rio Tinto this Summer. The newest company in the hot seat is Coca-Cola, which had an ex-employee arrested by the Shanghai police over corruption charges this weekend.

From the New York Times:

Police here have detained a former employee of a Coca-Cola bottling plant, whom they accused of corruption and bribery.

The detention of the employee from the Shanghai Shen-Mei Beverage and Food Company, a bottling plant partly owned by Coca-Cola, was reported over the weekend by China's state-run news media, which said the employee took about $1.5 million in bribes.

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The New York Times recently ran an article about young Americans flocking to China for job opportunities because job prospects are so bleak in the U.S. The article made it sound as if it's easy to find a good job there even if you don't speak Mandarin or know much about Chinese culture. Is it really that easy?

The answer quite simply is no. Starting a career in China can be very worthwhile, but there are major downsides. Before racing across the globe to launch your new life, you need to think very carefully about whether it is worth it and, if you decide it is, how to guarantee yourself a meaningful experience.

On the good side, China's economy remains strong, and people are palpably proud of its strength. Work in China is challenging and fast-paced, and young executives get far more responsibility than they would back home. China is clearly the next growth engine for most multinational corporations, as the country's consumers and companies buy more and become less price-sensitive. Executives with experience in China will be in high demand back at headquarters and at leading business schools in coming years, so getting a couple of years of China work experience on your résumé certainly can't hurt.

However, there are caveats. First, you mustn't expect a high salary. Second, government regulations can make it very hard to secure a work visa unless you already have two full years of work experience. Chinese coming out of top schools like Fudan and Beijing University make $500 to $600 a month. To get more than that, young Americans need to prove they really deserve more, which is getting harder and harder to do. Having good English skills is no longer enough.

Hundreds of thousands of Chinese have studied in the West. Unlike the first rounds of Chinese, who studied in the U.S. during the late 1980s and early '90s and mostly stayed in the States, younger Chinese are moving back home, both because of the opportunities available now and because of forbidding American work visa policies. Most companies prefer to hire these returnees, because they understand how to navigate China but also speak English well and have been exposed to Western practices and values. When I did my graduate studies at the Graduate School of Arts and Sciences at Harvard University, there were more Chinese there than any other nationality except Americans.

Continue reading "Should You Look For Work In China?" »

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China's exports plunged in May for a seventh month as the global downturn battered trade, while imports also dropped sharply, the government reported Thursday.

May exports fell 26.4 percent from a year earlier, the customs agency reported. That was sharper than April's 22.6 decline and far below March's 17.2 percent contraction.Chinese trade collapsed in late 2008 as the global economic crisis cut into demand for Chinese exports. The slump forced thousands of factories to close and threw millions of migrants out of work.

The government is trying to shield China from the downturn by pumping up domestic consumption with a 4 trillion yuan ($586 billion) earmarked for higher spending on public works construction and other initiatives.

May imports dropped by 25.2 percent, the agency said. That was worse than April's 23 percent fall and matched March's decline.The decline suggested Chinese demand for iron ore, industrial components and other foreign products is still weak.

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China's new railway schedule and the operation of two new high-speed passenger lines will accelerate the economic growth and improve people's living standards, analysts said.

Ding Li, a researcher on regional economy competitiveness at the Guangdong Provincial Academy of Social Sciences, said that high-speed railways and inter-city express services would bring more opportunities to less-developed regions, such as the central and northwestern parts of the country and rural areas.

The Ministry of Railways (MOR) launched a major overhaul of the rail schedule Wednesday, the seventh since 1997, featuring faster trips and more seats.

The new schedule includes 89 new direct passenger trains, bringing the daily total to 1,551 pairs and raising passenger capacity by more than 10.6 percent, the MOR said.

China also launched two 250-km-per-hour inter-city railway passenger lines Wednesday. One line links Hefei, capital of eastern Anhui Province, with Wuhan, in central Hubei Province. The other connects Shijiazhuang in northern Hebei Province with Taiyuan, Shanxi Province.

Continue reading "Expansion of China rail service" »

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Curious about what the Chinese stimulus plan looks like? Caijing Magazine has put together an interesting pie chart based on the recent “rebalancing” by the National People's Congress. Some of the biggest changes: a massive injection into sci-tech and social welfare, and surprisingly less towards rural civilian projects, considering how much publicity talks of “helping the rural areas” have been getting.

[National Development and Reform Commission Director Zhang Ping] said the changes to the original stimulus plan, which was announced by the State Council four months ago, includes slight adjustments to investment targets and a major reshaping of investment allocations. The changes were made based on varying opinions from the public, he said.

“The make-up of 4 trillion yuan is actually a process of give and take,” Zhang said. “Many projects, perhaps, will see changes in practice as situations are not unchanged.

While nobody (except the CCP, we guess) is sure how the extra billion here and there make a difference in their proposed categories, the pie chart is still a decent look at where the CCP's 4 trillion yuan may end up.

