REFLECTIONS IN A CHINESE EYE

A 546-Million-Ton Elephant in China’s Grain Silo

China’s grain harvest of 546.4 million tons this year is its largest on record. What’s more, the government tells us, it’s the seventh straight annual rise, which is also an expression of China’s determination, repeated in countless policy pronouncements, to make its farms feed 95% of the nation’s needs.

Jaw-dropping as this new record is, however, it also invites a fair bit of chin scratching.

The sustainability, or not, of China’s grain output matters because a shift in just a few percentage points in the country’s grain demand or output means millions of tons of shipments diverted from other parts of the world. The U.S. this year provided for 97% of China’s corn imports. Australian officials are keen to ratchet up their share of China’s wheat sector. Grain suppliers in Argentina are working hard to open the Chinese market to their farmers.

The problem with China’s recent grain figure is that defies two laws:

The first is the law of gravity. The most populous nation in the world, which meets its 95% self-sufficiency target on 7% of the world’s arable land, hasn’t had a streak of success in grain harvests this consistent since available records show in 1978. China has typically enjoyed two – at most three – bumper grain harvests in a row before nature conspires to drag the numbers back down to earth. But this year, as with every year since 2003, China says it’s been bumper to bumper harvests.

Read more at The Wall Street Journal

Worker Shortages Seen in Chinese Export Centers

BEIJING — Two of China’s main export manufacturing areas are suffering from an acute shortage of migrant workers, giving laborers more leverage over wages and curtailing the expansion plans of some companies, according to a report published Monday in China Daily, an official English-language newspaper.

The shortfall of workers is especially severe in the service and manufacturing industries. The regions most affected are the Pearl River Delta, which is in the southern boom province of Guangdong, and in the Yangtze River Delta, near Shanghai. The Pearl River Delta could be short by as many as 900,000 workers, China Daily reported, citing a recent survey by the human resources department of Guangdong.

The article cited experts saying that rising living costs along the coast coupled with low wages had led to an increasing number of workers deciding to stay in the interior of China, where living costs are much lower.

Some companies have moved factories inland, to provinces where many migrant workers have traditionally come, the newspaper reported. Transportation costs for goods being shipped out of China are higher in those regions, but lower labor costs appear to help offset that in some cases.

Read more at The New York Times

SPIRIT OF FREEDOM-What the Conflict on the Korean Peninsula Means to the World Economy

Image by Getty Images AsiaPac via @daylife

 She’s a beautiful vessel, about 1,092 feet long , 257 ft wide and 244 ft high. She has an enormous flight deck, 4.5 acres long which could accommodate up to 80 aircraft — each armed with the most sophisticated weaponry known to man. She has a crew of 6,250 brave men and women. Her name is the USS GEORGE WASHINGTON, and she has recently been deployed to the Yellow Sea, west of the Korean Peninsula, to begin joint military exercises with South Korea. In a statement from the US Navy’s seventh fleet, the military exercises are described as a measure to show the United States’ “commitment to regional stability through deterrence.”  In other words, what we are saying to the dictator Kim Jong Il and his “20 something” heir, apparently Kim Jung-un, is that we mean business when it comes to protecting our allies. The mere presence of this symbol of US power should inspire them to back down. It’s impossible to predict what the NORTH will do, since they continually act in a defiant, irresponsible manner — most notably in a recent revelation that there is a uranium enrichment facility in North Korea which could further advance their existing nuclear capabilities.

The most important aspect of this confrontation is how North Korea’s closest ally, China, deals with their recent aggression and insatiable need to advance their nuclear capabilities. China has a long history of using North Korea as a buffer against the US. Since the end of the Korean War, they have been leery of our strong alliance and our military presence in South Korea. They have never welcomed having our warships anywhere near their coast line. Furthermore, they have yet to firmly condemn North Korea on the attack of a South Korean warship which killed 46 sailors last March, the revelations of their nuclear capabilities or the most recent events. Alternatively, China, in a statement from its foreign ministry regarding our military exercises, has chosen to warn the US against “any military acts in our exclusive economic zone without permission.” In other words, China is threatening the US not to come too close to their coastline or face consequences. This statement by China will only serve to encourage the radical Korean dictator and his offspring to further threaten South Korea and defy the US. It should concern the Obama Administration that the strongest stand taken by the Chinese has been against the US protection of our allies, and not against the aggression of a radical dictator. 

