Saturday, 30 June 2012


Adelaide Now


It's getting hard even for the bulls to pretend something isn't off about China's breakneck growth story


Adelaide Now, June 30, 2012

ON the one hand, as everyone knows, China's GDP is said to have expanded by an incredible average 10 per cent per year for 30 years, according to the IMF, bringing millions of people out of poverty, and making it the second largest economy in the world behind the US.

On the other hand, much of this growth has been fuelled by investment - in innumerable highways, airports, apartment complexes, and trains - so much so that some experts say China's economy is not only imbalanced, but may actually be smaller than previously thought, due to waste and environmental destruction.

In fact, according to a new "Inclusive Wealth" index revealed by the United Nations at the Rio+20 conference this week, by some measures China's economy still trails Japan as the third largest in the world.

The UN's metric weighs economic growth against other factors, including environmental resources, and the value of "manufactured, human and natural capital stocks."

The top economy in the "Inclusive Wealth Index" is the US with $US118 trillion ($A117.90 trillion) in total wealth, followed by Japan with $55 trillion. Germany ranks nearly the same as China, with $20 trillion.

(...) [artículo aquí]

Friday, 29 June 2012


China Daily 3


Alfred Romann

China Daily, June 29, 2012

Hong Kong is largest offshore center for yuan trade and listing market of choice for Chinese companies

A veritable fortress of skyscrapers stands guard over the heart of Hong Kong, each of them marked by a different financial institution. The iconic HSBC tower stands next to the Standard Chartered Bank building. Just a flight of stairs away is Citibank tower and next to it, the Bank of China tower. The latter can be found emblazoned across plenty of HK$20 ($2.5, 2.06 euros) bills. Besides making up one of the most impressive skylines in the world, this collection of buildings is testament to the city's enduring strength as a financial center. A decade and a half after Hong Kong returned to China, the city has emerged as a wedge, opening up global markets for the yuan.

Fears that rapid growth in Shanghai and Shenzhen would overshadow Hong Kong have, so far, not come true. Rather, Hong Kong has become a bridge between the Chinese mainland and the rest of the world, most recently by taking up the mantle as the largest offshore center for yuan trade.

"Hong Kong has gone from strength to strength. Its position as a financial center has massively developed since 1997," says Richard Harris, founder and chief executive of investment management firm Port Shelter as well as a long-term Hong Kong resident who started his career in Hong Kong in 1978.

(...) [artículo aquí]

Thursday, 28 June 2012


The Japan Times


Michael Richardson

The Japan Times, June 28, 2012

SINGAPORE — China could easily grab control of the disputed Scarborough Shoal fishing grounds in the South China Sea using its increasingly modern and powerful armed forces. Chinese naval, air and amphibious units, working in unison, already have the capability to enforce Beijing's claims of island ownership and maritime control in the northern sector of the sea, where the shoal is located just 220 km from the Philippine mainland.

China dwarfs the puny Philippine military. Yet it deliberately chose not to deploy its regular armed forces to secure the unoccupied shoal, even though the standoff with the Philippines continued for more than two months. On June 16, Manila withdrew its remaining two coast guard vessels from the Scarborough area, ostensibly because of a passing typhoon, without saying whether they would return after the weather clears.

There are several reasons for China's decision not to use warships. The Philippines is an ally of the United States and China could not be sure the U.S. would not intervene if Chinese armed forces became directly involved in a Scarborough clash and takeover.

In the past few years, China's increasingly assertive actions not just in the South China Sea, but also against Japan over disputed islands and maritime boundaries in the East China Sea, have alarmed and alienated many of its neighbors. "The last thing China wants is to see these countries and the U.S. joining hands against China," Chen Xiangyang, deputy director of the Institute of World Political Studies in the China Institutes of Contemporary International Relations, wrote in the online edition of China Daily on June 11.

