Tuesday, 31 July 2012



Barry Eichengreen

The Diplomat, July 31, 2012

More than a year ago I, along with several colleagues, published a paper entitled “When Fast Growing Economies Slow Down.” In it we predicted that a significant slowdown in Chinese growth was coming. While it was not possible to be precise about the timing, we warned that the number of years for which China’s GDP would continue to grow at high single-digit rates could likely be counted on the fingers of one hand.

We got considerable pushback from critics in China and elsewhere. We had underestimated China’s enormous growth potential, these commentators warned. We failed to appreciate that the country’s growth model was unique and that it was not possible to extrapolate China’s future from the experience of other fast-growing economies.

Well, the slowdown is here.

Chinese growth in the second quarter slowed to 7.6 percent, down significantly from the double-digit norms of the past. Indeed the official figures may understate the magnitude of the change. The growth of electricity consumption has been falling even faster; at its most recent reading it has fallen to virtually zero. Unless the Chinese steel and aluminum industries have discovered how to make do without electricity, it would appear that their growth has virtually ground to a halt. That producer prices are falling is more evidence of weak demand.

The question is how much of this deceleration is structural, reflecting the fact that no economy can grow by ten percent per annum forever, and how much is cyclical, reflecting the weakness of the global economy. Clearly part of what we are seeing is structural. The Chinese population is aging. Labor force growth is slowing. Workers, especially in the urban centers, are demanding higher wages, which are being granted to ensure social stability and in response to pressure from foreign companies concerned with matters of image, all of which raises production costs. Other lower-cost national producers, in East Asia and elsewhere, are nipping at China’s heels. At the same time, part of the deceleration is cyclical. The tepid recovery in the United States and crisis in Europe augur poorly for Chinese exports, which were up by only 9 percent in the first half of 2012. When – it is tempting to say “if” – Europe and the U.S. begin to do better, exports and the growth of the Chinese economy should pick up again.

(...) [artículo aquí]

Monday, 30 July 2012




Rediff, July 30, 2012

Even as Europe continues to go through its economic suicide and the US is stuck in political paralysis -- which could lead to the abrogation of existing tax cuts and mandatory across-the-board budget reductions at the end of the year that would dampen already anaemic growth, or even trigger recession -- China is proving that it is ready to act and do what it takes to sustain its growth.

Beijing has been quite alarmed by the steep fall in economic activity in the last few months

What was initiated as a managed deceleration of the economy to reduce inflationary pressures and deflate a real-estate bubble on the verge of getting out of control acquired, since the end of winter, a dangerous momentum because of the impact of the European crisis.
By June, China's leadership was confronted with the prospect of gross domestic product growth of between seven and 7.5 per cent for 2012, a level too close to the threshold of seven per cent growth it had determined was the minimum needed to maintain social stability.
And some economists consider that real GDP growth for this year would be even lower if the economy were left to its own course.

(...)[artículo aquí]

Sunday, 29 July 2012


The Economic Times


Swaminathan SA Aiyar

The Economic Times, July 29, 2012

The monsoon has failed badly this year as it did in 1965. But it's little more than an inconvenience this year, whereas in 1965 it was a monstrous calamity. The drought-proofing of India is a success story, but one widely misunderstood.

India in the 1960s was pathetically dependent on US food aid. Even in the bumper monsoon year of 1964-65, food aid totalled 7 million tonnes, over one-tenth of domestic production. Then India was hit by twin droughts in 1965 and 1966. Grain production crashed by one-fifth. Only unprecedented food aid saved India from mass starvation. Jawaharlal Nehru talked big about self-sufficiency. Yet he led India into deep dependence on foreign charity. The 1966 drought drove India into a ship-to-mouth existence. Hungry mouths could be filled only by food aid, which reached a record 10 million tonnes.

Foreign experts opined that India could never feed itself. William and Paul Paddock wrote a best-seller titled Famine 1975, arguing that the world was running out of food and would suffer global famine by 1975. They said aid-givers couldn't possibly meet the food needs of high-population countries like India. So, the limited food surpluses of the West should be conserved for countries capable of being saved. Countries incapable of being saved, like India, should be left to starve, for the greater good of humanity. Indians were angered and horrified by the book, yet it was widely applauded in the West. Environmentalist Paul Ehrlich, author of The Population Bomb, praised the Paddock brothers sky-high for having the guts to highlight a Malthusian challenge.

