China Economy Forum

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China whizzes past India on rail-links with Nepal, Bhutan Feb 28, 2011

(Hindustan Times - McClatchy-Tribune Information Services via COMTEX) -- Even as China is working at break-neck speed to implement a reported $2-billion rail network plan that will virtually encircle India, railway minister Mamataa Banerjee's budget does not reflect India's urgency to get spurred on by the competition. Of India's nine projects to build 274 kilometres of rail lines with neighbouring countries at a cost of Rs 2,692 crore, none have found a mention in Banerjee's budget.

China's plans are to extend its Tibet rail network by connecting Lhasa with the region's second largest city of Xiagaze to reach the strategically important Chumbi valley, adjacent to Sikkim and the Siliguri corridor.

"China's infrastructure thrust along the Indo-China borders will greatly reduce Nepal and Bangladesh's reliance on India for commodities like drugs, transport vehicles, spare parts, cotton textiles and cement", strategic affairs analyst Lt General YM Bammi (retired) feels.

At the transport minister's conference at Colombo in 2008, India had also mooted the grand plan to run a passenger train connecting Dhaka, New Delhi and Lahore.

"None of these projects have moved forward or are likely to for the simple reason that India is not as cash happy as China. Also, the Indian government is unwilling to invest in the railways", said Sumant Chak of the Asian Institute of Rail Transport.

"Apart from the need for substantial financial outlays for infrastructure, there are many non-financing constraints such as bad quality of engineering and planning at DPR stage that need to be addressed to avoid time and cost over-runs", says the economic survey report of 2010-11.

 

[Brotherhood]

Labor shortage sparks calls for growth reform - People's Daily Online March 02, 2011

Job recruiters wait for potential employees at the Datang job market in Zhuji, East China's Zhejiang province, on Feb 19. Photos by Guo Bin / for China Daily

A child holds a recruitment poster outside the Datang job market in Zhuji on Feb 19.

Zhang Xiang, a young man from Ezhou, Hubei province, never expected to stay in the provincial capital, Wuhan. He had planned to go to Guangzhou to work in a factory.

He changed his mind a few days ago when he went to Wuchang Railway Station. There he found a number of enterprises had set up recruiting booths, in the hope of luring workers who planned to head south for work to stay.

Labor shortages in China are back in the headlines. But this year, the story has a new twist: Companies in central and western China have also entered the labor-grabbing fray.

Rising labor costs, together with labor shortages, are pressing enterprises to hasten industry upgrading to improve efficiency. And as workers' salaries increase, they are more willing to spend, helping make economic growth more consumption-driven.

According to Nomura Securities, local and multinational companies that once operated only in the coastal regions are moving or expanding inland in ever-growing numbers, attracted by lower costs and improving infrastructure, thus offering new job opportunities.

Increased labor demand in the inland region has narrowed the wage gap with the coastal areas.

A National Bureau of Statistics survey shows the average monthly wage in the east was 1,422 yuan ($215) in 2009. Wages were only 44 yuan less in the western regions and 72 yuan less in Central China. But the higher cost of living makes working in the eastern regions less attractive.

"I suddenly noticed that the salary Foxconn offers now is not so different from what the factory in Guangzhou did. Why should I bother to leave my home province and struggle for a train ticket each year?" Zhang said.

To fuel business expansion in China's inland cities, Foxconn, the world's largest maker of electronic components by volume, opened a green channel in each job fair where interviews, recruitment and transportation to the workplace could all be arranged on the spot. The company has built plants in inland Chinese cities of Wuhan, Chengdu, Zhengzhou, Jincheng and Taiyuan, creating thousands of jobs in the process.

"Though we've increased our salaries by nearly 20 percent this year, we still face a big labor shortage," a human resources manager said, adding that the company plans to hire 30,000 workers in Wuhan this year.

Local governments of inland cities also rolled out a slew of measures to retain labor forces.

In November, the Chengdu city government launched a program to attract the local labor force to stay by offering them more support in starting their own business and addressing the education difficulties for their children.

Sichuan used to be a major province exporting laborers to coastal areas.

China's labor shortage will be a long-term problem, rather than a short-term worry after the Spring Festival, economists said.

Stephen Green, a China economist with Standard Chartered, said new jobs hit 20 million to 25 million last year, more than doubling the official statistics.