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You won't have to go to Dubai to enjoy seven-star luxury anymore as the world's second seven star hotel — and China's first — is going to be built in Sanya, Hainan. Construction of the 120m high hotel will begin later this year and will be completed by 2011 to be managed under the Fairmont Hotels & Resorts brand. Shanghai Daily tells us more:

Located in the center of Haitang Bay in Sanya City, the hotel will spread over 150 square kilometers and include a luxury yacht club, a golf course and the biggest ocean park in Asia.

It will be among another 20 five-star hotels in the area and will be a major landmark in Sanya when it is completed.

The hotel will be designed by UK-based W.S Atkins plc which designed the world's first seven-star hotel, the Burj Al Arab, in Dubai.

Continue reading "China's first seven star hotel to be built in Sanya, Hainan" »

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For sports apparel brands, the Olympics are arguably the most important stage for marketing. So how did the sports marketers fare with the Chinese market in these Olympics? Here's a look at how things played out for Adidas, Li-Ning, Nike, Puma and Speedo

Adidas

Adidas reportedly shelled out 70 million euros to be an official Olympic sponsor. Adidas gear was also all over Olympians, great for television exposure. But aside from shoes and uniforms, Adidas wasn't particularly visible in Olympic venues. It had no special presence on the Olympic Green, but its beautiful flagship store in Sanlitun near the Workers' Stadium and Workers' Gymnasium saw lots of foot traffic.

Its Olympic ad campaign, though beautifully designed and fitting in concept ("Together in 2008, Impossible is Nothing"), came up short in the personnel categories. That campaign had four primary faces, in sports that are very popular in China--diver Hu Jia, footballer Zheng Zhi, basketball player Sui Feifei and a few women's volleyball players. Hu pulled out due to injury, Zheng and the men's football team had an embarrassing performance and Sui Feifei was only sixth in scoring on Team China. The women's volleyball team played strong in a very tough field, but in the end only came through with the minimum result acceptable to the hometown fans, a bronze medal.

Continue reading "Olympic marketing: How did sportswear brands do?" »

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Shanghai tops all other cities on the Chinese mainland in terms of income, according to a study conducted by human resource website Zhaopin.com.

Employees in Shanghai earned between 20,000 ($2,900) and 540,000 yuan a year, said the report, which also investigated earnings in Beijing, Shenzhen, Guangzhou, Hangzhou, Nanjing and some other cities between August 2007 and July this year.

Shenzhen, Beijing and Guangzhou follow Shanghai in the income ranking, but the difference is not as large. For example, annual incomes in Guangzhou, which ranks fourth, range from 18,000 yuan to 420,000 yuan, it said.

While having some of the highest earnings in the country, Beijing and Shanghai are also pricey places to live in. Both were ranked among the top 30 most expensive cities to live in the world, according to US-based Mercer Human Resource Consulting.

In second-tier cities such as Hangzhou and Nanjing, people earn much less than in the big four.

On average, company employees in urban areas witnessed a pay rise of 13.8 percent in the first half of this year, compared with 9.7 percent in 2007, according to the survey released on Thursday.

Employees at State-owned enterprises (SOEs) have seen the sharpest pay rise, by 14.5 percent, followed by private firms (13.9 percent), foreign enterprises (11.7 percent) and joint ventures (11.4 percent).

But people in SOEs and private firms earn "only half" the amount of those working for foreign firms and joint ventures. Salaries in foreign-funded companies and joint ventures are generally the highest in China, the survey noted.

Continue reading "Shanghai boasts fattest pay packets" »

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US-based Golf Digest magazine has released its annual list of what it considers to be the China's top ten golf courses. According to the magazine's editors, if you're looking for China's best courses, forget Shanghai, Beijing or Shenzhen – go west to the laid-back city of Kunming.

Sheshan Golf Club was the only Shanghai course on Golf Digest's list, coming in at third best. Kunming, capital of southwestern China's Yunnan province took three of the top six spots on the list. Here are the results:

Continue reading "China's top 10 golf courses" »

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Hong Kong investment fund manager Zhao Danyang (赵丹阳) made the winning bid of $2.11 million in a charity auction on Friday for the privilege of having lunch with Warren Buffett. Zhao, the general manager of Pureheart Asset Management, won the right to dine with Buffett, now chairman of conglomerate holding company Berkshire Hathaway, on a day of his choosing at the famous Manhattan steakhouse Smith & Wollensky. Just who is this Zhao Danyang? An interview with Zhao conducted by Euromoney in 2006 describes him as "a refreshingly frank and down-to-earth figure in an industry still dominated by overseas-educated princelings and the politically connected elite." Tariq Ali of Street Capitalist reports that Zhao is a former factory owner who began his investing career in 1996. Ali points out that the philosophy of Zhao's first fund, the Pureheart China Growth Investment Fund, shows similarity to the ideas expressed by Buffett and Charlie Munger, vice-chairman of Berkshire Hathaway. Just how much knowledge will Zhao gain from his meal with Buffett, ranked the world's #1 billionaire by Forbes? Last year lunch with Buffett, which is an annual offering at the charity auction for the Glide Foundation, went for $650,000 to value investors Mohnish Pabrai and Guy Spier. Pabrai said it was "worth every penny."