Read more at Forbes

Pound Drops Versus Dollar on China Tightening, Korea ‘Unease’

The pound posted its biggest weekly drop against the dollar in more than six months as concern that China is moving to slow its economy and tensions between North and South Korea diminished demand for riskier assets.

The U.K. currency fell below $1.56 for the first time since September as North Korea’s state-run news agency said planned naval exercises by South Korea and the U.S. moved the peninsula “closer to the brink of war.” Speculation grew that China will increase borrowing costs to contain consumer prices after inflation sped up to its fastest since 2008.

“The tensions in Korea, policy tightening in China and the likelihood of more to come add to the sense of unease,” said Daragh Maher, deputy head of global foreign-exchange strategy at Credit Agricole Corporate & Investment Bank in London. “In this kind of more nervous environment in general, we’re getting a dollar bid and by extension sterling is losing some ground.”

The pound dropped to $1.5602 as of 4:30 p.m. in London yesterday, a weekly decline of 2.4 percent. It’s the third weekly decline against the dollar in a row and the biggest since the week ending May 7. Sterling gained 0.9 percent versus the euro to 84.82 pence.

The U.K. currency depreciated against 11 of its 16 most- actively traded peers this week.

The U.S. sent an aircraft carrier, the USS George Washington, to the Yellow Sea off the western coast of the Korean peninsula in a show of strength after North Korea shelled a South Korean island on Nov. 23. Global stocks declined as yesterday North Korea threatened a “shower of terrifying fire” in response.

Read more at Bloomberg

"Soft landing" for Chinese economy? Tightening moves matter

BEIJING, Nov. 27 (Xinhua) -- Two years of monetary easing policies helped China's economy emerge from the global financial crisis. Now, facing a runaway inflow of hot money, fast loan growth, and escalating inflation, China could become serious about tightening regulations to achieve a "soft landing".

Analysts recently said China could see more interest rate hikes in the final month of 2010 in a bid to soak up excessive liquidity and prevent a potential overheating of the economy.

Further, the People's Bank of China (PBOC) Deputy Governor Hu Xiaolian said on Oct. 24 that using multiple monetary policy tools to improve liquidity management and guide the money and credit growth back to normal would be the main task for the central bank in the remainder of this year.

According to data released by the central bank Friday, in October those funds outstanding for foreign exchange (FOFE) hit 525.1 billion yuan (78.37 billion U.S. dollars), the second highest monthly record in history.

That is to say, PBOC issued 519 billion yuan of Renminbi in October to purchase the same amount of fresh inflow of foreign exchanges, which usually enter the nation in the form of trade surplus, foreign direct investment and short-term international speculative funds.

"The huge inflow of hot money is an important reason behind the sharp rise in FOFE," said Zhang Ming, a researcher with the China Academy of Social Sciences (CASS).

He noted, as the European debt crisis ceased, that speculative funds have returned to the emerging markets, notably after the U.S. Federal Reserve announced the second round of its quantitative easing policy.

Read more at XINHUANET

China-fuelled surge could mean decades-long pressure

KEN Henry reckons the mining boom could be "the largest external shock ever to hit the Australian economy".

The Treasury secretary told a Senate hearing this week the China-fuelled surge in the nation's terms of trade (the ratio of export prices to import prices), could be structural rather than temporary, and could impose intense adjustment pressures on the Australian economy for "many decades".

After the nation shrugged off the global financial crisis, many people are now talking again about a "stronger for longer" mining boom.

This shows up in the Australian Bureau of Resource and Agricultural Economics' latest six-monthly list of major minerals and energy projects.

Resource companies have committed to or have begun construction on 72 major projects, from iron ore, coal and rare earths to rail lines, ports and pipelines. These "advanced" projects are worth $132.9 billion -- 21 per cent higher than six months ago and six times higher than in 2004.

Read more at The Australian

Bernanke Vs. China on Inflation: It’s the Food, Stupid

European Pressphoto Agency

Really fascinating to see the tug-of-war between the policy makers in China and the U.S. gather steam this morning.

For those who haven’t been paying attention, the Fed is flooring the gas pedal to try to get the U.S. economy moving, by essentially creating money electronically and using it to buy U.S. Treasurys. (That’s the QE policy everybody has been talking about.)

