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Posts Tagged ‘China

Has China left behind traditional fixed growth targets?

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three
Lou Jiwei, Xi Jinping and Zhou Xiaochuan

“Isn’t it now time for China to abandon the concept of a growth target?”

That was the question I asked Chinese Finance Minister Lou Jiwei this week at the 15th annual China Development Forum, which brings together top Chinese officials and an international delegation of academics, leaders of multilateral organizations, and business executives. Having attended the CDF since former Premier Zhu Rongji initiated it in 2000, I can attest to its role as one of China’s most important platforms for debate. Zhu welcomed the exchange of views at the Forum as a true intellectual test for China’s reformers.

It was in that spirit that I posed my question to Lou, whom I have known since the late 1990’s…I have always found him to be direct, intellectually curious, a first-rate analytical thinker, and a forward-looking advocate of market-based reforms. He is cut from the same cloth as his mentor, Zhu…

While it may seem like splitting hairs, continuing to frame the economic goal as a target sends a message of determined and explicit guidance that now seems at odds with the government’s market-oriented intentions. Wouldn’t dropping the concept send a far more powerful message? Isn’t it time for China to let go of the last vestiges of its centrally planned past?

Lou’s response: “Good question.”

China, he went on, is in fact moving away from its once single-minded emphasis on growth targeting. The government now stresses three macroeconomic goals – job creation, price stability, and GDP growth. And, as evidenced by the annual “work report” that the premier recently submitted to China’s National People’s Congress, the current emphasis is in that order, with GDP growth at the bottom of the list…

This is particularly relevant in light of the important threshold that has now been reached by the structural transformation of the Chinese economy – the long-awaited shift to a services-led growth dynamic. Services, which now account for the largest share of the economy, require close to 30% more jobs per unit of output than the manufacturing and construction sectors combined. In an increasingly services-led, labor-intensive economy, China’s economic managers can afford to be more relaxed about a GDP slowdown…

RTFA. Few economists have the experience, personal knowledge of Stephen Roach on China. I mentioned in a recent post about the fight against corruption that economics and commerce fit more into my personal interests. You may find the topics dull as a hoe handle; but, if you haven’t curiosity about what’s going on in the whole world and how events will affect your own life – you may as well settle back and let some priest or pundit run your life.

Here’s where Doctor Roach ends up on this particular occasion. For more, read his latest book, Unbalanced: The Codependency of America and China.

Since Deng Xiaoping’s reforms of the early 1980’s, less and less attention has been paid to the numerical targets of central planning…China’s most senior fiscal and monetary policymakers – Lou Jiwei and Zhou Xiaochuan – are close to taking the final step in the long journey to a market-based economy. Their shared interpretation of flexible growth targeting puts them basically in the same camp as policymakers in most of the developed world. The plan is now a goal-setting exercise. From now on, fluctuations in the Chinese economy, and the policy responses that those fluctuations imply, need to be considered in that vein.

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Written by Ed Campbell

March 31, 2014 at 2:00 pm

Looks like China’s assault on corruption ain’t limited to second tier bureaucrats

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Chinese authorities have seized assets worth at least $14.5 billion from family members and associates of retired domestic security chief Zhou Yongkang, who is at the centre of China’s biggest corruption scandal in more than six decades…

More than 300 of Zhou’s relatives, political allies, proteges and staff have also been taken into custody or questioned in the past four months…

Prosecutors and the party’s anti-corruption watchdog had frozen bank accounts with deposits totalling 37bn yuan and seized domestic and overseas bonds with a combined value of 51bn yuan after raiding homes in Beijing, Shanghai and five provinces.

Investigators had also confiscated about 300 apartments and villas, antiques and contemporary paintings and more than 60 vehicles, the sources added. Other items seized included expensive liquor, gold, silver and cash in local and foreign currencies.

According to the sources, the seized assets had a combined value of at least 90bn yuan = $14.5 billion.

