China Economy Forum

[Brotherhood]

Throughput of Lianyungang Port in Jan. up 28.9% - People's Daily Online February 10, 2011

Photo taken on Feb. 10, 2011 shows the containers at the port of Lianyungang, east China's Jiangsu Province. The throughput of the port of Lianyungang in January 2011 hit 13.588 million tonnes, an 28.9 percent rise comparing to the same period of 2010. (Xinhua/Wang Chun)

 

[中国万岁-ProsperThroughCo-]

City's first organic fish sure to catch on

Lo Wei
Feb 11, 2011

Organic fish will be sold for the first time in Hong Kong next month.
They come from two fish farms in Yuen Long where 18,000 fish have been bred organically in terms of their feed and breeding environment, says Jonathan Wong Woon-chung, director of the Hong Kong Organic Resource Centre.

Three types of fish farmed organically - mullet, bighead carp and grass carp - have received certification from the centre established under Hong Kong Baptist University.

They will be sold for HK$60 to HK$70 each, about double the price for non-organic fish of the same type on the market.

Each fish will be labelled with a green sticker with a tick, the word "organic" and the centre's name to identify them as certified organic.

From next month, one of the farms will sell fish at its own retail outlets. Wong expects that more fish will soon be available in selective supermarkets.

"Organic fish are safer to eat as they are chemical-free," he said. "Eating them also benefits the environment."

He said the two farms had to comply with many international standards to earn their organic certification.

Apart from providing organic feed and unpolluted water, the farms had to ensure they had adequate space for the fish.

"The fish need enough room to swim," Wong said. "If it gets too crowded, they can be injured."

The fish were raised and killed humanely, Wong said.

He explained that methods commonly used in wet markets were acceptable, such as knocking fish unconscious with a hard blow before gutting them. But drugging fish was prohibited as this would contaminate them.

Wong is confident that organic fish farming has a future in Hong Kong. "We are now at the kick-off stage but hope more fish farmers will join the project," he said.

The Organic Resources Centre was co-operating with the two farms, with technological support from the Agriculture, Fisheries and Conservation Department.

When the fishing operation is more well established, the farms will breed more expensive species to raise profit margins and make it more attractive to fish farmers.

"Farming organic fish should be more profitable than breeding non-organic fish," Wong said.

For now, only freshwater fish can be cultivated organically in Hong Kong as there are no isolated bays suitable for organic mariculture. "We can't raise organic fish with non-organic types as they will be contaminated by chemicals and pollutants," Wong said.

Organic fish provided a safer and more environmentally friendly choice for consumers, Wong said, as organic fish farms strive to minimise water pollution.

Their carbon footprint was much lower as they did not use fertilisers and pesticides, which were petroleum by-products.

More than 70 per cent of the farms' fish feed is organic, meaning it has been produced with no chemical fertilisers, additives and hormones.

The fish are fed mainly residue from organically raised soya bean and fishmeal.

Water quality at the farms is also strictly controlled. The pond water and mud must be free of pollution, and any waste water from the operation is treated before it is discharged.

I am actually a fan of organic food, and I believe this is the future. I hope that within one or two decades, most food is organically grown (it shouldn't be called organic, rather, it is modern farming that should be called "additives/chemical farming").

Of course, one must find a good way to keep organic farming cost-efficient, but I believe China, due to economics of scale, R&D and a real demand for it, can make it able.

Healthy food is essential for improving people's health, more than exercise in my opinion. You wouldn't give your car bad gasoline, would you?

 

[below_freezing]

City's first organic fish sure to catch on


I am actually a fan of organic food, and I believe this is the future. I hope that within one or two decades, most food is organically grown (it shouldn't be called organic, rather, it is modern farming that should be called "additives/chemical farming").

Of course, one must find a good way to keep organic farming cost-efficient, but I believe China, due to economics of scale, R&D and a real demand for it, can make it able.

Healthy food is essential for improving people's health, more than exercise in my opinion. You wouldn't give your car bad gasoline, would you?

disagree. sometimes you want to feel the chemical taste, gives the meat a more harsh and metallic flavor like in McDonalds, sort of like a drug.

 

[no_name]

Not from China but I think this will be an important development since electric cars/battery is developing rapidly in china:

Air-Fueled Battery Could Last Up To 10 Times Longer: Ground-Breaking Technology For Electric Cars

ScienceDaily (May 18, 2009) — A new type of air-fuelled battery could give up to ten times the energy storage of designs currently available.

This step-change in capacity could pave the way for a new generation of electric cars, mobile phones and laptops.

The research work, funded by the Engineering and Physical Sciences Research Council (EPSRC), is being led by researchers at the University of St Andrews with partners at Strathclyde and Newcastle.