Meanwhile, on the other side of the world the Chinese are trying to dam up the flood of liquidity that’s been pouring into their economy — in part because of the Fed’s easy money policy. That wave of cash is putting upward pressure on prices there.

But isn’t this a global economy? How can the top economy wonks in the two largest economies in the world have such a fundamentally different view where policy needs to go? In a word: Food.

The Fed’s QE policies are weakening the dollar. And the weak dollar has been driving food commodity prices higher. But that means very different things in the U.S. and China. Morgan Stanley economist Richard Berner churned out a good piece running down whether food inflation would be a serious hit to consumers in the U.S. and emerging markets. He writes:

Read more at The Wall Street Journal

Risk-On, Risk-Off Might be Over for Euro-Dollar

It might be time for some currencies to go their own way.

The risk-on, risk-off paradigm in which currencies with similar yields tend to advance or retreat en masse shows signs of weakening as the global recovery lurches forward at divergent speeds.

The break in typical risk-on, risk-off trading could become more common as China and the economies closely tied to it continue to march ahead, while the U.S. is weighed down by questions over its own growth and the Federal Reserve's dollar-diluting easing program.

Meanwhile, the specter of a default within the stressed euro-zone periphery keeps the euro vulnerable to swings up and down based on headlines coming out of the fiscally troubled region.

"The euro-zone sovereign-debt problem is going to be around for years," said Robert Lynch, currency strategist at HSBC in New York, and the effects of Fed's asset-purchase program still are yet to be fully played out, he said.

Looking at the euro-dollar pair, then, might not be the best way to take the temperature of general market sentiment, or willingness to take risk.

"The very different backdrop in Europe and the U.S.," compared with the full-speed ahead growth in emerging markets, means that the even though the euro might average around $1.35 over the next few months, "you could have significant swings around that depending on when the market's attention is focused on deficiencies in the euro zone, or [when it's on] the difficult backdrop in the United States."

Read more at The Wall Street Journal

Wages, conditions improve as workers in China form unions

 

A production control board counts down how much clothing remains to be completed in a shift at TAL Group's Qingxi factory in southern China

SHAJING, China — In many ways, Lan Yimin represents the new generation of Chinese factory workers.

She wants fair working conditions. Time off to socialize. And a job that pays enough so she can open a milk tea business one day.

Lan, 22, is one of millions of migrant workers powering the electronics, furniture and toy factories in China's Pearl River Delta. While she's following in her parents' footsteps on the assembly line, unlike them, she's less willing to "eat bitterness" — as the Chinese call it — and toil away for meager pay and benefits. She has more job options and better access to information. And as China's economy booms, her generation is becoming bolder.

"The young generation has a wider social circle; we talk more about factory conditions and we know more about our legal rights," Lan says at a workers' center in this industrial town where she attends seminars on handling late wages and contract termination.

 INFLATION THREAT: China orders banks to boost reserves

Workers' growing awareness and their willingness to take action are slowly pushing up wages and improving conditions in the manufacturing industry. The Chinese government already moved to increase salaries and labor standards a few years ago. Now it is trying to maintain a delicate balance of improving income levels for workers while not scaring away foreign corporations with higher labor costs.

As wages and other costs rise here, U.S. companies will have to decide whether to take their production to other Asian manufacturing hubs or increase prices for American consumers.

This year, strikes at Honda factories and a spate of suicides at Foxconn — a maker of electronics for U.S. companies such as Apple and Dell — raised alarm among corporations and the government that the era of the docile worker had ended. Strikes still happen each week in China, labor rights groups say, but the government doesn't allow them to be reported. The labor unrest is even inspiring strikes in Cambodia and Vietnam, whose workers say they're emboldened by their Chinese colleagues' examples.

For now, factory workers in China "are only making economic demands, not political," says Chang Kai, a labor relations expert at People's University in Beijing who has assisted workers with strike negotiations.

But history shows that labor movements don't necessarily follow logical, or peaceful, paths. U.S. railroad and steelworkers staged massive strikes during the late 1800s that led to violence when authorities intervened.

In China, "If the government does not treat the workers' struggle for collective bargaining seriously, if it decides to treat these demands as political, then this will turn into a political struggle," says Han Dongfang, a labor activist deported to Hong Kong for his role in the Tiananmen Square protest of 1989.

