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China news tagged with: financial crisis 2008-2009 (199)

• Vietnam and China in an Era of Economic Uncertainty

  

  From the Japan Focus:

  Vietnam and China have much in common. There is no country more similar to China than Vietnam, and there is no country more similar to Vietnam than China. They share a Sinitic cultural background, communist parties that came to power in rural revolutions, and current commitments (China since 1978, Vietnam since 1986) to market-based economic reforms. Although the most recent war of both states was with one another, combat ended in 1991 and interaction has flourished since 1999. At present, together with the rest of the world, they both face a sharp increase in global economic uncertainty. What effects will global uncertainty have on the prospects for each country and on their relationship?

  Clearly, in 2008 a massive change in the world economy began, requiring that a range of policies and attitudes be rethought. Both Vietnam and China will have to adjust their development strategies. Part of the adjustment is likely to include rethinking regional institutions as well as bilateral relationships.

  » Read more
  • September 13, 2009 9:11 PM

• Bill Powell: Can China Save the World?

  

  From the Time Magazine:

  On a steamy saturday afternoon just outside Shanghai, Zhang Yi is in a blessedly cool General Motors showroom, kicking the tires of the company’s newer models. He’s not there to beat the heat. He drives a small Volkswagen now and wants to upgrade. A middle manager at a state-owned steel company, Zhang has no worries about his job or China’s economy. “Things are still pretty good,” he says. “I have no problem now affording one of these,” nodding toward the array of gleaming new Buicks nearby.
  (Read “China’s Booming Car Market Shifts into Reverse.”)

  There aren’t a lot of places in the world these days where consumers speak with that kind of confidence. With the U.S., Japan and all of Europe mired in the worst global recession in 30 years, China has shown a restorative strength that six months ago many doubted it had. A devastating slump in exports crippled growth late last year, but on the back of a $586 billion government stimulus program — about 13% of GDP, spread over two years — China has snapped back. The economy grew 7.9% in the second quarter and will now probably expand 8% or more this year. Evidence of increasing momentum appears almost every day. Factory production has begun to edge up, in part because Chinese consumers continue to spend money at a healthy pace. Auto sales, helped significantly by government subsidies for small-car purchases, hit an all-time record in April and will easily surpass those in the U.S. this year. Overall, retail sales in China this year are up 16%.

  » Read more
  • August 5, 2009 4:25 PM

• Nervous China May Attack India by 2012: Expert

  

  On possible international consequences of China’s domestic challenges, here is one perception from an Indian expert, from Times of India:

  A leading defence expert has projected that China will attack India by 2012 to divert the attention of its own people from “unprecedented” internal dissent, growing unemployment and financial problems that are threatening the hold of Communists in that country.

  “China will launch an attack on India before 2012. There are multiple reasons for a desperate Beijing to teach India the final lesson, thereby ensuring Chinese supremacy in Asia in this century,” Bharat Verma, Editor of the Indian Defence Review, has said.

  Verma said the recession has “shut the Chinese exports shop”, creating an “unprecedented internal social unrest” which in turn, was severely threatening the grip of the Communists over the society.

  » Read more
  • July 14, 2009 7:06 AM

• China Stock Market Surge Jives With Economy -Regulator

  

  From Reuters, via the Forbes:

  The big first-half rebound in Chinese stocks was closely in step with improving economic fundamentals, though uncertainties still cloud the outlook, the country’s top securities regulator was quoted as saying by official media on Wednesday.

  Shang Fulin, chairman of the China Securities Regulatory Commission, said that the government’s stimulus spending, a pick-up in business momentum, flush liquidity and strengthening expectations all underpinned the stock market in the first half, when the country’s benchmark index soared 63 percent.

  But he added that it would take ‘quite a long time’ to overcome the difficulties in the wake of the global financial crisis and that China’s economic recovery was still not firmly grounded, Xinhua news agency reported.

  » Read more
  • July 5, 2009 1:46 PM

• China’s Commodity Buying Spree

  

  From the New York Times:

  Strong buying by China has helped lift commodity prices around the world this spring, but growing evidence suggests that a sizable portion of this buying has been to build stockpiles in China, and may not be sustainable.