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Once on the fringes of China's economy, tropical Hainan Island has blossomed into a prosperous province in the two decades following its designation as a special economic zone.

The island off the coast of south China, before under the jurisdiction of Guangdong province, was designated a special economic zone in 1988 and then upgraded to a full province.

Twenty years ago Hainan began developing its newly offered economic status that entitled it to preferential policies - and its economy has taken off .

Gross domestic product (GDP) of the province hit 122.96 billion yuan last year, an increase of more than 20-fold from 5.73 billion yuan ($819.51 million) in 1987. Annualized 11. 4 percent growth over the past two decades was 1.6 percentage points higher than the national average.

Its productive economy resulted in per capita income that also grew robustly over the past 20 years at an aggregate rate of 9.7 percent annually.

Its economy not only grew in volume, but has also expanded in breadth. Once heavily reliant on agriculture, the island is now a rising industrial powerhouse and tourism mecca.

Agriculture's proportion in the economy has dropped from 50 percent in 1987 to 31 percent last year as the industrial sector increased from a 19 percent share two decades ago to 29 percent last year.

Continue reading "Hainan blossoms over 20 years as province" »

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China's economy could be 2.5 times that of the US by 2030, based on Japan's experience and the yuan's appreciation against the greenback, a senior Chinese economist says in Harvard Business Review's Chinese edition.

The forecast by Justin Lin Yifu, head of Peking University's China Center for Economic Research and chief economist-designate of the World Bank - in the May issue of the magazine published on Thursday - is one of the most ambitious for China's economic growth.

By 2030, it is possible that the per capita GDP of China reaches half of that of the Americans. Given that the Chinese population might be five times that of the US at that time, the Chinese GDP would be 2.5 times of the US.

Continue reading "GDP could be 2.5 times that of the US by 2030" »

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Foreign auto makers will display a large number of new models at the Beijing auto show next week, hoping the booming market in China will offset sales slumps elsewhere in the world.

Big global names saw their sales growth far outpace the industry average in China, where passenger car sales rose 20 percent to 1.85 million in the first quarter.

But new vehicle sales in the United States hit a 15-year low as consumers held back due to concerns about soaring oil prices and the spreading credit crisis.

The biennial Beijing auto show has attracted all the world's major auto makers - including General Motors, BMW, Toyota and Honda - and none of the big names will be absent, the organizers said.

Ford Motor Co plans to show 55 vehicles in its 5,500-square-meter exhibition space, the largest for a single company in the history of the auto show.

The US auto giant boosted its China sales by 47 percent in the first quarter compared with a year ago, while its US sales dropped 14 percent in March. 

Continue reading "Foreign automakers hope high on Beijing auto show" »

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China’s currency rose steeply against the dollar this week, feeding speculation that Chinese authorities were allowing their currency to appreciate more rapidly.

The currency, known as the yuan or renminbi, rose 0.9 percent this week -- faster than over any week since China stopped pegging it to the dollar on July 21, 2005. Thursday, the yuan rose 0.37 percent, the largest one-day increase since the peg ended. On Friday, it rose 0.18 percent, to close at 7.3041 to the dollar in Shanghai trading.

Yao Jingyuan, the chief economist of the National Bureau of Statistics in China, said Chinese officials were trying to figure out their next currency move.

"It is certain that the yuan will appreciate -- the time frame and magnitude of the adjustment is difficult to confirm at the current time. We are busy studying this issue right now," he said in a telephone interview. "What I can say is that it will be dependent on China's overall economic environment and outlook."

Yu Yongding, the director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences and until last year a member of the monetary policy committee of China's central bank, said that rising inflation at home was making it much easier for the Chinese government to accept a stronger yuan.

Continue reading "China lets yuan appreciate a bit faster" »

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Be worried. If you have given even a moment's thought to climate warming and its potential impact on our planet, be very worried. China, a nation of 1.3 billion people, has abandoned the bicycle as a principal mode of transportation and is now moving at a frightening pace to a car-based economy.

Perhaps it's the years of Western chest-beating about the grandeur of capitalism and consumerism. Or perhaps it's the simple human desire to have and consume more, to be more comfortable. Whatever it is, the Chinese are going the American way.

Recently I was in Korla, a fast-growing city in Xinjiang province in western China where I was at the tail end of my mission, to scout the Chinese portion of the famed Silk Route for a bicycle tour that my company is planning for the summer of 2007. The route will take about 45 cyclists from Istanbul to Beijing in 108 days, covering 10,000 km. Part of our mandate is to promote bicycles as sustainable transportation in a world that seems to be hurtling toward major ecological disaster.

