SEEING THE SIGHTS OF INDUSTRIAL CHINA: 2 FACTORIES, 2 FUTURES

Joe Nocera

New York Times, April 5, 2008

“The RMB is killing me,” groaned Jin Jue. Mr. Jin, a hip-looking 35-year-old with spiky hair and an all-black ensemble, describes himself on his business card as the “board chairman” of the Shanghai Jinjue Fashion Company. It was my first full day in China, and Mr. Jin was showing me around his factory on the outskirts of town.

RMB, of course, is shorthand for renminbi, the Chinese currency, also known as the yuan, which, since the beginning of the year, has risen more than 4 percent against the declining dollar. Even as the Chinese economy has become increasingly powerful, the government has kept the yuan artificially low, much to the annoyance of the United States. Truth to tell, it is still not nearly as high as it would be if it were unmoored from government control. When the Treasury secretary, Henry Paulson Jr., was in Beijing this week, he praised the recent rise of the yuan though — as he invariably does when he’s in China — he called on Chinese officials to let their currency float freely.

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INDIA LAYS OUT A RED CARPET FOR MYANMAR

Siddharth Srivastava

Asia Times, April 5, 2008

The elephant in the room when Myanmar's Number 2, General Maung Aye, was greeted graciously in India this week was an energy hungry China. Outbid by Beijing for energy blocks across the world, an alarmed New Delhi has softened its stand against Myanmar and is increasingly wooing the junta. Beyond energy, at stake are port projects, transport lanes and strategic control of the Indian Ocean.

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A GIANT PICKING UP SPEED

Tim Harcourt

Business Spectator, April 4, 2008

Are we ‘hugging the panda’ too much and therefore missing the potential in India where we arguably have stronger cultural ties? And why the comparison with China anyway? Well, it’s partly because of the enormous population of each mega-nation. China has 1.3 billion people, whilst India has 1.05 billion. Lots of people means of lots of potential but it also can mean lots of poverty too. India accounts for one-fifth of the world’s population and around one in three of the world's poor people live in India.

But the comparison is also made because of the relative economic success of China compared to India over the past 20 years. Their relative economic progress over the past twenty years is food for thought. In 1980, China and India were about level pegging when it came to GDP and per capita income. By 2007, however, China was over twice India’s size in terms of GDP and GDP per capita and eight times its size in terms of merchandise exports.

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CHINA'S RISING RETAIL MARKET

Chinese youth intend to spend "considerably more" in 2008 than they did in 2007. Multinationals had better start thinking young

Shaun Rein

Business Week, April 2, 2008

The subprime debacle has rattled retail sales in the U.S., forcing many companies to downgrade sales estimates as consumers shy away from checkout counters. Luxury retailers and credit-card companies in the U.S. have recently reported bearish projections for the coming quarters.

China, however, is a retail market on the rise. In 2007 China posted 17% growth in retail spending. Electronics retailers Guomei and Suning posted record numbers, and both paint positive pictures for the future as Chinese consumers continue to buy LCD TVs from LG Electronics and mobile phones from Nokia.

[artículo aquí]

DEVELOPING ASIA TO POST SOLID GROWTH IN 2008 EVEN AS MAJOR INDUSTRIAL ECONOMIES SLOW DOWN, SAYS ADB

Asian Development Bank, April 2, 2008

Developing Asian economies will register solid growth in 2008 despite a coincident slowdown in major industrial economies, surging food and fuel prices and a simmering credit crisis in the United States, the Asian Development Bank (ADB) says in a new major report.

ADB’s flagship annual publication, Asian Development Outlook 2008 (ADO) released today, forecasts developing Asian economies to expand at 7.6% in 2008 and 7.8% in 2009. The region posted its highest growth in almost two decades in 2007 – averaging 8.7%.

“Asia will not be immune to the global slowdown, neither will it be hostage to it. It remains tied to global activity through traditional trade channels, and increasingly, through its closer integration in international financial markets,” says ADB Chief Economist Ifzal Ali (video).

Mr. Ali says favorable policy conditions and impressive productivity growth associated with Asia’s economic modernization and structural transformation will continue to keep the region on a strong growth path.

