Overseas shipments decreased 0.5 percent and imports fell 15.3 percent from a year earlier, the customs bureau said on its website today. The median estimate of 30 economists was for a 3.6 percent drop in imports for the month, which had four fewer working days than January 2011 because of the holiday. The trade surplus widened to a six-month high of $27.3 billion.

Economists differed over whether the data are evidence of a slowdown in demand within China or result mainly from seasonal distortions. Commerce Minister Chen Deming said yesterday January exports “cannot make us optimistic” and the International Monetary Fund cautioned this week a deterioration in Europe could cut China’s expansion rate almost in half this year.

“Domestic demand was genuinely weak in January, while exports remained on a gradual downward trend,” said Yao Wei, a Hong Kong-based economist for Societe Generale SA.

© Sophie Beach for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: economic growth, economic slowdown, exports, trade surplus
Download Tools to Circumvent the Great Firewall

Based on the IMF’s “downside” forecast for the global economy, China’s growth could drop by as much as 4 percentage points from the fund’s current projection, which is for 8.2 percent this year, the organization said in a report released today by its China office in Beijing.

The outlook expands on the IMF’s warning last month that the world could plunge into another recession if Europe’s woes deepen. Premier Wen Jiabao reiterated last week his government will “fine-tune” policies to support growth amid the region’s debt crisis and the cooling domestic property market.

“China’s growth rate would drop abruptly if the euro area experiences a sharp recession,” the Washington-based IMF said. “However, a track record of fiscal discipline has given China ample room to respond to such an external shock.”

© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: debt crisis, economic growth, Europe, GDP, imf
Download Tools to Circumvent the Great Firewall

Japan had held the No.1 position since at least 1975 until 2010, the International Energy agency’s Coal Information showed.

China, also the world’s biggest coal producer and consumer, imported 182.4 million tonnes of the fuel in 2011, 10.8 percent higher than a year earlier, data from the country showed.

Japan’s customs-cleared imports fell 5.1 percent to 175.2 million tonnes last year, hurt by slack demand for coking coal as steelmakers curbed production.

It is unclear whether China will retain this position, however, as a Reuters poll last month showed the country’s coal imports are expected to grow at a slower pace in 2012, as domestic appetite moderates and home production rises.

© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: carbon emissions, coal imports, economic growth, Japan
Download Tools to Circumvent the Great Firewall

In 2011, China’s gross domestic product came in at 47.1 trillion yuan ($7.4 trillion). That represented nominal growth of 17.5% from 2010, a blistering pace which makes many of the problems of debt and credit that trouble investors and hang over valuations for Chinese stocks appear a little more manageable.

Take local-government debt. The government’s own auditor put the end of 2010 number at 10.7 trillion yuan. In 2010 that was equal to 26% of China’s GDP. In 2011, it had already shrank to 22%. Even if weaker demand and reduced inflation mean a slightly lower nominal growth rate in 2012, by the end of the year it could have shrank to 19%. Local-government debt may also be creeping up, but not enough to push the ratio in the wrong direction.

Investors also worry about China’s credit binge, which saw the ratio of loans to GDP soar from 96% at the end of 2008 to 119% at the end of 2010, as loan growth ran way ahead of GDP. An expanding economy means that ratio is also moving in the right direction—down to 116% in 2011. That smaller reduction in the ratio reflects the fact that banks’ loan books continue to expand, though not quite as fast as GDP.

Indeed, better-than-expected December manufacturing data and GDP growth have indicated a soft landing for China’s economy and helped to rally global markets in early 2012. In addition, Forbes points out that commodity demand from China continues to exceed expectations. Still, writes The Economist, key indicators suggest that the makeup of China’s growth is changing:

China still runs a sizeable trade surplus. But its net exports fell in 2011 (in absolute terms) for only the third time since 2000, subtracting 0.5 percentage points from its growth. Thanks to home-grown spending, China’s economy still managed to expand by 9.2% in 2011, remaining surprisingly strong even in the fourth quarter. This growth owed an unusual amount to consumption (both public and private), which contributed over half for the first time since 2001. As a consequence, the share of consumption in China’s GDP edged up in 2011 after falling for ten years in a row.