(...) [artículo aquí]

Wednesday, 27 June 2012



Andy Sharp and Mayumi Otsuma
Bloomberg Businessweek, June 27, 2012
Japan’s Prime Minister Yoshihiko Noda risks stalling the economy by pushing through a higher sales-tax that may damp consumption even as it aids efforts to tame the world’s largest debt burden.
The nation’s recovery after last year’s earthquake and tsunami could grind to a halt in 2014 when the first increase will take effect, according to UBS AG and Itochu Corp.
Parliament’s lower house yesterday approved the bill to raise the tax to 8 percent and then 10 percent in 2015 from 5 percent now. A slump would be a repeat of 1997, when an increase in the same levy contributed to pushing the economy into a 20-month recession, costing then Prime Minister Ryutaro Hashimoto his job.
“If there are no economic stimulus measures along with a consumption tax hike we can see around zero percent growth in fiscal 2014,” said Takuji Aida, a Tokyo-based economist at UBS, who raised his growth forecast for the year ending March 2014 to 2.9 percent from 2.2 percent because he sees a 4 trillion yen ($50.4 billion) rise in consumption and investment ahead of the tax increase.
(...) [artículo aquí]

Tuesday, 26 June 2012


China Daily 3


Louis Kuijs

China Daily, June 26, 2012

Debates about the slowdown in China's economic growth, the subdued global outlook, and how the government should respond have heated up again. As in late 2008, China's economy is slowing while the global economy is suffering from turmoil in the developed world. Then the center was the US subprime market and the collapse of Lehman brothers. Now it is the eurozone and its fiscal and banking sector problems.

Harking back to the deep recession three and a half years ago and the collapse of global trade that followed, some people are urging the government to take action, possibly along the lines of the bank credit-financed stimulus package that China implemented in 2008-10. This stimulus package is rightly credited with keeping China's economy growing at a critical time, thus supporting the global economy.

However, the stimulus package also saddled China's economy with some problems that are still being processed. A bout of new bank lending in 2008-10, equivalent to 60 percent of GDP, has led to concerns about non-performing loans and unsustainable local government debt. It also raised inflation expectations and, with a lot of liquidity flowing into the housing market, fueled a housing price boom that the government is still attempting to rein in.

Until a month or so ago, the government largely resisted calls for major policy easing or outright new stimulus measures. It did so because the deceleration of growth in China's economy was gradual, with no signs of a hard landing.

(...) [artículo aquí]

Monday, 25 June 2012




Weiyi Lim

Bloomberg, June 25, 2012

China’s stocks fell, dragging the benchmark index to a five-month low, as Citigroup Inc. cut the nation’s growth forecast on concern Europe’s debt crisis will reduce demand for exports.

Jiangxi Copper Co. (600362), the biggest Chinese producer of the industrial metal, slid to the lowest level since January after Citigroup said China’s economy may grow 7.8 percent this year, compared with a previous estimate of 8.1 percent. China Vanke Co. and Poly Real Estate Co. led a gauge of developers lower after the China Securities Journal said the government should impose a “reasonable” property tax. Citic Securities Co. and Haitong Securities Co. retreated more than 2 percent.

The Shanghai Composite Index (SHCOMP) lost 1.1 percent to 2,235.87 at 2:07 p.m. local time, poised for the lowest close since Jan. 16. The CSI 300 Index (SHSZ300) declined 0.9 percent to 2,489.99. China’s markets were closed for a holiday on June 22. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, gained 0.4 percent at the close in New York.

“Investors remain very concerned about the deteriorating economy and the European situation,” said Cao Xuefeng, an analyst at Huaxi Securities Co. in Chengdu. This month’s interest-rate cut “didn’t seem to boost stocks a lot, as even speculation about more loosening isn’t helping sentiment.”

The Shanghai Composite has fallen 5.7 percent in June, set for the worst monthly performance since March, even as the central bank announced a reduction in deposit and lending rates on June 7 to prevent economic growth from falling below the government’s target of 7.5 percent this year.

(...) [artículo aquí]

Sunday, 24 June 2012


The Korea Times


Shin Hyun-gook

The Korea Times, June 24, 2012

China and the United States seem to be heading toward a course of conflict. These two mega-powers of the world have now become global rivals. Their relations are tense; their interests are in conflict; and they face tougher times ahead.

Just decades ago, in the mid-1980s, these two giant nations saw each other as strategic partners, both interested in an alliance of necessity with the other to prevent the domination of Asia by the Soviet Union. However, the collapse of the Soviet Union has removed the rationale for the 20 years of close cooperation between the two countries.

By the mid-1990s, a trans-Pacific contest for power and influence between a still-dominant America and a fast-growing China began to dominate the relationship.