"The growth pace of new jobs will exceed the increase of workers, and the situation will deteriorate in the following decade," said Green. "We estimated the growth rate of the labor population will be close to zero in the following years, so improving efficiency is key to sustaining economic growth."

According to Nomura, the proportion of the population aged 10 to 19, the "pipeline workforce" (or upcoming workforce), has fallen steadily over the last two decades from 19.9 percent to 13.5 percent, while that of the age 50 to 59 bracket (the official retirement age being 60) has increased from 7.8 percent to 14 percent.

This development, which first occurred in 2009, suggests that the proportion of the workforce to the population as a whole is close to peaking.

"These labor market trends are intricately linked to China's ongoing economic restructuring and helpful to sustaining growth," said Sun Chi, an economist at Nomura Securities.

China has decided to seek a more balanced growth model and reduce the proportion of exports and investment in the economy. Premier Wen Jiabao said earlier that China will address "structural problems" and "we can rely on stimulating domestic demand to stabilize and further expand the Chinese economy".

Consequently, the country needs a larger wage share in national income to help rebalance its growth towards consumption.

The decades-long decline of the household sector's share in national income reflects China's traditionally cheap-labor advantage, but if labor shortages now lead to rapid wage growth, especially in low-income groups, household consumption should boom due to a greater propensity to spend among low-income households.

"Rising wages may also force companies to move up the value chain and boost total-factor productivity," said Sun. The government has pushed for this for years, but businesses had little incentive to do so while they could tap such a vast pool of cheap labor.

Upgraded industries, in turn, would better match the needs of better-educated workers, both in terms of jobs on offer and remuneration received.

A shortage of qualified talent and rising labor cost, in fact, is also a key challenge facing multinational companies operating in China.

Mitch Barns, president of Nielsen Greater China, said acquiring, developing and retaining qualified labor is regarded as the main difficulty for companies' development in China in the next five years.

Andy Zhang, managing director of Cushman &Wakefield China, had a similar viewpoint.

"A lack of quality staff really poses a big challenge for us in expanding business here," Zhang said.

The world's largest reinsurance company, Swiss Re, for instance, just signed a deal with Peking University to jointly develop an insurance course, with the aim of developing a talent pool for its expansion in China.

"The most wanted talents in China's insurance sector are actuaries, and finding qualified actuaries is always a top priority for our human resources staff," said Robert Wiest, managing director, Clients Markets of Swiss Re Asia.

Source:China Daily

 

[Brotherhood]

Yuan-based trade settlement volume increases - People's Daily Online March 02, 2011

The transaction volume of China's cross-border trade settled in yuan has increased sharply, as the government approved pilot companies to use the currency in direct overseas investments.

In the first month of this year, Bank of China's total volume of yuan-denominated cross-border trade settlement reached about 40 billion yuan ($6.09 billion), one-fourth of the 160 billion yuan for the whole of 2010, said Chen Jun, a manager from the international settlement business department of the bank on Tuesday.

Industrial and Commercial Bank of China, the world's largest lender by market value, transacted about 150 billion yuan in cross-border settlement business since the pilot program started in July 2009, a report of the bank said.

China's cross-border trade settlement in the currency rose to 510 billion yuan by the end of last year, Chen said adding that the government is looking to reduce dependence on the US dollar and quicken the pace of yuan globalization.

"Growing international trade and investment by Chinese companies abroad increased the need for yuan-denominated settlement business, and it also provided business opportunities for domestic financial institutions," said Chen.

Investors in the offshore yuan market are likely to hold more working capital in the currency as Chinese financial institutions are working on providing more innovative products and services, Chen added.

The People's Bank of China in January allowed some domestic pilot companies to directly invest overseas in yuan, in order to expand yuan-settled business.

These pilot companies were from 24 provinces and cities on the mainland, including Liaoning, Zhejiang, Guangdong and Shanghai.

"Allowing direct investment in the currency is a start to liberalizing the capital account and will help ease the pressure of excessive liquidity, said Xu Sheng, director of the Capital Management Department at JP Morgan Chase in Shanghai.

"It will further accelerate trade settlements in the currency and expand the offshore yuan markets," he said.

Hong Kong, the emerging yuan hub, is expected to provide more options for investors in the offshore yuan market, with companies issuing yuan-denominated bonds and with plans to sell yuan-based shares.