The US was never happy with India's non-alignment. President Johnson made Indian politicians and officials beg repeatedly for more food. This prevented mass starvation, but left Indians writhing with humiliation.

(...) [artículo aquí]

Thursday, 26 July 2012




What Beijing needs to spur growth is not greater spending or easy money, but fundamental reform

Michael Schuman

Time, July 26, 2012

Anyone who thought China was impervious to either the perilous state of the global recovery or the laws of basic economics should take a look at the data streaming out of the country in recent months. GDP growth in the second quarter slipped to 7.6%, the slowest clip in three years. Manufacturing output and exports have been weak and the property sector has stalled. The IMF recently lowered its forecast for China’s growth in 2012 to 8% — which would be the economy’s worst performance since 1999. And with the sagging data have come louder and louder cries for greater government stimulus to pump up growth, as Beijing’s policymakers did successfully after the 2008 financial crisis. “There’s lots more the government can do to ratchet things up,” HSBC said in a recent report.

That’s exactly what China doesn’t need, however. Government policies to greatly boost growth will only exacerbate the percolating dangers within the Chinese economy — dangers that could even result in an economic crisis. Instead, the current slowdown shows how badly China needs a new growth model, and the reform necessary to build one.

(...) [artículo aquí]

Wednesday, 25 July 2012




Bloomberg News

Bloomberg, July 25, 2012

Chinese companies’ overseas share sales will rebound next year as regulators root out fraud and misconduct that contributed to erasing $6.4 billion in value for mainland firms listed in the U.S., the senior investment banker in China for JPMorgan Chase & Co. (JPM) said.

There will be “a flurry of deals” once foreign investors’confidence in Chinese companies returns, Fang Fang, chief executive officer of China investment banking for New York-based JPMorgan, said in an interview in Beijing yesterday. The bank is ranked third among managers of overseas share sales by Chinese companies since the start of 2010.

“I’m hopeful that sometime in the second half, investors will come back to the table,” he said. “Investors will eventually see the value and have to do something. They can’t just sit on a pile of cash for too long.”

A revival in overseas equity sales, on track this year to raise about a third of 2010’s $61.5 billion, would bolster growth in the world’s second-largest economy. Only one Chinese company has made its U.S. trading debut in 2012, compared with about 60 in the previous three years, as short sellers such as Muddy Waters LLC said companies including Sino-Forest Corp. misstated accounts, data compiled by Bloomberg show.
“There are just a lot of companies who want to raise money,” Fang said. “We need investors to come back to the table.”

(...) [artículo aquí]

Tuesday, 24 July 2012


Business Spectator


Stephen Bartholomeusz

Business Spectator, July 24, 2012

HSBC’s flash China manufacturing Purchasing Managers’ Index has provided the first tentative signs that the increasingly intense efforts by China’s authorities to arrest the slowdown in their economy may be starting to get some traction.

Coming a week before the official PMI numbers are released, the HSBC index provides an early indication of manufacturing sector conditions in China. In July the index was at a five-month high, rising from 48.2 in June to 49.5.

While an index reading of anything below 50 says the rate of growth in the sector is still falling, the latest result would suggest that the rate of that contraction has slowed significantly. HSBC’s chief economist, China, Hongbin Qu, said the result implied demand was still weak and employment was under increasing pressure.

(...) [artículo aquí]

Monday, 23 July 2012



Keiichiro Oizumi

The Asahi Shimbun, July 23, 2012

As India’s domestic market grows, its imports have increased rapidly.

To secure a position in the Indian market, exports from production bases in members of the Association of Southeast Asian Nations are vitally important in addition to export promotions from Japan and investment in India.

India’s real GDP growth rate has been on a downward trend since peaking at 8.3 percent in the October-December period from the same quarter the previous year.

Nevertheless, the economy was able to maintain a high 7.1 percent year-on-year growth in 2011.

For the five years through 2012, India’s economic growth rate has been a high 8.1 percent on average, and the International Monetary Fund projects that an average annual growth of around 8 percent will be maintained over the next five years.

At $1,457, per capita GDP is low, but India’s markets have changed significantly, in terms of size and substance, in the wake of high economic growth.

(...) [artículo aquí]

Sunday, 22 July 2012


Global Times



Global Times, July 22, 2012

China's economic growth is expected to rebound in the second half of 2012 and the country is well on the way to achieving more balanced growth, according to analysts in Kuala Lumpur.