U.S. Secretary of State Hillary Clinton, in her speech at a seminar in Honolulu on Jan. 12, 2010, declared that "the U.S. is back in Asia to stay." It was interpreted that the U.S. government was reviewing and updating maritime security priorities in Asia and would strive to keep critical military and commercial sea lanes open and secure for its vessels and those of its allies while denying usage of Asian sea lanes by adversaries in time of conflict.

(...) [artículo aquí]

Saturday, 23 June 2012


The Washington Post


Craig Whitlock

The Washington Post, June 23, 2012

As the Obama administration revamps its Asian strategy in response to a rising China, the U.S. military is eyeing a return to some familiar bases from its last conflict in the region — the Vietnam War.

In recent weeks, the Pentagon has intensified discussions with Thailand about creating a regional disaster-relief hub at an American-built airfield that housed B-52 bombers during the 1960s and 1970s. U.S. officials said they are also interested in more naval visits to Thai ports and joint surveillance flights to monitor trade routes and military movements.

In next-door Vietnam, Defense Secretary Leon E. Panetta this month became the highest-ranking U.S. official to visit the naval and air base at Cam Ranh Bay since the end of the war. Citing the “tremendous potential here,” Panetta enthused about the prospect of U.S. ships again becoming a common sight at the deep-water port.

The Pentagon is also seeking greater accommodations in the Philippines, including at the Subic Bay naval base and the former Clark Air Base, once the largest U.S. military installations in Asia as well as key repair and supply hubs during the Vietnam War.

The U.S. military either abandoned or was evicted from its Southeast Asian bases decades ago. Amid concerns about China’s growing military power and its claims to disputed territories, however, Thailand, Vietnam and the Philippines have cautiously put out the welcome mat for the Americans again.

(...) [artículo aquí]

Friday, 22 June 2012


The Times of India


Shobhan Saxena

The Times of India, June 22, 2012

RIO DE JANEIRO: In their 13th meeting in eight years, Prime Ministers Manmohan Singh and Wen Jiabao on Wednesday decided to take the India-China relationship to the next level by giving a boost to trade and priority to resolving the border dispute between the two countries. Going into a huddle on the first day of the Rio+20 conference here, the Indian Prime Minister, who calls Wen his 'close friend', and his Chinese counterpart agreed to take steps to ensure that the bilateral trade between the two emerging economies reaches $100 billion (about Rs 5,60,000 cr) by 2015. The two-way trade between the two countries reached $74 billion in 2011, with China becoming one of the largest trade partners of India and vice versa.

With the delegates and officials of almost all 190 countries present here keeping an eye on the India-China bilateral, the prime ministers of two emerging economies of Asia emerged from their 40-minute meeting after agreeing to boost trade and also give top priority to defence and security dialogue between the two countries.

Speaking to media after the crucial meeting, India foreign secretary Ranjan Mathai said during the meeting, the Indian prime minister invited Chinese investment in infrastructure in India. "The two leaders also decided to start the export of Indian rice to China soon," the foreign secretary said, adding that the issue of trans-border rivers flowing in India and China also figured in the talks which took place on the sidelines of the UN summit on sustainable development.

(...) [artículo aquí]

Thursday, 21 June 2012


Economic Times logo OK


T T Ram Mohan, Professor, IIM-Ahmedabad

The Economic Times, June 21, 2012

So you think India is doing badly? Sample this:

China's growth rate in the second quarter of the year is expected to dip below 7%. India's growth rate has tended to be, in general, two to three percentage points below that of China. If India were to grow at 5% in the second quarter, that should not be a great shock.

Brazil, another of the BRIC economies, grew by just 2.7% in 2011, down from 7.5% in 2010. The IMF projects growth in 2012 at 3%.
Among the BRIC nations, Russia alone is poised to maintain its growth rate in 2012 but that is because Russia has been growing in the past two years at a relatively slower 4%.

You can't say that China's growth has slumped because of 'policy paralysis'. China does not face the difficulties that a democracy does. To get a better clue to the slump, just see when was the last time that its growth rate fell below 7%. China's growth was 6.6% in the first quarter of 2009, which was the worst time in the sub-prime crisis, following the collapse of Lehman Brothers.

