China Economy: News & Discussion

Discussion in 'China' started by Rage, Jun 1, 2009.

  1. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    why these guys are $hit scared about increasing the value whereas Chinese members here continuously blabber about not having dependent on external demand :D

    http://www.cnbc.com/id/34308550

    :rofl: :rofl:
     
  2. hbogyt

    hbogyt Regular Member

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    re

    "Economics is the only field in which two people can share a Nobel Prize for saying opposing things."

    There are factions of economists who believe an appreciation is beneficial. I believe otherwise, but let's not tease them.
     
  3. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    It still does not explains why Chinese government is so fearful of the rise in value or it is known that Chinese companies will not be able to compete?
     
  4. Daredevil

    Daredevil On Vacation! Administrator

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    It is simple, if yuan value rises, the cheap chinese products will not be any longer cheap and their export industry will suffer a lot and so does their GDP.
     
  5. badguy2000

    badguy2000 Respected Member Senior Member

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    ???????????????????????????
    [​IMG]

    Chinese Government has approved a plan of total investment of 0.9973 trillion RMB(about 0.1470 trillion USD).

    According to the plan, during 2010-2016,2500-KM-long subways will be constructed in 22 Chinese cities and cost 0.9973 trillion RMB.

    it means that in the coming 7 years, 70%+ of global additional subways will be in China.
     
  6. Martian

    Martian Respected Member Senior Member

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    I don't think it's that simple. A higher Yuan will allow most companies to lower the cost of their imports. The lower input price will offset part of the increased asking price for their products.

    I think the problem is that some export companies will suffer. The Chinese culture is different from US culture. Most US companies will lay off a worker if they think they can make an extra dollar. Chinese have a collectivist culture. The government prefers lower exports earnings from a cheaper Yuan as long as it keeps more Chinese employed.
     
  7. badguy2000

    badguy2000 Respected Member Senior Member

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    in fact, 70%+ of CHinese iron ore sand copper ores,50% of Chinese oil,almost 90% of CHinese woods and other raw resouces are imported all over the world.

    those imported raw resouces occupy big shares of the cost of "made in China".

    Once CHinese Yuan were to appreicated, only God know what would happen, because nobody can caculate the balance of decreased raw resource cost and increased labour cost.

    So, the consequence of apprecation of CHinese Yuan is now knowable to anyone for time being ,in fact.Such a appreication may be a cure to the west economy that is being hollowed out,but also may be a stimulus to "made in China" and make the trade balance more favourable to CHina,on the contrary.


    However,because the status quo is hollowing out west economy,yankees may think :" the status quo is already the worst and nothing would be worse,so why not try other ways, even if other ways might not be the cure?"

    To Chinese ,since the status quo is already favorable to China, it is not necessary to risk changing it,even if such a change might make the situation be more favorable to CHina.
     
  8. NSG_Blackcats

    NSG_Blackcats Member of The Month OCTOBER 2009 Senior Member

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    China launches landmark Central Asia gas pipeline

     
  9. badguy2000

    badguy2000 Respected Member Senior Member

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    Ordos City in Chinese Inner Mongolia has its per nominal GDP surpass Hongkongese

    Ordos city in inner Mongolia has had its per nominal GDP surpass Hongkongese.

    the city has a population of 2 million
    the city's GDP has grown 10 times during the past decade,because it has abundant coal and gas.

    this year its per nominal GDP is to supass 30K US dollars and supass Hongkongese

    [​IMG]
     
  10. atleast_a_bronze

    atleast_a_bronze Regular Member

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    Quite interesting. Just saw this youtube video about Ordos.
    http://www.youtube.com/watch?v=0h7V3Twb-Qk
    Ordos is described as an empty city built for a million people, with money infused by Chinese govt in order to achieve high GDP.
    As one writer in one of the sites put it, "The modern equivalent of paying workers to dig holes on Mondays, Wednesdays and Fridays, and paying other workers to fill them in again on Tuesdays, Thursdays and Saturdays."
     