The new design has the potential to improve the performance of portable electronic products and give a major boost to the renewable energy industry. The batteries will enable a constant electrical output from sources such as wind or solar, which stop generating when the weather changes or night falls.

Improved capacity is thanks to the addition of a component that uses oxygen drawn from the air during discharge, replacing one chemical constituent used in rechargeable batteries today. Not having to carry the chemicals around in the battery offers more energy for the same size battery. Reducing the size and weight of batteries with the necessary charge capacity has been a long-running battle for developers of electric cars.

The STAIR (St Andrews Air) cell should be cheaper than today’s rechargeables, too. The new component is made of porous carbon, which is far less expensive than the lithium cobalt oxide it replaces.

This four-year research project, which reaches its halfway mark in July, builds on the discovery at the university that the carbon component’s interaction with air can be repeated, creating a cycle of charge and discharge. Subsequent work has more than tripled the capacity to store charge in the STAIR cell.

Principal investigator on the project, Professor Peter Bruce of the Chemistry Department at the University of St Andrews, says: “Our target is to get a five to ten fold increase in storage capacity, which is beyond the horizon of current lithium batteries. Our results so far are very encouraging and have far exceeded our expectations.”

“The key is to use oxygen in the air as a re-agent, rather than carry the necessary chemicals around inside the battery,” says Bruce.

The oxygen, which will be drawn in through a surface of the battery exposed to air, reacts within the pores of the carbon to discharge the battery. “Not only is this part of the process free, the carbon component is much cheaper than current technology,” says Bruce. He estimates that it will be at least five years before the STAIR cell is commercially available.

The project is focused on understanding more about how the chemical reaction of the battery works and investigating how to improve it. The research team is also working towards making a STAIR cell prototype suited, in the first instance, for small applications, such as mobile phones or MP3 players.

Air-fueled Battery Could Last Up To 10 Times Longer: Ground-breaking Technology For Electric Cars

It is also reported in IEEE.

 

[中国万岁-ProsperThroughCo-]

Rabbit that will shape China’s future

By Anthony Bolton
Published: February 11 2011 17:45 | Last updated: February 11 2011 17:45
At the start of the year, I wondered if it was time to reassess the generally bullish view of markets that I had held since the last quarter of 2008. Faced with some increasingly widely-held concerns about the outlook, I began to question whether I should temper my optimism.

The short answer was, and remains, no. Valuations are not materially higher than their long-term trend and the behaviour of investors is not as aggressive as it tends to be at market tops. Flows into equities are not excessive and many investors continue to scale the wall of worry which is typical of a bull market.

My view is coloured by a continuing conviction about the case for investing in China, where I have been living for almost a year. China is not just any emerging market. It is the dominant economy in Asia and one of the two most important in the world. This will continue to have important repercussions for investors.

The year of the rabbit, which began last week, is a pivotal one for China. It will determine whether the world’s most populous nation can achieve a successful balance between sustaining growth and containing inflation. In March, we will see the full detail of China’s next five-year plan (the 12th) – and next year will see a new president take the reins. This political changing of the guard gives me confidence that the authorities will resist
doing anything too dramatic this year.

China had a shock during the financial crisis. It realised how dependent it was on the rest of the world and, in particular, the US. Policy will from now on be geared towards making the Chinese economy more self-reliant and much less dependent on exports. The days of China as the low-cost workshop of the world
are gone.

Travelling between Europe and Asia, I continue to see the emergence of a two-speed world. Growth in the developed world will be lower than before the financial crisis as the countries that over-extended unwind the high levels of debt with which they have saddled themselves. Emerging markets will not be immune to that slowdown but they will enjoy
higher growth and money will continue to flow towards them.

The drivers of growth in China will change, however. Consumption will become increasingly important and service industries – such as education, as well as pharmaceuticals and financial services – will experience strong growth. Low-cost manufacturing, commodities and infrastructure are, relatively speaking, yesterday’s story.

This is not to dismiss lightly the concerns many investors feel about China today, not least after this week’s further quarter-point increase in interest rates. I think that all emerging markets, China included, will have to get used to structurally higher inflation. Rising prices are currently being driven by food inflation, which accounts for around
70 per cent of the increase in China’s consumer
price index.

My conclusions are not the same as those who worry about inflation in China. But monetary tightening is not the answer to food-related inflation so I believe that the authorities will be measured in their use of interest rates to tackle price pressures. I have some sympathy with the argument that the government may even be comfortable with rising food costs as a means of lifting rural incomes which have lagged those
in the cities.

It is important to realise that Chinese consumers are not affected by rising interest rates in the same way as they are in the west. Consumer borrowing is very underdeveloped in China, although it is growing. With high levels of cash savings, Chinese consumers might even benefit from rising rates.