The mainstay of China’s growth remains investment, on which its economy remains worryingly dependent. Indeed, when China’s critics are not bashing it for overexporting, they bash it for overinvestment in property. Its housing boom is, however, slowing markedly. China this week reported that the price of new homes fell in 52 out of 70 cities across the country in December, compared with the month before. Households are struggling to obtain mortgages; developers are finding it almost impossible to obtain a loan. The drying up of foreign funds is particularly dramatic, points out North Square Blue Oak, a research firm based in London and Beijing. Foreign capital fell by 65% in December, compared with a year earlier.

The flight of foreigners from property partly explains another unusual twist in the China story. Its foreign-exchange reserves fell in the fourth quarter for the first time since the height of the Asian financial crisis in 1998. The drop was small, from $3.2 trillion to $3.18 trillion, but also a little mysterious. China still exports more than it imports, and attracts more foreign direct investment than it undertakes. These two sources of foreign exchange must, then, have been offset by an unidentified drain.

The worry is that China’s capital controls have sprung a leak. “Hot money”, attracted by the country’s growth, may be flowing out as the property market falters. Some even speculate that China’s rich may begin to smuggle their new-found wealth out of the country en masse.

The Diplomat’s Rajiv Biswas also speculated on the possibility of a “Goldilocks Landing” – not too hot, not too cold – as China enters 2012.

© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: debt crisis, economic growth, foreign exchange, GDP, hot money, trade surplus
Download Tools to Circumvent the Great Firewall

In the latest protest, around 1,000 people from Wanggang village gathered in front of a government building in Guangzhou, capital of Guangdong, Tuesday in protest against Li Zhihang, their allegedly corrupt Communist Party secretary.

They waited there until the early hours of Wednesday, when they were told officials would probe their case and would announce the result of the investigation by February 19, Li Zhikai, a local villager, told AFP.

“They will dispatch a working team to our village to investigate property and financial records and have promised we can elect new members of a party committee,” he said by phone.

…

According to a petition posted online by the villagers, they had tried to petition the government on several occasions but to no avail, and so decided to protest peacefully.

One observer told AFP that the Guangdong authorities had to give into the demands of the Wanggang protestors in order to both validate their approach in Wukan and avoid more demonstrations. The Diplomat’s Jiang Xueqin digs into China’s land grab issue in light of incidents in Wukan and elsewhere, asking why the practice is so prevalent despite the risks it poses to the Communist Party regime:

The Party’s authority and legitimacy are predicated on guaranteeing at least 8 percent GDP growth a year, and economic growth is the mandate of all Party officials. If you’re Ningbo or Yantai or any large Chinese urban center with an entrepreneurial population and large resources then that’s not a problem. But if you’re a rural township of subsistence farmers then your best shot at producing the numbers you need to win praise and promotion is to grab that worthless land and put a factory or a condo on it. The magic of economic statistics is that, even if the factory or condo is empty, the value of land shoots up, and so does your career prospects.

Land grabbing is the Chinese equivalent of alchemy, and this quick immediate economic fix is just too addictive for local officials to say no to. This is a problem not just commonplace in the villages, but everywhere in China.

Consider the Chinese public school system, which focuses on test scores and college enrollment statistics. The system destroys students’ creativity and curiosity, independence and imagination, but as long as you get eighty percent of your students into tier one colleges you’re promoted and rewarded as a brilliant educator – just like magic!

No official was arrested because of the Wukan uprising. That’s because, as everyone knows in China, those officials were just doing their job.

© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: chinese communist party, corruption, economic growth, GDP, Guangdong, Guangzhou, land grab, protests, Wanggang, Wukan
Download Tools to Circumvent the Great Firewall

1) The run-up to Beijing’s once-in-a-decade political transition in October 2012 is likely to generate intensified clampdowns internally and assertive rhetoric abroad as China faces rising domestic challenges, and finds itself constrained internationally. Fearful neighbors may further strengthen ties with the United States. Pariah/failed state “allies” North Korea, Pakistan, and Iran will likely experience problems that affect China’s own interests. Externally, China is likely to be more intransigent than before. Internally, Beijing will resist making difficult decisions about economic reforms, particularly reforms that might harm key state-owned enterprises and monopolistic/oligopolistic concerns connected with families of political elites. Domestically and internationally, Chinese leaders will attempt to postpone difficult policy decisions until after the transition.