The ongoing eurozone crisis is similar in intensity and in the risk-aversion it has created in the markets. It must explain why China's growth has decelerated so acutely and also India's. It tells us that it is global factors that are primarily responsible for India's economy running into rough weather not coalition politics, lack of leadership, corruption, assembly elections or any of the things we have been hearing about.

Unfortunately, it's not just commentators who don't get it but rating agencies and a section of the business community. What the latter think does matter. Rating agencies impact the flow of capital into the country and the costs of borrowing. Animal spirits are everything in an economy and businessmen's prophecies of doom tend to be self-fulfilling.

S&P warned recently that India faces a downgrade in its rating if it does not get its policy act together. It had changed the outlook from 'stable' to 'negative' in April. Now another rating agency, Fitch, has followed suit and the reasons it has cited are almost the same as those advanced by S&P.

(...) [artículo aquí]

Wednesday, 20 June 2012


The Chosun Ilbo


The Chosun Ilbo, June 20, 2010

Accounts from defectors that thousands of people are starving to death in North Korea's rice bowl of South Hwanghae Province brings to mind a theory formulated by Indian economist Amartya Sen, who won the 1998 Nobel Prize in Economics. Sen said mass starvation in a particular region is more closely related to whether the area is ruled by a democratic or autocratic system than whether there is a real shortage of food.

He researched cases of famine in India and Africa and found that there were no instances of mass starvation in democratic nations even during hard times.

Sen explained that in autocratic regimes, distribution of state budgets is not prioritized according to the needs of the people but channeled into wasteful and exorbitant projects designed to extend the rule of a dictator. As a result, even a slight shortage of food leads to mass starvation and deaths.

He cited as a key example the mass starvation in North Korea during the 1990s, and points out that democratization is more effective in preventing mass starvation than boosting food output. Millions starved to death in India's Bengal region under British rule, but such tragedies disappeared after Indian independence.

The UN's Food and Agriculture Organization and World Food Programme projected that North Korea's 2011 crop output would rise 8.5 percent on-year to 5.5 million tons. Bean output rose 10 percent, corn 11 percent and rice 2 percent, so it is illogical to see people starve to death in the country's rice bowl.

(...) [artículo aquí]

Tuesday, 19 June 2012


Business Standard



Business Standard, June 19, 2012

Premier Wen Jiabao has an unspoken message to his Group of 20 counterparts in Mexico on Monday: This time, don’t count on a growth bailout from China.

In the depths of the 2008 credit crunch, Wen’s 4 trillion yuan ($586 billion) fiscal injection over two years and 17.6 trillion yuan credit surge helped prop up the global economy. In China, it fueled a property bubble, stoked inflation and amassed bad debts that Fitch Ratings says weakened the banking system.

“The government is trying to strike a better balance between stabilizing growth in the short term and adjusting structure in the long term,” said Peng Wensheng, chief economist in Beijing at China International Capital Corp, who worked at the International Monetary Fund and Hong Kong’s central bank. Total stimulus this year may be less than one- third the size of the 5.4 trillion yuan fiscal and monetary firepower of 2009, Peng said.

Investment is more strategically focused than the efforts that year that helped cushion everyone from Australian iron-ore exporters to General Motors Co, which saw its Chinese sales soar 67 per cent as it coped with bankruptcy at home. Of some 818 billion yuan in projects recently approved, 55 percent were for clean energy or subsidies for fuel-efficient cars, according to Australia and New Zealand Banking Group Ltd

China has accelerated approvals for wind farms, hydropower plants, airports and steel mills endorsed in its five-year plan through 2015. The government released 66 billion yuan in funding for 2.3 million low-cost houses, and will allocate a 26.5 billion yuan subsidy for eco-friendly household appliances and 6 billion yuan to stimulate sales of energy-efficient vehicles.

(...) [artículo aquí]

Monday, 18 June 2012


The Times of India


Seema Sirohi

The Times of India, June 18, 2012

WASHINGTON: India and the United States, partners in prime, concluded the third round of their strategic dialogue last week. It was a talk session so vast and varied, it took 13 pages to summarise the discussions. The comfort level is obvious as is the keenness to help each other without pushing the wrong buttons.

The discussion has expanded from geostrategic issues to cover a dizzying array of fields - from agriculture to education, from science and technology to women's empowerment, from cyber security to counter-terrorism, from police training to creating virtual institutes on mathematics - a very large palette is coming alive.