China's National Bureau of Statistics said earlier this month the nation's gross domestic product (GDP) grew 7.6 percent in the second quarter, the lowest growth since the second quarter of 2009.

However, analysts said the dip was expected and China's economy was likely to grow at a faster pace in the second half of the year, voicing confidence in China's economy.

Prasenjit Kumar Basu, an economist at leading Malaysian investment bank Maybank Kim Eng, said China's economic growth had rebounded since April.

"For China, it is important to consider the monthly data, which suggest that the economy reached its cyclical trough in April 2012, and began a modest recovery in the subsequent two months," he told Xinhua in a recent interview.

In a report published after the announcement of the second quarter GDP data, Basu said the impact of a strong rebound in bank lending in May and June as well as the additional policy rate cut by the central bank might be seen during the rest of the year.

(...) [artículo aquí]

Saturday, 21 July 2012


Sydney Morning Herald


Peter Hartcher

The Sydney Morning Herald, July 21, 2012

THE White House has warned of the rising risk of accidental war in the South China Sea and called for countries in the region urgently to agree to a code of conduct.

China resists such a code as it jostles for ownership of resource-rich seabeds claimed by six south-east Asian nations. But the top Asia policy official in the White House has said a recent two-month maritime standoff between China and the Philippines ''threatened to escalate'' and created ''a scenario of grave concern to all countries in the region''. The standoff ended only when a hurricane sent the Philippine vessels back to port.

Analysts say the South China Sea is the new flashpoint of Asia. Most world shipping - and Australian exports - pass through it. ''A code of conduct, in our view, is a matter of commonsense,'' the National Security Council's senior director for Asia, Danny Russell, said. In a call implicitly aimed at China, Mr Russell said 10 years ago China had agreed to negotiate such a code of conduct. It has repeatedly said it will agree to discussions ''when the time is ripe''. A Pentagon official with responsibility for US defence policy in Asia, Vikram Singh, said: ''The time is ripe now''.

China has said the US is meddling in the region's affairs by encouraging a code of conduct. The US Secretary of State, Hillary Clinton, responded: ''The US is a resident Pacific power''.

(...) [artículo aquí]

Friday, 20 July 2012


China Briefing


Nicholas Hopper

China Briefing, July 20, 2012

Jul. 20 – China’s real estate market has seen massive development since it’s opening to private investors in the late 1990s. This rapid development, not unlike that seen in the United States before the 2008 crisis, is a risky one for several reasons, which we get into below.

For one, the disproportional value of real estate prices compared to the average citizen’s wages and standard of living has become cause for concern in today’s China. This can be seen when comparing office rental prices across various locations to each country’s GDP per capita, as illustrated by the graph below. aking New York City as a baseline, Shanghai’s ratio is more than eight times as high, Beijing seven, and Guangzhou nearly five.

(...) [artículo aquí]

Thursday, 19 July 2012




Tom Buttenberger

Seeking Alpha, July 19, 2012

Last Friday, China released their Q2 GDP print and sparked a rally in world markets. Economist Marc Faber appearing here on CNBC, casts doubts over the headline 7.6% YOY growth figure, and even goes as far as to say that the rally was due to how weak the report was, and the expectation of further monetary stimulus. He goes on to mention that his view of GDP in China is much lower based on trade data of Asian partners who are very reliant on exports to China. Are his views corroborated with the data? What else could he be looking at that would lend itself to this skeptical view?

To explore these questions I examined data from the World Trade Organization (WTO). It sounds like his central thesis is that the exports figures from some of China's major trade partners have been weak. As he alludes to, China is a major export destination for many Asian countries and using their export figures should provide a reliable proxy for overall personal consumption in China. Because if less international goods are being consumed, it is probable that less domestic goods are consumed as well - the main assumption being that the product mix has not changed. Shown below are YOY change rates for several countries' merchandise exports.

(...) [artículo aquí]

Wednesday, 18 July 2012



Langi Chiang and Nick Edwards

Reuters, July 18, 2012

BEIJING (Reuters) - China home prices broke eight straight months of decline in June in a tentative sign that pro-growth policies are gaining traction in the world's second biggest economy, now in its longest sequential slowdown since the global financial crisis.