Korla is one of 661 cities in China. What distinguishes it from all others is that it is the home base for several oil companies, including the U.S. conglomerate Exxon. The companies are tapping into the oil reserves of the vast Taklaman desert.

Continue reading "China: Kingdom of bicycles no more" »

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The gross domestic product is expected to grow 10.8 percent in 2008, compared with estimated growth of 11.5 percent last year, the State Information Centre said in a report published in the Shanghai Securities News.

Consumer inflation is seen at 4.5 percent for 2008 from an estimated 4.7 percent in 2007, a decade high, said the centre.

The centre is a research body under the National Development and Reform Commission, the state economic planner, and is one of the most authoritative outlets for economic predictions in China.

The centre reiterated Beijing's pledge to "prevent fast economic growth transforming into overheating" and to control inflation.

China took a series of measures to cool the economy in 2007, including six interest rate hikes.

The report said growth in the trade surplus would drop in 2008 due to "foreign protectionism", uncertainty about the US economy and the removal or reduction of tax incentives for exporters.

It predicted the trade surplus for this year would be around 328.4 billion dollars, up 22.5 percent from an estimated 268 billion last year.

Growth in urban fixed asset investment, another driver of economic growth, is expected to slow to 24 percent from 26.3 percent, it said.

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But the figures do carry important implications, not the least of which is something which affects all of us working in China — the value of the renminbi. The International Herald Tribune's Keith Bradsher says the new figures take the pressure off Beijing to revalue the yuan. Even hardline advocates of yuan appreciation, such as Harvard Professor Jeffrey Frankel, seem to be backing down. Frankel admitted to the Trib that the new figures badly undermine his argument for the renminbi to be revalued. "I would have to retract that based on these latest numbers," he's quoted as saying.

Meanwhile, the Financial Times' Albert Keidel says the revised estimate indicates that China just won't have the dough anytime soon to build a defense capability to rival America's. He also says a "smaller, poorer" China strengthens Beijing's case for continued funding by the World Bank.

But it seems Beijing can't have it both ways. The Times of India's Chidanand Rajghatta points out that Beijing has argued on the strength of the old figures for increased voting clout at the World Bank and the International Monetary Fund. So the revised figures (which say China is poorer) are a setback for more voting muscle.

Continue reading "The incredible shrinking economy and what it means" »

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What should a Wall Street firm do when it loses billions on risky bets in the mortgage securities market? Have its CEO call the Chinese government for a capital infusion of course. Bear Stearns did it back in October. Yesterday, Morgan Stanley announced a USD $5 billion equity investment from China Investment Corp. after writing down USD $9.4 billion of its mortgage securities portfolio, ouch! China Investment Corp. is the USD $200 billion sovereign wealth fund that the Chinese government has setup to invest its massive foreign currency hoard, estimated at roughly USD $1.4 trillion.

Continue reading "Morgan Stanley cuddles up to China" »

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Be worried. If you have given even a moment's thought to climate warming and its potential impact on our planet, be very worried. China, a nation of 1.3 billion people, has abandoned the bicycle as a principal mode of transportation and is now moving at a frightening pace to a car-based economy.

Perhaps it's the years of Western chest-beating about the grandeur of capitalism and consumerism. Or perhaps it's the simple human desire to have and consume more, to be more comfortable. Whatever it is, the Chinese are going the American way.

Recently I was in Korla, a fast-growing city in Xinjiang province in western China where I was at the tail end of my mission, to scout the Chinese portion of the famed Silk Route for a bicycle tour that my company is planning for the summer of 2007. The route will take about 45 cyclists from Istanbul to Beijing in 108 days, covering 10,000 km. Part of our mandate is to promote bicycles as sustainable transportation in a world that seems to be hurtling toward major ecological disaster.

Continue reading "China: Kingdom of bicycles no more" »

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CHINA'S ECONOMY IS booming like never before and its social fabric is being ripped apart and knit together in novel ways. State-of-the-art sports stadiums, a renovated airport terminal, and a new financial district have been built or are under construction in pre-Olympic Beijing, where there's even been talk of seeding rain clouds to limit pollution.

And, not to be outdone by its rival to the north, Shanghai is preparing to host the 2010 World Expo, an event that will have decidedly twenty-first-century elements. Upon arrival, visitors will be rocketed from airport to WiFi-wired exhibition halls via magnetic-levitation trains that run through a city that now has more skyscrapers than Manhattan.

Yet amidst the cacophony of the new the historically minded can often hear curious--and sometimes disturbing--echoes of the past. Even the most seemingly futuristic phenomena turn out to have surprisingly old-fashioned aspects. This is certainly true of both the Beijing Games and the Shanghai Expo. Each will open a new chapter in Chinese history: one will be China's first Olympics, the other its first World's Fair. But some preparations underway for both are throwbacks to patterns dating to the 1900s—or even the 1800s.