After China's government revised the settlement agreement on the clearing of yuan business in July 2010, Hong Kong handled 370 billion yuan in trade settlements last year, according to the Xinhua News Agency.

The total value of cross-border trade in the currency rose to 108 billion in January, from 100.9 billion yuan in December last year, data from the Hong Kong Monetary Authority showed.

According to a survey from HSBC, about 30 percent of cross-border trade of small and medium-sized companies in Hong Kong is settled in yuan, and this figure is likely to increase to 50 percent by the end of 2011.

China Daily

 

[Brotherhood]

China Telecom to build world's largest fiber optic network - People's Daily Online March 02, 2011

China Telecom plans to triple the number of users for its fiber optic broadband service this year to reach 30 million.

The company further aims to grow the user base to 100 million by the end of China's 12th Five-Year Plan (2011-2015).

China Telecom plans to cover every city in China with the fiber broadband service in three years and convert all copper lines to fiber, China Daily reported. Under the Five-Year Plan, the Chinese government will focus on developing the telecommunications infrastructure, with total investments reaching 2 trillion yuan. Broadband development would account for 80 percent.

"Only 23 percent of Chinese families have Internet access now, so China still has huge potential in this industry," said China Telecom chairman Wang Xiaochu.

This plan will provide broadband access, high-definition IPTV, 3D and rich media services that require bandwidth of about 10 megabytes and above.

China Telecom will follow the government's policies to improve infrastructure and cooperate with local authorities to integrate telecommunications, television and Internet networks.

The company further plans to introduce cloud computing and Internet of Things services, more internet applications for mobile and fixed Internet users and to accelerate its transformation into a comprehensive telecommunications provider.

It is expected to benefit the optical fiber firms.

Orient Securities holds that this large-scale user access upgrade will stimulate the upgrading of fiber optic metropolitan area networks and backbone transmission networks, and a fast-growing optical communication sector is expected.

Donghai Securities estimates that the investment made by the telecom operators in broadband construction will increase by 47 percent year on year in 2011 to 68 billion yuan. The broker believes that related accessory, equipment, and optical fiber cable sectors are will be the top three most popular sectors in the stock market.

By People's Daily Online

 

[Brotherhood]

Xinjiang builds foundation for rapid development - People's Daily Online March 03, 2011

The government of Northwest China's Xinjiang Uygur autonomous region has vowed to make more efforts to achieve rapid development and long-term stability during the 12th Five-Year Plan (2011-2015) period.

"To fulfill the strategic goal of rapid development set by the central government, fundamental work is needed and requires great effort," Nur Berkri, chairman of the Xinjiang regional government, said in an interview with China Daily.

"We regional administrators always focus on economic development, especially the growth of GDP, but I don't think we should go out of our way to court GDP growth," the chairman said.

"Competent governors usually implement fundamental projects and bring long-term benefits to people," he added.

For Nur Berkri, the fundamental projects most needed for Xinjiang's economic and social development are infrastructure construction, education and environmental protection.

In the 11th Five-Year Plan (2006-2010) period, Xinjiang saw rapid development in infrastructure construction, including water conservation, transportation and communication.

In the past five years, Xinjiang spent nearly 70 billion yuan ($10.6 billion) to improve its transportation system and build asphalt roads for each town and village.

"Before that, rural people had to prepare two suits when they went to markets in towns and cities. One was dirty for village roads, the other was clean for city markets," said Nur Berkri. "Now people in Xinjiang have said goodbye to this way of life."

However, infrastructure construction in Xinjiang is still "far from enough".

"Current infrastructure development can't meet the demand of realizing rapid development in Xinjiang," the chairman said.

For example, there are only 1,100 kilometers of high-grade highways in Xinjiang, though the region accounts for one-sixth of China's territory.

"The mileage of high-grade highways in a smaller coastal province is several times that in Xinjiang," he added.

Solid educational foundation is vital to Xinjiang's economic and social development, said the chairman, who worked as a teacher in his 20s.

"I have received great benefit from educational development and insisted on developing education for decades," Nur Berkri said. At present, there is a big regional gap in higher education, especially in southern Xinjiang's Kashgar region, Hotan prefecture and Aksu prefecture, the chairman said.

In 2010, only 20 to 30 percent of junior high school graduates in those areas received higher education because of a shortage of schools and poor living conditions.