To a certain extent, the Chinese government is tolerating worker unrest because it recognizes that higher wages translate into more spending that can stimulate the economy. The government wants all residents to share in the country's economic growth, says Juzhong Zhuang, deputy chief economist of the Asian Development Bank, because "high income inequality can lead to social problems that undermine long-term economic growth."

The challenge is that the government wants to "offer more protection for workers, but it is also exposed to a lot of pressure from companies" resisting change, says Debby Chan, a project officer for Students & Scholars Against Corporate Misbehavior (SACOM), a workers' advocacy group.

Read more and view photos at USA Today

Tibet Lures St. Regis as China's Big Cities Crowded by Luxury Hotel Chains

Expansion in China, the world’s fastest-growing economy, is causing an urban lodging glut that’s spurring luxury chains including Starwood Hotels & Resorts Worldwide Inc.’s St. Regis to head to areas as remote as Tibet.

The 162-room St. Regis Lhasa Resort, which opened this week as the first international luxury hotel in Tibet’s capital, is about 12,000 feet (3,680 meters) above sea level and boasts a five-star spa. Shangri-La Asia Ltd. will open a 350-room hotel in Lhasa in 2012, and InterContinental Hotels Group Plc plans to add a high-end, 2,000-room hotel in the city within three years.

The surge of hotel development in China has led to an oversupply, particularly in cities, and it may take five years for demand to catch up, said Jonas Ogren, a Singapore-based director for STR Global, an industry research company. That’s made Tibet and other regions far from Beijing and Shanghai increasingly attractive to expanding hoteliers.

“While Tibet isn’t necessarily the first location that comes to mind for a hotel, these companies usually already have properties in primary and secondary cities,” Ogren said. “So more are looking to smaller markets or resort-type places.”

Hotel occupancies in China climbed to 60 percent this year through September from 51 percent a year earlier, according to STR Global. This year’s level was the fourth-lowest among the 16 countries in the Asia Pacific region tracked by the company.

In Tibet, ruled as an autonomous region in the People’s Republic of China, tourism has surged since the opening of the Qinghai-Tibet Railway four years ago, largely driven by domestic demand. A total of 5.56 million tourists visited Tibet in 2009, up 147 percent from a year earlier, according to the Pacific Asia Travel Association. Of that, 5.39 million were domestic travelers.

‘Demand for Luxury’

“There’s a great deal of affluence in China,” said Judy Reeves, a spokesman for Shangri-La Asia, based in Hong Kong. “So much wealth has been created. The demand for luxury is insatiable.”

Read more with photos at  Bloomberg

Getting rich in China's frontier boomtown

Chongqing, China (CNN) -- Zhou Xunshu and Yan Qi both grew up in the mountains in southwestern China, but today their hometowns are worlds apart.

Zhou's home village in a remote corner of Guizhou province remains impoverished.

"Every time I go back, I feel saddened," said the 37-year-old professional golfer. "It was poor and it's getting poorer."

Yan's childhood town, on the other hand, is now a suburb of one of the world's fastest-growing cities, Chongqing.

"I started a small restaurant here in 1995 with five tables," the 43-year-old businesswoman told CNN. "We went from there to 10 tables and eventually to 90 restaurants nationwide."

"My restaurants expanded along with the city," she said.

Chongqing has expanded at a remarkable pace since 1997, when Chinese leaders awarded it special political status on par with Beijing and Shanghai.

A metropolis the size of Austria, Chongqing is now home to 32 million people. That's four times the entire population of London and 10 times that of Rome.

Read and view more at CNN

What Inflation In China Feels Like

Inflation according to the KFC Index.

Investors are worried about the latest headlines reporting inflation in China, but average people here have felt the effects of unreported inflation for the last two years, and especially the last 12 months.

You have already heard of a few items in China whose prices have spiraled out of control — houses, for one; garlic, for another — but at least not everyone needs to buy a house, and not everyone absolutely needs to eat garlic. But you’d like to eat eggs and pork, right, and cook them using some oil? (Maybe with some garlic). Or you’d like your restaurant to do that for you without raising its prices.

To make this picture clearer, the valuable blog China Hush gives a visual rundown of how much less of this stuff you can buy for 100 yuan ($15) compared to the same time last year. The most eye-popping number: 30 fewer apples. See their whole list, with price changes included.

Read more at Forbes

China as the world’s biggest economy (in one way)

China is not lacking in self-confidence, as world leaders gathering for a G20 tussle over currencies and trade balances know very well. Here’s something that could boost it further: a prediction that China could surpass the US and become the world’s largest economy by 2012, at least on one measure of gross domestic product.