Continue reading "China Gets Beijing and Shanghai Ready for the 2008 Olympics and 2010 Expo" »

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Orders for Chinese toys are on the rise in the run-up to Christmas despite a wave of product recalls that have shaken confidence in the safety of Chinese-made goods, the country's product safety chief said on Wednesday.

Millions of Chinese-made toys have been recalled this year, mostly because of excessive levels of lead in paint and other components, stoking U.S. complaints that lax quality controls were threatening consumers.

But Li Changjiang, the head of General Administration of Quality Supervision, Inspection and Quarantine, said factory owners in the southern province of Guangdong, China's manufacturing heartland, told him business was booming.

"They told me, 'our orders are all up', the workers have to work overtime or the orders cannot be met," Li told reporters. "When I heard this, I was shocked."

Problems with Chinese exports prompted the world's biggest toy maker, Mattel Inc, to recall about 21 million of its Chinese-made toys earlier this year. A senior Mattel executive later apologized to China for the trouble the recall had caused.

Continue reading "China Christmas toy orders up despite quality fears" »

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In years past, foreigners were skeptical about China, doubting whether it would ever become a stable society and have a decent economy. In years recent, foreigners are nervous about China, worrying whether China will take over the world (at least economically). But how do China's own researchers and leaders think about the future of the mainland?

Researchers at the Institute of Quantitative & Technical Economics of the Chinese Academy of Social Sciences, which is the official government think tank housing more than 3,000 scholars and researchers, have shared some of their insights with us. The institute's English-speaking director, Professor Wang Tongsan, says the forecasts assume a significant slowing of China's growth, but he warns that similar estimates proved wildly wrong in the past.

In the 1960s, forecasters assumed that China's gross domestic product would about double between 1960 and 2000, but the annual economic growth rate sped up so astonishingly that the GDP grew almost 17 times (in real terms). Even China's most sophisticated researchers sitting in Beijing and Shanghai did not appreciate how China's huge population enabled growth to exceed forecasts. The same conditions, he says, might be still true today, making forecasted numbers conservative. With that caveat, here are China's own forecasts for China 2030-2035.

Population: The institute sees slowing growth in the number of Chinese, from approximately 1.31 billion in 2005 to 1.47 billion in 2030 and 1.49 billion in 2035.

GDP: China's GDP (nominal), expected to be about $2.8 trillion in 2007, is forecast to grow to about $5.9 trillion in 2030 and $6.7 trillion in 2035. (In comparison, U.S. GDP in 2007 is about $14 trillion.) By 2030-2035, the economic growth rate is forecast to decrease to about 2% to 5% per year. Western economists, almost unanimously, forecast a much higher GDP for China. The Chinese researchers are quite aware of foreigners' forecasts, but still stick to their own numbers, which they freely admit are conservative.

GDP Per Capita: China's projected GDP per capita shows an even starker gap with the U.S.: $1,867 in 2005, increasing to about $4,000 in 2030 and $4,500 in 2035. In 2006, the U.S. GDP per capita was about $44,000. (A GDP per capita analysis by purchasing power parity would, of course, find a smaller gap.)

The Service Economy: China's huge trade surplus is driven by its excessively high dependence on export manufacturing. Only when China's service industry increases its percentage of GDP, reflecting a more consumer-oriented economy, will trade imbalances ease. But while the researchers forecast that service industries will grow from 40% of the economy in 2005 to 48%-49% in 2030-2035, Professor Wang himself thinks service industries will make up 55%-60% in the target years.

Income Inequality: In the 1950s through 1970s, everyone in China was equally poor. Since the beginning of reform, China has followed Deng Xiaoping's dictum, "Let some people get rich first," all too well, and the country's Gini co-efficient (an economist's measure of income inequality) has been rising steadily and, to some, alarmingly (from below 0.3 four decades ago to 0.46 today; some say it is nearly 0.5). Researchers state that income inequality will moderate steadily over the next 30 years. But the institute director, disagreeing with his own team, is not so optimistic.

Energy Efficiency: Professor Wang expects progress—energy efficiency is a prime national directive—but expresses doubt about the optimistic projections of his researchers. The researchers respond: "A fourfold increase [in efficiency] is possible because the majority of China's companies are small with very low energy utilization. With the advancement of technology and the changing mindset of basic consumption, it is possible to enhance the efficiency by a large margin."

Imported Oil: About 150 million to 160 million tons are imported annually now, forecast to rise to about 350 million tons annually by 2035. Why only this modest increase, considering China's voracious energy appetite? Higher efficiency in energy use, the researchers state, and increasing use of alternative energy.