My approach to investing is a little different from the one I employed when managing money in the UK and closer to how I operated in continental Europe when I was looking for opportunities in then emerging markets such as Poland and Hungary. Broadly speaking, I am interested in two types of opportunity. First, I am finding plenty of companies that are growing their earnings at between 20 per cent and 30 per cent a year and look like their western counterparts but at an earlier stage of their development. Although these are a little more expensive, the valuations are justified by the higher growth prospects.

The second group is growing a little more slowly – say between 15 per cent and 20 per cent – but the attraction here is that these shares trade at a big discount to western companies.

For a stockpicker such as me, China is a treasure trove of investment opportunity. Over the past 10 months or so, I have had around 340 company meetings. Not all were what I expected and I spend a lot of time cross-checking whether the management or the financials are what they seem. In a market that is still relatively under-researched, however, I believe that the chance of discovering what others have missed is high. Even if I were less sanguine about the overall market outlook, I would be optimistic about the remarkable stockpicking opportunity I find here.

Anthony Bolton is president, investments, at Fidelity International

US lawmakers revive China currency bill

By Alan Beattie in Washington
Published: February 10 2011 23:47 | Last updated: February 10 2011 23:47
A group of US lawmakers have reintroduced legislation to punish China for holding down its currency, a bill likely to encounter stiff resistance in the House of Representatives.

Thursday’s move came as the US Treasury’s senior international official said that Beijing had showed promising but so far insufficient progress in allowing the renminbi to rise.

The issue of currencies and current account imbalances is likely to dominate next week’s meeting of Group of 20 finance ministers and central bank governors in Paris, the first big meeting held under France’s 2011 presidency of the grouping.

Nicolas Sarkozy, French president, initially said that reform of the international monetary system would be a priority for the G20 this year, though he has subsequently backed off and admitted that the US dollar would remain the dominant global reserve currency for a while to come.

Also on Thursday, the International Monetary Fund released a policy paper laying out options to expand the use of special drawing rights (SDR) a reserve asset used by governments and the IMF. The paper said that there were some advantages to wider use of SDRs, which currently play a small role in the global monetary system, but that “very significant practical, political, and legal hurdles would need to be overcome in the process.”

On Capitol Hill, Sander Levin, the senior Democrat on the House ways and means committee, and Sherrod Brown, a Democratic senator from Ohio, reintroduced legislation designed to let the US impose emergency tariffs against China if its currency is found to be undervalued. The legislation has been considerably toned down from previous versions, which would have imposed an across-the-board tariff, but some lawyers still question its legality under World Trade Organisation rules.

Although the bill has some Republican support, its chances of passing have diminished sharply since the Republicans took over the House of Representatives last month. Dave Camp, the new chairman of the ways and means committee, has said that currency legislation was not a priority for him or the Republican House leadership.

Lael Brainard, the US Treasury’s senior official on international affairs, said on Thursday that while the administration shared Congress’s goal of pushing for a faster rise in the renminbi, it had “different means and mechanisms than Congress” in trying to achieve them.

Mr Sarkozy and other policymakers, including senior Chinese officials, have called for the SDR – made up of a basket of the dollar, the euro, the yen and the pound sterling – to be more widely used in international trade, foreign exchange reserves and the pricing of commodities such as oil.

Mr Sarkozy has suggested including the renminbi in the basket that makes up the SDR, but IMF officials say that currencies in the basket need to be freely and widely traded to enhance liquidity in the unit. Ms Brainard said that the renminbi might one day be included, providing that Beijing had proceeded further with liberalising the use of the currency and flows of capital in and out of the country.

A summary of debate between countries on the IMF’s executive board, released on Thursday along with the SDR paper, showed that governments were still divided about how far new reserve currencies were likely to be used.

The Treasury Department themselves said the yuan wasn't undervalued. What more do these democrats want? Look at your own problems first.

 

[Brotherhood]

Chinese company to build luxury helicopters - People's Daily Online February 12, 2011

A Chinese motor home manufacturer has acquired licenses from regulatory authorities to build luxury helicopters using technologies from Eurocopter, sources told Xinhua on Friday.

The State Administration for Industry and Commerce (SAIC) had approved Zhong-Ou International Group, which is a based in east China's Zhejiang Province, for assembling helicopters, company chairman Wu Guolin said.

A sample helicopter is expected to run off the assembly line by the end of this year, according to Wu.

Wu said that luxury helicopters would be powered by advanced turbo-charged engines instead of piston engines that are normally seen on private helicopters made by other Chinese companies.

He noted that the new helicopters would be delivered in June next year, with a price tag between 30 million yuan (4.55 million U.S. dollars) to 60 million yuan.

