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Economy/Resources - 171. page

CRN: The Missing Piece before China Becomes the Top Trading Country

China Review News (CRN) recently published a commentary on China’s import and export structure. In 2013, the value of China’s total imports and exports reached $4.16 trillion. It is becoming a sure thing that China’s physical goods trade volume will surpass the United States. However, the commentary expressed the belief that China is still far behind the U.S. in terms of trade services. The commentator suggested that the focus of global economic competition has shifted to trade services. China has to become a strong service provider in order to achieve its goals. Based on official statistics, the Chinese trade volume for services was $520 billion in 2013, which translates into an eleven percent increase over the previous year. However, compared to the leading countries, China’s trade volume for services was small and, in general, suffered from low quality. The author found that the global services market is getting deeper and deeper into knowledge, technology, and capital investments. Meanwhile the key fields China is currently playing in are still transportation and tourism. The commentary concluded that, unless China adjusts its services export structure, it will ultimately suffer an overall trade decline.
Source: China Review News, February 14, 2014
http://hk.crntt.com/doc/1030/2/2/0/103022053.html?coluid=53&kindid=0&docid=103022053&mdate=0214085447
Briefings | | |   Economy/Resources

New study: Beijing Not Fit for Human Habitation Due to Severe Pollution

The Shanghai Academy of Social Sciences released a new study of 40 major cities around the world, ranking them according to their environment. The study ranked Beijing as the second worst, stating that Beijing’s pollution has made the city nearly “uninhabitable for human beings.” 

The ecological factors in the survey included habitability, environment, and pollution. Beijing was rated the second worst, according to the study, because “Beijing’s habitability is far below average and the city is considered not habitable; its environment is about half way below the average, meaning it is far from meeting the [safety] standards; pollution is extremely severe, and is much worse than the average. It has even reached the extent that it is not fit for human habitation.” 
According to the official release of the Beijing authorities early this year, in 2013 the city had 176 days of good weather and 58 days of severe pollution. 

Source: Finance, February 12, 2014 
http://finance.jrj.com.cn/2014/02/12114516651875.shtml

Briefings | | |   Economy/Resources

Outflow of Wealth Accelerates as More Chinese Emigrate

Xinhua recently reported on information from the annual blue book on Chinese International Migration (2014), released by the Center for China & Globalization (CCG). According to the blue book, a huge number of emigrants have left China taking 2.8 trillion yuan with them. 

The blue book stated that as of 2013, emigrants to overseas had reached 9,343,000, an increase of 128.6 percent in 23 years. These emigrants brought 2.8 trillion yuan (US$46 billion) with them when they left China, thus making China the 4th largest source of emigrants. 
According to the blue book, in 2011, those people who had over 6 million yuan available for investment had a total assets of 33 trillion yuan in China. Of that amount, 2.8 trillion has since been transferred out of China, accounting for about 3 percent of China’s GDP in 2011. 

Hong Kong, the United States, and Canada have become the main destinations for the transfer of assets, accounting for 22 percent, 21 percent and 16 percent respectively, followed by Switzerland (9 percent), Singapore (6 percent) and Australia (5 percent). 

Source: Xinhua, February 7, 2014 
http://news.xinhuanet.com/house/sh/2014-02-07/c_119231579.htm
Briefings | | |   Economy/Resources

Wu Jinglian: Chinese Economy This Year Will Face Difficulties

At the annual conference of Chinese Economists forum 50, Wu Jinglian, a prominent economist and a fellow at the Development Research Center of the State Council, expressed his view that China’s economy in 2014 will face difficulties and that what’s most important is to let the market play a decisive role in allocating resources. Wu believed that the debate around whether real estate is a "pillar industry" is by itself planned economy thinking. If the central bank continues to print money, housing prices will continue to climb. Wu noted that a very important aspect of furthering the reform is to prevent the outbreak of systematic risks. Regarding the local governments, he believes that the transition of their functions involves a lot of personal power and interests. Wu said that China’s economy this year will face difficulties because many problems, accumulated over the decades, need to be sorted out and resolved. For state-owned enterprises (SOE) reform, Wu believes it is important to pay attention to "near-death" enterprises, as a large number of highly indebted SOE’s still rely on subsidies to survive.

