As the US stock market tosses and turns, it seems that in China, recovery already seems to be a reality. Real estate, automobiles and industrial sales have all bounced back this year and the Shanghai stock exchange is up 50% since February. The speed of recovery has surprised the World Bank, which has increased its estimate for China's GDP growth from 6.5% to 7.2%. JP Morgan thinks that China can achieve 8%, because 'everything happens very fast there'. This is indeed impressive, considering other big economies are shrinking. But China is not immune from the world's woes because it depends on exports.
However, there is a new source of demand: the Chinese consumer. The recovery has been driven by the domestic economy and the government has acted as the catalyst by lowering taxes and issuing subsidies as part of a 4 trillion yuan ($585 billion) stimulus. The state is trying to turn China from a nation of savers to spenders and growth is spreading across the country despite the decline in exports. Nationwide retail sales grew by nearly 15% in May and the rural consumption outpaced demand in the cities. Even in Sichuan province, which was hit by a massive earthquake last year, the economy grew by nearly 11% last quarter. (From Fortune 20/7/09)
Authorities closed a smelting plant in Shaanxi province following a protest by villagers upset over the lead poisoning of over 600 children in the area. Residents stormed the into the Dongling Lead & Zinc plant in Baoji city breaking the factory gate and damaging at least 10 trucks, according to Xinhua. Responding to the concerns, the Baoji Mayor, said all operations had been halted. It will not open up again until it has been proven that it will not harm villagers. The county government has pledged free health care for affected children. It also said that a relocation plan, which had been delayed, would be completed within two years. (From The Wall Street Journal 19/8/09)
NB. A later article, also in The Wall Street Journal reported that the Chinese government has ordered a safety review of Chinese lead smelters in the wake of this incident. China producers one third of the world's lead and as a consequence, the market is worried that a mass shutdown of lead smelters could lead to a shortage of lead. Prices have already increased. However, analysts say that there have been previous attempts to clean up the industry by enforcing environmental regulations already in place. These have not been effective.
Countless numbers of small smelters operate beyond the reach of China's central government and many are, in fact, on the outskirts of populated areas. Many generate revenue for local governments, who have vested interests in keeping them in business. Central government lack the resources to control the fragmented industry. Each individual smelter cannot be reached by regulators - this is the responsibility of local government. (From The Wall Street Journal 28-30/8/09)
Is China Inc. intent on buying the world? It looks this way! In June and July, Chinese companies from oil refiner Sinopec to carmaker Beijing Automotive and appliance giant Haier have invested or shown interest in investing in oil fields in Iraq, GM's Opel car business in Germany, an upscale appliance maker in New Zealand and a Japanese department store. The sums involved range from tiny ($50 million for Haier's stake in the New Zealand appliance maker) to considerable: the £7 billion plus Sinopec paid for a Swiss oil company. Also, a rumoured bid for a Spanish-owned Argentinean oil producer would be double this.
China's investments aboard at $170 billion are only a thirtieth the capital that the US has spent on foreign factories, real estate and other items, but the Chinese have certainly been revving up their deal machine. Their investments last year doubled to $52 billion and the economic planners predict a 13 % increase this year despite the economic slowdown.
Some deals have not come off well, for example the purchase of the Korean Ssangyong Motors, which is now bankrupt, and the Rio Tinto deal. And the jury is still out on China's Lenovo purchase of IBM's PC business. But the Chinese are learning and the world will see more Chinese acquisitions abroad. (From Businessweek 27/7/09)
The Chinese economy rebounded in the second quarter, boosted by a surge in state spending and in bank lending putting the country on course to lead the world out of the worst global downturn since the Great Depression. China's economy had been expected to show a strong improvement as a 4,000 billion yuan (£365 billion) government stimulus package - introduced to combat a slump in exports - began to take effect after being unveiled in November. The figures actually look even stronger if calculated on the basis of an annualised quarter-on-quarter comparison, showing that the economy may have grown by as much as 17%. It would seem that the government target of 8% is being achieved. This figure is crucial, because it is seen as the minimum level needed to hold down unemployment.