To be sure it is an experiment in building a new kind of relationship, one never attempted by either country. Because it is an experiment, finding the right ingredients and a catalyst is a search. But the fundamental logic of strategic convergence holds. Of that, there is little doubt. And there is new logic unfolding daily.

Top officials in both governments have reached a good understanding on how to structure this "special relationship". The Americans know India will not become an "ally" and no one is pushing for it. They have enough treaty allies. Expectations have been adjusted and Washington well understands that India wants a partnership of equals. For historical, psychological and philosophical reasons, India won't be anyone's junior partner.

Neither is the US egging India onto adventures it doesn't want to undertake but at the same time it has determined it would help India to build capacity. As more US defence technology becomes available, India can gather greater "comprehensive national power"- a phrase the Chinese casually throw around to disparage India.

(...) [artículo aquí]

Sunday, 17 June 2012




Balazs Koranyi

Reuters, June 17, 2012

OSLO (Reuters) - Myanmar opposition leader Aung San Suu Kyi finally received her 1991 Nobel Peace Prize in Oslo on Saturday after spending 15 years under house arrest, and said her country's full transformation to democracy was still far off.

"What the Nobel Peace Prize did was to draw me once again into the world of other human beings outside the isolated area in which I lived, to restore a sense of reality to me," Suu Kyi said as the packed crowd, led by Norway's King Harald and Queen Sonja, rose in a standing ovation at the ornate Oslo City Hall.

Suu Kyi, 66, the Oxford University-educated daughter of General Aung San, Myanmar's assassinated independence hero, said much remained to be resolved in her country.

"Hostilities have not ceased in the far north; to the west, communal violence resulting in arson and murder were taking place just several days before I started out the journey that has brought me here today," said Suu Kyi, on her first visit to Europe in nearly a quarter of a century.

"There still remain (political) prisoners in Burma. It is to be feared that because the best known detainees have been released, the remainder, the unknown ones, will be forgotten," she said, wearing a purple traditional Burmese dress and looking strong and healthy after falling ill on Thursday.

Still, Suu Kyi - elected to parliament in April - said she was confident President Thein Sein wanted to put the country on a new path.

"I don't think we should fear reversal," she told public broadcaster NRK. "(But) I don't think we should take it for granted there is no reversal."

Suspending rather than lifting sanctions was also the right move to keep pressure on the government, she said a day after arriving from Switzerland to a jubilant, dancing and chanting crowd, which showered her with flowers.

"If these reforms prove to be a façade, then the rewards will be taken away."

(...) [artículo aquí]

Saturday, 16 June 2012


Deutsche Welle symbol 2012


Nobody can see into the future, but certain experts are daring to predict the state of the world in 2030. They see China ahead of other countries.

Zhang Danhong

Deutsche Welle, June 16, 2012

Although it is almost impossible to predict how some of the developments underway in the world right now will end up, many economists are doing their best to make forecasts, which are as precise as possible.

The retired German economist Bert Rürup and Dirk Heilmann, the chief economist of Germany's leading business newspaper Handelsblatt, describe the world economy 2030 in their book "Fette Jahre - Warum Deutschland eine glänzende Zukunft hat."

This translates roughly as "great years - why Germany has a bright future". But the writers have not only looked at Germany in the book; they describe a future in which the US will still have the largest GDP, at $21.2 trillion, and will be followed closely by China, with a GDP of $19.4 trillion. The third and fourth places, they say, will also be occupied by Asian countries - with Japan ahead of India. Germany, which at the moment is the fourth largest economy in the world, will slip down to sixth - right behind Brazil.

"If one were to form a new G7, all of the BRIC countries would be part of it but only three of the old members," they write. Germany would be the only European country in the club of the largest economies.

(...) [artículo aquí]


Friday, 15 June 2012


Bloomber - BWok


Eric Talmadge (AP)

Bloomberg Businessweek, June 15, 2012

Japan moved closer Thursday to restarting nuclear reactors for the first time since last year's earthquake and tsunami led to a nationwide shutdown after a mayor gave his support to a plan to bring two of them back online.