Source: Xinhuha, February 11, 2014
http://news.xinhuanet.com/2014-02/11/c_126111686.htm

Briefings | | |   Economy/Resources

CRN: China’s Macroeconomy Faces Three Major Risks

China Review News (CRN) recently published a commentary analyzing the “cyclical fall back” of the Chinese macroeconomy as well as the much needed structural adjustments. The commentary focused on the “imbalance risks” and identified three major ones: 1) The volume of China’s exports is not in sync with the trend of the global economic recovery. The author expressed the belief that this was caused by the rebound in U.S. manufacturing, the increased costs in Chinese manufacturing, the appreciation in China’s currency, competition from other emerging economies, and new international trade agreements in which China does not participate. 2) China’s domestic economy suffers a significant imbalance between the real economy and the virtual economy. The financial industry and the housing industry are the primary contributors to economic growth, while the manufacturing industry is seeing minimal profits. 3) China’s actual interest rate is moving in the opposite direction from that of the global interest rate. While most of the countries in the world are maintaining zero or near-zero interest rates, China’s actual interest rate is growing rapidly. This significantly increases the cost of financing. Government branches, companies, and financial organizations are suffering from across-the-board debt increases.
 
Source: China Review News, February 7, 2014
http://hk.crntt.com/doc/1030/1/0/4/103010469.html?coluid=53&kindid=0&docid=103010469&mdate=0207092022
Briefings | | |   Economy/Resources

Food and Beverage Industry Suffered Lowest Growth in 21 Years

On February 8, 2014, the China Cuisine Association published a report indicating that the revenue for China’s food and beverage industry in 2013 was 25.392 trillion yuan (US$4.19 trillion), up 9 percent from 2012. This represented the lowest growth in 21 years. The report also stated that, in 2013, the business structure of the food and beverage industry underwent a major shift: high end food and beverage businesses suffered the greatest losses. Their revenue declined for the first time, while the mid-range food and beverage businesses gained main stream popularity. The report said that the high end businesses are slowly adjusting their business model to find their niche in the industry. However, the pressure to stay in business in the industry remains high in general. The report also suggested that, in 2013, Microblog, food, and restaurant review websites such as weixin and WeChat became the new sales platform for food and beverage businesses.

Source: People’s Daily, February 9, 2014
http://finance.people.com.cn/n/2014/0209/c1004-24302911.html

Briefings | | |   Economy/Resources

Mergers and Acquisitions in the Dairy Industry to Peak Prior to May

According to an article published by People’s Daily, mergers and acquisitions in the dairy industry have started and will peak prior to May of this year. In 2013, the central administration introduced the series of policies driving this phenomenon in order to improve the quality of the products in the baby formula industry. The article stated that the Ministry of Industry and Information Technology set a target to allow two years for the dairy industry to consolidate and transform into ten large enterprises, each with annual revenue of over two billion yuan (US$330 million), its own patents, and the ability to compete in the world market.

Currently there are 128 dairy manufacturing companies. The article said that most are small to mid-size companies. China’s Food and Drug administration has ordered that all dairy manufacturers complete an audit and inspection for their license renewal by May 31. If the manufacturer fails to do so, it will be shut down and be given two years to come back. The article continued with the prediction that this policy will allow those companies who fail to meet the requirements to find another way to survive. Estimates are that close to 1/3 of the companies will close. According to an industry expert quoted in the article, most of them are small size businesses. Therefore some experts predict that the small size dairy manufacturers will be better off putting themselves up for sale to get some money back instead of facing elimination.

Source: People’s Daily, February 7, 2014
http://shipin.people.com.cn/n/2014/0207/c85914-24288124.html

Briefings | | |   Economy/Resources

Xinhua: HSBC January Chinese PMI Hit Six-Month Low

Xinhua recently reported that the newly released HSBC January Chinese Manufacturing PMI (Purchasing Managers Index) number showed a six-month low, at 49.5. This is the first time since August 2013 that the number fell below 50. Qu Hongbin, HSBC Chief Economist of the China Region, commented that the Chinese manufacturing industry demonstrated a very weak start in 2014, mainly caused by the low volume of new export orders and the low level of domestic business activities. Companies surveyed suggested that some primary export markets are seeing a lower demand. Qu suggested that the decision makers should pay attention to the risks, which may require policy adjustments. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.
Source: Xinhua, January 30, 2014
http://news.xinhuanet.com/fortune/2014-01/30/c_119192408.htm
Briefings | | |   Economy/Resources