That’s the forecast from the Conference Board, a well-respected research organisation based in New York, which has run the numbers with GDP calculated on the basis of purchasing power parity, a measure that is not universally liked.

The key line from the Conference Board’s latest global economic outlook is this:

Read more at Financial Times

China Sees Highest Inflation in More Than Two Years

Stephanie Ho | Beijing 11 November 2010

Photo: AP

An elderly Chinese couple pushes carts load with groceries as they shop at a supermarket in Beijing, China, 11 Nov 2010

Inflation in China for the month of October rose well above the official target, which is leading to increased pressure on the Chinese government to introduce new tightening measures. Stephanie Ho reports from Beijing.

Official statistics released Thursday show China's inflation rate for October jumped to 4.4 percent, the highest in 25 months.

The highest inflation came in foodstuffs, which saw prices rise more than 10 percent. The official target for overall inflation this year is 3 percent.

Brian Jackson, a financial analyst in Hong Kong with the Royal Bank of Canada, thinks inflation in China has been high, and is still likely to move higher.

"It's been going high for about eight months now, and that is causing a lot of concern for the cost of living for Chinese households," said Jackson. "And I think that is putting a lot of political pressure on p

Read more at VOA

China State-Run Newspaper: World Needs To Weaken Dollar's Dominance

SHANGHAI (Dow Jones)--The world urgently needs to weaken the U.S. dollar's dominance and reform the international monetary system through multilateral means, China's state-run China Securities Journal said in a front-page opinion piece.

The newspaper said the U.S. has been exporting risks to the global economy, and a continuously weakening dollar has resulted in appreciation pressure on other currencies and the outflow of excess liquidity into emerging markets.

Using terms reminiscent of slogans of China's cultural revolution in the 1960s-1970s, the newspaper said the world needs to "redress the dollar" and the dollar has "descended from the alter".

The editorial comes ahead of the leaders summit of the Group of 20 industrialized and developing nations that begins Thursday, where the currency issue and scrutiny over the U.S.'s recent quantitative easing measures are likely to be among the main issues.

It also called for a stronger voice for developing countries in the global economy, adding China should seek the opportunity to push forward the internationalization of the yuan and reform the country's interest rate market amid the international monetary system reform.

The Wall Street Journal

World looks to China after growth-salvaging stimulus

A worker is seen at a construction site in Changzhi, Shanxi province, February 17, 2009.

Credit: Reuters/Stringer/Files

By Alan Wheatley, Global Economics Correspondent

BEIJING | Mon Nov 8, 2010 11:55pm IST

BEIJING (Reuters) - The giant fiscal stimulus and bank lending spree that China launched two years ago saved the world from recession. What can Beijing do for a follow-up act?

Internationally, the success of the unprecedented pump-priming has accelerated a shift in economic influence that has put Beijing front and centre of policymaking, as this week's summit of the G20 major economies in Seoul is likely to show.

Domestically, the 4 trillion yuan package announced on Nov. 9, 2008, put a floor under an economy that was in free fall due to the global financial crisis. More than 20 million migrant workers who lost their jobs were quickly absorbed as the government started an array of public works projects.

Two years on, China can boast, among other things, the world's biggest high-speed rail network, which is doing wonders for the country's reputation.

"China's self-confidence got a big boost from the fiscal programme which goes beyond the immediate economic effects," said Jonathan Fenby, head of China research at Trusted Sources, an emerging markets consultancy.

Charting China's stimulus: r.reuters.com/guz53q

Fenby said the tangible results of the spending splurge can only increase China's pride in its ability to raise its game.

"One cannot help making comparisons with infrastructure in the U.S. and U.K.," he said. "I am sure the Chinese do."

Success, however, heightens expectations.

China, now the world's second-largest economy, is under pressure to shoulder more responsibility for everything from curtailing carbon emissions to reducing global economic imbalances.

Read more at REUTERS

China's Middle-Class and Affluent Consumers May Almost Triple in 10 Years

China’s middle-income and affluent consumers will probably almost triple in 10 years with the bulk of the increase coming from smaller cities, Boston Consulting Group Inc. said today.