  Commodities and shipping executives describe Chinese stockpiling in recent months of a range of other commodities as well, including aluminum, copper, nickel, tin, zinc, canola and soybeans. Starting in April, China began stockpiling significant quantities of crude oil.

  China’s goals vary by commodity. Chinese companies have bought iron ore heavily on the spot market in anticipation of higher prices in annual contract talks now nearing completion. The Chinese government has been stockpiling oil and some metals for strategic reasons, and bought huge quantities of aluminum and canola to insulate domestic producers of these goods from falling global prices over the winter.

  Those extra purchases beyond China’s daily needs have helped reverse the price collapse in commodities that followed the economic downturn, but could also limit the scale of the rebound.

  » Read more
  • June 11, 2009 1:18 AM

• China to Push Ahead With ‘Go Abroad’ Policy – Ministry

  

  After being blocked from purchasing an Australian mining company, China has decided to push forward. From Reuters:

  China will steadily push its long time policy of ‘go abroad’, despite risks caused by the financial crisis, its Commerce Ministry said on Thursday, a week after Rio Tinto scrapped a planned tie-up with Chinalco.

  ‘Opportunities to invest in high-quality enterprises and assets have increased, investment costs have declined and transaction conditions have improved,’ the ministry said in a statement posted on its website.

  Industry players and analysts are worried Rio’s decision to scrap the deal would dampen the interest of Chinese companies in overseas expansion.

  See also the anger sparked by the rebuff from the Wall Street Journal and from Radio Australia, that states discrimination against Chinese companies from these large overseas deals.

  See also Reuters for more details about Rio/Chinalco merger.

  » Read more
  • June 11, 2009 12:43 AM

• GM Reportedly Selling Hummer to Chinese Company

  

  After filing for bankruptcy on the morning of June 1, 2009, American car company General Motors (GM), once one of the largest automobile manufacturers in the world,  may be selling its Hummer brand to a Chinese heavy machinery company in Sichuan.  From AP via NPR:

  GM has a tenatative agreement to sell its rugged Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery Co. of China, said a person briefed on the deal.

  The Detroit automaker announced Tuesday morning that it had a memorandum of understanding to sell the brand of rugged SUVs, but the buyer’s identity was not released. A formal announcement of the buyer was to be made Tuesday afternoon.

  Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business, said the person briefed on the deal, who spoke on condition of anonymity because the details have not been made public.

  » Read more
  • June 2, 2009 12:42 PM

• China Expects a Sharp Drop in Number Seeking College Degree

  

  Chinese education officials expect a nationwide drop in the number of students sitting for the college entrance exams this year.  From Xinhua:

  China expects fewer students to participate in the upcoming three-day annual college entrance exam this year, according to Sunday version of China Daily.

  [...]Minister of Education Zhou Ji had predicted that the overall number of applicants would exceed 10 million — last year’s total was 10.5 million — but figures from local governments suggest the number of students taking part may be far fewer, the newspaper said.

  [...]“Since the financial crisis last year, the grim employment situation has broken the ‘employment myth’ for those with a college degree. Some students changed their minds about getting a good job through higher education. They simply quit (from taking the exam),” an anonymous recruitment officer with the Beijing Institute of Technology was quoted as saying.

  Mark at Mark’s China Blog is unsurprised by this phenomenon, and points out that a similar disenchantment with higher education is underway in the U.S.:

  This kind of news isn’t surprising. I hear all the time from young people in Xi’an about graduates from last year’s university class who still can’t find work. There are about to be several more million fresh graduates entering the job market in a few weeks also looking for jobs. Times are looking bleak for educated Chinese young people trying to find work doing what they studied at university.

  This phenomenon of people questioning the value of high-level education is not limited to China. America is currently undergoing a similar debate.

  An article from last week’s New York Times’ Magazine – “The Case for Working With Your Hands” – does a great job talking about the more academic life young Americans have been molded for and the more labor intensive jobs that they are told to avoid.