The company already invested about 500 million yuan for the first phase of production, which will be carried out on its 33.3-hectare Changshu base in Jiangsu Province.

The company had also set up a second production base in Shanghai over an area of 13.3 hectares, according to Wu.

Wu said his company would first resort to manufacturing the helicopters through CKD, and that they aim to produce all parts and components in China later on.

Originally an automotive and motorcycle parts manufacturer, Zhong-Ou International Group began manufacturing high-end motor homes in 2002. The company also signed contracts with German automaker Mercedes-Benz to jointly produce Benz-branded motor homes.

Eurocopter, a subsidiary owned fully by European Aeronautic, Defense and Space Company (EADS), is the world's largest helicopter manufacturer in terms of revenue.

Source: Xinhua

 

[Brotherhood]

January car sales drive to monthly high in China - People's Daily Online February 12, 2011

Sales of domestic car makers raced to their highest monthly level in January despite the expiry of government incentives on purchases and the introduction of vehicle license quotas in Beijing to ease the city's chronic traffic problems.

Ford Motor China yesterday said it sold a record 53,340 units in January, an increase of 20 percent from a year earlier.

Luxury car maker Mercedes-Benz sold 15,330 units in China last month, a surge of 89 percent from the same month a year ago.

Japanese rival Honda Motor Corp yesterday also reported sales more than doubled to 65,580 units in January from the same month last year.

The brisk sales occurred after the government ended incentives on smaller, fuel-efficient vehicles from January 1, which included tax cuts and subsidies. Beijing's city government limits vehicle registrations to combat congestion.

Analysts said the robust January sales were an extension of last year's market boom. Policy changes have prompted consumers to flock to showrooms and place their orders at the end of last year.

"The market doesn't show a significant slump amid the negative impact," said Fang Quan'an from Western Securities. "Growth in 2011 will be more steady."

However, the small car market started to show signs of cooling after the incentives were removed.

Ford said about 7,135 units of Fiesta compact cars were sold in January, an only 1 percent rise from a year earlier.

Source: Shanghai Daily

 

[Brotherhood]

Value-added output ofelectronic information sector grows 16.9 pct in 2010 - People's Daily Online February 11, 2011

The value-added output of China's large electronic information manufacturers grew 16.9 percent year on year in 2010, the Ministry of Industry and Information Technology (MIIT) said on Friday.

The growth rate was 11.6 percentage points higher than the same period in 2009, the MIIT said in a statement posted on its website. The ministry did not file a figure for value-added output.

The rise was attributed to the government's stimulus measures and its recovery in exports. According to the statement, revenues of large electronic information manufacturers, that is, companies with annual sales in China in excess of 5 million yuan, rose 24.1 percent year on year to 6.36 trillion yuan (964.9 billion U.S. dollars) last year.

Profits totaled 282.5 billion yuan during the period, up 57.7 percent year on year. Imports and exports of electronic information products also increased 31.2 percent year on year to 1.012 trillion U.S. dollars.

China's electronic information manufacturers include producers of mobile phones, personal computers, television sets, digital cameras, electronic components and home appliances.

Source: Xinhua

 

[CardSharp]

Value-added output ofelectronic information sector grows 16.9 pct in 2010 - People's Daily Online February 11, 2011

Must CRUSH Japan!

 

[中国万岁-ProsperThroughCo-]

scmp
Think big for the nation, HK told

12TH FIVE-YEAR PLAN
Gary Cheung
Feb 12, 2011

Hong Kong is just getting used to being part of China's five-year plans. And with a new one about to be adopted, the city is receiving some expert advice: don't dwell on the details. Think big.
"We must look at the big picture," said Peter Leung Pak-yan, the former director of the Hong Kong Economic and Trade Office in Guangdong, "such as what the country needs in the next stage of development and how Hong Kong can benefit from the opportunities arising from this".

With Hong Kong's fortunes increasingly intertwined with the mainland's economy, many people in the city are eager for some indications of its future under the latest plan.

The nation's 12th five-year plan, the road map for development through to 2015, will be discussed and endorsed at the annual National People's Congress meeting in Beijing next month.

Some local observers have gone so far as to compare the number of words in the previous five-year plan with the new one, claiming that an increase of 400 words in this draft means Beijing wants Hong Kong to have a more active role.

That is nonsense, according to Leung and other experts familiar with the mainland's five-year plan. They said Hong Kong should not read too much into the nitty-gritty of the 12th five-year plan but think about the big picture and what new opportunities we can capture.

Hong Kong's goal is to find out the nation's development priorities and see how to cash in on that.

Leung, who served as Hong Kong's top representative in Guangdong from 2002 to 2008, said the mainland would have a hard time increasing exports to Western countries in coming years.