ADO warns that the risk of an inflation spiral in Asia is palpable and urges policymakers to keep a close watch on it. Despite a slew of administrative measures and subsidies that are reining in price rises, inflation is expected to spike in 2008 and could hit a decade-long regional high, the report says.

Inflation is expected to rise to 5.1% in 2008 and gradually slide to 4.6% in 2009. Price increases will be highest in Central Asia where it will remain in double digits. Inflation is running at an 11-year high in the People’s Republic of China’s (PRC), and is a threat to other countries, like Viet Nam.

ADO urges policymakers to tackle the problem at its root. For some economies, this may mean a more flexible exchange rate, while in others it may need a scrutiny of fiscal spending and priorities and, in some cases, targeted measures may be warranted to ease supply pressures that are piling on to cost pressures.

Growth in the region’s main economic powerhouses, PRC and India, is expected to moderate as authorities tighten policies to rein in blistering demand and ease inflationary pressures.

PRC is expected to grow by a solid 10% in 2008 and the Indian economy is forecast to expand by 8%. The slowdown in the economies of the US, European Union and Japan will have a more pronounced impact on PRC, which is more open to trade than India. Growth in East Asia is expected to decelerate in 2008 to 8.1% from 9.3% in 2007. Southeast Asia will slow to 5.7% in 2008, from 6.5% in 2007, as its export prospects are likely to be pinched by a slowdown in the global economy. In Southeast Asia, only Thailand is expected to post higher growth after a return to normalcy in politics. Viet Nam’s economic expansion will moderate as it grapples to keep a lid on inflation. South Asia is also expected to lose some steam in 2008 mainly on moderation of growth in India. Pakistan, Bangladesh and Sri Lanka will also be affected by economic deceleration in major markets as garment exports are expected to suffer. Growth in Central Asia is expected to decelerate sharply to 7.5% in 2008 from double digit levels in recent years on the back of weaker expansion in the region’s largest economy, Kazakhstan. A sudden halt of capital flows to Kazakh banks has triggered a reduction in lending and downturn in non-oil economy. Economic expansion in the Pacific Islands is expected to pick up in 2008 with the region’s biggest economy Papua New Guinea benefiting from high global commodity prices and Fiji Islands forecast to grow after contracting in 2007.

“Looking beyond the immediate bumps in the road, Asia’s long-term growth prospects will depend on how successfully countries tackle a range of structural constraints facing them,” says Mr. Ali.

These include maintaining macroeconomic stability, integrating into the global economy, getting prices to send the right signals, creating a conducive business and investment climate and above all, ensuring that the benefits of growth are shared by all.

[Comunicado aquí e informe aquí]

PREPARING FOR CHINA'S URBAN BILLION

McKinsey Global Institute, March 2008

The scale and pace of China's urbanization promises to continue at an unprecedented rate. If current trends hold, China's urban population will expand from 572 million in 2005 to 926 million in 2025 and hit the one billion mark by 2030. In 20 years, China's cities will have added 350 million people—more than the entire population of the United States today. By 2025, China will have 219 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.

For companies—in China and around the world—the scale of China's urbanization promises substantial new markets and investment opportunities. At the same time the expansion of China's cities will represent a huge challenge for local and national leaders. Of the slightly more than 350 million people that China will add to its urban population by 2025, more than 240 million will be migrants. This growth will imply major pressure points for many cities including the challenge of managing these expanding populations, securing sufficient public funding for the provision of social services, and dealing with demand and supply pressures on land, energy, water, and the environment.

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EAST ASIA & PACIFIC UPDATE - TESTING TIMES AHEAD

World Bank, April 1, 2008

Growth in developing East Asia will decline by around one to two percentage points to around 8.5% in 2008 as a result of the unfolding financial turmoil in the US and the resulting global slowdown, says the World Bank’s latest six-monthly review of the East Asia and Pacific region’s economies.

But despite the likely drop from recent double-digit levels, overall growth remains healthy across the region and most countries are well positioned to navigate the global slowdown because of the investments they’ve made in the last 10 years in structural reforms and putting sound macroeconomic policies in place, the report says.
In fact, according to the latest East Asia & Pacific Update, East Asia and especially China have increasingly become a “growth pole” in the world economy – acting as a counterweight to the slowing industrial economies.

[Web y texto completo aquí]