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China in new Great Game over Central Asian riches
Sunday, December 16, 2007
KHORGOS, Kazakhstan: The driver of the 18-wheel tractor-trailer from China idling at the Kazakhstan-China border said apples were the cargo he brought to Almaty, Kazakhstans booming commercial centre. For Kazakhs, theres a tart irony in the shipment.
Almatys region is where the first apple trees were found and the first apple orchards planted. The city was a centre of the Soviet Unions s fruit industry. Its very name means Father of Apples.
In the past few years, Chinese fruit, vegetables, TV sets, T-shirts and tires have flooded markets along the old Silk Road in former Soviet Central Asia. Each day, all along the Chinese border, hundreds of tractor-trailers rattle west.
These goods are the most visible sign of Beijings growing power here as China, Russia, the United States and others compete for financial and strategic advantage on the borders of some of the worlds most turbulent countries, Iran, Afghanistan and Pakistan. Its a struggle in which China seems to be gaining the upper hand.
At stake are oil, hydropower sources, strategic metals, pipelines, transit routes and access to markets. The chief prize is energy supplies: China needs them, Russia wants to control their distribution, and Western powers want to ensure they are not monopolized by Moscow or Beijing.
China today is reaching deep into Central Asia to tap oil and gas reserves, using pipelines and investments to challenge Russias monopoly on gas shipments and to thwart Moscows hopes of controlling a bigger share of the regions oil.
In recent years, China and Russia have forged a strategic alliance, as part of a group called the Shanghai Cooperation Organization, to squeeze the United States out of Central Asia, after the US established military bases here. They have largely succeeded.
However, friction is developing between the two neighboring giants. And given Chinas 1.3 billion people and its economic strength, it seems certain that Russia, with its dwindling population and economy based narrowly on energy, will increasingly be on the defensive.
Nowhere, perhaps, is Chinas presence more starkly evident than at Khorgos, straddling the Kazakh-China border.
Central Asia, which includes Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan, was long regarded as the middle of nowhere, caught between Russia, China, Siberia and Afghanistans Hindu Kush mountains.
The region emerged from isolation about 200 years ago as Russian imperial troops and British spies competed for influence in a rivalry that Rudyard Kipling called The Great Game.î
In todays Great Game, Russia finds itself struggling to shore up its influence through arms sales and energy contracts, dominance of mobile phone and TV networks, and shared language and culture, as well as the Kremlins pledges of billions in fresh investment.
Above all, Moscow wants to preserve its monopoly on distributing Central Asian gas and its major role in other energy sectors. To this end, President Vladimir Putin proposed at an October regional summit in Tehran that all the Caspian Sea states have a veto on any new pipelines crossing the sea bed, apparently so Moscow can block plans to connect Kazakhstans and Turkmenistans rich oil and gas fields to the west, bypassing Russia.
But Moscows dominance of the regions energy reserves is eroding. Despite Russian pressure, both Kazakhstan and Turkmenistan have welcomed discussion of a trans-Caspian pipeline, and Putins proposal was met with silence.
Twice in the past two years, Turkmenistan has signed contracts to ship natural gas west through Russian pipelines, only to turn around a month later and, in effect, promise to ship the same gas east to China.
After the Soviet collapse, Russian goods vanished For China, with its appetite for raw materials and its awakening as a world power, Central Asia is the Wild West: a land of opportunity, a reservoir of resources and a corridor to the Middle Easts oil fields and Europes wealthy shopping districts.
China has been moving in quietly and steadily since the mid 1990s, when trucks loaded up on scrap iron, steel and copper at derelict Soviet factories and carted the metals back to China for recycling.
In the 1990s, China did relatively little trade with Kazakhstan, Central Asias economic motor, an oil-and gas-rich nation of 15.2 million larger than Western Europe. But by 2006, China ranked third behind Germany and Russia in Kazakhstans US$35.6 billion (euro24 billion) export market and second after Russia in the nations US$22 billion (euro15 billion) import market.
The tiny, mountainous nation of Kyrgyzstan imported almost nothing from its giant neighbor to the east. By 2006, 57 per cent of Kyrgyzstans imports came from China, and only 15 per cent from Russia.
In 2003, Beijing predicted a 30-to 50-fold increase in its trade with Central Asia within a decade.
Chinas growing clout makes many Central Asians anxious.
But China knows much of its future energy supply is here. The state-owned China National Petroleum Company bought PetroKazakhstan in 2005 for US$4.2 billion (euro2.9 billion), then Chinas biggest foreign acquisition. In July 2006, the CNPC and Kazakhstans Kazmunaigaz completed a US$700 million (euro477 million), 597-mile (962-kilometer) oil pipeline across Kazakhstan to Alashankou in northwest China.
The pipeline, designed to supply up to 15 per cent of Chinas oil needs, will serve the major new Chinese refinery in Karamay, to open in 2008. By some estimates, one-sixth of Kazakhstans oil production will someday be pumped to China.