The sheer size of the asset seizures and the scale of the investigations into the people around Zhou – both unreported until now – make the corruption probe unprecedented in modern China and would appear to show that President Xi Jinping is tackling graft at the highest levels

The government has yet to make any official statement about Zhou or the case against him and it has not been possible to contact Zhou, his family, associates or staff for comment…

Nice to see the fight against corruption making progress. Frankly, my interests in China proper are more concerned with economics and commerce. But, both of those qualities are affected by corruption. Just as corruption is affected by whether or not crooks are actually prosecuted.

Good thing we don’t have to worry about that here in the GOUSA.

Oh.

Written by Ed Campbell

March 30, 2014 at 8:00 pm

China planning a high-speed rail network to link Asia/Europe

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The world’s fastest trains ready to roll — Click to enlarge

China is in negotiations to build a high-speed rail network to India and Europe that would make a trip from London to Beijing last just two days.

The network would begin in London and extend to India, Pakistan and Beijing. It could eventually carry passengers from on to Singapore, a trip that would last three days, according to project consultant Wang Mengshu, as reported in the Telegraph (UK).

A second line would extend from Beijing northward, through Russia to Germany, linking with the European railway system.

A third line would extend southward, connecting Vietnam, Thailand, Myanmar (Burma) and Malaysia…

“We are aiming for the trains to run almost as fast as aeroplanes,” said Mr Wang. “The best case scenario is that the three networks will be completed in a decade,” he added.

According to the Telegraph report, China is in negotiations with 17 nations for the massive project, which would effectively open the Central, East and Southeast Asia to Europe (and vice-versa).

In a way, it’s the Silk Road 2.0: the rail lines would allow China to transport raw materials more directly and efficiently.

According to the report, the system wasn’t China’s idea — it was the other nations, such as India. But it took Chinese know-how and tech to get it done.

China is in the midst of completing a $735.6 billion, five-year domestic railway expansion project consisting of almost 19,000 miles of new railways.

The nation unveiled the world’s fastest train, the Harmony Express, last year. The train has a top speed of almost 250 miles per hour, and will be used between the cities of Wuhan and Guangzhou.

High speed rail isn’t unique, nowadays. Except, of course, if a system was built in the United States. We’d rather wrestle with concrete highways especially as we let them fall apart from lack of maintenance.

We should be able to count on Republicans and Blue Dog Dems to stand around next to the last crumbling interchange and bridge complex and take credit for all the money they’ve saved taxpayers over the years. While food prices triple and our stature in the world of manufacturing moves to last place.

Logistics? Who cares in the GOUSA besides UPS?

Thanks, Mike

Written by Ed Campbell

March 20, 2014 at 8:00 pm

Shipping container community center in Shanghai

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Non-profit organization INCLUDED has produced a new community center for Shanghai’s migrant worker community. Dubbed Community Cube, the two-storey 1,614 sq ft structure was completed in 2013 and comprises a number of used shipping containers as a primary building material.

Based in Shanghai’s agriculturally-focused Chongming district, the structure is joined together by metal plates which can be detached, allowing the separate containers to be transported more easily if the migrants need to move on. The interior space is also flexible, and contains a modest library, play area, a computer area, and a main large classroom which can be divided into two rooms using a sliding divider.

The room divider itself, and all suitable furniture sport a whiteboard finish for use as teaching surfaces, while the kids also have small whiteboard-surfaced furniture to draw on. Excess corrugated metal was cleverly re-used as a security fence that encloses the area…

The container doors were drilled with small holes in order to allow light to filter across the floor during sunny weather, and those using the center can open the doors to the outside if conditions allow.

Yes, I’m an enthusiast about re-purposing shipping containers.

Written by Ed Campbell

March 6, 2014 at 2:00 am

China’s economic slowdown, unlike that in other emerging countries, should be welcomed

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Once again, all eyes are on emerging markets. Long the darlings of the global growth sweepstakes, they are being battered in early 2014. Perceptions of resilience have given way to fears of vulnerability.