  
  

  » Read more
  • May 31, 2009 5:02 PM

• Shanghai as World Financial Capital? Maybe Next Century (Updated)

  

  Dan at the China Law Blog agrees with Richard Florida’s argument that cities such as Shanghai and Hong Kong will not soon become centers of world finance, in spite of Asia’s fast-growing economic clout.  The following is excerpted from Florida’s article, How the Crash Will Reshape America:

  The transition from one financial center to another typically lags behind broader shifts in the economic balance of power, Cassis suggests. Although the U.S. displaced England as the world’s largest economy well before 1900, it was not until after World War II that New York eclipsed London as the world’s preeminent financial center (and even then, the eclipse was not complete; in recent years, London has, by some measures, edged out New York). As Asia has risen, Tokyo, Hong Kong, and Singapore have become major financial centers—yet in size and scope, they still trail New York and London by large margins.

  [...]“A crucial contributory factor in the financial centres’ development over the last two centuries, and even longer,” writes Cassis, “is the arrival of new talent to replenish their energy and their capacity to innovate.” All in all, most places in Asia and the Middle East are still not as inviting to foreign professionals as New York or London. Tokyo is a wonderful city, but Japan remains among the least open of the advanced economies, and admits fewer immigrants than any other member of the Organization for Economic Cooperation and Development, a group of 30 market-oriented democracies. Singapore remains for the time being a top-down, socially engineered society. Dubai placed 44th in a recent ranking of global financial centers, near Edinburgh, Bangkok, Lisbon, and Prague. New York’s openness to talent and its critical mass of it—in and outside of finance and banking—will ensure that it remains a global financial center.

  Update #1: Michael Pettis also explains for Newsweek why New York and London will not likely be overtaken by major Asian cities in the current credit crunch:

  Financial crises tend to trigger overwrought predictions of major economic shifts—and then debunk them. Today’s global economic meltdown is no different. In recent months, it has become popular to predict that New York and London (or NyLon, as they’re together known) will soon lose market share as cities in the emerging world use the crisis to wrest away dominance. But history suggests that the opposite is more likely: that New York and London will actually increase in importance over the decade to come.

  [...]Big centers have two huge advantages over smaller rivals: greater liquidity and larger networks. Big investors tend to flock to big financial capitals because they offer higher volume and lower trading costs, and issuers of stocks, bonds and other financial products follow the flock of investors.

  [...]When a liquidity boom ends, however, it tends to accentuate the advantages of big markets while diminishing those of smaller ones. The volume of financial transactions declines as does investors’ appetite for risk, and the costs of buying or selling, especially for large trades, rise sharply. These changes all make smaller, less-liquid secondary financial centers seem less attractive to most parties. Traders and issuers begin to migrate back to the deeper primary financial centers, which increases the liquidity of the big players while further reducing that of the smaller centers. Liquidity draws liquidity, as the old trader’s saw has it.

  » Read more
  • May 31, 2009 4:32 PM

• Treasury’s Geithner: Durable Economic Stability

  

  U.S. Treasury Secretary Timothy Geithner spoke to reporters on his way to Beijing on Saturday, the first day of his highly-anticipated first visit to China.  From MarketWatch:

  “We are seeing more durable stability in the economy and the financial system is substantially in better shape,” Geithner told reporters Saturday en route to Beijing, his first trip here since taking office in January. “But we have a ways to go, and we need to keep working in the U.S. and with other major economies to restore conditions for a sustainable recovery.”

  [...]“I will of course make it clear that we are committed to a strong dollar, that we are committed to bringing our fiscal deficits down over the medium-term to a sustainable place,” the Treasury chief told the Chinese press, according to a transcript Treasury first provided U.S.-based reporters on Saturday. “We believe in a strong dollar. A strong dollar is in the U.S. interest.”

  Geithner added in that briefing that the Federal Reserve is “completely committed to keep inflation low and stable over time.” The U.S. “will do anything we need to do to make sure that we bring down our fiscal deficits and improve the strength of the US economic fundamentals,” he said.