Turkmenistan in August started building a 4,350-mile (7,000-kilometer) natural gas pipeline through Kazakhstan to northwest China. When completed in 2009, the pipeline is expected to provide China with 30 billion cubic meters (1.1 trillion cubic feet) of natural gas a year. Cheap Chinese goods have turned many poor Central Asians into consumers. But some experts say dependence on Chinese products slows the growth of local industries.
Tajikistan, with a per capita annual gross domestic product of just US$1,300 (euro886), desperately needs investment. Saifullo Safarov, deputy director of the Center for Strategic Research in Tajikistan, said without Chinese money, his country cant exploit its mineral wealth.
In July, the Chinese Zijin Mining Group bought 75 per cent of Tajikistans Zerafshan Gold Company, once controlled by a British company, and in late September it claimed to have increased the mines production by 50 percent. Despite Chinas economic onslaught, Russia retains enormous influence.
China in new Great Game over Central Asian riches
China rolls out first self-designed hybrid car
Sunday, December 16, 2007
SHANGHAI: Chinas state-owned Changan Automobile group has started making its own hybrid cars, the first such move by a Chinese automaker, the Xinhua news agency reported.
Mass production of the Chinese-designed car, which consumes 20 per cent less fuel than ordinary cars of the same size, was launched after six years of research and development, Xinhua said late on Friday.
This shows Chinese automakers have grasped the core technology of making hybrid cars, the report said.
The Changan group controls listed Changan Automobile Co, a Chinese partner of Ford Motor Co and Mazda Motor Corp. The listed arm, based in the south western city of Chongqing, is also Chinas largest mini-van maker.
Fuel economy figures little in consumers purchasing decisions in China. Hybrid cars are also expensive since the government offers buyers no incentives to purchase them.
Toyota Motor Corp was the first carmaker to build hybrid cars in China. General Motors Corp said last month it would begin producing a hybrid car in China from next year, in time for the Beijing Olympics in August.
Japans Nikkei said the hybrid vehicle made by Changan is based on a 2-liter compact wagon that will be able to travel 100 kilometres (62 miles) on 6.8 litres of gasoline, and it will be officially released next year.
The new hybrid is close in size to Toyotas Prius hybrid, which the Japanese automaker has assembled and sold in China since late 2005, the Nikkei said. Chinese sales of the Toyota hybrid were down 86 per cent in the first 10 months of 2007 from the same period a year earlier to 299 units, as the vehicles 300,000 yuan ($40,700) price tag dampened its popularity, it said.
Changans new offering will cost around 150,000 yuan, roughly 20,000 yuan more than the base vehicle but just half as much as the Prius, the Nikkei said.
Chinese sales of the Toyota hybrid were down 86 per cent in the first 10 months of 2007 as the vehicles 300,000 yuan ($40,700) price tag dampened its popularity, it said.
China rolls out first self-designed hybrid car
China second largest economy: WB
WASHINGTON, Dec 17: The size of Chinas economy is overestimated by some 40 per cent, but it remains the worlds second largest using a ranking based on purchasing power, the World Bank said on Monday.
In a report ranking the worlds economies for 2005, the World Bank said its updated survey using purchasing power parity shows a much smaller value for China than earlier estimates which the Bank called less reliable.
The study carried out by the World Bank and other partners was the most extensive and thorough effort to measure the relative size of 146 economies using the PPP method which strips out the effect of exchange rates, a WB statement said.
China participated in the survey for the first time and India for the first time since 1985.
While the economies of China and other developing countries appear larger using the PPP method compared to using market rates, the new estimates include more reliable data on goods and services in China.
The PPP method is still somewhat controversial among economists compared with the traditional market exchange rate methods.
Using market methods, Japan would be the second largest economy and China would rank behind Germany, roughly equivalent to the economies of Britain and France, according to the World Bank report.
The World Bank had in the past extrapolated figures on China and India using the purchasing power method, but the latest report is based on more extensive data.AFP
China second largest economy: WB -DAWN - Business; December 18, 2007
Sena Lee
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BEIJING -- China Investment Corp (CIC), the nation's state-owned forex investment firm, said late Wednesday that it has agreed to invest $5 billion in the No. 2 US investment bank Morgan Stanley.
The Chinese firm, which invested 3 billion US dollars earlier this year in the US private equity firm Blackstone Group, will purchase equity units that are mandatorily convertible into 9.9 percent of Morgan Stanley common shares.
The equity units carry a fixed annual interest rate of nine percent before conversion on August 17, 2010.
The purchase is "a long term, passive financial investment" and does not lead to a role in management of Morgan Stanley, said a statement from CIC.
"It is a good opportunity to invest in US-based financial institutions, many of which are being undervalued when the subprime mortgage crisis has had an impact on them," Li Yang, director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences, said.
Also on Wednesday, Morgan Stanley reported a larger-than-expected loss in the fourth fiscal quarter due to a $9.4-billion writedown from its exposure to subprime and other mortgage-related investments.
It lost $3.61 billion in the fourth quarter, compared to a profit of $2.27 billion in the same period a year earlier.