Li Xiaochao, spokesman for the National Bureau of Statistics, said that the impact of the stimulus package has been remarkable. The economy is continuing to turn for the better and there are more and more positive signs. More people are spending and the recovery is intensifying. Some economists said that the data showed that China had achieved a V-shaped recovery, with a carefully managed shift to nurture stronger domestic demand helping to offset the drop in exports.
Since 1978 China has averaged near to 10% growth every year, but this year the government has had to ramp up spending and shift to a loose monetary policy to put the country on track for its official target for 2009. Because consumer prices fell in June by 1.7% from a year earlier, Beijing has had a freer hand to keep spending without increasing inflationary pressure. Signs of this are evident in lending. Banks have issued twice as much in new loans so far this year as they did in the first half of 2008. In a sign that money has been flowing back into the economy in anticipation of the success of the stimulus package, the central bank's foreign exchange reserves leapt by $177.9 billion to $2,130 billion, making China the only country to amass more than $2,000 billion in official reserves. However, Mr Li said that the foundation for recovery is still not solid and is not yet fully balanced. (From The Times 17/7/09)
Everyone arriving in China has their temperature measured before leaving the plane. Medical officers wearing masks and protective clothing come on board the aircraft and point an electronic thermometer at each passenger's forehead whilst they remain in their seats. This actually does not take very long. Every passenger then fills in a form giving contact details in China and their seat number in case they sat next to anyone who is later found to be infected with H1N1. As a double check, as the person hands in their form in the airport, a thermal imaging device again checks the temperature of everyone who walks past. Other countries in Asia have introduced similar measures, including Singapore and Hong Kong.
Meanwhile, 48 school children and teachers who had travelled to China for a two-week language and culture tour are in quarantine in a four-star hotel in Beijing. The trip was organised by the British Council and Han Ban, the Chinese Language Council International. Eight of the children are believed to have the infection and have been admitted to hospital in Beijing. Martin Turner, a spokesman for the tour organisers, Specialist Schools and Academic Trust, praised the Chinese handling of the outbreak. He said that it is not an ideal situation, but it is being managed well. (From The Times 20/7/09)
Money analysts, who have looked for signs that China is switching its foreign reserves from dollars to gold, may be looking at the wrong metal. China's State Reserve Bureau (SRB) has been buying copper and other industrial metals in recent months on a scale that seems to go beyond the usual building of stocks for commercial reasons. The next industrial revolution is likely to be led by hybrid cars, which need copper. The SRB has also been accumulating aluminium, zinc, nickel, and rarer metals such as titanium, indium (useful in thin film technology), rhodium (catalytic converters) and praseodymium (glass). While it makes sense to take advantage of last year's commodity crash and restock cheaply, some analysts are convinced that the move is to diversify out of dollars and other foreign bonds. (From The Daily Telegraph 16/4/09)
China is urging Western nations to do more to cut emissions of greenhouse gases and believes that the EU pledge of a 20% cut on 1990 levels and the US talk of a 17% drop from 2005 levels were not sufficient. Four months before the Copenhagen negotiations, which aim to produce a successor to the Kyoto treaty, China's chief climate change negotiator confirmed that China was holding out for developed nations to reduce emissions by 40% by 2020 from 1990 levels. He says that due to the historical responsibility of the developed nations, they must continue to take the lead.
China has developed green energy industries but it has resisted any regulations that would dampen growth. It is not, at present, required to set any emission targets because its per-capita rate is far lower than those in Western countries. (India's climate change envoy has said that 'hypocritical' Western nations should sacrifice some luxuries before asking developing countries to cut their greenhouse gas emissions). (From The Daily Telegraph 6/8/09)
Timothy Geithner, US treasury secretary, in a speech at Beijing University on his first visit to China since his appointment, insisted that China's US assets are 'very safe'. The students saw the funny side and responded with loud laughter. Mr Geithner told politicians and academics in Beijing that he still supports a strong dollar and that the trillions of dollars of Chinese investments would not be unduly damaged by the economic crisis. There are growing fears over the size and sustainability of the US budget deficit, which is set to rise to almost 13% of GDP this year as the world's biggest economy fights off recession. The US is reliant on China to buy many of the government bonds it is planning to issue. Beijing's policy makers have expressed concern about the strength of the dollar and the value of its investments. However, Chinese vice-premier Wang Qishan said that the two countries were working closely together to fight the economic crisis. (From The Telegraph 2/6/09)
The Financial Times survey published at the end of May 2009 shows three Chinese companies in the top five.