All 50 of Japan's workable reactors are offline because of safety concerns or for maintenance since the March 11 disaster touched off a crisis at the Fukushima Dai-ichi plant. Public opposition to nuclear power remains high, even though the government has been pressing for the restart of reactors because it says nuclear energy is crucial to Japan's economy.

Power companies have warned of shortages in the months ahead, as demand reaches its summer peak.

Work to restart two reactors in the western town of Ohi, which are the first ready to resume generating power, could begin as soon as this weekend now that the mayor signed off on the plan. Once the work begins, it takes about three weeks to get a reactor operating at full capacity.

(...) [artículo aquí]

Thursday, 14 June 2012


The Financial Express



The Financial Express, June 14, 2012

(Beijing) China’s annual economic growth could fall below 7% in the second quarter if weak activity persists in June, an influential government adviser was quoted on Wednesday as saying.

The forecast by Zheng Xinli, a former deputy director of the Chinese communist party’s policy research office, is among the most bearish by any government and private sector economists. “GDP growth in the second quarter could fall below 7% if there is no significant improvements in economic data for June,” the overseas edition of the People’s Daily quoted Zheng Xinli, now deputy head of the China Center for International Economic Exchanges, a top government think-tank, as saying.

China’s industrial output growth usually outpaces GDP growth by 3-5 percentage points, the newspaper cited Zheng as saying. China’s industrial output rose 9.6 percent in May from a year earlier, picking up slightly from a three-year low of 9.3% stuck in April.

Analysts forecast in a Reuters benchmark poll in May that China would deliver its weakest quarter of growth in three years in the second quarter at 7.9 percent, which would also mark the sixth straight quarter of slower growth. They forecast full year growth of 8.2 percent.

(...) [artículo aquí]

Tuesday, 12 June 2012


India today


S&P released a report titled 'Will India be the first BRIC fallen angel?'

India Today, June 12, 2012

The stock markets went into a tailspin and the rupee resumed its free fall on Monday, following an ominous Standard & Poor's (S&P) report titled 'Will India be the first BRIC fallen angel?'. The document warned that slowing GDP growth and political roadblocks to economic policymaking could put the country at a risk of losing its investment-grade rating.

"The report is a wake-up call for the government which has not taken any fiscal measures to improve the economy. Even today, the finance minister made a false promise that the economy would turn around. There was no explanation about how and when," K.R. Choksey Share and Securities MD Deven Choksey said.

In a scathing indictment of the way India is run, S&P boldly expressed the view that "the division of roles between a politically powerful Congress president who can take credit for the party's two recent national election victories, and an appointed Prime Minister has weakened the framework for making economic policy".

Continuing the blunt dissection, the report stated: "In fact, the Cabinet is appointed largely by Sonia Gandhi and leaders of the allied parties who choose their own candidates for the Cabinet posts allocated to them. Hence, the Prime Minister often appears to have limited ability to influence his cabinet colleagues and proceed with the liberalisation policies he favours."

The 'BBB-' long-term sovereign credit rating for India is currently one notch above the speculative grade. A cut in ratings would push up yields on the benchmark 10-year bond. Public sector entities, including state-run banks, would be hit squarely between their eyes since their finances are closely tied to government finances. It could also drive down foreign investment into India as global investors will look to more stable destinations for better returns.

(...) [artículo aquí]

Monday, 11 June 2012


Money Control


Money Control, June 11, 2013

After a surprise interest rate cut by China, all eyes are now on another Asian economic powerhouse, India, which is also expected to cut rates to boost flagging growth when its central bank meets in over a week`s time.

But one expert warns against such monetary easing as it would fan inflation, which shows little sign of decelerating in India.

"Inflation risks are still high. The Reserve Bank of India can risk raising inflation (further) by cutting rates, when prices are (already) at an elevated level," Taimur Baig, Chief Economist, Global Markets Research at Deutsche Bank wrote in a note titled `RBI Should Not Be Cutting Rates on June 18, But Would It Anyway?`

The market consensus is for a 25-50 basis point rate cut on top of April`s 0.5% cut as economic growth slowed to a nine-year low of 5.3% in the first quarter of the year.

In contrast, China`s economy slowed in the first quarter to 8.1% and it`s inflation rate has also eased, falling to 3.4% in April. But slowing GDP expansion in India has had little impact on reining in prices.