Continue reading "What Will China Look Like in 2035?" »

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China has 106 billionaires, up from 15 last year, as surging stocks boost the wealth of the nation's richest people, according to the Shanghai-based Hurun Report.

Yang Huiyan, the 26-year-old daughter of a property developer, is the nation's wealthiest person with $17.5 billion, according to the annually published list. She also topped a list released by Forbes Asia two days ago.

China's billionaire tally is second only to that of the U.S., which has 400, according to the Hurun Report, as surging mainland and Hong Kong stock markets have boosted wealth.

Continue reading "China Has 106 Billionaires, Up From 15 Last Year" »

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Over the week-long National Day holiday:

• Total airline passenger numbers climbed a quarter on the year-earlier period to 3.75 million people, with the record of 540,000 was set on September 30 - the highest number of people to be flying on a single day.
• One million computers were infected with various computer viruses, and 118,000 computers crashed on one day alone.
• Retail sales of consumer goods in China rose 16 percent year-on-year to almost 350 billion yuan.
• Traffic accidents killed 1,171 people, and that's a drop of 43 percent from last year!
• Average pork prices dropped by 0.4 percent, and the average price of live hogs dropped to 13.25 yuan per kilogram.

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Dealer Carlo Scalvini in a stretch limo model of the Hover, a car imported from China in a showroom in Palazzolo Sull'oglio, Italy. China's inroads into Europe are the first test of the world's richest markets by Chinese automakers.

 They have names like the Brilliance BS6, the Landwind Fashion, or the improbable Hover Wingle, and though these sedans, vans, and sport utility vehicles are hardly as familiar to Europeans as, say, a Volkswagen Golf, they are beginning to show up on European roads.

"I've got air conditioning, ABS brakes, and air bags," said Carlo Scalvini, describing his Hover, a big and boxy sport utility vehicle built by the Great Wall Motor Co., with headquarters in Baoding in eastern China. "And the price is competitive: You pay 10,000 euros less in the end," more than $13,000.

The enthusiasm of people like Scalvini could influence the global auto industry and China's place in it. China's quiet inroads into Europe are the first test of rich markets by Chinese automakers as they build dealer networks and deliver small shipments of cars to test the reaction of drivers and auto industry experts.

Continue reading "Low-priced Chinese cars quietly gain a foothold in Europe" »

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EVERY year around the Mid-Autumn Festival, Chinese people give and receive millions of mooncakes - more, in fact, than they can eat - and the question often asked is: "Where do all the mooncakes go?"

Now the Internet has the answer: from scalpers selling cut-price mooncake gift coupons to those unwanted gift boxes going for a song, mooncakes are becoming the ultimate recycling industry.

"Mooncake gift boxes for sale, 50 percent off. Be quick," says one ad posted on a city-based community bulletin board system.

In the run-up to Mid-Autumn Festival, today, the war for mooncake sales is heating up in stores and restaurants. Meanwhile, a discount mooncake market is booming on the Internet, with the number of related posts hitting 551 on a Beijing sub-BBS alone.

Continue reading "Savvy mooncake sellers make big use of the Internet" »

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China's central bank raised the benchmark interest rates on Tuesday for the fourth time this year in an effort to prevent the economy from overheating and curb accelerating inflation.

The one-year deposit rate will increase 27 basis points to 3.60 percent, while one-year lending rate will rise by 18 basis points to 7.02 percent, effective on Wednesday, the People's Bank of China said in a statement on its website.

The increase is aimed at better steering bank credit and stabilizing inflation expectation, according to the statement.

The timing is somewhat of a surprise as the central bank usually announces interest rate changes during the weekend in the past. However, the latest hike is not totally unexpected given mounting concerns about overheating economy and accelerating inflation.

Continue reading "China raises interest rates 4th time in 2007 to curb inflation" »

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THE lads loitering in front of the screens at one of Beijing's many new gambling dens are wearing shorts and thongs. It could almost be a TAB in Sydney or Melbourne - except the thongs are worn with grey nylon socks.

A 30-something man named Ma has punted most of his wealth on a land developer called Yinji Fazhan. He does not want his full name in print because he should be at work. In any case, he says, his share investment is a breach of company policy.

Sharemarket punters everywhere else in the world are getting smashed.

In Sydney a few hours earlier the Australian Stock Exchange posted a 10 per cent official "correction". But Ma's stock has just hit a new high of 12.25 yuan ($2.03) on the Shanghai Stock Exchange. He has lost count of how much money he has made.

But shouldn't he diversify his investments?

"No, I invest in one company because I don't know much about the market and don't have time to do the homework," he says.

Isn't he concerned that the world's financial convulsions will find their way to China?

"It won't greatly affect the market here," he says. "There will be ups and downs, but the trend will keep rising until the Olympics, and then I will sell."

Continue reading "China jumps to top global financial tier" »

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Currently China ranks third after Germany and the United States in terms of export volume. Though it is highly possible that China will surpass the US to be next only to Germany as the second largest exporting country this year, Vice Minister of commerce, Yu Guangzhou said.

