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Economy/Resources - 191. page

CRN: How to Fight the Exchange Rate War

China Review News (CRN) recently published a commentary that discussed the action plan developed to fight the apparent global exchange rate war. After the United States announced its QE3 plan, Japan, Britain, European Union, India, and Australia all followed suit and announced more liberal currency policies. The commentary offered a five-point plan on how China should handle the situation: (1) Speed up the process of internationalizing the Chinese currency (RMB) in order to establish a better position in the world economy; (2) Improve the reliability of the supply of strategic energy and resource materials, which will help build up the national reserve and lower the pressure of currency appreciation; (3) Construct China’s own new financial marketplace to improve financial risk management; (4) Sell a certain amount of U.S. bonds, which will suffer devaluation after QE3; (5) Expand the scale of importing U.S. high-tech goods, including intellectual property.  
Source: China Review News, October 10, 2012
http://www.zhgpl.com/doc/1022/6/2/7/102262784.html?coluid=53&kindid=0&docid=102262784&mdate=1010070949
Briefings | | |   Economy/Resources

CRN: Dropping U.S Bond Prices Causes Inflation Concerns

China Review News (CRN) recently reported that U.S. 10-year and 30-year bond prices are dropping. The price drop occurred just at the time when the Federal Reserve announced its QE3 policies, which caused a lot of concern about inflation. The Federal Reserve is scheduled to release its September meeting minutes. The difference between the yields of the inflation-indexed bonds and the regular 10-year bonds is commonly used to measure expected consumer prices. That difference is 2.48 percent, which is higher than the same number collected at the end of last year (1.95 percent). Some experts expressed the belief that the U.S. economy may slow a little bit but won’t fall. The Federal Reserve is to ensure growth and it should monitor inflation. However this may weaken the demand for long term bonds.
Source: China Review News, October 5, 2012
http://www.zhgpl.com/doc/1022/5/8/1/102258102.html?coluid=148&kindid=7551&docid=102258102&mdate=1005174237
Briefings | | |   Economy/Resources

Xinhua: Holiday Economy Can Be Strategic for Domestic Consumer Spending

Xinhua reported that the recent Mid-Autumn Holidays delivered an unexpected test result on the newly implemented no-fee freeway policy for vehicles with seven seats or less. Stimulated by this new policy, a large number of car owners took the opportunity to travel. As a result, surprisingly strong consumer spending took place at tourist attractions during China’s Golden Week. The holiday, which started on National Day on October 1, commemorates the anniversary of the founding of the PRC on October 1, 1949. National statistics showed that 119 famous tourist attractions reported an average sales increase of 19.47 percent as compared to the same period last year. Freeway traffic volume in Beijing, Shanghai, and Nanjing increased 30 percent to 70 percent. The number of domestic tourists was estimated to reach 345 million for the holiday week alone. However, the extremely high traffic volume in some areas caused major congestion, which also made news. Economists took notes and are studying the value of this phenomenon as a strategic base for stimulating domestic consumer spending so as to give a boost to the falling economy.
Source: Xinhua, October 7, 2012
http://news.xinhuanet.com/fortune/2012-10/07/c_113289037.htm
Briefings | | |   Economy/Resources

BBC: China’s Economy Affects the Hurun Rich List

The Hurun Research Institute published China’s 1,000 Rich List for 2012. The shift in China’s economy has affected the list in that the super rich candidates from China showed a net decrease in assets.

In 2012, although 43 out of the top 100 candidates were from the real estate business, for the first time, the number of those who came from the manufacturing sector surpassed those in the real estate sector. Meanwhile, the threshold that delineated the top 1,000 was 1.8 billion yuan, down from 2 billion yuan the previous year. Of these, the number of candidates who held over 10 billion in asset totaled 120, down by seven from the prior year. Of the 1,000 candidates, the net assets of 469 of them decreased, with 37 of them showing a rate of decrease that was 50 percent or more. The professions that were most affected were in the solar energy, clothing, and retail sectors.

The list also showed that 157 or 15.3 percent of the candidates held political titles, including members of the National People’s Congress or the National Committee. Beijing is the city that had the most rich people, with Shanghai in second place and Shen Zheng in third place.