  11. badguy2000

    badguy2000 Respected Member Senior Member

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    Your perspective is always "unique". Ordos is a city with 2 million inhabitants. I don't think that it is wrong to built city in advanced when urbanization is so rapid.

    IMO, the problem of Ordos is that its economy is based on coal&gas too much and needs diversity.
     
  12. atleast_a_bronze

    atleast_a_bronze Regular Member

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    Agree Ordos Old city has 2 million people. The video talks about how the Chinese govt had spent huge amounts of money in development of the new Ordos City which resulted in the high GDP.
    What I understand is that "the high GDP" that you had mentioned was an artificial creation of Chinese govt.
     
  13. badguy2000

    badguy2000 Respected Member Senior Member

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    you know little about the economy of Ordos city.

    the backbone of Ordos city economy is the coal &gas and chemical industry. at the same time, its wool spining industry is also very developed.

    During the past decade, Ordos city received heavy investment on coal&gas industry. the global most advanced coal-oil plants are also located there.
     
  14. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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  15. badguy2000

    badguy2000 Respected Member Senior Member

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    the bridge is to link Macao,Hongkong and Zhuhai city.

    Hongkong is be marginalized now,because other cities in Pearl river Delta are growing much faster ,such as Shenzhen, Guangzhou ,Dongguan...etc.

    In one decade, dozes of cities in mainland China will surpass Hongkong ,in term of per nominal GDP. Ordos is just the frist one.

    In two decades,Hongkong will become ordinary one of hundreds of CHinese cities.
     
  16. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    The Hindu : Business News : Can China sustain its cost advantage in the years to come?

    First, a brief overview of your China study, and the challenges you had to face when conducting the same.

    The IMA study examined PRC management accounting practices and the role of management accountants in PRC companies. It was sponsored by, and partially funded by, the PRC’s Ministry of Commerce. The study involved both field research (on-site firm visits to 12 companies) and a mail survey of 400 Chinese companies (with a response rate in excess of 50 per cent).

    IMA was the first non-Chinese organisation to be allowed to conduct research in this area and we faced numerous challenges. These included getting permission to conduct the survey and also finding companies willing to participant in on-site visits (given China’s tradition of secrecy).

    Does the Chinese manufacturing sector really possess a cost competitive edge in all sectors, or is it a myth? Is scale the only reason for the Chinese competitive cost structure?

    I do not believe that the Chinese manufacturing sector possess a cost competitive edge in all sectors. There are numerous reasons besides scale for the Chinese competitive cost structure, including massive government in infrastructure, the rapidly increasing productivity of the average Chinese worker, and investment by Chinese companies and the Chinese government in R&D.

    As Chinese manufacturing costs increase (as they are), foreign companies looking for low cost manufacturing will increasingly turn to countries such as India and Vietnam with lower manufacturing costs. However, there will remain reasons for companies to locate facilities in China. These include, among others, a desire to be close to and to sell to the growing domestic China market, access to R&D facilities in China, and the need to be close to existing partners’ facilities.

    Is cost advantage felt more in commodity-oriented products, or do they fare better in the value-added products, as well?

    The dynamics of the situation are changing. China currently is much stronger than India in mass manufacturing and logistics. In contrast, India is much stronger than China in software and information-technology services. However, China is making great efforts to move up the value chain, towards producing value-added products and leaving commodity-oriented products to countries with lower labour costs.

    Chinese firms are making great efforts to acquire technology through a variety of means, including purchase, partnership with foreign entities, or in-house development. The Chinese government has also adopted policies aimed at forcing foreign companies to share their technology with local companies. Through these efforts Chinese companies are becoming better able to compete with value-added products.

    To what extent does the Chinese regulatory framework influence cost structure? Also, your views on the levels of compliance to Chinese accounting requirements.

    Chinese tax regulations clearly affect the cost of imports and exports and are used by the government to further public policy goals. Besides the regulatory framework itself, uneven enforcement of the framework can affect an organisation’s cost and its competitive position.