This year, the Xinjiang government will give priority to the development of higher and vocational education. A batch of senior high schools is under construction. Students from poor families will get annual allowances of 2,000 yuan if they go to senior high schools. And those entering vocational schools will be exempt from tuition, rent and textbook fees.

"Xinjiang's development needs educated youngsters, no matter what ethnic group they are. Through our 20 years of effort, this generation will provide an extraordinary drive for Xinjiang's development," he said.

Nur Berkri was honored as the "Mayor of Environmental Protection" when he worked as head of the regional capital city Urumqi from 1998 to 2000.

During his tenure, he advocated the idea of "giving priority to eco-environment", planting thousands of trees in the city and implementing the "Blue Sky Project" aimed at controlling air pollution in winter.

"I'm quite eager to receive a new title - 'chairman of environmental protection', in a bid to raise people's awareness," Nur Berkri said, laughing.

The eco-environment in Xinjiang is "too fragile to be abused in the silly way of the past" - controlling pollution after the environment has been polluted, he said.

"Through more than a decade's effort, we've just seen preliminary success," he said, "The winter snow downtown can now stay white for at least three to five days. It used to turn black overnight.

"Environmental pollution happens easily, while controlling pollution is tough and takes decades of work."

By Shao Wei, China Daily

 

[Brotherhood]

Capital injection planned for China's sovereign wealth fund CIC - People's Daily Online March 03, 2011

A capital injection plan for China Investment Corp (CIC), the country's $300 billion sovereign wealth fund, has been submitted to the State Council for approval, according to sources close to the matter.

"The State Council is now working on the plan," said one source, who declined to be identified. He refused to disclose the scale of the capital injection.

Another source close to the matter said the injection could be between $10 billion and $20 billion.

CIC declined to comment on the issue, as did the State Administration of Foreign Exchange, which manages China's foreign reserves.

Wang Jianxi, executive vice-president and chief risk officer of CIC, said at a forum in January that the sovereign fund achieved a satisfactory performance last year but has used up its operating capital and has applied for a capital injection.

In May, the company said it entered into an agreement - through one of its wholly owned subsidiaries - with Penn West Energy Trust. The companies formed a partnership to develop Penn West's bitumen assets in the Peace River area of Alberta, Canada. CIC will invest approximately C$817 million ($796 million) to acquire a 45 percent interest in the partnership.

That deal was the only mergers and acquisitions (M&A) activity published on the company's website last year. However, the Economic Observer said CIC was involved in 11 overseas M&A deals in 2010. Five of those deals, valued at $1.579 billion, were made solely by the company.

On Jan 20, CIC opened its first overseas representative office. The bureau, in Toronto, will seek to enhance CIC's cooperation with local companies and promote its overall investment business in Canada, according to its online statement.

Last year, CIC - which was set up in 2007 with a mandate to earn a higher return for the government - opened a wholly owned unit in Hong Kong.

The fund, which also holds sizable stakes in a number of China's major State-controlled banks, added $58 billion to its overseas holdings in 2009, mainly in publicly traded stocks and bonds.

Though some analysts said CIC could also raise funds through issuing bonds, in common with other sovereign wealth funds, Liu Shengjun, deputy director of the Lujiazui International Financial Research Center at the China Europe International Business School, said using the existing foreign exchange reserves is a more reasonable choice, given the country's high volume.

By the end of 2010, China's foreign exchange reserves were $2.8 trillion.

Source: China Daily

 

[Brotherhood]

China's direct investment reaches $2.57 bln to ASEAN in 2010 - People's Daily Online March 03, 2011

China's direct investment to Association of South East Asian Nations (ASEAN) countries stood around 2.57 billion U.S. dollars since the China-ASEAN Free Trade Area came into force one year ago, said an official with China's Ministry of Commerce (MOC) in Anhui on Wednesday.

Over the past year, tariffs on trade between China and ASEAN countries have been sharply reduced. Now 90 percent of goods traded between both sides enjoy zero duties, said Sun Yuanjiang, deputy director from the MOC's international trade and economic affairs department.

In 2010, direct investment from ASEAN countries to China reached 6.32 billion U.S. dollars, an increase of 35.2 percent.

In 2010, trade volume between China and ASEAN countries reached 292.8 billion U.S dollars, an increase of 37.5 percent year on year. China has become the biggest trade partner and the first export destination for ASEAN countries.