|Rank||Company||Country||Market value ($bns)||Total assets ($bns)|
|4||Industrial & Commercial Bank of China||China||187.885||1,425.722|
Other high rating Chinese companies are China Construction Bank (13), Bank of China (21) and Sinopec (24). HSBC Bank of the UK is rated 29th.>(From FT Weekend 30-31/5/09)
Note that a list of the top companies in the world issued by Fortune Magazine on 24 August 2009 ranks them on revenue and there is only one Chinese company in the top ten. This is Sinopec rated at number 9. The highest rating Chinese bank is China Construction Bank at number 125! Bank of China is number 145 and Agricultural Bank of China is number 155.
China has nurtured manned spaceflight aspirations since as far back as 1967, but did not actually do anything until October 2003, when the Chinese National Space Administration succeeded in launching a man, Yang Liwei, into space. This was quickly followed by two and three-man missions. Then in 2008, Chinese astronauts completed their first spacewalk. In 2006, China's National Space Administration announced its plan to land people on the Moon by 2020 and then progress to Mars between 2030 and 2040. Many space pundits believe that China has the drive to make it there first. (From Focus, Summer 2009)
Is China taking the first step towards ending its one-child policy? The authorities in Shanghai are encouraging thousands of couples to have a second baby. The move was prompted by the growing demographic imbalance in the city and fears that the younger generation will not be able to support the ageing population. The director of the Shanghai Population and Family Planning Commission said that they are encouraging eligible couples to have two kids because it can help reduce the proportion of the aging population and alleviate a workforce shortage in the future. Shanghai's over-60 population already exceeds three million or 21.6% of registered residents. This is near to the average figure of developed countries and it is still rising quickly - by 2020 the proportion of elderly is expected to rise to 34% of the population.
The elderly population is rising at a similar rate across China, mainly in the cities, and the working age population is expected to start shrinking in about 2015. The overall population is expected to peak in about 2030, with China becoming the first country to grow old before it grows rich and therefore unable to support a nation of pensioners. In Shanghai, where the rise in incomes is amongst the fastest in the country, young couples want to enjoy a level of prosperity unknown and some couples may say that raising a family is too expensive. (From The Times 25/7/09)
Armed riot police, armoured personnel carriers and guard dogs patrolled Urumqi, capital of Xinjiang Autonomous Region yesterday after violence which left 156 people dead and 828 injured. Officials said that the number of fatalities would almost certainly rise. It is believed that the violence was sparked off by reports of a clash last month in Guangdong in which two Uighurs died.
Locals in Urumqi gathered after the hugely popular Sunday market to demand redress for the dead men who were killed after what proved to be a rumour that two Han girls had been raped by Uighurs at a factory in Guangdong. The government believe that the unrest was stirred up by the US-based World Uighur Congress led by Rebiya Kadeer. She was a businesswoman in Xinjiang but later spent five years in prison for providing state secrets to foreigners. In 2005 she was freed and deported to the US. (From The Times 7/709)
The first one was founded in 2004 and the programmes are primarily focused on language instruction but also include cultural events around major Chinese festivals and sponsorship of arts performances. Currently there are 339 Confucius Institutes in 83 countries with 1,500 teachers from China. There is also several thousand local staff.
In Asia there are 92 institutes in 26 countries: in the Americas, 91 institutes in 11 countries: in Australia and New Zealand, 11 institutes: in Europe 122 institutes in 28 countries and in Africa, 23 institutes in 16 countries.
China wants other countries to learn and understand China through cultural activities. Chinese culture has been non-stop for 5,000 years and as a part of world culture, China should help create a more harmonious world. In addition to establishing Confucius Institutes and sending 1,500 teachers abroad to help staff them, every summer 4,000 students and 4,000 teachers come to China to do research. It helps for people to meet so they can understand each other.