(...) [artículo aquí]

Sunday, 10 June 2012


The Times of India


Brahma Chellaney

The Times of India, June 10, 2012

As it awaits a major turnover in its senior civilian leadership, China appears at the crossroads. Its future is likely to be determined not by its hugely successful economy, which has turned the country into a world power in just one generation, but by its murky politics. A reminder of that is the vicious political struggle that has broken out in the run-up to the leadership changes, as well as official figures showing that rural protests have been increasing at the same rate as China's GDP.

Bo Xilai's downfall is just one example of the noholds-barred power struggle. The Communist Party's sudden vilification of Bo after lauding him for his Chongqing model has only promoted public cynicism over his orchestrated downfall and laid bare the leadership elite's thin ideological marrow.

If China is to preserve its rising strength, it must avoid a political hard landing. Although it is difficult to predict China's political future, at least five different scenarios are conceivable.

Scenario 1: The party protects its legitimacy, keeps the military subordinate to the party, and manages to put a lid on popular dissent. In other words, the status quo prevails. This is the least likely of the five scenarios because of the political flux and rising popular discontent.

Scenario 2: China implodes. This scenario is the opposite of the first scenario, yet its likelihood may be no better.

(...) [artículo aquí]

Friday, 8 June 2012


China Daily


Syetarn Hansakul

China Daily, June 8, 2012

China's economy is slowing. Since 2002 China's annual real GDP growth has always been above 9 percent year-on-year; this may not be the case in 2012. Real GDP growth slowed to 8.1 percent year-on-year in the first quarter of this year; down from 8.9 percent in the fourth quarter of 2011, and recent data in April suggest that a strong rebound is not on the cards.

The slowdown can be attributed to the impact of slowing external demand on China's export sector as well as the deliberate policy to discourage unproductive investment. This is not necessarily a cause for concern. One should not see growth of less than 9 percent as a sign of China losing its competitiveness. China's current focus on the sustainability of growth is appropriate. What is important is that growth remains sufficient to absorb new job seekers and continues to deliver the income growth that improves the livelihood of the majority of the population. Judging from the experience of other countries, achieving strong economic growth but having the wealth concentrated among a minority of the population will create problems later on.

Most economists, including Deutsche Bank's, continue to expect China's real GDP growth to stay above 8 percent year-on-year in 2012 and 2013. This is not a disaster for China, especially considering that demand from key trading partners such as the United States and the European Union is unlikely to grow as strongly as it did in the past decade. As for domestic demand in China itself, there is indeed untapped potential. However, it is correct to tread cautiously in order to avoid over-stimulating to the extent of creating overheating or new asset bubbles, which would lead to a hard landing.

(…) [artículo aquí]

Thursday, 7 June 2012



MoneyWeek, 7 June 2012

Is China’s economy heading for a hard landing? We think so – which is why we think you should steer clear of everything from most industrial commodities to Asia-dependent luxury goods firms.

It is hard to tell much (except the general trend) from the official GDP numbers, so with this in mind, here’s a list of reasons to think that all is not well in the economy the bulls hope will be the financial saviour of the West.

1. The FT reports that Chinese buyers have deserted the Hong Kong art market. Six months ago, they accounted for around 44% of Sotheby’s sales. That is now down to more like 20-25%. Kevin Ching, chief executive of Sotheby’s Asia, noted that “there used to be five to six mainland Chinese individuals who would bid like crazy here, but they did not make any offer in spring sales.” Sotheby’s reported a net loss of $10.7m in the first quarter.

2. reports that demand for polyethylene, which has long been “a very reliable leading indicator for the economy”, is no longer rising but falling (down 6% overall).

3. The FT again – reporting that Chinese buyers have started to “defer raw material cargos” in a “hand to mouth” market. Traders are reporting requests that cargo deliveries be deferred, but also an increasing number of defaults.

4. The Purchasing Manager’s Index (PMI) is at a five-month low. Headline PMIs are also falling across the rest of Asia.

(...) [artículo aquí]

Wednesday, 6 June 2012


Asia Times


Robert M Cutler

Asia Times, June 6, 2012

MONTREAL - The headline figures from India's release of economic data shocked observers as the country's economic growth in the January-March period fell to 5.3% year-on-year, the lowest rate of expansion in nine years and almost a full percentage point below the consensus estimate established by a Bloomberg News survey. Growth was down from 6.1% in the fourth quarter of last year.