"CIC believes that Morgan Stanley has potential for long-term growth, particularly in its investment banking, asset management and wealth management businesses, as well as new business development opportunities in emerging markets," said the statement.
The purchase is made in accordance with CIC's global investment strategy, which is to seek attractive long-term returns with acceptable risks, it said.
CIC will maintain a cautious investment strategy, Finance Minister Xie Xuren said last week at the China-US high-level economic talks. "It will pursue long-term investment instead of short-term speculation, and will achieve a balance between security and profitability."
China Investment Corp was set up in September this year, with an initial capital of $200 billion from the country's massive foreign exchange reserves.
One-third of the capital would be used to purchase Huijin Investment Co, an investment arm of the Chinese government, and another third would be injected into state-owned banks for shareholding reforms, CIC chairman Lou Jiwei said.
The remaining $70 billion was earmarked for overseas investment in a wide range of portfolios but would not seek control, he said.
Earlier this month, CIC made its second investment this year of about $100 million in the initial public offering of the China Railway Group in Hong Kong.
China's forex investment firm to invest $5b in MS
The Chinese firm, which invested 3 billion US dollars earlier this year in the US private equity firm Blackstone Group, will purchase equity units that are mandatorily convertible into 9.9 percent of Morgan Stanley common shares.
The equity units carry a fixed annual interest rate of nine percent before conversion on August 17, 2010.
The purchase is "a long term, passive financial investment" and does not lead to a role in management of Morgan Stanley, said a statement from CIC.
"It is a good opportunity to invest in US-based financial institutions, many of which are being undervalued when the subprime mortgage crisis has had an impact on them," Li Yang, director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences, said.
Also on Wednesday, Morgan Stanley reported a larger-than-expected loss in the fourth fiscal quarter due to a $9.4-billion writedown from its exposure to subprime and other mortgage-related investments.
It lost $3.61 billion in the fourth quarter, compared to a profit of $2.27 billion in the same period a year earlier.
"CIC believes that Morgan Stanley has potential for long-term growth, particularly in its investment banking, asset management and wealth management businesses, as well as new business development opportunities in emerging markets," said the statement.
The purchase is made in accordance with CIC's global investment strategy, which is to seek attractive long-term returns with acceptable risks, it said.
CIC will maintain a cautious investment strategy, Finance Minister Xie Xuren said last week at the China-US high-level economic talks. "It will pursue long-term investment instead of short-term speculation, and will achieve a balance between security and profitability."
China Investment Corp was set up in September this year, with an initial capital of $200 billion from the country's massive foreign exchange reserves.
One-third of the capital would be used to purchase Huijin Investment Co, an investment arm of the Chinese government, and another third would be injected into state-owned banks for shareholding reforms, CIC chairman Lou Jiwei said.
The remaining $70 billion was earmarked for overseas investment in a wide range of portfolios but would not seek control, he said.
Earlier this month, CIC made its second investment this year of about $100 million in the initial public offering of the China Railway Group in Hong Kong.
China's forex investment firm to invest $5b in MS
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US: China not manipulating currency
WASHINGTON -- China is not manipulating its currency to gain unfair trade advantage, the US Treasury Department said Wednesday in a semiannual report to Congress.
"Treasury concluded that neither China nor any other major trading partner of the US met the requirements for designation" as a manipulator of their currency, the report said.
However, the report said the Chinese yuan remains severely undervalued against the US dollar, claiming the recent movement of the yuan had been "too limited and modest."
The Treasury issues the report twice a year according to a 1988 law, which requires the department to analyze trading partners' foreign exchange policies and determine whether currency manipulation to gain unfair trade advantage is occurring.
Under the law, economic sanctions can be imposed on countries found in violation.
The report acknowledged that the yuan, also known as the renminbi, appreciated against the dollar by 12.1 percent since a new currency regime was imposed in July 2005 that allowed it to trade in a wider range.
The Chinese currency rose by 2.5 percent in the first half of 2007 and another 3.2 percent in the second half through December 11. Against a broader range of currencies, the gain has been 3.8 percent since 2005.
US: China not manipulating currency
WASHINGTON -- China is not manipulating its currency to gain unfair trade advantage, the US Treasury Department said Wednesday in a semiannual report to Congress.
"Treasury concluded that neither China nor any other major trading partner of the US met the requirements for designation" as a manipulator of their currency, the report said.
However, the report said the Chinese yuan remains severely undervalued against the US dollar, claiming the recent movement of the yuan had been "too limited and modest."
The Treasury issues the report twice a year according to a 1988 law, which requires the department to analyze trading partners' foreign exchange policies and determine whether currency manipulation to gain unfair trade advantage is occurring.
Under the law, economic sanctions can be imposed on countries found in violation.
The report acknowledged that the yuan, also known as the renminbi, appreciated against the dollar by 12.1 percent since a new currency regime was imposed in July 2005 that allowed it to trade in a wider range.
The Chinese currency rose by 2.5 percent in the first half of 2007 and another 3.2 percent in the second half through December 11. Against a broader range of currencies, the gain has been 3.8 percent since 2005.