ASEAN countries have also become a major source of investment for China, said Sun at an international East Asia free trade area seminar held in Maanshan, east China's Anhui Province.

"The implementation of China- ASEAN free trade area agreement has played an active role in pushing forward the integration of regional economy of East Asia," said Sun.

Source: Xinhua

 

[Brotherhood]

Strategy for new-energy autos to be released in 2011 - People's Daily Online March 03, 2011

A senior official confirmed on Wednesday that China would release the national planning for four of the seven strategic emerging industries by the end of this year, and the planning for new-energy vehicles and energy saving will likely be the first announced.

The four sectors are new-energy autos, advanced equipment manufacturing, new materials and next-generation information technology, said Li Yizhong, former minister of Industry and Information Technology and current vice director of the Economic Committee of the Chinese People's Political Consultative Conference (CPPCC), the country's top advisory body.

Economic restructuring and shifting to a more environmentally-friendly, balanced growth model are more important than the pace of economic growth this year, Li said.

The advanced equipment manufacturing sector will mainly include subcategories of aviation equipment, satellites, rail transportation equipment, marine engineering equipment and smart equipment. The other three sectors are energy conservation and environmental protection, biotech and new energy.

The National Development and Reform Commission (NDRC) recently approved the framework for the blueprint for the development of the strategic emerging industries during the 12th Five-Year Plan (2011-2015). It has also urged other relevant government departments to draft the planning and submit it to the State Council for review.

Chinese Premier Wen Jiabao declared recently that the target for annual growth is set at 7 percent for the 12th Five-Year Plan period — well below the target of 8 percent, which is regarded as a de facto bottom line for China’s economy. Over the years since 2010, China's GDP has been growing much faster than 8 percent most of time.

The new target of 7 percent, said Li, could make the economic restructuring more achievable. However, some local governments are still eying much higher targets, and they need to re-adjust their way of thinking, he noted.

He also warned of "severe" price pressure this year. But he is confident that the inflation is controllable. One of the important ways of easing that pressure, he pointed out, is to reduce the demand for energy and resources by making more efforts to promote energy conservation and reducing emissions.

The target of emission reduction will be specified in the 12th Five-Year Plan.

By Li Jia, People’s Daily Online

 

[Brotherhood]

China has largest electric vehicle charging network - People's Daily Online March 03, 2011

At present, the pilot project of China's electric vehicle charging and replacement facilities has been completed and put into operation, and China now boasts the most extensive charging facilities in the word.

China's facilities include nearly 90 standard charge and replacement power stations, almost 5,200 charger and 7,000 AC charge spots, covering 26 provinces in China, including Hangzhou, which built charging and replacement power service networks for electric vehicles.

China imported about 240 million tons of crude oil in 2010, which means it was nearly 54 percent dependent on foreign sources, and cars accounted for 40 percent of national oil consumption. Globally, the vehicle emissions of carbon dioxide accounted for 28 percent of the total. Electric vehicles have high efficiency, low noise, zero emissions and other significant advantages, which is why the development of this technology has become a consensus at home and abroad.

Power supply for electric vehicles is essential for the development of electric vehicle industry. Currently, the National Grid has established a laboratory of electric vehicle battery characteristics.

In 2011, the National Grid will build intercity cross intelligent charge and replacement power service network in the Bohai Rim region and the Yangtze River Delta. The agency predicted that the number of China's electric vehicles will reach 500,000 in 2015. To meet the requirements of the development of electric vehicles, the State Grid will build 2,351 charge and replacement power stations and 220,000 charge spots during 12th Five-Year Plan period to initially complete the intelligent charge and replacement power service network covering the business area and vigorously promote the development of electric vehicles in China

By Yan Meng, People's Daily Online

 

[中国万岁-ProsperThroughCo-]

China builds way to top of construction league

By Ed Hammond in London and Jamil Anderlini in Beijing
Published: March 2 2011 17:28 | Last updated: March 2 2011 17:28
China’s housing boom has propelled it to the top of global construction, overtaking the US for the first time, as the country ploughed more than $1,000bn into new building projects last year.

Spending on building work in China soared during 2010 as government stimulus-fuelled demand drove up the cost of materials and labour. Meanwhile, construction prices in the US have declined steadily during the recession and the country invested $983bn last year, down from $1,500bn in 2005.