In 2006, China's export volume trailed that of the United States by less than 70 billion U S dollars. Its export growth speed was seven percentage points higher than that of the US, Xinhua news agency reported.

Continue reading "China set to become world's second largest exporter this year" »

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China's Gini coefficient, a standard measure of a country's overall income inequality, rose to 0.473 in 2004 from 0.4 in 1993, according to a report by the Asia Development Bank (ADB) released yesterday.

It is the latest figure for assessing income disparities and crosses the international warning line of 0.4.

A coefficient of between 0.3 and 0.4 is generally deemed normal, but the larger it is, the more serious the inequality.

The World Bank said in a previous report that China's Gini coefficient was 0.45 in 2003, a figure that aroused widespread concern.

Continue reading "Income disparity getting worse: Report" »

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China will become the biggest driver of global economic activity this year for the first time, the International Monetary Fund said yesterday as it raised its already bullish forecasts for growth.

China is the world’s fourth-largest economy, but accounts for only 5 per cent of the global economy on market-exchange rate terms.

However, it is projected to grow by a blistering 11.2 per cent this year, far above the predicted 2 per cent expansion of the US economy. It will make the largest contribution to the world’s growth rate of any country, the IMF said.

The forecast was set out in an update to the IMF’s World Economic Outlook first published in April. The IMF raised its forecast for international growth in both 2007 and 2008 to 5.2 per cent, from 4.9 per cent, and said that more than half of growth was now coming from emerging markets.

China would provide a quarter of the annual growth rate of the world economy, while China, Russia and India together will account for more than half of world growth this year, the report said. Next year China’s growth rate was forecast to fall back, but only to a still very strong 10.5 per cent.

Continue reading "China tipped to be main driver the global economy this year" »

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The country's huge trade surplus has helped build up the world's largest currency reserves, which until now were invested mainly in US treasury bonds.

Finance minister Jin Renqing gave no details when the fund would be set up or how it would manage the money.

However, he pointed to Singapore's state investment firm Temasek as a possible model for the fund.

Continue reading "China makes $1 trillion work hard" »

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Five Chinese carriers have committed to buying 57 of the new fuel-efficient, long-haul Boeing 787 Dreamliner, and three Chinese companies are producing parts and components for the new plane. Air China and China Eastern Airlines have each ordered 15 of the new planes. China Southern Airlines has ordered 10, Shanghai Airlines nine and Hainan Airlines eight. Boeing has won 677 orders for the Dreamliner, which means it will be sold out all the way till 2015. The news comes amid a new aviation pact that will significantly increase passenger and cargo flights between China and the US. It is estimated that the agreement will generate as much as US$5 billion in passenger and cargo revenues for the airline industry over the next six years, and as much as US$8 billion in new economic activity in the United States.

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Here are some of their interesting findings:
1. Moscow is once again the world’s most expensive city.
2. Beijing has fallen from 14th to 20th and Shanghai from 20th to 26th.
3. Douala in Cameroon is ranked 24th, two ranks above Shanghai, which is just one rank above Kiev in Ukraine.
4. Other curious rankings: Dakar, Senegal (33); Abidjan, Cote d’Ivoire (35); Lagos, Nigeria (37).
5. Los Angeles (42); Luxembourg (43)
6. Algiers in Algeria just managed to edge in at 50

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When setting up a new business in China, speed kills. Things take longer to accomplish in China, particularly at the start up phase. U.S. companies are notoriously impatient and will often attempt to speed up the process, which generally leads to disaster. For success in China, you need to expect that everything you plan to do will take longer than expected. If meetings in the U.S. or Europe require three days, plan on three weeks of meetings in China. Any attempt to rush the process will lead to disaster. While this message has generally been accepted by foreign investors in here, I am now seeing a related issue that is very dangerous for foreign investors in China.

I work a lot in establishing WFOE and JV companies in China. Formation of such entities takes much longer in China than in Europe or the U.S. The process can take a particularly long time for newcomers to China who are unwilling to provide all of the detailed documentation required by the Chinese authorities company approval. In many cases, as the approval process drags on for many months, the foreign investor grows increasingly impatient as it watches business opportunities pass by while waiting for government approvals. This frustration is compounded by the desire of the Chinese JV partners, employees and suppliers to begin earning income as soon as possible.

Continue reading "Message to foreign investors in China: take it slow!" »

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Back in late February, a 10 percent swoon in China’s equity market touched off a global sell off. Had you NOT listened to us and bought in on the dip, you’d sitting pretty and swimming in coins like Scrooge McDuck. Yesterday, the Shanghai Composite Index crossed 4000 for the first time ever, a whopping 50 percent higher than where it stood at the end of that dreadful day just two months ago, and on the heels of a 160 percent gain last year. Sorry, we were dead wrong. Now we hear stories of people pawning their homes, cars, children to raise capital for the stock market. Very sensible indeed.