US: China not manipulating currency
As matter of fact, Japan was faster at a time.
Chinas fiscal revenue grows rapidly
BEIJING, Dec 19: Chinas central and local governments recorded 4.82 trillion yuan ($ 651 billion) in fiscal revenue during the first 11 months of this year, up 33.5 per cent from the same period of last year. Revenue was 9.3 per cent higher than the annual budget, Finance Minister Xie Xuren said on Wednesday.
However, revenue and spending patterns diverged at the central and local levels. While central government revenue grew faster, local government spending expanded more rapidly.
The 11-month revenue total was 2.69 trillion yuan for the central government, up 37 per cent, and 2.13 trillion yuan for local governments, up 29.4 per cent, Xie added.
He attributed the higher revenue to rapid and stable growth of the economy, favourable conditions for the structure and efficiency of the economy, and better collection practices.
According to Xie, the first 11 months saw fiscal expenditure amount to 3.71 trillion yuan, up 25.2 per cent.
By expenditure category, 236 billion yuan was used for agricultural, forestry and water supply projects, up 31.4 per cent, 557.8 billion yuan for education, up 32.7 per cent, and 141.9 billion yuan for health and medical care, up 40.6 per cent.
Another 412.8 billion yuan went to social welfare projects, up 28.6 per cent and 117.4 billion yuan to scientific research, up 33 per cent.APP
Chinas fiscal revenue grows rapidly -DAWN - Business; December 20, 2007
Chinese banks strength yet to be tested
BEIJING, Dec 25: Chinas state lenders have reported impressive growth in earnings but harder times may be on the way, testing their ability to withstand a downturn, a top banking regulator cautioned on Tuesday.
Cai Esheng, vice chairman of the China Banking Regulatory Commission, told a financial forum that banks should not be complacent but should prepare to face potential stumbling blocks by enhancing their risk controls and corporate governance.
Our banks have been developing robustly and have made a lot of money, but so what? Cai said. There is still a question mark as to whether we can withstand challenges, present or future. Cai cited the subprime mortgage crisis in the United States as a warning to Chinese banks that even well-established financial institutions could get into trouble.
Chinese lenders, which rely mostly on lending for their profits, could suffer once the economy turns sour, he said.
The comments reflect concerns in Beijing that although Chinas state banks have shed their debt-ridden past to become some of the worlds largest by valuation, on the back of government bailouts and strong economic growth, there may be lingering problems of internal management and governance.
State-owned banks, including Industrial and Commercial Bank of China, China Construction Bank Corp and Bank of China have been warmly welcomed by investors in their public listings over the past few years.
Cai reiterated that China was not ready to lift the ceiling on foreign ownership of its banks anytime soon.
US and European financial institutions have been pressing Beijing to lift ownership caps, hoping to better tap the growth in financial services that is accompanying Chinas economic boom.
The extent to which Chinas banking market will be open to the outside depends on how much other countries open their markets to Chinese banks, he said, echoing earlier comments by CBRC chief Liu Mingkang that greater openness would depend in part on the United States giving more access to Chinese banks.Reuters
Chinese banks strength yet to be tested -DAWN - Business; December 26, 2007
Chinese bourses raise $113bn in 2007
BEIJING: Chinas Shanghai and Shenzhen stock markets have raised 830.6 billion yuan (113.3 billion dollars) this year largely on an investment mania over initial public offerings, state media said Wednesday.
The total amount, which was only for the year up to December 21, was nearly a four-fold increase over the money raised on the countrys stock markets last year, Xinhua news agency said.
According to estimates, the total amount raised for the entire year is expected to exceed 841 billion yuan, it said.
This is equivalent to what was raised by the two bourses in their first 14 years of existence from 1990, it added.
More than half the funds raised this year were through 120 IPOs, as investors jumped at new flotations with a vengance, disregarding warnings that an ongoing share bubble is destined to burst eventually.
Chinese IPOs this year raised about 61 billion dollars, far outperforming the US capital market which earned 10 billion dollars in new flotations, Xinhua said.
Chinas stock markets are in the midst of an ongoing boom with the Shanghai bourse up 95.60 percent for the year as of Wednesday, while last year the benchmark index rose 130.32 percent.
According to Xinhua, more large IPOs are expected next year from numerous Chinese state-owned enterprises.
Meanwhile 13 large state companies already listed on the Hong Kong bourse, such as China Telecom and Dongfeng Motor Group, are being encouraged to seek mainland listings in the future, it said. Notable IPOs in 2007 include PetroChina which became the worlds biggest flotation when it raised nearly nine billion dollars in the sale of four billion shares in early November.
Enthusiasm for Chinas largest oil refiner however faded quickly with the stock trading at around 30 yuan per share in recent weeks after touching highs of around 48 yuan immediately after the IPO.
Other top IPOs include China Shenhua, one of the nations largest coal producers, which raised a record 66.58 billion yuan on the Shanghai bourse in late September and China Construction Bank, one of Chinas four top commercial lenders, which raised more than 58 billion yuan.