Real estate, which directly impacts around 40 other business sectors in China, was cited last week as a brake on economic activity when Q2 GDP data showed growth eased to 7.6 percent from a year ago - the slowest in more than three years.

The signs of a turn in property coincide with other June data published recently which show the sequential rate of decline in the economy slowing after nine months of policy fine-tuning by Beijing that has included two cuts to benchmark interest rates in June and early July.

"Upward movement is surely the direction of China's home prices after two rate cuts," said a salesman surnamed Shao who is marketing a housing development by Poly Real Estate (600048.SS: Quote, Profile, Research) in Beijing.

Prices were flat nationwide in June versus May, according to Reuters calculations of data from the National Bureau of Statistics that showed small increases of 0.3 percent and 0.2 percent, respectively, for Beijing and Shanghai.

(...) [artículo aquí]

Tuesday, 17 July 2012


the huffington_post


Foster Klug (AP)

The Huffington Post, July 17, 2012

SEOUL, South Korea -- North Korea is reshuffling its most powerful institution: its million-man military. The authoritarian regime has dismissed the army chief – a key mentor to young ruler Kim Jong Un – and promoted a little-known general to an important position.
Illness was the reason cited for army chief Ri Yong Ho's departure, but to some outside analysts it resembled a purge by Kim as he tries to shape the government he inherited seven months ago. The announcement Tuesday of Hyon Yong Chol's promotion could further that goal; his is the fourth vice marshal appointment North Korea has made public since the death of Kim's father, Kim Jong Il.

The changes have significant but as yet unclear implications for the nation's relationship with its neighbors and the United States, which stations more than 28,000 troops in ally South Korea. North Korea maintains one of the world's largest armies, builds up its nuclear weapons and missile programs despite broad condemnation and sanctions, and regularly flings warlike rhetoric at Seoul and Washington.

News of Hyon's promotion in the Korean People's Army followed the announcement Monday that Ri, a vice marshal who had been chief of the General Staff of the army since 2009, was dismissed from his high-ranking posts in the military and the Workers' Party because of illness, according to state media. No details were provided about who might succeed Ri as army chief.

(...) [artículo aquí]

Monday, 16 July 2012


The Epoch Times


He Qinglian

The Epoch Times, July 16, 2012

In recent months, bad news about China’s economy has continued to emerge. Even people who were generally optimistic have begun to worry.

In late May, Chinese people noticed that, without much fanfare, China’s National Development and Reform Commission (NDRC) rolled out a version 2.0 of its 4 trillion yuan (US$628 billion) stimulus package.

Although the NDRC tried to dampen the expectation for a new round of stimulus and denied that there is one being launched in 2012, the fact remains that there were 8,000 new industry projects from January to April.

Since early this year, the NDRC has already awarded generous grants for a lot of projects, including many large ones. The NDRC has also drastically sped up its evaluation process and approved grants for more than 100 industry projects in a single day on May 21, and for 328 additional projects in April—almost twice as many as in April of last year.

(...) [artículo aquí]

Sunday, 15 July 2012




Nick Edwards and Kevin Yao

Reuters, July 15, 2012

BEIJING (Reuters) - China's government is engaged in the economic equivalent of holding its nose and swallowing nasty medicine, dosing up on investment spending, local government debt and real estate sales to push up growth.

Eight months of policy fine-tuning have yet to arrest an economic chill lasting six successive quarters and at risk of infecting a seventh, forcing Beijing to opt for near term expedients to boost growth ahead of a once-a-decade leadership transition later this year.

It's not easy for a government sensitive to the social impact of inflation and speculation set off by its last investment binge in 2009-10, which priced millions of middle class Chinese out of city centre property markets.

But the apparent recoil by Beijing from the pursuit of economic rebalancing that eschews short-term spending on more infrastructure capacity in favor of policies promoting services and consumer-driven growth simply highlights the urgency for more reform.

"Because consumption is still only 35 percent of GDP, the reality of that being able to drive the economy when fixed asset investment is falling and industrial production is slowing is unlikely," Jeremy Stevens, Beijing-based China economist at Standard Bank, told Reuters.

(...) [artículo aquí]

Friday, 13 July 2012




Bloomberg News

Bloomberg, July 13, 2012

China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound.

Gross domestic product expanded 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said today in Beijing. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists. Industrial production increased at a slower pace in June while retail sales growth decelerated.