Source: BBC Chinese, September 25, 2012
http://www.bbc.co.uk/zhongwen/simp/chinese_news/2012/09/120925_china_richlist.shtml

Briefings | | |   Economy/Resources

Xinhua: HSBC Released China’s Manufacturing PMI for September

Xinhua reported in Hong Kong that HSBC released the latest PMI (Purchasing Managers Index) number for China’s manufacturing industry. The September PMI reached 47.9. This indicates that China has had a month-by-month manufacturing decline for 11 months in a row. The Manufacturing Output Index showed a 10-month low of 47.3. The New Export Orders Index dropped to 44.9, which meant a further decline from August’s figure. The inventory Index reached a 5-month low, which reflected the continuation of the inventory clean-up process. These numbers demonstrated a consistent decline in manufacturing activities. With the biggest decline of new orders in 42 months, the inventory level naturally dropped. HSBC’s Chief Economist of the Chinese Economy expected higher pressure from quantitative easing for the Chinese central government. PMI is an indicator of financial activity reflecting the purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.
Source: Xinhua, September 29, 2012
http://news.xinhuanet.com/gangao/2012-09/29/c_113258732.htm
Briefings | | |   Economy/Resources

CRN: China May Suffer Low Quality Growth

China Review News (CRN) recently published a commentary on the decline in the quality of China’s economic growth. In the year 1980, an investment of RMB 1 yuan could result in RMB 4.1 yuan worth of return in GDP. However in year 2011, an RMB 1 yuan investment brought only RMB 1.8 yuan worth of GDP return. China’s model of high government investment in economic growth results in a weakness in the promotion of quality domestic consumption. The lowered quality is reflected in the inability to match supply with the decreased international demand. Meanwhile, China’s government run financial market suffers from very low efficiency in capital utilization. The private sector has much higher productivity but cannot access sufficient credit to obtain loans. The situation is made even worse when higher inflation and asset bubbles are added to the mix. The commentator called for tax cuts, breaking up monopolies, and improving financial support to the private sector.
Source: China Review News, September 25, 2012
http://www.zhgpl.com/doc/1022/4/6/3/102246367.html?coluid=53&kindid=0&docid=102246367&mdate=0925065247
Briefings | | |   Economy/Resources

China’s Huge Highway Liabilities Relate to Years of ‘Great Leap Forward’ Development

On September 25, 2012, People’s Daily published an article related to the nation’s highways asking, “How can highways survive with over one hundred billion yuan in highway liabilities?”  The liabilities of the 19 listed highway companies amounted to 124.79 billion yuan (US$19.8 billion) for the first half-year of 2012, compared to 105.33 billion yuan (US$16.72 billion) for the same period last year.

On August 2, 2012, China’s State Council announced a plan to lift road tolls for passenger cars taking the highways during major Chinese holidays in order to promote tourism and related industries. At present, the listed highway companies are affected because they have little other income except toll revenue. They have entered into a cycle of “over charge tolls, build more highways, borrow more money, and build more highways.”

Source: People’s Daily, September 25, 2012
http://politics.people.com.cn/n/2012/0925/c70731-19097317.html

Briefings | | |   Economy/Resources

Ministry of Commerce: China May Miss This Year’s Target for an Increase in Exports

China Review News (CRN) recently reported that, by the end of August, Chinese exports recorded a growth of 7.1 percent. The annual target set at the beginning of the year was 10%. In June, the spokesman for the Ministry of Commerce said he was “confident” that the goal would be achieved. However, recently, the spokesman suggested that the export situation is “critical.” He expressed the belief that the growth in the coming months will actually be weaker than the previous months. He cited the decrease in demand, the increase in overall costs, and a global downturn in the trade environment as the main causes of the situation. Meanwhile, international trade friction is on the rise. Both the European Union and the United States are having trade disputes with China. In order to improve competitiveness, many Chinese manufacturing companies are relocating to Mid-Western China, where labor costs are lower. Some companies are also adjusting their product lines to produce more value-added products.
Source: China Review News, September 21, 2012
http://www.chinareviewnews.com/doc/1022/4/3/5/102243571.html?coluid=10&kindid=253&docid=102243571&mdate=0921181807
Briefings | | |   Economy/Resources