"Hong Kong should think about that and see if we can team up with the mainland, particularly Guangdong province, to explore new export markets," he said.

Boosting domestic consumption is another coming trend for China's economy. Leung said Hong Kong companies should start thinking how to build good brand names on the mainland to capitalise on that opportunity.

Anthony Wu Ting-yuk, chairman of the Bauhinia Foundation Research Centre, agreed. He singled out the offshore yuan business as one to watch for Hong Kong.

According to the draft, the central government is to give Hong Kong more support for "consolidating and enhancing its status as an international financial, trade and logistics centre" - a code for it to take on more offshore yuan business.

Dr Fang Zhou, assistant chief research officer at the One Country Two Systems Research Institute in Hong Kong, said: "The importance [for Hong Kong in the five-year plan] is to get a `hat' for the city. Once we get the hat, we are in a favourable position to lobby for preferential policies from the central government."

For instance, an "international financial, trade and logistic centre" is such a hat. Once it is written into the national development plan, Hong Kong could use it to push Beijing to give it more yuan business and use the city as a launching pad for mainland enterprises to break into overseas markets.

Since the handover, Hong Kong - often hailed as a beacon of laissez faire economics - has been on a learning curve in its participation in development plans for China.

Fang said his institute had urged Hong Kong officials in the late 1990s to get actively involved in the drafting of the 2000 to 2005 five-year plan.

"But many Hong Kong officials at the time were not familiar with the process," he said. Most Hong Kong officials then were eager to keep their distance from the mainland and many local politicians also had reservations about economic integration with the mainland.

Fang said attitudes started to change after 2003, when Hong Kong slumped into a recession after the severe acute respiratory syndrome outbreak. Beijing stepped in to help the city revitalise its economy.

Chief Executive Donald Tsang Yam-kuen said in his 2008 policy address that the Hong Kong government would contribute to the formulation of the 12th five-year plan so the city could play a greater role in China's development.

Wu said: "We can't afford to turn a blind eye to what is going to happen on the mainland in the next five years. We must explore in which areas we can contribute to the nation's development and secure a win-win situation."

But legislator Cyd Ho Sau-lan said the safety and rights of Hong Kong people must be protected amid further cross-border integration. "There are lots of cases of detention of Hong Kong people by public security bureaus on the mainland. I am worried that the `two systems' will be undermined as the Hong Kong government does not dare to stand up to mainland authorities," she said

Hong Kong deputies to the National People's Congress were invited to read a draft of the five-year plan at the central government's liaison office last Thursday or this Monday.

 

[Brotherhood]

China Transforms from Copycat to Patent Powerhouse February 13, 2011

The company that filed the most international patent applications in 2008 was not from Japan or the U.S. It was China's Huawei Technologies, a telecommunications equipment maker based in Shenzhen. Huawei filed 1,737 patent applications under the Patent Cooperation Treaty of the World Intellectual Property Organization, nudging Japan's Panasonic Corp. (1,729 applications) into second place. It was the first time for a Chinese company to top the list. Huawei had ranked second after Panasonic in the previous year, but it had trailed by only 44 applications.

China is emerging as a global patent powerhouse, cleaning up its image as "the world's factory" relying on a huge pool of cheap labor or a hub for fake goods without original expertise. China's patent filings have risen dramatically on the back of innovative research and development efforts, putting the country on track to overtake the U.S. and Japan in the worldwide patent race.

According to the WIPO, Chinese companies filed 203,257 patent applications in 2008, up 14-fold from a decade ago. The country now ranks among the top three after Japan (500,000 applications) and the U.S. (390,000). The number of applications filed by China surged 17.7 percent between 2008 and 2009, while the number filed by Western countries fell for the first time in 10 years due to reduced R&D spending amid the global financial crisis.

China's rise is the result of strong government support. Beijing has promoted corporate research and development by building technology clusters nationwide and even granting monetary incentives to help private companies pay expenses for filing patent applications.

In a recent report that looked at growth rates of PCT patent applications over the past five years, Thompson Reuters Scientific predicted that China could surpass Japan next year and the U.S. in 2012 to take the No.1 spot. Chinese patent applications have soared particularly in such strategic future industries as biotechnology and renewable energy. It has already overtaken Japan, the U.S. and European countries in applications involving environmental technologies.

The country's strive for technological primacy is also reflected in its growth in research. According to Japan's National Institute of Science and Technology Policy, China had 104,157 scientific articles published in the world's leading scientific journals in 2008, second only to the U.S.
The Chosun Ilbo (English Edition): Daily News from Korea - China Transforms from Copycat to Patent Powerhouse

 

[Brotherhood]

BBC News - China overtakes Japan as world's second-biggest economy 14 February 2011

China has overtaken Japan as the world's second-biggest economy.