Daily Times - Leading News Resource of Pakistan
Wealth gap in China widening: minister
Friday, December 28, 2007
BEIJING: Chinas wealth gap between urban and rural residents is widening, state media said on Thursday, a potentially explosive issue that has long worried the nations communist rulers.
City residents earned 3.28 times as much as those living in the countryside last year, compared to 3.23 times in 2003, the Xinhua news agency quoted agricultural minister Sun Zhengcai as saying.
In his report to the nations legislature, Sun said the yearly net income of Chinas 900 million rural residents rose seven per cent to 4,000 yuan (545 dollars) in 2007. The dispatch did not provide any comparative figures. In the financial hub of Shanghai the annual gross salary per capita for a worker last year was nearly 30,000 yuan or more than 2,400 yuan per month, according to Shanghai labour bureau statistics.
The growing inequality has accompanied Chinas huge economic boom, as Beijing has repeatedly vowed to improve the lot of its destitute farmers by spending more on health care, education and economic development.
Chinas leadership remains increasingly worried about the income gap brought about by 30 years of market reforms that have made a few Chinese cities very rich, but raised tensions in the nations hinterland.
Complaints in the countryside over high taxes and fees, illegal land grabs and pollution have repeatedly sparked protests that at times turn violent with tragic consequences. Despite an increase in spending on agricultural, rural workers and farmers to 431.8 billion yuan this year, an increase of 80.1 billion yuan over the previous year, the countryside remains woefully behind, Sun said.
Wealth gap in China widening: minister
China's Invent-It-Here Syndrome - Forbes.com
China's Invent-It-Here Syndrome
Christopher Thomas 12.31.07, 6:00 AM ET
BEIJING, CHINA - In the past 18 months, China has officially embarked on a multi-year, multi-faceted plan to transform "made in China" into "invented in China."
You can read about state economic plans on the Internet, and they sound dry and flat. In China, however, these plans are alive. They imbue every conversation with Chinese technology companies and with Chinese government ministers with urgency. They get written into contracts.
Here's how China's long-term economic plan came alive for me: This past summer, I moved to China for Intel (nasdaq: INTC - news - people ) to co-run our sales and marketing operations there. A few weeks into the job, I realized that doing business in China involved much more than winning sales in the world's only very large and very fast-growing PC market.
For instance, international standards are the glue of the PC and communications industry, ensuring that machines can communicate and work together, no matter where they're made. Big corporations devote significant time and people power to making sure their ideas are represented on the standards bodies that write these rules.
But in every introductory "ops" review I did in China, all our managers talked about how the "local standards" were a key to Intel's success in every market. By insisting (as any country can) that products sold in China must adhere to local as well as international standards, China makes sure that Chinese inventions get built into high-tech products sold here. That means there is a Chinese voice in which products succeed or fail in China. And products that succeed in China have a much higher chance of succeeding globally.
Local standards are core to China's innovation policy. But there is much, much more. My plan is to share in subsequent columns some of the profound changes underway in China, as well as how to do business and drive innovation in China. I'll include the good, the bad and the unusual. (That includes today, when my feng shui tape measure told me not to buy a certain desk because its 174-centimeter or "yao qi si" width literally means "want my wife dead.")
The Chinese government's goals are sweeping: to develop, influence or downright own the core intellectual property of the next generation of technologies that will power the global economy. To do this, the government has committed to doubling its spending on research and development so that it reaches 2.5% of China's gross domestic product by 2010, approaching $100 billion annually. China is also on track to have more research scientists and engineers than any other country by 2015.
China's efforts are sharply focused on 16 fundamental sectors. Among them are high-end chips, semiconductor manufacturing, next generational wireless communications, software, pharmaceuticals, large aircrafts and space systems including high-resolution Earth-observation systems. The government also intends to use China's very large domestic market as a carrot to encourage the international community to embrace and support inventions from Chinese companies.
The current determination in China echoes what Americans experienced in the 1960s during the space race. Back then, we had a national focus. Programs touched everyone, even school children. We were thrilled to see an American take that first small step on the moon. The investments made to propel the U.S. through the space race and its military twin, the cold war defense buildup, became cornerstones of American economic prosperity. They supported the education of cadres of science and engineering students who subsequently invented personal computers, software, wireless communications and the Internet. Thanks to such investments, America became exceptionally good at thinking things up.
How will the world change if the next great technology breakthrough happens in China? We haven't yet seen a Chinese breakthrough on the scale of an ipod or Web browser. But this will happen sooner than many pundits expect.
China transforms itself quickly. Everyone knows about the skyscrapers of Beijing or Shanghai. But I have also walked the streets of many "Tier 2" and "Tier 3" cities from Lanzhou in the northwest to Guilin in the southeast. These once decrepit towns now pulse with energy as crane after crane builds skylines that would rival any U.S. or Asian metropolis. In cities like these across China, a PC mall with at least 100 storefronts opens every other day.