The rise to the top of global construction, which coincides with China’s displacement of Japan as the world’s second-largest economy, underlines a decade- long power shift in the industry from the mature markets of the US, Japan and western Europe to China, India and a clutch of smaller emerging economies.

The gap, though, is set to widen, with a new report published today forecasting China will account for a fifth of the world’s building industry by 2020, compared with 14 per cent today.

“This is the real tipping point in the history of the construction industry,” said Graham Robinson, director at Global Construction Perspectives, which produced the report with PwC and Oxford Economics.

“The old powers have been swept aside and it will be many decades before China comes close to ceding its position as the biggest spender on construction, whether on residential, commercial or infrastructure projects,” Mr Robinson added.

However, the growth in house building, which accounted for 57 per cent of total construction spend in China last year, is expected to slow during the decade as the government tries to prevent a property bubble.

Instead, the growth is likely to be fuelled by increased government spending on new railways, roads and power infrastructure projects.

While China will account for the lion’s share of an expected $97,700bn in global construction spending during the next decade, India will also invest heavily and is forecast to overtake Japan to become the world’s third largest.

The growth in construction activity in both countries has provided a boon to domestic building groups, while international cement and aggregate companies have invested heavily in increasing their exposure.

Holcim of Switzerland and France’s Lafarge, the world’s largest and second-largest cement producers by output respectively, both generate more than half of their sales from China, India and smaller developing economies.

Meanwhile, China’s three largest construction equipment makers are set to post record full-year sales and profit jumps for 2010 and are also quickly becoming global players on the back of the country’s continued construction boom.

Xugong, Zoomlion and Sany Heavy, which between them make most of the country’s cranes, cement mixers and earth movers, expect to report profit rises for last year of between 60 and 100 per cent when they publish their full-year earnings in the coming weeks.

In 2009, China accounted for nearly 43 per cent of global construction machinery sales, up from 18 per cent in 2002, industry figures show.

China’s inner landscape changes

By Kathrin Hille in Zhengzhou
Published: March 3 2011 20:35 | Last updated: March 3 2011 20:35
After more than 20 years on the job, Zhou Debao didn’t think that there was anything left to learn. Since the late 1980s, the director of the Labour Export Bureau in Gushi, a rural county in the central Chinese province of Henan, has been helping locals find work in more developed regions of the country.

“For at least 20 years, the first thing our young people would do after graduating from junior high school would be leaving [the area],” says Mr Zhou. Indeed, the county has long been one of China’s largest sources of migrant workers.

But things are changing – so fast that the local government wants to rename Mr Zhou’s office as its focus is no longer just on getting local labour out.

“Now more people are willing to stay, and more of those who went out are coming back,” he says. For the past seven years, the number of Gushi people working away from home has held steady around 520,000, although the county’s total population has risen from 1.5m to 1.7m.

During the traditional hiring season after the Lunar New Year holiday last month, many small companies in China’s coastal manufacturing hubs have been reporting difficulties in finding workers. Larger firms deny there is a labour shortage, but have raised wages and offered perks rarely seen in the past.

Here in Henan, one of China’s most populous provinces and one of the country’s main sources of migrant labour, the drivers behind that change are clearly visible.

There are those who left as workers and return as entrepreneurs. Gushi has seen a handful of light industry investments over the past four years which is creating thousands of jobs in the county seat.

Just before his 16th birthday, Philip Yu left without graduating from middle school to work in a brick kiln, then in a coal mine.

Later he moved to Dongguan, the light industry hub next to Hong Kong, where he started working in a knitwear factory. Mr Yu worked his way up from ironing cloth to supervising production.

In 2005, he partnered with Leroy Knitwear, his former employer, to set up a joint venture factory in his home town. Now 400 workers, mostly women, knit, fold, press and pack sweaters for Zara, the Spanish retailer for a monthly wage of Rmb1,000-Rmb3,000 ($152-$456), depending on their speed.

Mr Yu’s factory has also kick-started a network of home knitting workshops in the villages around Gushi, a repetition of the early days of industrial development in Hong Kong and Taiwan.

Several others who returned followed in the textile entrepreneur’s footsteps, setting up small-scale agro-industry plants, wood furniture factories and electronics workshops in Gushi.