The US Federal Reserve’s tapering of its unprecedented liquidity injections has been an obvious and important trigger. Emerging economies that are overly dependent on global capital flows – particularly India, Indonesia, Brazil, South Africa, and Turkey – are finding it tougher to finance economic growth. But handwringing over China looms equally large. Long-standing concerns about the Chinese economy’s dreaded “hard landing” have intensified.

In the throes of crisis, generalization is the norm; in the end, however, it pays to differentiate. Unlike the deficit-prone emerging economies that are now in trouble – whose imbalances are strikingly reminiscent of those in the Asian economies that were hit by the late-1990’s financial crisis – China runs a current-account surplus. As a result, there is no risk of portfolio outflows resulting from the Fed’s tapering of its monthly asset purchases. And, of course, China’s outsize backstop of $3.8 trillion in foreign-exchange reserves provides ample insurance in the event of intensified financial contagion.

Yes, China’s economy is now slowing; but the significance of this is not well understood. The downturn has nothing to do with problems in other emerging economies; in fact, it is a welcome development…Yet a superficial fixation on China’s headline GDP growth persists, so that a 25% deceleration, to a 7-8% annual rate, is perceived as somehow heralding the end of the modern world’s greatest development story…

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Written by Ed Campbell

February 27, 2014 at 2:00 pm

China’s Xinjiang bursting with an excess of green energy

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Click to enlarge

Xinjiang Uygur Autonomous Region, a major power supplier in China, has accelerated the development of green energy as it recorded higher installed capacity in 2013.

Statistics with the Xinjiang branch of the State Grid Corporation of China (SGCC) showed that by 2013, the combined installed capacity of wind power, hydropower and solar power stations exceeded 1,368 million KW, accounting for about one third of all installed capacity in Xinjiang….

A project to connect the Xinjiang power grid to the northwest China grid was launched in 2010 to transmit Xinjiang’s redundant electric power to other parts of the country. The money made from this is used for developing Xinjiang.

The SGCC Xinjiang branch has put an average annual investment of 500 million yuan towards green energy projects.

Total installed capacity is expected to reach 6,048 million KW by the end of 2014, and that of green power will exceed 2,200 million KW.

While this wee post may seem a bit foreign to many of my readers you have to understand I live in a part of the United States with many parallels to Xinjiang.

Aside from some historic political differences, the natural landscape is often similar. As is the potential. It’s been 20 or 30 years since the New Mexico state engineer’s office determined we had sufficient resources to be a net exporter of wind-generated electricity. We are equally capable of filling state needs and then exporting solar-generated electricity.

The technology for each of these alternatives has improved and become more cost effective over the decades – while the state, local power utilities and the federal government have accomplished little more than a sampling of what might be if they were as serious about non-polluting power generation as they all are about the crap coal mined and burned in the Four Corners.

Written by Ed Campbell

February 2, 2014 at 2:00 pm

Pic of the Day – Study in dark and light

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Click to enlargeREUTERS/China Daily

Craftsmen making a snow castle at a park in Changchun, Jilin province, China…

Written by Ed Campbell

January 4, 2014 at 2:00 am

Japan’s resurgent nationalism pours salt on the wounds of war

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Nanjing Massacre
Verdict of the International Military Tribunal

A Japanese cabinet member visited a shrine seen by critics as a symbol of Tokyo’s wartime aggression on Wednesday, pouring salt on a fresh wound after Prime Minister Shinzo Abe’s pilgrimage there last week drew sharp criticism from China and South Korea.

Internal Affairs Minister Yoshitaka Shindo said he thought his visit to the Yasukuni Shrine was unlikely to become a diplomatic issue…

But Beijing and Seoul have repeatedly expressed anger over politicians’ visits to Yasukuni, where Japanese leaders convicted as war criminals by an Allied tribunal after World War Two are honored along with those who died in battle.

Both China and Korea suffered under Japanese rule, with parts of China occupied from the 1930s and Korea colonized from 1910 to 1945. Japanese leaders have apologized in the past but many in China and South Korea doubt the sincerity of the apologies, partly because of contradictory remarks by politicians.