But there are challenges: classroom discipline and management in other countries are very different from those in China: shortages of teaching material in languages other than English and French and finally differences in teaching methods in foreign countries. (From Monocle, September 2009)
While much of the world sinks into debt, China is one place where money is looking good, with its $3 trillion of foreign currency. Whilst the developed world has been spending, China has been saving. This situation is partly the result of the non-convertibility of the Chinese yuan and partly the hunger of the EU and the US for cheap goods from China over the last decade.
The G20 expects Beijing to contribute some of this money to solving the current economic crisis. The question is how much will China play along.
There is one clear area where China can use and is using its money: overseas investment. China is now the world's sixth-largest outward investor, according to the UN Conference on Trade and Development. Even this assessment is almost certainly an underestimate. Chinese financial institutions have significant minority shareholdings in US and European financial institutions in US and EU financial institutions.
As one commentator has said the era of 'Made in China' is drawing to a close. The era of 'Owned by China' is starting, and we should be ready for a rapid transition. The Chinese government is encouraging its largest state-owned companies and some of its non-state owned companies to 'go out'. The objective is to expose Chinese companies to international markets and to show that China is interested in building globally competitive companies and brands.
The west should overcome its doubts about Chinese investments and realise that a more welcoming approach will bring immediate economic gain and also longer term benefits. The economic integration between the west and China will deepen. A powerful interest group within the Chinese elite will be drawn into fuller engagement with their western counterparts and maybe the west will find that the political influence of which it is most afraid works both ways. (From The Guardian Weekly 15/5/09
China launched a further navigation satellite, Compass G2, on 15 April 2009. This was the second satellite in the Beidou next-generation development. Compass G2 is a geostationary navigation satellite, whose orbit is fixed in relation to the Earth. The first satellite in the Beidou system was launched in October 2000 and a regional satellite navigational system (for China and neighbouring areas) became operational in 2003 after the launching of further satellites. Compass M1, launched in April 2007 was the first of the next generation development. The Beidou global positioning system is expected to be complete by the year 2020. Beidou means 'the big dipper' after the star constellation and is the fourth such navigation system. Ther others are the American GPS, the Russian Glonass and the EU's Galileo system, which should be in operation by 2013. (From Beijing Review 9/7/09)
The 2008 Beijing Olympics raked in a profit of more than 1 billion yuan ($146 million) the Chinese National Audit Office said on Friday. A report posted on the office's website said the total operating cost of the games was 19.343 billion yuan and the operating revenue, 20.5 billion yuan.
Apart from the operating cost, China also spent 19.49 billion yuan on building 102 Olympic projects in Beijing and the five other cities that co-hosted the games. Of these projects, 36 were competition venues and the rest were used for training. The earnings from the games will be used to set up special funds for the development of sport, to improve sport facilities and to organise events for ordinary people. (From China Daily 20-21/6/09)
China is planning to significantly increase its power generation by wind energy. About one trillion yuan ($146 billion) is to fund seven wind power farms by the year 2020. Each wind farm will have a minimum generating capacity of 10 gigawatts and the total combined capacity will be about 120 gigawatts. They are to be located in Gansu, Hebei, Jilin and Jiangsu provinces, Xinjiang Autonomous Region and the Inner Mongolia Autonomous Region. Each area will have one each except Inner Mongolia, which will have two wind farms. (From Beijing Review 9/7/09)
The Communist Party of China at the end of 2008 had 75.9 million members. This is 17 times the number in 1949 when the Peoples Republic was foundered. Last year, 2.8 million new members joined and of these new members, 2.3 million or 80.8% were under 35 years old. (From Beijing Review 9/7/09)
China's Banking Regulatory Commission (CBRC) on 8 July prohibited banks from investing wealth management funds in secondary-market stocks. Wealth management funds are banned from secondary-market securities-backed funds, equities of unlisted companies and shares in listed companies that are not allowed to be issued or traded publicly. The CBRC has said that banks should not spend clients' wealth management funds on high-risk investments or complicated financial products. Banks should protect clients with medium or low incomes while providing rational investment services for high-end clients. (From Beijing Review 16/7/09)
Preparations are well underway on a 4 square kilometre site on the banks of the Huangpu River between the two landmark bridges of Nanpu and Lupu. The exhibition is due to open on 1 May 2010 and by 4 May 2009, 237 countries and international organisations had confirmed that they would participate in the event. The expo will last for 184 days until 31 October 2010 and is expected to attract 70 million visitors.