Today’s data painted a mixed picture from a pickup in fixed-asset investment that could signal the economy is stabilizing to the warning sign that electricity output failed to increase in June from a year earlier. Singapore reported an unexpected economic contraction as China’s slowdown undermines a global recovery already threatened by Europe’s debt crisis and limited U.S. job growth.

“The fact that the data shows persistent weakness --rather than a precipitous plunge -- means policy makers are likely to continue incremental monetary accommodation but not embrace a more aggressive fiscal stimulus policy response in the immediate term,” said Ramin Toloui, Singapore-based global co-head of emerging-markets portfolio management at Pacific Investment Management Co., which manages the world’s largest bond fund.

(...) [artículo aquí]

Wednesday, 11 July 2012



Peter Cai

The Sydney Morning Herald, July 11, 2012

There are several enduring myths about the Chinese economy such as the country's zealous over-investment and frugal consumers.

These two things, amongst others, have been blamed for China's unbalanced economy.

A growing consensus has been forged among policy-makers and scholars both in and outside China that the country's consumers must spend more, while the massive government sector must scale back its wasteful and inefficient spending.

However, economists from the Bank of International Settlements - the central bank of central banks - Guonan Ma, Robert McCauley and Lillie Lam have shed new light on the received wisdom in a recent research paper.

These economists acknowledge that China saves and invests at an exceptionally high rate even when compared with Asian neighbours' own long record of high saving and investment.

In 2010, China's saving rate reached a staggering 53 per cent of GDP, and some 48 per cent of the annual output was churned into investments of one kind or another.

It is assumed that such high rates would have discouraged consumer spending. The fact that private consumption as a proportion of China's GDP declined from about one half to a third between 1990 and 2010 is often used as proof.

But data also shows that private consumption has been growing at a strong pace of 8 per cent to 9 per cent a year for the last 20 years.

The spread of consumer durables such as TVs and refrigerators have increased tenfold.

(...) [artículo aquí]

Tuesday, 10 July 2012


Eurasia Review


Arun Sahgal (IDSA)

Eurasian Review, July 10, 2012

The construct of Indo–US relations in the Asia-Pacific region is to be seen against the backdrop of the United States increasingly looking upon India and its growing influence as an alternative to Chinese hegemony in the region. While most countries such as Australia, Japan and the smaller South-East Asian countries do hold strategic relevance for America’s Asia-Pacific strategy, it is perhaps nuclear India with its growing economy destined to leap frog in the next two or more decades that currently tops the US priority list for its regional designs.

Despite the current hiccups and comments about the relationship losing steam, the Indo-US relationship has seen greater ascendancy on every account—economic, military, and strategic. This was underscored during the recent visit of the US Defense Secretary to New Delhi and followed by the Indo-US strategic dialogue, which appear to have provided new impetus to the relationship, particularly in outlining the future US vision for bilateral defence cooperation.

Outlining his concept of the US re-balancing strategy towards the Asia-Pacific region, the US Defense Secretary explained that the American military plans to expand its partnerships and presence in the arc extending from the Western Pacific and East Asia into the Indian Ocean region and South Asia. It is within this arc that the US plans to redeploy the bulk of its naval forces including as many as six aircraft carriers by 2020. The perspective outlined also talked about combating shared challenges including ensuring open access to maritime, air space and cyber space domains as also challenges posed by radical ideologies, piracy and proliferation of weapons of mass destruction, etc.1

(...) [artículo aquí]

Monday, 9 July 2012


China Daily


Dan Steinbock

China Daily, July 9, 2012

For two years now, the prophets of doom have forecast that China is heading for a hard landing. But while China is not immune to the debt crises in the West, it is better positioned to cope with them.

Last Thursday, the People's Bank of China lowered the benchmark deposit rates by 25 basis points and cut lending rates by 31 basis points; the second time in a month. The cuts fueled concerns that there is more trouble ahead for the Chinese economy.

In fact, there is a lot of noise in the markets and three macro trends complicate the picture. Economic conditions are deteriorating in Europe, the hoped-for recovery is slowing down in the United States, and China's economy has been weaker than anticipated in early spring.

But what we may be witnessing is a bottoming out.

At the recent euro summit, the region bought time, yet again. Last Thursday, the European Central Bank cut its interest rate to a historic low of 0.75 percent, and its overnight deposit rate from 0.25 percent to zero. However, these measures will not have an energizing effect on the eurozone, instead, they indicate that the ECB's ammunition is being exhausted.