Everyone has a stake in China's innovation economy: the research institutions, American-trained Chinese Ph.D.'s flocking back to China, Silicon-Valley funded start-ups in Suzhou, the Chinese multinationals looking to join the ranks of the global greats. International companies, too.
China's economic development over the last 25 years has been good for China, good for the international economy and good for companies with a deep commitment to China. Intel is on that list. China's continued rise as an innovation leader would clearly be good for us as well. We want the native Chinese technology industry to advance. We want China to have its rightful seat at the table for setting global standards. We have built large research teams in China precisely for this reason.
But the swiftness and focus of China's development also raise many questions: How successful can an innovation-based industrial policy be in today's global economy? What will China's "top down" path, so different from what led to Silicon Valley, bring about? What role will China's large domestic market play? How much innovation performed inside of China is "Chinese" vs. international? Does it make a difference if Intel China or a "red chip" makes the breakthrough? And of course--how does an international company align its goals with China, to win with China in the new innovation world order? I welcome your thoughts and comments.
Christopher Thomas is Intel's deputy general manager for China and is based in Beijing.
China's Invent-It-Here Syndrome
Christopher Thomas 12.31.07, 6:00 AM ET
BEIJING, CHINA - In the past 18 months, China has officially embarked on a multi-year, multi-faceted plan to transform "made in China" into "invented in China."
You can read about state economic plans on the Internet, and they sound dry and flat. In China, however, these plans are alive. They imbue every conversation with Chinese technology companies and with Chinese government ministers with urgency. They get written into contracts.
Here's how China's long-term economic plan came alive for me: This past summer, I moved to China for Intel (nasdaq: INTC - news - people ) to co-run our sales and marketing operations there. A few weeks into the job, I realized that doing business in China involved much more than winning sales in the world's only very large and very fast-growing PC market.
For instance, international standards are the glue of the PC and communications industry, ensuring that machines can communicate and work together, no matter where they're made. Big corporations devote significant time and people power to making sure their ideas are represented on the standards bodies that write these rules.
But in every introductory "ops" review I did in China, all our managers talked about how the "local standards" were a key to Intel's success in every market. By insisting (as any country can) that products sold in China must adhere to local as well as international standards, China makes sure that Chinese inventions get built into high-tech products sold here. That means there is a Chinese voice in which products succeed or fail in China. And products that succeed in China have a much higher chance of succeeding globally.
Local standards are core to China's innovation policy. But there is much, much more. My plan is to share in subsequent columns some of the profound changes underway in China, as well as how to do business and drive innovation in China. I'll include the good, the bad and the unusual. (That includes today, when my feng shui tape measure told me not to buy a certain desk because its 174-centimeter or "yao qi si" width literally means "want my wife dead.")
The Chinese government's goals are sweeping: to develop, influence or downright own the core intellectual property of the next generation of technologies that will power the global economy. To do this, the government has committed to doubling its spending on research and development so that it reaches 2.5% of China's gross domestic product by 2010, approaching $100 billion annually. China is also on track to have more research scientists and engineers than any other country by 2015.
China's efforts are sharply focused on 16 fundamental sectors. Among them are high-end chips, semiconductor manufacturing, next generational wireless communications, software, pharmaceuticals, large aircrafts and space systems including high-resolution Earth-observation systems. The government also intends to use China's very large domestic market as a carrot to encourage the international community to embrace and support inventions from Chinese companies.
The current determination in China echoes what Americans experienced in the 1960s during the space race. Back then, we had a national focus. Programs touched everyone, even school children. We were thrilled to see an American take that first small step on the moon. The investments made to propel the U.S. through the space race and its military twin, the cold war defense buildup, became cornerstones of American economic prosperity. They supported the education of cadres of science and engineering students who subsequently invented personal computers, software, wireless communications and the Internet. Thanks to such investments, America became exceptionally good at thinking things up.
How will the world change if the next great technology breakthrough happens in China? We haven't yet seen a Chinese breakthrough on the scale of an ipod or Web browser. But this will happen sooner than many pundits expect.
China transforms itself quickly. Everyone knows about the skyscrapers of Beijing or Shanghai. But I have also walked the streets of many "Tier 2" and "Tier 3" cities from Lanzhou in the northwest to Guilin in the southeast. These once decrepit towns now pulse with energy as crane after crane builds skylines that would rival any U.S. or Asian metropolis. In cities like these across China, a PC mall with at least 100 storefronts opens every other day.
Everyone has a stake in China's innovation economy: the research institutions, American-trained Chinese Ph.D.'s flocking back to China, Silicon-Valley funded start-ups in Suzhou, the Chinese multinationals looking to join the ranks of the global greats. International companies, too.
China's economic development over the last 25 years has been good for China, good for the international economy and good for companies with a deep commitment to China. Intel is on that list. China's continued rise as an innovation leader would clearly be good for us as well. We want the native Chinese technology industry to advance. We want China to have its rightful seat at the table for setting global standards. We have built large research teams in China precisely for this reason.