The villages of Gushi among the muddy fields still look desolate in the icy rain, with most doors barred and barely a human being in the streets. But in the county seat, change is starting to show. The bustling streets fill up so quickly in the afternoon that a traffic jam forms as parents pick their children up from school and office workers start shopping at the end of their working day.

But there are much larger forces at work. Following a steady rise in wages and other costs in China’s coastal provinces, multinationals have started moving inland, including a partial relocation by Intel from Shanghai to Chengdu, new plants by HP and Foxconn in Chongqing, and a large new Foxconn plant in Henan.

The new Foxconn factory is already helping change local workers’ minds about labour migration. For now, it is operating out of rented factory buildings in an export processing zone on the outskirts of Zhengzhou, the provincial capital.

But it already employs 11,000, and has recruited another 40,000 from Henan who are expected to start work back home after three to six months training in Shenzhen.

“This is having a profound impact on our labour market,” says Liu Guoqing, head of the city government’s employment office. According to Mr Liu, Zhengzhou has about 980,000 in rural surplus labour, and 700,000 are looking for jobs outside agriculture. Only 20 per cent of them are now leaving the province.

The decision to stay home is made easier because the wage gap with the coast is narrowing – the minimum wage in rural Henan is Rmb750, compared with Rmb950 in Shenzhen. As living costs are much lower back home, that translates into higher disposable incomes.

But there are other reasons workers want to stay closer to home. “It’s going to be easier to find a girlfriend here which my parents consider fit for marriage,” says Wang Fenghui, who transferred to Foxconn’s Zhengzhou plant after four years at the company’s Shenzhen factory.

Yang Hu, a 25-year-old engineering graduate, says Foxconn’s presence in Zhengzhou changed his plan to leave Henan.

“We graduates used to ... need to go places to get some experience at a big company,” he says.

“Now a Fortune 500 company has come right to my doorstep.”

 

[中国万岁-ProsperThroughCo-]

Foxconn to move China jobs inland

By Kathrin Hille in Zhengzhou
Published: March 3 2011 19:33 | Last updated: March 3 2011 20:56
Foxconn Technology will transform its south China manufacturing hub into an engineering base and move 200,000 jobs to cheaper inland provinces in a further sign that the region’s days as a low-end production centre are numbered.

The world’s largest contract electronics manufacturer employs 1m people in China. About half its workforce is based at two huge factory complexes in Shenzhen, near Hong Kong.

“Shenzhen will probably be our largest site in China for quite some time to come,” Louis Woo, special assistant to group chairman Terry Gou, told the Financial Times. “But the goal is to eventually move all of the actual mass manufacturing to other sites. We will make Shenzhen an engineering campus where we do pilot production only.”

Foxconn, a unit of Taiwan-listed Hon Hai, began its move to less developed regions of China last year, after a series of suicides among its Shenzhen workforce. The company responded to the crisis by raising wages – a trend that was reinforced last year after pay-focused strikes at a number of Honda factories in south China.

Mr Woo said Foxconn’s Shenzhen headcount would eventually drop below 300,000.

The company’s decision to reinvent its Shenzhen factories as “engineering campuses” is emblematic of the broader relocation of low-end manufacturing processes from coastal manufacturing zones with relatively high costs.

Foxconn makes mobile phones, flatscreen televisions, computers and game consoles for customers including Apple, Sony, Nokia and Dell. Like most contract manufacturers, it already carries out hardware research and design on behalf of its multinational clients.

Because of the large amount of parts and complicated production processes required to make consumer electronic products, the establishment of a new Foxconn assembly plant typically attracts dozens of smaller supplier facilities.

The early presence of Foxconn International Holdings, Hon Hai’s Hong Kong-listed handset manufacturing unit, helped transform Shenzhen into a global manufacturing base for the consumer electronics industry.

Foxconn is building huge plants in Henan and Sichuan, two of China’s most populous provinces and home to most of the migrant workers who have moved to work at factories in coastal export centres such as Shenzhen.

The China Syndrome

By By FT Reporters(James Kynge, Richard McGregor, Daniel Dombey, Martin Arnold, Helen Warrell and Cynthia O’Murchu).
Published: March 3 2011 22:18 | Last updated: March 3 2011 22:18
Let’s just talk, you know, straight realpolitik. We are in a competition with China. Take Papua New Guinea: huge energy find . . . ExxonMobil is producing it. China is in there every day in every way, trying to figure out how it’s going to come in behind us, come under us.