In the US, job creation continues to slow, and unemployment remains at 8.2 percent. The number of unemployed Americans is 12.7 million and if the temporarily unemployed are included more than 23 million. Moreover, Washington has deferred critical economic decisions and a potential "fiscal cliff" until after the 2012 elections, even though the national debt is now close to $15.9 trillion.

(...) [artículo aquí]

Sunday, 8 July 2012


The Japan Times


China, Taiwan enraged; owner still plans to sell islets to Tokyo


The Japan Times, July 8, 2012

The government is preparing to buy part of the disputed Senkaku Islands from a private owner to increase its control over the chain in the East China Sea, government sources said Saturday.

Taiwan and China reacted sharply to the news, as both claim sovereignty over the islands.

The government has already started making arrangements with the owner and the Tokyo Metropolitan Government, which announced its own plan to purchase some of the islets in April, the sources said.

Analysts say the latest move to put the Senkakus under state control appears intended to demonstrate Japan's uncompromising stance on the sovereignty issue.

Prime Minister Yoshihiko Noda simply told reporters that his government will deal with the issue "comprehensively."

State officials, including Noda's special aide, Akihisa Nagashima, notified the metropolitan government Friday of its plan to buy Uotsuri, the largest of the islets, as well as nearby Kitakojima and Minamikojima, according to the sources and Tokyo Gov. Shintaro Ishihara.

(...) [artículo aquí]

Saturday, 7 July 2012


Deccan Herald


No planning, no investment

S N Chary

The Deccan Herald, July 7, 2012

One of the basic requirements is that of power, which has been in short supply for several years.

After the last few years of rapid increase in the GDP, the rate of growth of Indian economy has slowed down to the prospects of a little over 6.5 per cent for the present financial year. Going by the recent behaviour of the stock markets, the marketers seem to think that a change of head of the finance ministry will probably boost the sagging business and industry.

Assuming that despite the tribulations of a ‘coalition dharma,’ the Union government is able to pull off a partial reversal of GAAR and is able to manage some loosening of the retail sector for foreign investment, but these and similar policy changes are not going to push the growth engine to any significant extent. While so-called ‘policy paralysis’ is definitely not good for any economy, it is only one of the problems.

India needs infrastructure development on a massive scale. The Central government itself had indicated a requirement of one trillion US dollars for the next five years.

Economic movement is associated with the movement of products and services. Goods that are made need to reach the market. Raw materials and supplies need to get to the production facilities and in good time. Indian national highways, state highways and network of roads in the hinterland need large-scale improvements in length and quality. There was a plan for investing over 120 billion US dollars in just the highways. The really ‘trillion dollar’ question is: where will the money come from?

(…) [artículo aquí]

Friday, 6 July 2012


The Economic Times


The Economic Times, July 6, 2012

BEIJING: The second rate cut this year made by China's central bank yesterday to boost the sagging economy came sooner than expected, but it has still more room for further reductions, say experts.

"The rate cuts (this year) came a little bit earlier than what the market expected," Li Huiyong, chief macroeconomic analyst for Shenyin & Wanguo Securities said.

"I think a declining inflation level gives more room for lowering the interest rates and it reflects that economic growth is not looking that good in the second quarter," he said told state run Xinhua news agency.

In a surprise move yesterday, the People's Bank of China (PBOC) cut benchmark interest rate for the second time this year as the world's second largest economy showed signs of slowing down further in the second quarter.

It has reduced the rate for one-year deposits by 25 basis points (0.25 per cent) and for one-year lending by 31 basis points (0.31 per cent).

The move came less than a month after the rate cuts announced on June 7, when the benchmark rates were slashed by 0.25 per cent in their first cuts since December 2008.

The central bank also brought down the lower limit for lending rates to float to 70 per cent of the benchmark rate from 80 per cent announced in June, stepping up its bid to liberalise interest rates.

(...) [artículo aquí]

Thursday, 5 July 2012




Reuters, July 5, 2012

BEIJING (Reuters) - China's economic growth probably slowed further in the second quarter to 7.6 percent, its worse performance since the 2008/09 financial crisis, as investment, factory output and retail sales weakened across the board.

But analysts are hopeful the world's second-largest economy would have seen the worst between April and June, and that growth would pick up in the third quarter as Beijing further loosens monetary policy and fast-forwards infrastructure spending.