Each country will try to exhibit its unique culture; for example the UK pavilion will be a huge 'light box' with 60,000 spines projecting into the air. The Luxembourg Pavilion will be like a castle in the forest, while the Poland Pavilion is designed like a paper cutting. The China Pavilion, which has been under construction since December 2007, will appear to be twice as wide at the top as at the bottom and the roof will be equal in size to two and a half football pitches. The Japanese Pavilion which, has been under construction since February this year, will look like a castle in space. Visitors will be amazed by the designs of the 200 pavilions and there will be an estimated 20,000 events with more than 100 performances every day.
To accommodate the visitors, there will be an estimated 500,000 hotel beds in 500 hotels and 4,000 hostels in Shanghai and in addition a further 150,000 beds in neighbouring Jiangsu and Zhejiang provinces. To ensure smooth transportation, six subway lines are being extended and more than 1,000 new trains will be put into service before the end of 2009. By 2010, Shanghai will have 13 subway lines with 400 km of track. (From Beijing Review 14/5/09)
Xu Shanda, a former senior tax official, recently suggested that the Chinese Government launch a $500 billion financing assistance programme for developing countries to sped up the world's recovery from the financial crisis. It could be called 'World Harmony Programme' and would be expected to share some features with the Marshall Plan set up by the US after WW2. It is proposed in the light of China's huge foreign currency holdings. The money could help cash-strapped developing countries in the form of low-interest commercial loans to help them improve domestic capital infrastructure and develop trade capacity. These countries (in Asia, Africa and the Americas) could then increase their purchase of Chinese goods and labour services and thus boost China's export-orientated economy. Xu, 62, obtained a doctorate from Bath University in 1990 and served as vice-minister of China's State Administration of Taxation from 2000 to 2006. (From Beijing Review 23/7/09)
Six public health and hygiene projects have been launched for this year, backed by central government. They include vaccination for Hepatitis B for children under 15; folic acid treatment for rural pregnant women to prevent neural-tube defects in babies; examinations for cervical cancer for 10 million rural women and against breast cancer for 1.2 million more rural women: one million cataract operations for poverty stricken persons; prevention of fluorine poisoning caused by coal burning and also renovation of public toilets, water supply facilities and drainage systems. Within the year 7.1 million rural households will have new toilets and 30,000 drinking water projects across the country will be upgraded. (From China Today, August 2009)
Arnold Schwarzenegger signed a bill into law on 21 July which apologised for historical discrimination against the Chinese American community. This is a bold step that heralds a new era not just for Chinese Americans, but also for Sino-US relations. Despite their reputation for being hardworking, kind-hearted and polite, the Chinese have been the only ethnic group to be systematically banned by the federal government from entering the United States in America's history. Even Japanese, German and Italian immigrants were not subject to such a ban during World War II.
The Chinese Exclusion Act was passed under pressure from Californians. Ten years previously in, 1872, the State of California adopted its first law barring Chinese immigrants and denying them naturalisation. Chinese Americans were thus unfairly treated for more than five decades and although California's apology is long overdue, it is highly meaningful as it offers rectification of its past mistakes. The Chinese Exclusion Act was repealed on 17 December 1943 by US President Roosevelt. He wrote to congress saying that it was to 'correct an injustice to our friends'. He also said that, 'nations, like individuals, make mistakes' and also, 'We must be big enough to acknowledge our mistakes of the past to correct them'.
California's bill was timely because US Energy Secretary Judy Chu from California, (the first Chinese congresswoman), and US Commerce Secretary Gary Locke (a former governor of the State of Washington) were in Beijing for a joint visit. (From Beijing Review 13/8/09)
The recession has hit international tourist arrivals in Shanghai more severely than many other mainland cities. Overseas visitor numbers fell by nearly 10% in the first half of this year. It is believed that this is because of the international nature of Shanghai which is therefore more prone to feeling the impact of the overseas economic environment. The Shanghai drop is about three times higher than the drop in total tourist arrivals in 28 other mainland cities.