Japan's economy was worth $5.474 trillion (£3.414 trillion) at the end of 2010, figures from Tokyo have shown. China's economy was closer to $5.8 trillion in the same period.

Japan has been hit by a drop in exports and consumer demand, while China has enjoyed a manufacturing boom.

At its current rate of growth, analysts see China replacing the US as the world's top economy in about a decade.

"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.

Overseas risk

Japan played down the significance of the shift in the economic league table, and the fact that it has been replaced as the second-largest economy for the first time in more than four decades.

"As an economy, we are not competing for rankings but working to improve citizens' lives," said Economics Minister Kaoru Yosano.

The minister added that China's booming economy was welcome news for Japan as a neighbouring country.

China is now Japan's main trading partner and is increasingly important to companies such as electronics firm Sony and carmakers like Honda and Toyota.

However Mr Yosano said that Japan needed to closely watch "risks from overseas economies and currency moves".

The yen has been strengthening against other currencies, recently touching a 15-year high against the dollar, and the fear is that the currency's gains may hurt foreign demand for Japanese products.

Negative demand

According to the latest figures from Tokyo, Japan's economy contracted at an annualised rate of 1.1% in the final three months of 2010. Growth declined 0.3% from the previous quarter.

It was the first time in five quarters that the economy contracted and it was caused by a dip in domestic and export demand, analysts said.

Consumer spending fell 0.7% in the final three months of 2010, the figures showed.

Analysts said that while demand has been picking up since the start of the year, there will not be a sudden revival in Japan's economic fortunes.

Not least because government plans to boost consumer spending by giving incentives to buy products such as consumer durables had either finished or were about to end.

"The main reasons for the contraction are the expiry of government stimulus measures and negative external demand," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"It is going to be difficult for the economy to emerge from a lull in the January-March period.

"We are unlikely to see the economy worsen, but the recovery will not be strong enough for people to actually feel it is happening."

'Lost decade'

Japan has been struggling to come to terms with what many analysts call the "lost decade" of the 1990s when a property market and asset crash turned the economy on its head.

Domestic demand tumbled and exports also dropped as consumers looked for cheaper products from other emerging markets, and China in particular.

Today, Japan's biggest headaches are an aging population that is spending less, and a workforce that is relatively expensive and inflexible to operate.

By contrast, the majority of China's growth has been funded by a long-running manufacturing boom and the subsequent expansion of its domestic industries and infrastructure.

"There was an emphasis on infrastructure," said Duncan Innes-Ker of the Economist Intelligence Unit (EIU) in Beijing.

"They were building way ahead of where people thought the demand would be. And because the infrastructure was there, companies went there."

Whole picture

Most economists agree that while China as a whole is growing, and the average person is getting wealthier, comparing only the size of its economy to Japan's does not paint an accurate enough picture.

"GDP per head in China is about $4,500, but in Japan it's about $40,000 per head," said Mr Miller of GK Dragonomics.

"Most people in China are still poor, more people live in the countryside than in cities. The average Japanese person is much much richer than the average Chinese person."

 

[Crypto]

China has overtaken Japan as the world's second-biggest economy.

Japan's economy was worth $5.474 trillion (£3.414 trillion) at the end of 2010, figures from Tokyo have shown. China's economy was closer to $5.8 trillion in the same period.

Japan has been hit by a drop in exports and consumer demand, while China has enjoyed a manufacturing boom.

At its current rate of growth, analysts see China replacing the US as the world's top economy in about a decade.

"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.

Overseas risk

Japan played down the significance of the shift in the economic league table, and the fact that it has been replaced as the second-largest economy for the first time in more than four decades.

"As an economy, we are not competing for rankings but working to improve citizens' lives," said Economics Minister Kaoru Yosano.

The minister added that China's booming economy was welcome news for Japan as a neighbouring country.

China is now Japan's main trading partner and is increasingly important to companies such as electronics firm Sony and carmakers like Honda and Toyota.

However Mr Yosano said that Japan needed to closely watch "risks from overseas economies and currency moves".

Negative demand

The yen has been strengthening against other currencies, recently touching a 15-year high against the dollar, and the fear is that the currency's gains may hurt foreign demand for Japanese products.



According to the latest figures from Tokyo, Japan's economy contracted at an annualised rate of 1.1% in the final three months of 2010. Growth declined 0.3% from the previous quarter.

It was the first time in five quarters that the economy contracted and it was caused by a dip in domestic and export demand, analysts said.

Consumer spending fell 0.7% in the final three months of 2010, the figures showed.

Analysts said that while demand has been picking up since the start of the year, there will not be a sudden revival in Japan's economic fortunes.