    The level of compliance with Chinese accounting requirements is fair, with non-compliance in at least one area observed at nearly all the case study companies visited. This may be due to the rapid evolution of Chinese accounting standards as the country transitions from a planned to a market economy. This non-compliance can be an issue not only for external reporting, but also for its effect on internal management decision-making. As Chinese companies face an increasingly competitive environment, accurate costing will becoming increasingly important.

    Are the Japanese cost management practices such as kaizen, TPM, etc. adopted in China?

    I do not believe there is widespread use of Japanese cost management practices in China at this time, although their use would be expected to increase over time. The use of these techniques, or advanced western techniques in general, is more prevalent in companies with a foreign partner.

    Can China sustain its cost advantage in the years to come?

    I view China as making a similar journey as that made by Japan after the World War II. At the end of that war, Japanese firms focused on making low-cost, generally low-quality merchandise. Over time the emphasis changed to making high-quality goods at an acceptable price. China is now transitioning from making low-quality commodity products to making goods that will compete with goods made by western companies. Thus the Chinese “Famous Brand” initiative, in which the government is promoting the development of domestic brands that can become international ones.

    So, in this context, while China cannot permanently sustain its cost advantage in producing commodity-type goods over other countries with lower labour costs, that is not essential to the path to development that it is pursuing. With its massive investments in infrastructure, education, and R&D, China is preparing the way for this transition.

    IMA is a member of the COSO which came out with the risk management framework. Do you foresee that eventually COSO framework will be considered as the best practice on enterprise risk management?

    We are not sure there really is a single best practice framework as that implies that there has been a high level of adoption of ERM as a business process/ practice in the US and around the world which unfortunately is not the case. With that said, COSO is one of several global frameworks that went through a rigorous evaluation and comment period and we believe that given the high number of translations (Japanese, Chinese, German, etc.) the COSO framework is robust and relevant for ERM implementations.

    Do SOX-driven organisations in the US accept COSO framework as a standard?

    Yes, the 1992 Internal Controls Framework is used by nearly 100 per cent of publicly-traded companies in the US who are large, accelerated filers subject to SOX. SOX 404 requires that companies assert in writing, as part of their regulatory filings, that their internal controls are “effective” in accordance with a recognised and credible framework such as COSO. As noted earlier, given the low adoption rate of ERM around the globe, there really is no prevalent or best practice ERM framework.

    IMA has been making presentations to the SEC on the need for greater transparency and a management-accounting centricity in financial reporting? How successful are these efforts?

    The efforts have been successful on transparency, but not on management accounting centricity with respect to a true risk-based approach that makes sense not just for auditors, but also for CFOs, Controllers, financial managers, product managers, etc.
     
  17. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    http://www.nytimes.com/2009/12/16/business/global/16chinanuke.html?_r=2

    SHENZHEN, China — China is preparing to build three times as many nuclear power plants in the coming decade as the rest of the world combined, a breakneck pace with the potential to help slow global warming.

    China’s civilian nuclear power industry — with 11 reactors operating and construction starting on as many as an additional 10 each year — is not known to have had a serious accident in 15 years of large-scale electricity production.

    And with China already the largest emitter of gases blamed for global warming, the expansion of nuclear power would at least slow the increase in emissions.

    Yet inside and outside the country, the speed of the construction program has raised safety concerns. China has asked for international help in training a force of nuclear inspectors. :rofl:
    {So it means China does not have properly trained personal for manning nuclear reactors, So much for the technological advancements}

    The last country to carry out such a rapid nuclear expansion was the United States in the 1970s, in a binge of reactor construction that ended with the Three Mile Island accident in Pennsylvania in 1979. And China is placing many of its nuclear plants near large cities, potentially exposing tens of millions of people to radiation in the event of an accident.

    In addition, China must maintain nuclear safeguards in a national business culture where quality and safety sometimes take a back seat to cost-cutting, profits and outright corruption — as shown by scandals in the food, pharmaceutical and toy industries and by the shoddy construction of schools that collapsed in the Sichuan Province earthquake last year.

    “At the current stage, if we are not fully aware of the sector’s over-rapid expansions, it will threaten construction quality and operation safety of nuclear power plants,” Li Ganjie, the director of China’s National Nuclear Safety Administration, said in a speech this year.