"With the help of sufficient bank financing and a marginally improving property market, we expect an investment-led recovery in economic growth from the third quarter onwards, with 2012 gross domestic product growth still likely reaching 8 percent," said Wang Tao, an economist at UBS.

The median forecast of 21 analysts is for China's economy to expand 7.6 percent in the second quarter, down from 8.1 percent in the first, and the slowest since the first three months of 2009 when growth slid to 6.6 percent.

Economic growth of 7.6 percent would put China just a whisker above its 2012 annual growth target of 7.5 percent, and supports market forecasts that China's economy could grow at its slackest annual pace in 13 years this year at 8.2 percent.

Fixed-asset investment is expected to have risen 20.1 percent in June, steady from May's pace of growth, but down from around 25 percent seen for most of last year.

Consumption is also expected to soften. Retail sales is forecast to expand 13.5 percent, the weakest pace since February 2011. Growth in factory output is estimated to edge up slightly to 9.8 percent, from May's 9.6 percent.

(...) [artículo aquí]

Wednesday, 4 July 2012




Linda Sieg

Reuters, July 4, 2012

TOKYO (Reuters) - Buffeted by industry worries about high electricity costs on one side and public safety fears about nuclear power on the other, Japan's leaders are still struggling to craft a coherent energy policy more than a year after the Fukushima disaster.

Critics say Prime Minister Yoshihiko Noda, whose top priority is raising the sales tax to curb bulging public debt, is caving in to Japan's "nuclear village" - a powerful nexus of utilities, bureaucrats and businesses - by restarting the first of Japan's 50 reactors to come back on line since the crisis.

Kansai Electric Power Co's No. 3 unit at its Ohi plant, in western Japan, will resume supplying power to the grid as early as Thursday, and its No. 4 unit will also restart this month, as the government seeks to avoid a summer power crunch.

Many experts, though, say the nuclear interests are unlikely to win the longer-term battle given the hidden costs of atomic power exposed by Fukushima and a new set of forces pushing for a bigger role for renewable sources of energy such as solar power.

"They (the nuclear interests) are fighting with their backs to the wall ... and assuming that after one restart, the rest will fall into place," said Martin Schulz, a senior researcher at Fujitsu Research Institute. "But basically, there is very little they can do to turn the clock back."

Nuclear power supplied almost 30 percent of Japan's electricity before last year's disaster, when a huge earthquake and tsunami devastated Tokyo Electric's Fukushima plant causing meltdowns, spewing radiation and forcing evacuations.

In the months following the accident all the country's reactors that had been online were shut down for maintenance, with public safety fears preventing them from restarting.

The knock-on effect has posed the biggest challenge to Japan's energy policy since the 1970s "oil shocks" of rising fuel import prices that drove resource-poor Japan's big push into nuclear power, as well as huge gains in energy efficiency.

(...) [artículo aquí]

Tuesday, 3 July 2012


Malaysia Chronicle


The Malaysia Chronicle, July 3, 2012

Shenzhen is where China’s economic miracle began. Back in 1980, Deng Xiaoping and his Beijing comrades launched a special economic zone, or SEZ, in the southern enclave that became the center of a grand experiment in introducing free capitalism into Communist China. Foreign investors were invited to set up factories in the zone, cracking open the tightly controlled economy to the outside world, and as money poured in, attracted by China’s cheap and plentiful labor, world economic history was altered forever. The Asian giant was transformed from an agrarian basket case into the “Workshop of the World” and chief rival to American economic dominance.

Now Beijing is again turning to Shenzhen for a new batch of trials with capitalism by dusting off that old idea of the SEZ and repurposing it. The consequences could prove just as sweeping for both China and the world. On Friday, Chinese policymakers formally revealed that they would turn a slice of Shenzhen into a new sort of SEZ to experiment in currency convertibility. The SEZ, called the “Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone” will be developed near the border with bustling Hong Kong at a cost of $45 billion. Details on exactly what financial reforms will take place in the zone were sparse. It is possible that the measures will include the permission of some cross-border yuan lending between Hong Kong and mainland firms. But the purpose was made clear: China is will take steps to free up the ways in which its currency, called the yuan or renminbi (RMB), can be used in international finance. “The country’s policy is to gradually open up its capital account and realize the full convertibility of the yuan,” said Zhang Xiaoqiang, vice chairman of China’s influential National Development and Reform Commission. “Qianhai, as the first experimental zone of the country’s modern service industry, should be a pioneer of that.”