2) Slowing economic growth will likely increasingly expose the flaws and unsustainable nature of China’s infrastructure-driven growth model.One local banking regulator cited by Minxin Pei claims only 1/3 of the investment projects currently under construction will produce cash flows large enough to cover their debt service burden. This may rapidly reduce economic growth and commodity demand in 2012.

Damien Ma writes in The Atlantic that 2011 “saw the democratization of the China narrative,” and assesses the likelihood of rebalancing in 2012 as a number of “structural maladies” – including high inflation, employment, healthcare and education costs – continue to fester:

To me, one of the biggest questions next year is whether China can create the necessary political conditions, amid one of the most important transitions in a decade, to forge ahead with its restructuring. With the anticipated slow down in growth and a shrinking export surplus, there appears to be an opportunity to steer the ship of state in a different direction. Yet with a political leadership still unsettled, I find it hard to be optimistic over the extent of progress next year. But I am fully open to being surprised.

See also warnings by Wen Jiabao of a “difficult” start for China’s economy in 2012, via CDT.

© Scott Greene for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: 2012, economic growth, education, healthcare, inflation, leadership succession
Download Tools to Circumvent the Great Firewall

Mr Wen also reiterated pledges to expand domestic demand as authorities try to ward off the effects of crises in the US and Europe – key markets for China’s export-dependent economy.

“The first quarter of the year may be quite difficult,” Mr Wen said, according to a statement by the State Council, China’s cabinet.

“We are now in a situation where pressure from an economic downturn and high prices both exist,” he said.

Mr Wen added that slowing external demand and the rising cost of doing business domestically further complicated the situation when compared with the financial crisis in 2008.

This warning comes amid last month’s claim  by the government of guaranteed steady growth. Wen also said that monetary policy will be fine-tuned as needed. Bloomberg adds:

“We see downside pressure on our economy and elevated inflation at the same time,” Wen said during a trip over the past two days to Hunan province, according to a statement on the government’s website today. “We also face problems of weakening external demand and rising costs for companies.”

“The government is closely monitoring the downside risks to growth,” said Chang Jian, a Hong Kong-based economist at Barclays Capital. “With an expected deceleration in property investment and exports, we expect to see more weakness in industrial activity.”

The government aims to stabilize growth and consumer prices to “promote social harmony,” Wen said. He made the comments during meetings with company executives including Liang Wengen, chairman of Sany Heavy Industry Co. Ltd. and Zhan Chunxin, chairman of Zoomlion Heavy Industry Science and Technology Co. Ltd., according to the government statement.

China will continue to focus on rebalancing growth, restructuring the economy and increasing consumer and investment demand to support the “real economy,” he said.

See also President Hu Jintao delivers new year speech and Manufacturing defies negative forecasts via CDT.

© melissa chan for China Digital Times (CDT), 2012. | Permalink | No comment | Add to del.icio.us
Post tags: economic growth, economic slowdown, monetary policy
Download Tools to Circumvent the Great Firewall

The argument that there is an unsustainable reliance on exports — and investment — to generate growth seems widely accepted, even if it is less clear how a ‘rebalancing’ can be achieved. Still, the possibility that an identifiable Chinese model exists is not just the source of considerable interest, but also a degree of national pride.

But rather than highlighting a contradiction in thinking, these apparently divergent responses point to what most observers suggest is a key component of the model; it is flexible, pragmatic and responsive, as it is built around experimentation and doing what works, rather than basing itself on rigid ideological and/or policy prescriptions. This not only means doing different things as conditions change at home and abroad, but also having different models for different parts of the country. While it might not be possible for other developing countries to do what China has done, the essence of this understanding is that they should not search for blueprints, but should instead do whatever works for them.