Continue reading "China's stock market en fuego (the Greenback, less so)" »

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Many, if not most, of the clothes, electronics and household goods for sale on Western shelves are made in China. According to China Today, sixty to seventy percent of formal eveningwear supplied to the world is produced in a single factory in Chaozhou, Guangdong Province (1)! The figures are difficult to grasp, but their effects on shopping in China are immediately obvious: Chinese workers learn to make the real thing, and then they start making counterfeits by the ton.

Any of China’s big cities has fakes markets where it’s possible to buy a “Luis Vuitton” purse for $10 or less, sprawling electronics markets with the latest technology at a discount, and DVD shops with the latest movies on sale days after they come out in theaters. These places do a better than brisk trade; they’re packed with shoppers, foreign and Chinese alike, day in and day out. According to one website it’s estimated that one in five Chinese women owns a fake handbag, and that the majority of these are “Louis Vuitton” (2), but no source is cited.

Continue reading "LV for Everyone" »

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Continue reading "101st Canton Fair Open Session Today" »

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Continue reading "New generation Chinese travellers" »

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When Zhe Xu receives his M.B.A. degree from the University of California at Berkeley this spring, he will hop a plane back to his native China for a job in management consulting rather than seek employment in the U.S.

Just a few years ago, such a career move would have been almost unthinkable. Most students returned to China reluctantly and only because they couldn't land a position with an American company that would sponsor them for a work visa.

But Mr. Xu represents a new breed of Chinese M.B.A. student for whom China's booming economy is proving more alluring than a career in the West. "It is much more exciting right now to be in China, especially in the health-care area," says Mr. Xu, who plans to work in the field of life science and health-care consulting in the Shanghai office of Cambridge, Mass.-based Monitor Group. "Many things are changing rapidly, and I can really put my hands on some of the hot buttons and make my own mark on the country's economic development," he says.

Continue reading "More Chinese Graduates Return Home" »

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Continue reading "Venturing into China? Now or Never!" »

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The terms of the deal, giving Wal-Mart an interest in 100 stores in 34 Chinese cities, were not revealed but analysts have said the business is worth $1bn.

Should Wal-Mart ultimately buy out the group, it would make it China's largest foreign retailer in terms of stores.

Continue reading "Wal-Mart expands Chinese business" »

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Continue reading "EU study sees China opportunities" »

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Continue reading "Fears over Shanghai's red-hot bourse" »

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Thousands of migrant workers arrive in Chongqing every week

A grim mixture of mist and man-made pollution usually makes it difficult to see very far in this sprawling metropolis on the banks of the Yangtse River.

But even in the gloom I count fifty huge construction sites before we are halfway to our hotel.

The population of the city is expected to grow by 40,000 people this month, and every month for years to come.

The municipality of Chongqing, which includes a chunk of surrounding countryside, already has a population of 31 million.

That is more than half the number of people who live in Britain.

And there seems almost no limit to Chongqing's ambition for future growth.

Continue reading "China's new economic frontier" »

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HONG KONG: What's changed in Hong Kong since Britain handed the territory over to Beijing 10 years ago? I have tried avoiding this question, put by almost every visitor since July 1997. But with the 10th anniversary approaching, maybe it's time for some random thoughts from a resident who has lived here since 1973.

First a word of caution. It is always assumed that Hong Kong must have changed enormously since Beijing took charge. To me, though, the city has mostly just gotten bigger. Its money-making, high-rise, noisy, and sometimes uncouth nature has not changed.

Continue reading "Meanwhile: China changes, not Hong Kong" »

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COLOGNE, Germany - China will wrest the "world's champion exporter" title from Germany as early as 2008, the federal foreign trade body BFAI has predicted.

Already this year, China will overtake the United States as the world's number two exporter and fight neck-and-neck with Germany for the number one position, BFAI director Gerd Herx said Monday.

Continue reading "China set to become biggest exporter in 2008" »

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A drastic rise in China's currency, the yuan, could trigger a financial crisis, a leading Chinese economist has warned in comments published in state press.

A stronger yuan would lead to more imports and less exports, exacerbating China's problem with overcapacity, said Peking University scholar Lin Yifu, according to the China Daily.

This may, in turn, lead to deflation, lower corporate profits, an increase in banks' bad loans and "could even trigger a financial crisis," Lin, an advisor to the government, was quoted as saying.

Continue reading "Drastic rise in China's yuan could trigger financial crisis: economist" »

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The current bull market in China shares looks like a lot like any other bull market: frenzied trading volumes, fresh record highs on a regular basis, cheerleading banks upgrading their "price targets". 

But there is also a very special rationale involved in the run on China assets. This is not just a bull market   this is a fight that could be called “China versus the Speculators.”

Continue reading "China’s Raging Bull" »

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