There will be 270 million more consumers whose annual household incomes exceed 60,000 yuan ($9,000) in the world’s most populous country by 2020, said Carol Liao, a partner at the Boston-based consulting company. That would lift the total number of middle-class and affluent Chinese to 415 million from 148 million now, she said.

“China is no doubt the highlight of the global consumer sector, and second-tier and third-tier cities are the main driving force within the Chinese market,” Liao said at a briefing in Beijing today. Three-quarters of the growth will come from smaller cities as incomes rise, she said.

“Middle-income consumers in smaller cities are expected to become the new blood in China’s consumption,” Liao said. They also have a greater potential to save because their living costs are lower than in cities such as Beijing, Shanghai and Shenzhen, she said.

Boston Consulting surveyed more than 7,000 consumers in 28 Chinese cities in 2010.

Bloomberg

China's stiff upper hand

The idea of "rebalancing" the world economy is simple. Before the financial crisis, some advanced countries (led by the United States) were overspending, and some poorer countries (led by China) were oversaving. The two offset each other. The big spenders ran large trade deficits, and the big savers ran large trade surpluses. Now, the financial crisis has dampened the overspending. If the big savers don't increase their spending, the world economy faces prolonged slow growth. Countries may battle each other for shares of that weak demand by managing exchange rates, subsidies or tariffs.

This is a formula for economic strife, whether called "currency wars," protectionism or economic nationalism. As wealthy countries wrestle with stubborn unemployment (9.6 percent in the United States, 10.1 percent in France, 20.5 percent in Spain), it will become harder to resist policies that favor local businesses and workers, especially if other countries are doing the same. Avoiding this future is the central issue facing leaders of the Group of 20 economies when they meet this week in Seoul.\

Read more at The Washington Post

China Growth Accelerated, Poll Shows

BEIJING—China's economic growth unexpectedly accelerated in the third quarter, according to the estimates of analysts polled by The Wall Street Journal, a finding that runs counter to official statistics and could help explain the central bank's recent move to raise interest rates.

The poll, the latest in a quarterly series, asks economists for their estimates of China's growth in the same seasonally adjusted quarter-to-quarter terms used by other major economies. China officially reports changes in gross domestic product only relative to the same period a year earlier, which can make it harder to discern turning points in the economy.

The National Bureau of Statistics reported last month that the country's gross domestic product was 9.6% higher than a year earlier in the third quarter, slowing from the 10.3% expansion in the second quarter. The figure was in line with market expectations and consistent with the government's public statements that it has been gradually cooling down the economy to avoid risks from the huge stimulus plan launched in late 2008.

But a closer examination of the figures paints a more complex picture. According to the median estimate of the 12 economists surveyed, China's GDP for the third quarter expanded 9% from the previous quarter on an annualized, seasonally adjusted basis, actually picking up from an estimated 8.2% growth in the second quarter. In the Journal's previous poll in August, economists had forecast third-quarter growth to slow to 7.9%.

Read more at The Wall  Street Journal

China Inflation Unlikely to Ease Soon: Economist

BEIJING (Reuters) - China's consumer price inflation will hover above 3 percent in the final quarter of this year, driven by global excess liquidity and a spike in agricultural prices, a senior government economist said in remarks published on Monday.

Fan Jianping, chief economist with State Information Center, a think tank under the powerful National Development and Reform Commission, also said that interest rate increases would not help to curb inflation, although they could possibly help contain asset price bubbles.

"Global agricultural prices will continue to climb up for a while under the U.S. quantitative easing policy," Fan said. "Agricultural prices will have monetary foundation to stabilize only when the global money supply returns to neutral."

A surge in hot money inflows, combined with domestic speculative money, will drive up Chinese agricultural prices, he told the official China Securities Journal.

Read more at ABC News

China: turning restaurant waste into a commodity

While China reaches ever further overseas to secure energy supplies, some Chinese businesses at home are coming up with increasingly creative ways of tapping into new energy sources. Take the story of one small company in Fujian province that has captured a local niche market: collecting waste oil from restaurants and factories and turning it into biodiesel and chemicals that can be sold at a handsome profit.

The five-year-old biodiesel business of China Clean Energy has got a big boost from the government’s vows to cut carbon emissions. According to its chief financial officer, William Chen, the New York-listed company has seen its revenues quadruple this year compared with 2009.

“Recently there was a government policy that requires power generators to reduce emissions, so some of the power generation plants have started shifting their regular petroleum diesel to biodiesel,” explains Chen.