    A top-level corruption scandal is already unfolding in the nuclear industry.


    In August, the Chinese government dismissed and detained the powerful president of the China National Nuclear Corporation, Kang Rixin, in a $260 million corruption case involving allegations of bid-rigging in nuclear power plant construction, according to official media reports. No charges have been reported against Mr. Kang, who is being held incommunicado for interrogation. {So the case is getting a slow death by communist government to hide there incompetency}

    While none of Mr. Kang’s decisions publicly documented would have created hazardous conditions at nuclear plants, the case is a worrisome sign that nuclear executives in China may not always put safety first in their decision-making.

    In contrast with its performance in industries like toys, China has a strong safety record in industries like aviation, which receive top-level government attention.

    The challenge for the government and for nuclear companies as they increase construction is to keep an eye on a growing army of contractors and subcontractors who may be tempted to cut corners.

    “It’s a concern, and that’s why we’re all working together because we hear about these things going on in other industries,” said William P. Poirier, a vice president for Westinghouse Electric, which is building four nuclear reactors in China.

    Philippe Jamet, the director of the division of nuclear installation safety at the International Atomic Energy Agency in Vienna, said that China had welcomed foreign inspectors at its reactors and that “they show pretty good operations safety.”

    But he added that the international agency was concerned about whether China would have enough nuclear inspectors with adequate training to handle the rapid expansion.


    “They don’t have very much staff, when you compare their staff with how many they will need,” Mr. Jamet said. The agency accepted a Chinese request to send a team of international experts to the country next year to assess staffing and training, he added.

    In late October, Prime Minister Wen Jiabao ordered a quintupling of the safety agency’s staff by the end of next year, to 1,000, according to United States regulators. Chinese officials did not respond to requests for confirmation.

    China has two rival state-owned nuclear power giants: the China National Nuclear Corporation, mainly in northeastern China, and the China Guangdong Nuclear Power Group, mainly in southeastern China.

    Western experts regard the Daya Bay nuclear power plant in Shenzhen, which mainly uses French designs and is run by China Guangdong Nuclear, as evidence that China can run reactors safely. A display case holds trophies the power plant won in global safety competitions.

    China National Nuclear likewise cooperates with international inspectors and has had no reported mishaps. But its roots are in a government ministry with close ties to the former Soviet Union, making it more of an enigma to most Western experts, and the corruption case has added to their concern. China National Nuclear was on track to grow faster than China Guangdong over the next decade.

    China National Nuclear has sought to hush up the case involving the arrest of its president, deleting from its Chinese-language Web site even the most minor news releases that mentioned Mr. Kang. In a faxed response to questions, China National Nuclear made no mention of Mr. Kang, but emphasized that its plants met international standards.

    The arrest of Mr. Kang, a member of the Chinese Communist Party’s powerful Central Committee, can be seen as evidence of China’s seriousness about safety.

    Today, China’s nuclear plants can produce about nine gigawatts of power when operating at full capacity, supplying about 2.7 percent of the country’s electricity. Three years ago, the government set a goal of increasing that capacity more than fourfold by 2020.

    The government will soon announce a further increase in its targets, to 70 gigawatts of capacity by 2020 and 400 gigawatts by 2050, said Jiang Kejun, an energy policy director at the National Development and Reform Commission, the main planning agency.

    Electrical demand is growing so rapidly in China that even if the industry manages to meet the ambitious 2020 target, nuclear stations will still generate only 9.7 percent of the country’s power, by the government’s projections.

    Bringing so much nuclear power online over the next decade would reduce the country’s energy-related emissions of global warming gases by about 5 percent, compared with the emissions that would be produced by burning coal to generate the power.

    “For anyone concerned about carbon dioxide emissions, it’s heartening, but it’s only a piece of the puzzle,” said Jonathan Sinton, a China specialist at the International Energy Agency in Paris.

    China, which by most estimates overtook the United States in 2006 to become the largest emitter of greenhouse gases, is seeking sharp improvements in the energy efficiency of its economy.