Not least because government plans to boost consumer spending by giving incentives to buy products such as consumer durables had either finished or were about to end.

"The main reasons for the contraction are the expiry of government stimulus measures and negative external demand," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"It is going to be difficult for the economy to emerge from a lull in the January-March period.

"We are unlikely to see the economy worsen, but the recovery will not be strong enough for people to actually feel it is happening."

'Lost decade'

Japan has been struggling to come to terms with what many analysts call the "lost decade" of the 1990s when a property market and asset crash turned the economy on its head.

Domestic demand tumbled and exports also dropped as consumers looked for cheaper products from other emerging markets, and China in particular.


Today, Japan's biggest headaches are an aging population that is spending less, and a workforce that is relatively expensive and inflexible to operate.

By contrast, the majority of China's growth has been funded by a long-running manufacturing boom and the subsequent expansion of its domestic industries and infrastructure.

"There was an emphasis on infrastructure," said Duncan Innes-Ker of the Economist Intelligence Unit (EIU) in Beijing.

"They were building way ahead of where people thought the demand would be. And because the infrastructure was there, companies went there."

Whole picture

Most economists agree that while China as a whole is growing, and the average person is getting wealthier, comparing only the size of its economy to Japan's does not paint an accurate enough picture.

"GDP per head in China is about $4,500, but in Japan it's about $40,000 per head," said Mr Miller of GK Dragonomics.

"Most people in China are still poor, more people live in the countryside than in cities. The average Japanese person is much much richer than the average Chinese person."

 

[中国万岁-ProsperThroughCo-]

FT
China in talks over Panama Canal rival

By John Paul Rathbone and Naomi Mapstone in Bogotá
Published: February 13 2011 21:54 | Last updated: February 13 2011 21:54
China is in talks to build an alternative to the Panama Canal that would link Colombia’s Atlantic and Pacific coasts by rail – a move that Bogotá also hopes will spur Washington to push for Congressional approval of a US-Colombia free-trade pact.

“It’s a real proposal  ... and it is quite advanced,” Juan Manuel Santos, Colombia’s president, told the Financial Times. “The studies [the Chinese] have made on the costs of transporting per tonne, the cost of investment, they all work out.”

The mooted rail link is the latest example of China’s increasingly aggressive lending to the developing world, as evidenced by Chinese banks having lent more to developing countries over the past two years than the World Bank.

The 220km “dry canal” would run from the Pacific to a new city near Cartagena where imported Chinese goods would be assembled for re-export throughout the Americas. Colombia-sourced raw materials would make the return journey to China.

“I don’t want to create exaggerated expectations, but it makes a lot of sense,” Mr Santos said. “Asia is the new motor of the world economy.”

Colombia has long dreamt of building an alternative to the Panama Canal. The country is the US’s closest ally in South America, but Bogotá is frustrated by Washington’s stalling over a free-trade agreement signed by both governments four years ago but yet to be ratified by Congress.

Bilateral Sino-Colombian trade has meanwhile soared from $10m in 1980 to more than $5bn in 2010, making China Colombia’s second-biggest trade partner, after the US.

“Colombia has a very important strategic position, and we view the country as a port to the rest of Latin America,” said Gao Zhengyue, China’s ambassador to Colombia.

In documents seen by the FT, the project is just one of a series of Chinese proposals that would boost transport links with Asia and improve Colombia’s creaking infrastructure – a priority of Mr Santos’ administration.

Chinese and Colombian officials say talks are most advanced over a 791km railway and expansion of the Pacific port of Buenaventura. The $7.6bn project, funded by the Chinese Development Bank and operated by China Railway Group, would move up to 40m tonnes of cargo a year from Colombia’s economic heartland to the Pacific. Priority would be given to coal destined for China.

Colombia is the world’s fifth-largest coal producer, but most is exported via Atlantic ports even as demand is growing fastest across the Pacific.

Additional reporting by Geoff Dyer in Beijing and Robert Wright in London

scmp
China proving to be saviour of the world's poorest people

Toh Han Shih
Feb 14, 2011
Worker in Africa

"For man holds in his mortal hands the power to abolish all forms of human poverty and all forms of human life."

US president John Kennedy in his inaugural address 50 years ago

Kennedy made his speech during the cold war, when the Soviet Union and the United States had nuclear weapons aimed at each other and were capable of "abolishing all forms of human life", while each was also competing to prove their rival ideologies were the most effective in abolishing "all forms of human poverty".

Today, China, a nominal communist state, is no longer involved in nuclear brinkmanship with the US but is making its own bid to end poverty and proving better at it than the US.