Read more at The Financial Times

China's hunt for resources stops for Peru copper

The Chinese entrepreneur and the Peruvian shopkeeper have never met. Yet Li Shiping's dream of riches and success in China is uprooting Victor Raul Ancieta's village 11,000 miles away in the Andes.

Their lives are joined by a thread of copper stretching from Dao County in southern Hunan province to a $50 billion deposit of ore underneath the 103-year-old mining town in Peru.

Li, 47, owns a smelting company that is about to fire up a new electric furnace made with 110 tons of copper, one of thousands of industrial projects in China's developing interior. To stoke them, a Chinese state-owned mining company will tear down the peak in Peru and ship home the copper. It plans to relocate the town of Morococha, population 5,397. Many, including Ancieta, don't want to leave.

The project is part of $11 billion in Chinese mining investments planned for Peru, a quarter of the country's total, according to Fernando Gala, the Peruvian vice minister of mines. China is prospecting for mineral treasures around the world as it develops faster than any major economy in history. Its copper use is growing so quickly that by 2035 global demand for the metal may outstrip supply by 11 million tons, according to CRU, a London-based mining and metals consulting firm.

That's equal to 55 times the planned annual output in Morococha, where a crater 800 meters (2,600 feet) deep and a third larger than New York City's Central Park will be left behind. The copper supply gap is driving up prices and foreshadows more conflicts in places like the mountain village.

 "What China wants is wealth and power," says Stapleton Roy, U.S. ambassador to China from 1991 to 1995. "What we have to fear from China is that as it gets stronger and wealthier, it does not develop a commensurate sense of responsibility to the global system." Roy, 75, was born in China and witnessed the Communist revolution. He heads the Kissinger Institute on China and the United States in Washington.

Great powers have always reached beyond their borders for wealth and resources, including the U.S. as it built the world's largest economy. Today, China's purchases of copper, iron, oil and other materials pour cash into resource-producing countries like Peru, while its exports hold down prices for consumers around the world.

"A lot of countries are benefiting" from China's demand, says Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington and an author of the 2008 book, "China's Rise: Challenges and Opportunities." "You don't hear so many complaints from the countries that are the recipients of the Chinese investment."

Read more at The San Francisco Chronicle

AVIC signs agreement to deliver eight aircraft to African nation

A model of a Modern Ark 60 is displayed at an aviation show in Zhuhai, Guangdong province. Jiang Xin / for China Daily

 BEIJING - AVIC (Aviation Industry of China) International Holding Corp, an import and export subsidiary of China Aviation Industry Corp, said it has signed an agreement to deliver eight aircraft to the Democratic Republic of the Congo (DRC).

The aircraft, which will be delivered to LAC, the DRC's national airline, are six Modern Ark 60 (MA60) and two Y-12 light aircraft.

The MA60, produced by AVIC's subsidiary, Xi'an Aircraft Industry (Group) Company Ltd, costs between $14 and $15 million on the international market, two-thirds the price of civil airplanes produced by other global manufacturers.

The deal between AVIC and LAC, involving products, after-sales and equipment services, is believed to be worth more than $150 million.

The first two MA60s will be delivered to the DRC on June 20, 2011, and the remainder will be sent in three further batches, AVIC said.

Export-Import Bank of China will provide financial support to AVIC's project, the statement said.

China has in recent years been stepping up exports of civil and defense aircraft. In July, AVIC signed a contract with Venezuela to sell 25 multi-purpose Y-12 light aircraft and two helicopters.

AVIC said it has exported more than 100 Y-12 aircraft to 20 nations since 1986. Last year, the company exported 42 fighter aircraft to Pakistan. Industry analysts said Chinese aircraft companies are exploring new markets such as Egypt.

At present, Chinese trade with African countries is growing at a fast pace, outperforming that of China's major trade partners, including the United States and the European Union. China is currently Africa's largest trade partner.

From January to September this year, China-South Africa trade grew 50.6 percent year-on-year to $17.28 billion, compared with 31.5 percent for trade with the US and 34.4 percent for trade with the EU.

The African Development Bank predicted the continent's economy will grow 4.5 percent this year and 5.2 percent in 2011. Some African nations have far exceeded this rate, with economic growth this year in the DRC expected to rise 12 percent and by 10 percent in Angola.