    But the economy is growing so fast that even if the country can meet its goals, total emissions will rise 72 to 88 percent by 2020, Mr. Sinton said.

    The challenge for China is to build and operate its nuclear reactors without the equivalent of the Three Mile Island accident, in which a reactor core partly melted and released radioactivity, or the Chernobyl disaster in the former Soviet Union in 1986, the world’s worst civilian nuclear accident.

    China does not use the kind of reactor that exploded at Chernobyl. And engineers in China study the mistakes that poorly trained operators made at Three Mile Island.

    Liu Yanhua, a vice minister of science and technology, said China believed that its nuclear industry would continue to grow safely.

    “So far,” Mr. Liu said, “there is no damage.”
     
  18. Daredevil

    Daredevil On Vacation! Administrator

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    China Banks’ Capital Likely More Strained, Fitch Says

    By Bloomberg News

    Dec. 18 (Bloomberg) -- Chinese banks’ capital strength is probably more “strained” than it appears as lenders use more off-balance sheet transactions to make room for loan growth, Fitch Ratings said.

    The increasing amount of unreported transactions, including repackaging loans into wealth management products to sell to investors, and the outright sale of loans to other financial institutions, represent a “growing pool of hidden credit risk,” Fitch said in an annual review of Chinese banks.

    Lenders advanced a record 9.21 trillion yuan ($1.3 trillion) of new loans in the first 11 months to support a 4 trillion yuan government stimulus plan. Credit growth has slowed since July after the regulator told lenders to pace their lending to avoid possible asset bubbles.

    “A high degree of caution is still warranted due to major ongoing weaknesses in loan classification and disclosure of off- balance-sheet exposures,” Fitch analysts Charlene Chu and Chunling Wen wrote in the review dated yesterday. They said the unreported loan transactions may lead Fitch to lower its ratings for some Chinese banks in 2010 and 2011.

    Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, fell 0.8 percent to 5.13 yuan as of 11:30 a.m. break in Shanghai trading, trimming this year’s gain to 45 percent. China Construction Bank Corp., the nation’s second-biggest lender by market value, dropped 1.7 percent and Bank of China Ltd. slipped 0.7 percent.

    Repackaging Loans

    The outright sale and repackaging of loans helps explain the slowdown in new loans in the second half of 2009, Fitch said. These transactions will free up balance sheet space for new loans and lessen pressure on capital and liquidity, Fitch said, without providing an estimate on the amount.

    China’s banking regulator has proposed guidelines to ban such activity by requiring trust firms to take more active ownership of the loan assets underlying wealth management products, Fitch said.

    The regulator has already tightened rules on loans for consumption, fixed-asset investment, and working capital since July to prevent them from being used for speculation. It tightened capital requirements for banks in September by capping cross-holding of subordinated bonds.

    New lending may drop to 8 trillion yuan in 2010 as “the pressure for economic stimulus eases and balance sheet constraints from weakened capital and loan-deposit ratios become more binding,” the rating company said.

    Capital Requirements

    The nation’s 11 largest publicly traded banks, including Bank of China and China Merchants Bank Co., may need as much as a combined 368 billion yuan to keep their capital adequacy ratios at 12 percent, according to estimates from BNP Paribas SA. Wang Zhaoxing, vice chairman of the China Banking Regulatory Commission, said this month that the agency has asked the biggest banks to maintain ratios of at least 11 percent.

    Bank of China, the nation’s third-largest by market value, said last month it’s studying “various options” to replenish capital. China Merchants Bank, the country’s fifth-largest lender by value, said on Dec. 12 it will explore ways to sell subordinated bonds and hybrid bonds at home and overseas to boost capital after a rights offer to raise as much as 22 billion yuan is completed.
     
  19. Daredevil

    Daredevil On Vacation! Administrator

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    Finally, India is waking up to the threat cheap chinese products pose to the Indian domestic industry.

     
  20. Energon

    Energon DFI stars Stars and Ambassadors

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    Protectionist policies for nearly 45 years are what crippled the Indian domestic industry in the first place.
     

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