  » Read more
  • May 31, 2009 3:27 PM

• All Eyes on U.S. Treasury Secretary Geithner’s First Trip to China (Updated)

  

  U.S. Treasury Secretary Timothy Geithner arrived in China this weekend, where he will meet Monday and Tuesday with some of China’s highest officials, including President Hu Jintao and Premier Wen Jiabao.  These are unusually high-level talks, according to Business Week:

  Geithner travels to China for the first time this weekend. He’s scheduled to visit with a string of Beijing leaders, including President Hu Jintao. As a reality check for the significance of this reception, imagine that Wang Quishan visited Washington next week. Wang, who as China’s vice premier is Geithner’s counterpart, would certainly see Geithner, and doubtlessly Larry Summers, head of President Barack Obama’s National Economic Council. But would he get a meeting with Vice President Joe Biden? How about Obama himself? Probably not. Yet in addition to Hu and Wang, Geithner is scheduled to meet with Chinese Premier Wen Jiaboa.

  The Chinese will have to explain why they are so interested in Geithner. But an interesting subtext is that it is Geithner who delivered the administration’s most stinging, high-level remark aimed at China. In his Senate confirmation hearing in January, Geithner said in reply to a written question that China is deliberately suppressing the value of the renminbi, the country’s currency. Geithner’s staff later said the reply was a mistake, yet it attracted much attention, and he had much explaining to do for weeks after – China is by far the largest international holder of U.S. debt, and may be relied on to finance much of Washington’s deficit for years to come.

  In contrast to his combative tone during his confirmation hearings, analysts expect that Geithner will not raise the issue of currency revaluation on this trip.  Instead, he will encourage China’s leadership to transition its export-led economy to one supported by domestic consumption.  From The Wall Street Journal:

  Treasury Secretary Timothy Geithner heads to Beijing this weekend to urge Chinese leaders to fundamentally alter the export-oriented economy that has created years of trans-Pacific trade tensions.

  [...]That means encouraging Beijing to offer more generous health-care, retirement, welfare, educational and other benefits in order to persuade the average Chinese citizen that spending now doesn’t mean starving later.

  [...]That will also require, in the U.S. view, allowing China’s currency to move more freely against the dollar. But Mr. Geithner is unlikely to hector Beijing about the yuan very much during this visit.

  Read more about the expected agenda for Geithner’s China talks on The Wall Street Journal’s China Journal blog.

  Greg Robb at MarketWatch reports in-depth on the political backdrop for Geithner’s visit – the complicated and often uncomfortable relationship between the world’s two largest economies in the current global recession:

  The theory went that with the U.S. consumer tapped out, China would focus on building up its own domestic consumer market. But experts say this hasn’t happened, at least to the extent required.

  Instead, Chinese exporters have doubled down on the return of the U.S. consumer and have increased their capacity. Exporters appear to have political muscle in China to block meaningful reform.

  At the same time, the U.S. budget deficit is projected to reach record levels for the next several years.

  “We’ve got to hope China still has an appetite for our debt,” given the “ocean of red ink” coming down the road, said [Timothy Adams, who also served in the Bush Treasury].

  See also the Telegraph for an editorial on the inevitable growing pains of restructuring the China-U.S. economic relationship.

  Update #1: This article from The China Post offers more in-depth analysis of the strength of Geithner’s bargaining position and the deal he intends to push:

  Though the crisis has given Geithner a weak hand, treasury officials said he will seek to push this bargain:

  The U.S. will work to reduce its budget deficits once the crisis ends, urge Americans to save more and shrink the trade deficits. To replace diminished U.S. spending, the Chinese will be asked to step up spending and stop saving so much. The administration says this can be done if Beijing improves pensions and health insurance so Chinese households don’t feel pressured to save so much.

  Geithner is expected to point out that U.S. consumers already are rebuilding their retirement savings. The Chinese have pledged to redirect their economy to boost domestic growth. But many private economists question how serious China is about it.

  Analysts said they expect Geithner and the Chinese to pledge to do all it takes to end the recession. Both sides know any hint of discord between the world’s largest and third-largest economies probably will unsettled [sic] financial markets.

  » Read more
  • May 30, 2009 1:41 PM

• China Economy Can’t Recover in Isolation

  

  Chinese officials are waiting for the U.S. economy to recover from the financial crisis before they expect China’s to. From Reuters:

  Aggressive monetary and fiscal policies put in place over the past few months are being “effective” in supporting China’s economy but the “current improvement is not solid,” said Chen Deming, China’s minister of commerce.