China Daily

China growth to drop to 7% in 3 to 5 yrs: Researcher

China's economy is likely to see annual growth of about 7 per cent in the coming three to five years, a marked slow-down from an estimated growth of 10 per cent this year, a senior government researcher said on Saturday. Liu Shijin, a deputy director of the Development and Research Centre under the State Council, or cabinet, said a slower-than-expected global economic recovery, as well as the focus on economic rebalancing of the domestic economy, would moderate the country's growth.

China's annual gross domestic product growth slowed to 9.6 per cent in the third quarter from 10.3 per cent in the second quarter, in what the government described as an expected moderation resulting from targeted structural adjustment.

"China has witnessed 30 years of long, high-speed growth. In the coming three to five years, the economy will enter a phase of mid-level speed growth," Liu told a forum organised by Caixin magazine.

He said that China's eastern coastal provinces would be the first to enter a period of slower growth.

Liu warned that China may face mounting risks from imported inflation in the coming years, as the new round of quantitative easing by the US would create excessive liquidity and push up global commodity prices.

Global speculative capital stemming from monetary easing policies by rich economies may also inflate asset bubbles in emerging markets, as investors bet on the prosperous economic outlook in these regions, Liu said.

"It is an inevitable trend for the US dollar to keep weakening, which may bring about substantial adjustments in the global monetary system," he added.

The Hindustan Times

China’s economic espionage prowess

 

A rag-and-bone man sleeps near apartment blocks under construction in Beijing November 4, 2010. China on Wednesday raised down payments and mortgage rates for home buyers whose acquisitions are supported by the government's housing fund, marking Beijing's latest step in a campaign to tame the property market. -Reuters

(November 14, New Delhi, Sri Lanka Guardian) Over the past couple of decades, there is growing body of scholarly works, including electronic and print media reports that speak of China’s growing prowess in economic espionage. Andrew Jones, Head of security Technology Research, BT Security Centre, Adjunct, Edith Cowan University, has called China’s economic espionage operations as an affair of ‘hi-tech world’. i James Mulvenon, Director of DGI’s Centre for Intelligence Research and Analysis, has found the ‘innovation firms’ around the world as most vulnerable targets to Chinese economic espionage operations.ii

The Chinese spy defectors both diplomats and full time students, including Chen Yonglin, Han Guangshen, Li Fengzhi have turned over the names of several spies and their espionage activities in several industrialized countries in Europe, the US, Australia and Japan. In a similar vein, the arrest of Chinese national Huang Kexue on July 13, 2010 by the Federal Bureau of Investigation (FBI) in Westborough, Massachusetts, United States of America (USA) and subsequent interrogation leaves no body in doubt about the penchant of the Chinese nation and its people in this direction.

Roger Faligot, credited with dozens of espionage-related books, including The Chinese Secret Services from Mao to the Olympic Games, has gone on record to put the number of Chinese secret agents, operating worldwide to over two millions. Belgium intelligence expert says the Chinese industrial espionage network happens to be not just only by scale, but also very penetrating. Besides, investigative studies in the filed, including Ralph D. Sawyer’s The Tao of Spycraft: Intelligence Theory and Practice in Traditional China, Nicholas Eftimiades’s Chinese Intelligence Operations, Tod Hoffman’s The Spy Within: Lary Chin and China’s Penetration of the CIA, and John Byron’s The Claws of the Dragon: Kang Sheng- The Evil Genius behind Mao and His Legacy of Terror in People’s China, largely testify how, what and where of espionage activities and practices in vogue.

Economic espionage per se is not the exclusive domain of China. While being an illegal act, and more often than not outright unethical in form as well as substance, it draws on and thrives as a staple of human history. Nonetheless, it is rooted in the objective reality of competitive modern life, where comparative edge over ones rival constitutes both a shield and promise for future.

As long as individual firm and/ or groups of them get to commit the act, it can be left to nature for self corrections. What is worrisome is the involvement of a nation state. The ‘default fallout’ is a system disorder, in which ‘quest for power’ rather than ‘cooperative co-existence’ comes to rule the roost. There is bound to be no stopping until either the ‘world order’, built around the United Nations (UN) system, including the apparatus of World Trade Organization (WTO) get to develop zero tolerance for such an enterprise and/ or the socio-economic cost of ‘economic espionage led growth and development’ turn counter productive.

Read more at Sri Lanka Guardian