But the swiftness and focus of China's development also raise many questions: How successful can an innovation-based industrial policy be in today's global economy? What will China's "top down" path, so different from what led to Silicon Valley, bring about? What role will China's large domestic market play? How much innovation performed inside of China is "Chinese" vs. international? Does it make a difference if Intel China or a "red chip" makes the breakthrough? And of course--how does an international company align its goals with China, to win with China in the new innovation world order? I welcome your thoughts and comments.
Christopher Thomas is Intel's deputy general manager for China and is based in Beijing.
Chinas per capita GDP to hit $3,000 
BEIJING, Jan 5: Chinas per capita GDP will reach $ 3,000 by 2010, a decade ahead of the schedule set by the 2002 Communist Party National Congress, a government think-tank expert said.
An expert with the Chinese Academy of Social Sciences (CASS), Lu Xueyi said the figure would reach $6,000 in 2020 if it maintained the current growth rate. It was also aided by the Chinese currencys continued appreciation against the US dollar.
The countrys per capita GDP had grown by about $200 annually in the last two years to $2,200 in 2007, he estimated.
China had been in the fast lane in recent years as the nation took two years to raise its per capita GDP to $1,000 from $800 in 2000. It took another four years to reach $2,000.
The day (of $3,000 per capita GDP) will come sooner than expected, as the current economic growth is faster than the annual average of 7.2 per cent necessary for the realisation of this goal, an Asian Development Bank economist, Zhuang Jian said.
Chinas per capita GDP to hit $3,000 -DAWN - Business; January 06, 2008
AMEC Enters Etch, HPCVD Tool Markets
Peter Singer, Editor-in-Chief -- Semiconductor International, 12/5/2007 6:49:00 PM
Shanghai-based Advanced Micro-Fabrication Equipment Inc. (AMEC) launched its official entry into the global semiconductor capital equipment market with a portfolio of leading-edge process tools for the 65-45 nm nodes and beyond. The company unveiled the Primo D-RIE (decoupled reactive ion etch) system for critical and other dielectric etch applications and the Primo HPCVD (high-pressure chemical vapor deposition) system for shallow trench isolation (STI) and pre-metal dielectric (PMD) deposition at Goldman Sachs offices in Tokyo, preceding SEMICON Japan.
AMEC is one of the first suppliers of leading-edge semiconductor manufacturing equipment suppliers based in China, with its main operations in the Pudong district of Shanghai. Company executives emphasize that the company is Asia-based with a global infrastructure that includes R&D, manufacturing, business and support operations in China, Japan, Korea, Singapore and Taiwan. The company was established in 2004 in the Cayman Islands, has its sales holding headquarters in Singapore and subsidiaries in Japan, Korea and Taiwan. In Shanghai, AMEC owns a 6500 m2 building on 28,000 m2 of land. A second phase building is under design for large-volume manufacturing capacity. A 50,000 m2 adjacent lot is reserved for future expansion.
AMEC is well funded, having obtained funding from Goldman Sachs, Qualcomm and Samsung, among others. Total funding is $111M, with an additional $90M available, according to company chairman and CEO, Gerald Yin.
Yin said the company reflects a growing trend of new Asia-based capital equipment companies poised to serve a semiconductor manufacturing industry that has increasingly shifted to Asia. This provides advantages in terms of closer geographic and cultural proximity to customers, access to skilled technical talent and experienced semiconductor executives, and it places these critical vendors in the hub of a thriving local supply chain, he said.
According to Dean Freeman, research vice president with market research firm Gartner Dataquest Inc. (Stamford, Conn.), 66% of all semiconductor device revenue is consumed in Asia, making the Asia-Pacific region [including Japan] the epicenter of semiconductor manufacturing. Our data also shows that 75% of all capital expenditures for semiconductor manufacturing take place in Asia, thus making it the hotbed for semiconductor equipment manufacturers as well.
The Primo systems feature advanced technology innovations and a unique chamber design that Yin said delivers high on-wafer performance, very low defects and high throughput. At the heart of each tool is a mini-batch cluster architecture that improves productivity by more than 35% over comparative systems, while offering a 35% lower cost-of-ownership (CoO) benefit. Two systems have already been shipped. They were installed and fully operational in only seven days; several more systems are ready to ship to leading-edge semiconductor fabs in Asia.
The 300 mm Primo D-RIE system leverages a twin-station mini-batch cluster system with a single-wafer environment and patented VHF D-RIE plasma source designed to provide fine CD control, high selectivity to mask, wide process window, and robust and repeatable performance for critical and other dielectric etch applications at nodes of 65-45 nm and beyond, according to the company. The applications include: VHAR, hard mask open, spacer, dual damascene via and trench etches, among others.
The system features decoupled, dual-frequency RIE with independent ion density and energy control; symmetrically distributed and direct RF feed for precise process control and within-wafer etch rate uniformity; proprietary, dual plasma confinement for process stability with high flow conductance for wide process window; independent RF generator, on-board uniformity control unit and end-point control per station; a bottom-powered, high-frequency source that enables stable, low-pressure, high-plasma-density strip to preserve low-k integrity; a proprietary, self-isolated RF match for quick and repeatable frequency tuning capability; high purity, plasma-resistant chamber materials for near zero defectivity and low cost of consumables, and a direct resistive top electrode heating with close-loop control.