China condemned Wednesday’s visit, which it said exposed Japan’s war crimes and attempts to “challenge the outcomes of the world’s anti-fascist war“…

Underscoring the deteriorating ties between Asia’s two biggest economies, China said its leaders would not meet Abe after he visited Yasukuni on Thursday, the first visit by a serving Japanese prime minister since 2006.

The quality of Reuters commentary continues to deteriorate. They end the article with one of those fatuous boilerplate sentences famous in diplomatic annals: “Experts see his visit as an attempt to recast Japan’s wartime past in a less apologetic light and revive national pride.”

Which experts, working for which governments — and what sort of national pride is raised by visiting a memorial best-known even in Japan as important to the nation’s greed and brutality to all other Asian nations? There are beaucoup alternatives popular among the Japanese people.

Can you imagine Angela Merkel or Giorgio Napolitano paying a visit of remembrance to Hitler’s bunker or the Esso station in Milan where Mussolini’s body was laid out for the public to spit on. Do you think President Obama should wander through Oakwood Cemetery in Raleigh, North Carolina to visit Jesse Helms’ grave? The last and most unrepentant racist elected to the US Senate on a platform of opposing civil rights for non-white Americans – forever!

Right-wing nationalism in Japan only means one policy in the last century of Asian history. Military might and political will commanded to serve Japanese corporate Zaibatsu.

Written by Ed Campbell

January 2, 2014 at 8:00 am

Snow Goddess

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Click to enlargeREUTERS/Sheng Li

Visitors walk past a giant snow sculpture ahead of the 30th Harbin Ice and Snow Festival in Harbin, Heilongjiang province, China. The festival kicks off on January 5, 2014.

Wow!

Written by Ed Campbell

December 30, 2013 at 8:00 pm

China’s high-speed rail on fast track – 7 new routes opened

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Click to enlarge

Several new high-speed railway links in China are expected to start operations by the end of 2013, extending the network to over 12,000 kilometers, more than half of the world total…

It is the last link in the chain between the most dynamic cities and manufacturing centers in east and south China, with a population over 700 million, and almost as large as Europe…”Convenient transport will…strengthen the links between the economic engines,” said Long Guanghui, director of DTZ Shenzhen.

The “engines” Long refers to are the Yangtze Delta, the Pearl River Delta, and the Western Taiwan Strait Economic Zone, which are connected by several high-speed rail links now, and may turn into a world-class urban belt on a par with the northeast coast of the United States, or the Seto Inland Sea of Japan, according to Chen Hongyu, counselor of Guangdong provincial government.

Other new high-speed rail lines which began services on Saturday include one in the northwestern province of Shaanxi, starting point of the ancient Silk Road, and another in south China’s Guangxi Zhuang Autonomous Region, the bridgehead of China-ASEAN cooperation…

Huge shadow was cast in 2011 when a crash claimed 40 lives in east China. Since then, a series of corruption scandals have brought about the arrest of the former railways minister, Liu Zhijun, on charges of corruption and abuse of power…

“The former railways ministry was a mixture of administrative and commercial operations and a monopoly. It was a hotbed of corruption,” said Xiao Jun, a professor at Shenzhen University. “Besides investigating the accident and scandals, the government has taken action to solve institutional problems…”

Xiao Jun believes that what happened in the high-speed rail sector proves that fighting corruption will not hamper economic development…”On the contrary, it is the zero-tolerance of corruption and the improvement of systems that restored public confidence in the industry,” Xiao added.

He stressed that the world’s largest constructor and operator of high-speed rail must continuously eliminate institutional flaws, carry on the separation of government and enterprise, and enforce supervision of investment in the public sector.

It’s difficult for Western rail builders to compete when your country hasn’t suitable track or the inclination to build their own high speed rail system. France can compete – and does. The United States hasn’t a clue.

Yes, there are people in government, members of Congress who are fully aware of the benefits of high speed rail for transport as well as the commercial possibilities for domestic and mostly foreign consumption. They could probably carry enough votes to change the name of a railroad station somewhere on one of the coasts.

That’s it, folks.

Written by Ed Campbell

December 30, 2013 at 8:00 am

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