In introducing this zone, China is taking an important step towards achieving one of its major goals – elevating itself from solely a global manufacturing power into a global financial power as well. Beijing has been striving to make its currency, called the yuan or renminbi (RMB), more widely used internationally, and thanks to the growing importance of China in global trade, the yuan has been gaining something of a worldwide profile. The yuan is being used more frequently in trade conducted between China and its trading partners. In a mere three years, the share of China’s international trade settled in yuan increased from nothing to 8% in 2011. Beijing has been encouraging this trend through a series of currency swap arrangements to make the yuan more readily available. China inked just such a deal, of nearly $30 billion, with Brazil in June. Some Chinese companies have been permitted to settle trade transactions in yuan through Hong Kong banks, turning the special administrative region into the primary offshore center for business in the Chinese currency. More yuan-dominated securities are available for investors, such as the “dim sum” bonds traded in Hong Kong. As China’s economic might continues to grow, the influence of its currency will inevitably increase with it. “It is apparent that more and more central banks are realizing that alongside the secular decline of the USD (U.S. dollar) as a reserve currency, the RMB is the most likely currency to challenge the near-monopoly position of the USD in the global reserve system,” Jun Ma, Deutsche Bank’s chief economist for Greater China, wrote in a June 25 report.

[artículo aquí]

Monday, 2 July 2012



Karen Maley

The Business Spectator, July 2, 2012

Fears over the faltering Chinese economy will cast a shadow over global markets this week, after the release of figures on the weekend showed that the country’s giant manufacturing sector is battling a slump in export orders.

China’s official purchasing managers’ index dropped to 50.2 last month, down from 50.4 in May, and its lowest level in seven months. Some economists now estimate that the China’s growth rate fell below 8 per cent in the first half of the year as demand for Chinese exports, the main driver of the Chinese economic miracle, has been dented by the growing economic woes in Europe and the United States.

Beijing will now face increasing pressure to cut interest rates and to boost spending on infrastructure in a bid to boost economic activity. Already China’s central bank has been reducing the level of deposits that banks must hold in reserve, and last month it cut interest rates for the first time in more than three years (Worries in the quarries as China cuts, June 8).

But Beijing will be wary of cutting interest rates too far, for fear of reinflating the country’s huge real estate bubble. And it will also be cautious when it comes to another massive spending spree because the last one – undertaken in the wake of the global financial crisis in 2008 – left the country littered with countless ill-advised infrastructure and real estate investment projects that are now clogging up the balance sheets of the country’s state-controlled banks.

Indeed, some analysts warn that China is yet to feel the full brunt of its massive real estate frenzy, which continued to run into 2011. Last year, residential construction accounted for a massive 9.2 per cent of Chinese GDP – well above the 6 per cent of GDP that the US saw in 2006 at the peak of its housing boom. Indeed, the only country that has hit that level is Spain, immediately before its own real estate bubble burst.

(…) [artículo aquí]

Sunday, 1 July 2012


The Japan Times


The Japan Times, July 1, 2012

Asian millionaires have surpassed North American millionaires for the first time ever, according to a study by Capgemini consultancy and the Royal Bank of Canada. The Asia-Pacific region now has 3.37 million so-called high-net-worth individuals, calculated in terms of the number of people with over $1 million in investible assets.

That edged out the 3.35 million in North America. Asia had already edged out Europe in the number of millionaires in 2010.

China's ongoing economic boom churned out 562,000 millionaires in 2011, the fourth-highest number after the United States, Japan and Germany. While India and Hong Kong saw a downturn in the numbers of millionaires, the figures in China, Japan, Thailand, Malaysia and Indonesia all increased considerably.

Despite the 3/11 disasters and general economic downturn, Japan managed to show 4.8 percent more millionaires last year, due in part to conservative investments and high savings.

Of course, many of those with increasing wealth are really multimillionaires. Details on how the ultrarich spend their money in these investment reports focus on the future of markets in real estate, luxury brands, high-end travel, and auctions of everything from wine to art. Those purchases seem to indicate that the wealth of Asia's millionaires is becoming more fully established and diversified, as well as more sophisticated.

(...) [artículo aquí]