The 300 mm Primo HPCVD system combines a mini-batch cluster system with a single-wafer processing environment and other technology features to tackle STI and PMD applications at 65-45 nm nodes and beyond. The system features a patented multi-channel distribution technology that enables high deposition rate, wide void-free gap-fill window and low particle performance. A dynamic wafer heater stage enhances within-wafer and wafer-to-wafer uniformity control for dopants and film thickness, and a unique injector design that reduces particle generation and provides higher liquid flow rate, according to the company.
AMEC's manufacturing facility in Shanghai.
Peter Singer, Editor-in-Chief -- Semiconductor International, 12/5/2007 6:49:00 PM
Shanghai-based Advanced Micro-Fabrication Equipment Inc. (AMEC) launched its official entry into the global semiconductor capital equipment market with a portfolio of leading-edge process tools for the 65-45 nm nodes and beyond. The company unveiled the Primo D-RIE (decoupled reactive ion etch) system for critical and other dielectric etch applications and the Primo HPCVD (high-pressure chemical vapor deposition) system for shallow trench isolation (STI) and pre-metal dielectric (PMD) deposition at Goldman Sachs offices in Tokyo, preceding SEMICON Japan.
AMEC is one of the first suppliers of leading-edge semiconductor manufacturing equipment suppliers based in China, with its main operations in the Pudong district of Shanghai. Company executives emphasize that the company is Asia-based with a global infrastructure that includes R&D, manufacturing, business and support operations in China, Japan, Korea, Singapore and Taiwan. The company was established in 2004 in the Cayman Islands, has its sales holding headquarters in Singapore and subsidiaries in Japan, Korea and Taiwan. In Shanghai, AMEC owns a 6500 m2 building on 28,000 m2 of land. A second phase building is under design for large-volume manufacturing capacity. A 50,000 m2 adjacent lot is reserved for future expansion.
AMEC is well funded, having obtained funding from Goldman Sachs, Qualcomm and Samsung, among others. Total funding is $111M, with an additional $90M available, according to company chairman and CEO, Gerald Yin.
Yin said the company reflects a growing trend of new Asia-based capital equipment companies poised to serve a semiconductor manufacturing industry that has increasingly shifted to Asia. This provides advantages in terms of closer geographic and cultural proximity to customers, access to skilled technical talent and experienced semiconductor executives, and it places these critical vendors in the hub of a thriving local supply chain, he said.
According to Dean Freeman, research vice president with market research firm Gartner Dataquest Inc. (Stamford, Conn.), 66% of all semiconductor device revenue is consumed in Asia, making the Asia-Pacific region [including Japan] the epicenter of semiconductor manufacturing. Our data also shows that 75% of all capital expenditures for semiconductor manufacturing take place in Asia, thus making it the hotbed for semiconductor equipment manufacturers as well.
The Primo systems feature advanced technology innovations and a unique chamber design that Yin said delivers high on-wafer performance, very low defects and high throughput. At the heart of each tool is a mini-batch cluster architecture that improves productivity by more than 35% over comparative systems, while offering a 35% lower cost-of-ownership (CoO) benefit. Two systems have already been shipped. They were installed and fully operational in only seven days; several more systems are ready to ship to leading-edge semiconductor fabs in Asia.
The 300 mm Primo D-RIE system leverages a twin-station mini-batch cluster system with a single-wafer environment and patented VHF D-RIE plasma source designed to provide fine CD control, high selectivity to mask, wide process window, and robust and repeatable performance for critical and other dielectric etch applications at nodes of 65-45 nm and beyond, according to the company. The applications include: VHAR, hard mask open, spacer, dual damascene via and trench etches, among others.
The system features decoupled, dual-frequency RIE with independent ion density and energy control; symmetrically distributed and direct RF feed for precise process control and within-wafer etch rate uniformity; proprietary, dual plasma confinement for process stability with high flow conductance for wide process window; independent RF generator, on-board uniformity control unit and end-point control per station; a bottom-powered, high-frequency source that enables stable, low-pressure, high-plasma-density strip to preserve low-k integrity; a proprietary, self-isolated RF match for quick and repeatable frequency tuning capability; high purity, plasma-resistant chamber materials for near zero defectivity and low cost of consumables, and a direct resistive top electrode heating with close-loop control.
The 300 mm Primo HPCVD system combines a mini-batch cluster system with a single-wafer processing environment and other technology features to tackle STI and PMD applications at 65-45 nm nodes and beyond. The system features a patented multi-channel distribution technology that enables high deposition rate, wide void-free gap-fill window and low particle performance. A dynamic wafer heater stage enhances within-wafer and wafer-to-wafer uniformity control for dopants and film thickness, and a unique injector design that reduces particle generation and provides higher liquid flow rate, according to the company.
AMEC's manufacturing facility in Shanghai.
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