Beijing recorded a 2.3% decrease, whilst Tianjin saw an increase of 14%. However, Sanya (Hainan) experienced a 40% decrease and Zhongshan in Guangdong experienced a 30% drop. Shanghai, however, still expected to attract 6.8 million overseas visitors this year, compared to 6.2 million last year, whilst next year, 70 million are expected to come to Shanghai for the World Expo.
Work has already started on 60 of the 100 pavilions for the Expo which will occupy 5.28 sq km - the largest ever site for an exhibition. Construction costs will amount to 18 billion yuan. So far 192 countries and 49 international organisations have arranged to participate. The organisers are expecting 700,000 to 800,000 visitors each day and even 300,000 to 400,000 on quiet days. The Exhibition theme will be, 'Better City, Better Life'. (From South China Morning Post 17/08/09)
The ship, 'New Golden Bridge' left Fuzhou in Fujian Province on 13 July bound for Taiwan. This is the first combined passenger and cargo vessel to embark on a direct trip between the Chinese mainland and Taiwan. (From Beijing Review 23/7/09)
The executive vice chair of the Beijing Organising Committee of the Olympic Games, Jiang Xiaoyu , told China Daily that, compared with the Lhasa riot last year, he thinks China has shown more openness with the Xinjiang riots of the 5 July this year. He also believed that granting foreign reporters immediate access to the scene was a sign of China's growing confidence in the wake of the games and that this has had a good impact on China's image. Ted Plasker of the Economist has also said that compared to the Lhasa incident and the Sichuan earthquake, China's government adopted a 'much more open attitude toward the media' after the Xinjiang riots. Plasker is among the 700 or so foreign journalists who are based in China and who have benefited from the Games' legacy. (From China Daily 8-9/809)
A director of the Shanghai tourist board believes that China can sustain three Disneylands and that a Shanghai one would not take business away from the Hong Kong theme park. He said that the Shanghai park might be 10 times larger than the one in Hong Kong, the smallest in the world, and possibly even bigger than the Tokyo park. The project had still to be approved by China's central government. An associate professor in Hong Kong's Chinese university, however, has said that China could support three Disneyland theme parks only if everyone of the 1.3 billion mainlanders were affluent. (From South China Morning Post 17/8/09)
To traders from across the Muslim world, the Shangmao district of Yiwu, a small city in southwestern Zhejiang province is as well known as Xi'an was 2,000 years ago. Anwar Agreeb, a Yemeni, who came to China in 2001 as a student, now works as a translator for some of the 200,000 Arab traders who visit each year. Yiwu is a city of two million people about four hours drive south of Shanghai which has benefited from the September 11, 2001 terrorist attacks and China's accession to the World Trade Organisation. The mainland threw open its doors to traders from all over the world, just as the US and Europe were slamming theirs to the Muslim world. Now many Arabs and Muslims feel more comfortable in China than they do in Western countries.
An Iranian who exports air-conditioning units to Iran and Iraq says in Europe, people think that Arabs, Iranians and Pakistanis are terrorists. But here, Chinese just think about business and don't care about politics. Last year, China's exports to Arab League countries were worth $62 billion - a huge jump from $7 billion in 2001. But by next year, the Chinese government are hoping the figure will reach $100 billion. Beijing is keen to stress the long history between China and the Arab world and believe that Yiwu is now performing the same function that the Silk Road once did. (From South China Morning Post 19/8/09)
Xuan Changneng has been appointed to the Financial Stability Bureau of the Peoples' Bank of China (China's clearing bank). He was previously the bank's research chief. He is 42 years old and has a master's degree from the University of Pennsylvania and a PhD in finance from the University of Texas in Austin. He has also worked for JP Morgan in New York and JC Flowers & Co, the US private equity firm. In China he has worked for the China Securities Commission and the China Construction Bank. (From Beijing Review 20/8/09)
Construction began in Shanghai on China's research and development centre for large aircraft. The first phase will be completed and operational at the end of 2011, according to Commercial Aircraft Corporation of China Ltd. (COMAC), which is designated maker of China's large aircraft. (From Beijing Review 16/7/09)
Sino File is compiled by Walter Fung with some input for From the Chinese Press by Teresa Ray.
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