In Brazil, for instance, China has played a key role in pulling millions of Brazilians out of poverty, says the Brazilian consul in Hong Kong, Antonio Jose Rezende de Castro.

According to the Instituto de Pesquisa Economica Aplicada (Ipea), Brazil's economic research institute, 12.8 million Brazilians were lifted from poverty between 1995 and 2008, while another 13.1 million escaped extreme poverty. Ipea defined poverty as individual earnings of less than US$140 per month and extreme poverty by earnings below US$70 per month.

Although government policy played a big part, De Castro gave a lot of credit to trade and investment between China and Brazil. China overtook the US as Brazil's biggest trading partner in 2009 and Brazil's biggest foreign investor last year.

"If Brazil maintains the same trend towards decreasing poverty and inequality ... by 2016 its social indicators will resemble developed countries," said Ipea.

Chinese and Brazilian officials met in the Brazilian capital Brasilia in August 2009 to discuss poverty reduction.

Yet this month, US Secretary of the Treasury Timothy Geithner sought an alliance with Brazil against the Chinese currency, which the US says is undervalued, reported the Financial Times. Although Brazilian manufacturing has weakened in the face of cheap Chinese-made goods, Brazil ran a US$4.8 billion trade surplus with China in the first 11 months of last year, meaning Brazil has little incentive to push for a stronger yuan.

"We have as many problems with the currency policy of China as we do with the currency policy of the US. It's not only China's currency policies that are loose. The world's policies are loose," Marco Aurelio Garcia, adviser to Brazilian President Dilma Rousseff told Bloomberg last month.

Instead of ganging up against China, the US should co-operate with China in ending poverty in Brazil, Africa and other parts of the world, noted Maya Bhandari, an economist with London think tank Lombard Street Research.

Meanwhile, Swedish development aid organisation Diakonia and the European Network on Debt and Development said a triangular approach in Africa was needed between Chinese, Africans and the West.

"China's assistance to and co-operation with Africa are changing the rules of the game and threaten to leave governments and organisations that do not act strategically by the wayside," said their report titled "China and the end of poverty in Africa, towards mutual benefit?"

The United Nations Development Programme worked with China to end poverty in Africa at the Africa-China Poverty Reduction and Development Conference in November last year in Addis Ababa, Ethiopia.

"We are all drawn to an exchange of ideas with China because of the magnitude of its success in reducing poverty over the past three decades," said UNDP administrator Helen Clark.

China lifted more than 600 million of its people out of poverty between 1981 and 2005, according to the World Bank. In 1981, 84 per cent of China's population was below the poverty line of US$1.25 a day but that figure fell to 16 per cent in 2005.

The extreme poverty rate in sub-Saharan Africa in the late 1990s was more than 58 per cent, said Clark, a former New Zealand prime minister. "Since then, rapid growth contributed to reducing the extreme poverty rate to 50 per cent by 2005. A development breakthrough in Africa is within reach."

In 2009, trade between China and Africa surpassed US$114 billion, with China accounting for 10 per cent of the continent's trade, up from 2 per cent a decade ago, said Donald Kaberuka, president of the African Development Bank Group.

China's foreign direct investment in Africa has increased from US$56 million in 1996 to US$7.8 billion in 2008, Kaberuka said.

China's huge investment in Africa has not been without problems. For example, International Rivers, an environmental non-governmental organisation, alleged the Kajbar dam in Sudan to be built by Chinese state firm Sinohydro will displace 10,000 people and threatens to fuel ethnic conflict in Sudan. Sinohydro has declined to comment on the allegations.

There has been violence against Chinese in Angola and shootings of local workers by Chinese company representatives in Zambia. Human rights groups have criticised the lack of transparency in Chinese multibillion-dollar infrastructure and mining deals in Congo.

Nonetheless, Diakonia's report said: "There is an underlying assumption that Western policy is essentially progressive and Chinese policy essentially negative. It is wrong to demonise Chinese policy ... and Western governments should practice what they preach."

Western governments could fulfil their pledges to increase aid to Africa, added the report. "On corruption and good governance, Western governments could do more in prosecuting their own companies who engage in bribery; sign up to the UN Convention to combat corruption which very few Western governments have done; as well as initiate reform of the governance structures of the IMF and World Bank which leave much to be asked for in terms of giving voice to poor countries."

On the available evidence, would it be reasonable to suggest that if a big reduction in world poverty contributes to world peace, then perhaps the Nobel Peace Prize could be jointly awarded to China and a prominent dissident?

China, it may be argued, deserves the prize since poverty increases the risk of war. An award to another Chinese dissident could be a signal that despite its record, China still has some way to go in securing human rights for its citizens at home.

 

[CardSharp]

^^^^^^

Sweet our own Panama canal (or Columbian canal rather)