In this respect, the Chinese model is less important for what it is as what it is not. It is not big-bang reform and shock therapy; it is not a process where economic liberalisation necessarily leads to democratisation; it is not jettisoning state control over key sectors or full (neo)liberalisation (particularly in financial sectors); it is not the Western way of doing things; and it is not following a model or a prescription, or being told what to do by others. And unlike other communist-party states, all this has taken place under regime continuity. While the successes of China’s economic experience are clearly important in promoting this idea, so too are the failings of the neoliberal ‘other’ against which China is being compared.

See also an East Asia Forum piece from August 2011, in which Suisheng Zhao sheds light on the fault lines present in the existing so-called “China model” that have led to a number of China’s social and political ills.

© Scott Greene for China Digital Times (CDT), 2012. | Permalink | One comment | Add to del.icio.us
Post tags: China model, democratization, development, economic growth, ideology, neoliberalism
Download Tools to Circumvent the Great Firewall

For instance, the satellites saw a steep decline in lighting in Rwanda in 1994 and the following years, reflecting that country’s civil conflict and genocide. Similarly, a civil war in Cote d’Ivoire from 2002 to 2004 severely darkened the country, with lights only returning in recent years. As well, increased lighting in Iraq in 1999 corresponded to the UN lifting import restrictions at the time, while external investment in Afghanistan led to increases in satellite-observed lighting starting in 2002.

Perhaps not surprisingly, countries undergoing rapid growth, such as China, had a high correlation between lighting and both GDP and population. In contrast, highly developed countries, such as the U.S. and Western Europe, showed fairly stable lighting patterns that didn’t shift despite increases in population and GDP.

This effect is clearly visible in the contrast between China and South Korea, Japan and Taiwan from 1992 to 2010 (click through to view a time-lapse sequence). North Korea remains almost entirely dark throughout.

A second sequence at Wired shows similar images of India and its neighbours. See more on the observation of city lights from NASA.gov, and timelapse videos taken from the International Space Station showing flyovers of various regions around the world, as well as orbital views of the Northern and Southern lights.

© Samuel Wade for China Digital Times (CDT), 2011. | Permalink | One comment | Add to del.icio.us
Post tags: economic growth, GDP growth, India, Japan, North Korea, satellites, south korea, Taiwan
Download Tools to Circumvent the Great Firewall

From the territorial disputes with Vietnam and the Philippines in the South China Sea to tensions with Burma (Myanmar) and Thailand, relationships that were sound, if not always friendly, have now soured.Myanmar’s decision to shelve the Chinese-backed Myitsone Dam project shocked China. Likewise, the killing of 13 Chinese boat crewmen on the Mekong River in October serves as a stark reminder that China’s presumably peaceful southern land border, which has been untroubled for nearly 20 years, today resembles the most hostile sort of neighborhood.

China’s people and government are especially dismayed by the Mekong killings, which seemed to demonstrate, once again, the government’s inability to protect its citizens from being murdered abroad, despite the country’s newfound global status. As a result, two compelling questions have arisen: Why do China’s neighbours choose to neglect its interests? And why, despite China’s rise, do its authorities seem increasingly unable to secure Chinese lives and commercial interests abroad?

…

Indeed, China’s neighbours will not be reliably good to Chinese interests unless and until China begins to provide essential public goods – not just commerce, but also full-fledged regional governance based on the rule of law, respect for human rights, and regional economic growth. Otherwise, ruptures such as those at Myitsone and along the Mekong will recur, deepening China’s sense of isolation and panic.

China reached an agreement earlier this week with Laos, Myanmar and Thailand to send patrol ships to protect its interests on the Mekong River, though questions remain over the exact nature of the initiative and how its Southeast Asian partners will contribute. See also CDT coverage of the Myitsone dam project and recent analysis of rising tensions on the South China Sea.

© Scott Greene for China Digital Times (CDT), 2011. | Permalink | No comment | Add to del.icio.us
Post tags: Burma, economic growth, Human Rights, Laos, Myanmar, neighbors, philippines, rule of law, Southeast Asia, thailand, Vietnam
Download Tools to Circumvent the Great Firewall