  “We still see some factors of instability,” including the lack of a notable increase in private sector investment, Chen said in response to questions after a speech to the Chicago Council on Global Affairs.

  China’s central bank has slashed interest rates five times since September 2008 to the current 5.31 percent on the benchmark one-year yuan lending rate, and a major fiscal stimulus package, estimated at some $586 billion over two years, was announced in November.

  Some of China’s new programs are aimed at spurring domestic consumption. Still, “without the world economy, without the U.S. economy improving, it’s impossible for the Chinese economy to improve on its own,” Chen said.

  » Read more
  • April 28, 2009 5:12 PM

• Slump Tilts Priorities of Industry in China

  

  Environmental concerns have taken a backseat to economic interests in the global financial crisis. From Jonathan Ansfield of the New York Times:

  A year ago, pollution was a top issue around Duanjialing.

  Now, amid the global economic downturn, priorities have shifted.

  Cumbersome environmental reviews have been accelerated, state bank loans are flowing freely again and workers are welding the grinding mills of Sanhe Yongsheng Cement, one of the new cement plants under construction not far from China’s capital.

  [...] In the rush to invest $585 billion in stimulus spending and revive flagging industrial production, China has at least temporarily backpedaled on some environmental restraints imposed, though with limited impact, during the country’s long boom.

  » Read more
  • April 18, 2009 1:15 PM

• China’s Economic Growth Slows in First Quarter

  

  China’s gross domestic product output has grown by 6.1% in the first quarter, the worst quarterly growth rate in years. From Keith Bradsher of the New York Times:

  Still, 6.1 percent is substantially below the double-digit growth rates China has frequently posted this decade. China’s leaders have called for 8 percent growth just to create enough jobs for school graduates and for the tens of millions of rural migrants pouring into the country’s cities.

  [...] Prime Minister Wen Jiabao said after a cabinet meeting that the condition of the economy was “better than expected” and attributed it to government stimulus measures, according to Xinhua, the official Chinese news agency.

  But the cabinet, with Mr. Wen as chairman, issued a report warning against “blind optimism” on the economy. The report said the foundations for China’s recovery were not solid, citing weak overseas demand, overcapacity in some industries, job losses and lackluster investment by the private sector.
  While the economy grew at its slowest pace in more than a decade in the first quarter, other indicators suggest a possible bottoming out of the slowdown that brought the country’s dazzling economic boom to a screeching halt late last year. [Image from Associated Press]

  Still, the 6.1% figure may be reason for optimism. From Elaine Kurtenbach of the Associated Press:

  Q: How is China’s economy doing?

  A: China’s economy grew by 6.1 percent in the first three months of the year, helped by a revival in stalled industrial activity and stronger investment in factories and other infrastructure. That’s down from 6.8 percent in the previous quarter, although China’s habit of frequently revising its data makes analysis difficult.

  Year-on-year comparisons of many statistics for January through March are skewed by the relatively high figures for the first quarter of last year, when the economy was growing at double-digit rates. But data for March were much better than for January and February, suggesting an upturn, says economist Mingchun Sun of Nomura Securities.

  A 4 trillion yuan ($586 billion) stimulus package is boosting employment and revenues at construction companies and building materials makers thanks to a massive program to build new roads, railways and housing.

  » Read more
  • April 17, 2009 5:56 PM

• Funeral jobs Hot among Shanghai Graduates

  

  Desperate graduates apply for funeral jobs in Shanghai, via China Daily:

  It is the one business that is never short of clients, and 366 college graduates will this week find out if the city’s funeral industry is the answer to their desperate job search.

  The students have all applied for more than 300 vacancies at 18 funeral homes and cemeteries, with pre-interview training to find out if any have what it takes to survive in the trade starting yesterday.

  But despite being a business that has had little to fear from the global financial crisis, dealing with the dead is not everyone’s cup of cha. “Working in the industry is considered morbid and I hope you are fully prepared and make a sensible choice,” said Wang Hongjie, of the civil affairs bureau’s funeral and crematory division, as he addressed the hopefuls.

  » Read more
  • April 12, 2009 7:07 PM

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