Searchers for a silver lining to the dark cloud can point to report from DBS Bank's Daily Breakfast Spread that sequential growth (ie from one quarter to the next) for the January-March period this year was above the last quarter of 2011, and comfortably up from the "mere" 3-4% of the last six months of 2011.

The implication is that growth has accelerated since last year, when the economy would have bottomed out. However, "sequential growth in the last three quarters has averaged a mere4.5%," which is "much weaker than the headline year-on-year growth" suggests.

A report by the Asian Development Bank (ADB) enumerated the factors in the downdraft: a tight monetary policy to restrain persistently high inflation, continuing weakness in the global economy including its financial aspects, an increased budget deficit arising from larger subsidies, and a "lack of political consensus on resolving the policy impediments to growth".

Gross domestic product (GDP) for the 2011 fiscal year, which in India runs from April 2011 through March 2012, rose 6.5%, down from the 8.4% growth rate during 2010-11. The consensus growth currently expected for the 12 months to next March is 7.3%. Foreign observers, including but not limited to the ADB, anticipate recovery to be led by investment, and in particular by increased capital expenditure under the government's new five-year economic plan, since the still high rate of inflation makes the cost of capital more difficult for the private sector.

(...) [artículo aquí]

Monday, 4 June 2012


Forbes India


The economies of Brazil, Russia, India and China grew at a furious pace for much of the past decade and looked like they would beat even the most optimistic of forecasts. But recent missteps and increased competition from other nations have slowed the momentum

Shishir Prasad, Dinesh Narayanan, Pravin Palande

Forbes India, June 4, 2012

Jim O’Neill’s epiphany came on September 11, 2001. Chief economist at Goldman Sachs then, he had grown up in a working class neighbourhood, south of Manchester in England “getting drunk and playing soccer”.

Three thousand people died that day when 19 terrorists’ owing allegiance to Al-Qaeda, a terrorist group, hijacked four passenger jets. Of these, two were used to bring down New York’s iconic twin towers at the World Trade Center; another one was rammed into the Pentagon, America’s defence headquarters; and one crash landed into a field in Pennsylvania after passengers onboard the plane overpowered the hijackers and a scuffle ensued. An outraged America responded with grief, fury and acts of retribution.

Unlike most people who believed this was a clash of civilisations, the economist in O’Neill argued it was an act of lopsided globalisation. In fact, in January 2010, he’d told the London-based Financial Times that all things global are exemplified by all things American. And that it didn’t feel right to him. “...for globalisation to advance, it had to be accepted by more people … but not by imposing the dominant American social and philosophical beliefs and structures,” he argued. September 11 was his evidence.

He called in his team of number geeks, including Roopa Purushothaman and Dominic Wilson, to interpret the world from this lens. It culminated in a report: Global Economics Paper No: 66. People in business and economics know of it as the BRIC report, with BRIC being an acronym for Brazil, Russia, India and China.

(...) [artículo aquí]

Saturday, 2 June 2012




New strategies intend to change longer-term economic structure. -China Daily/ANN

Ed Zhang and Huang Ying
China Daily/Asia News Network

AsiaOne, Jun 02, 2012

Call it Beijing's "Stimulus 2.0".

China is at an inflection point as its economic policy focus shifts to growth instead of inflation control.

This time, the method of boosting growth is different from the past. Instead of throwing money at the problem - up to 4 trillion yuan (US$791 billion) was spent after the global financial crisis broke out in late 2008 - China is aiming for a more managed, selective stimulus.

In the next couple of months, more changes are likely in the run-up to the leadership transition, scheduled for the third quarter. The changes so far have fallen into the following categories:

Adjusting strategy

No top-down change can come without a signal from Beijing.

Premier Wen Jiabao, during an inspection trip to Central China's Hubei province from May 18 to 20, told local officials that judging from "the new situation and new problems", the central government now sees the need for a greater emphasis on maintaining the speed of growth.

Last July, inflation was at what was considered a dangerous level of 6.5 per cent. Even in January, inflation was 4.5 per cent, still very high. Policymakers' top priority in such circumstances would inevitably be inflation control.

(...) [artículo aquí]