Hillary Clinton’s words this week were blunt. Not only was the US head-to-head against China in a battle for international influence but Washington was losing the “information war” to emerging powers.

The comments made by the secretary of state to a congressional hearing bring bang up to date the anxieties laid bare in confidential US government cables over the surge in Chinese global influence in recent years.

Emanating from American embassies across the developing world, these characterise Beijing variously as having fewer scruples than Washington, “playing dirty” in commerce and ignoring human rights in its dealings with other countries.

“I might also mention China has about a $600m development programme for these Pacific island nations. And what do we have in a response? Zero,” Mrs Clinton added. She went on to observe that China’s establishment of a multi-language international television network, Russia’s launch of an English-language network and the continued success of al-Jazeera had come at a time of cuts in US networks and at the BBC.

“We are in an information war and we are losing that war,” she said.

Such remarks open a crack of daylight into what is revealed by the WikiLeaks cables as a long-standing tournament of shadows – the diplomatic feints and dodges that animate often undeclared US-China rivalries – in places as varied as Africa, the Indian subcontinent, central and south-east Asia and Latin America.

The vignettes on this page, which are taken from cables written over several years until last year, demonstrate not only the number of areas in which US and Chinese interests clash, but also the varying intensity of the competition that results.

In a number of African countries, the sense of rivalry is unambiguous. Alleging that “Chinese companies play dirty”, a cable from the US embassy in Nairobi said: “We wonder if [Beijing] simply turns a blind eye to the dirty work of Chinese firms, or if it actively contributes to the problem.” In Nigeria, US officials see a benefit to China from having fewer scruples than Washington. “In pursuing its economic interest here, China is free to ignore human rights, democracy, and other issues which complicate the US relationship,” the cable from Nigeria-based US officials said.

Cables from Algiers show a similar vein in complaints. “Competition between US and Chinese firms will continue to dominate the US-China relationship toward Algeria,” said one, noting that “more than 40,000 Chinese nationals reside in Algeria”. In Ethiopia, US companies told officials their contracts with the country’s telecommunications operator were terminated after they allegedly exposed “inadequacies and falsification of data” by a Chinese rival.

In contrast to the anxiety manifest and unsubstantiated claims made in cables from embassies in Africa, those from Asia convey a milder disappointment, such as over Sri Lanka’s apparent disinclination towards western investment in favour of China’s “no-strings generosity”. This may be “convincing President Mahinda Rajapaksa that he can have both his war and his infrastructure, instead of having to choose between the two”.

US experts endorse the sentiments. “There’s definitely a new game taking place in many parts of the world. The extent to which it has advanced has taken a lot of people by surprise, not least the Chinese themselves,” says Charles Freeman, previously America’s top trade negotiator with China and now at the Centre for Strategic and International Studies. But he also notes a sense among some countries that China has come on too strong: “People are pleading with us to stay around and stay engaged.”

A sense of this dynamic is evident in the cables. In one, a warning comes from executives at Vale, the Brazilian mining giant. At a May 2007 meeting with the US ambassador to Brazil, they said America “would need to pay greater attention to where its raw materials would come from as China hoped to lock up both South America and Africa as its suppliers”.

Washington has tried to translate Brasilia’s annoyance over unfair Chinese competition into a joint position pushing for the faster appreciation of the renminbi. So far, however, Brasilia has maintained an even hand.

China is aware of countries’ concerns. Yang Jiechi, foreign minister, wrote last month of a need for “public diplomacy” because the world “still has biases, misunderstandings and worries about China”.

Sour grapes..

 

[below_freezing]

Don't worry, US Wall Street regime will keep jumping in public to put on a show for their low IQ masses, we just have to keep walking our path. Currently, major areas we have to improve on are copper sourcing, cobalt sourcing, reducing losses of rare earths, reducing dependence on foreign CPUs, reducing dependence on foreign lithography machinery, and protecting our technological secrets in areas we are ahead.

 

[Brotherhood]

China to continue expanding cross-border yuan settlement - People's Daily Online March 03, 2011

The People's Bank of China (PBOC), China's central bank, announced on March 2 that it would further expand trial cross-border yuan trade settlements across the country this year.

The People's Bank of China said it will increase the use of yuan in cross-border investment and financing flows.

China will "actively study" the use of yuan settlement for foreign direct investment and yuan-denominated foreign debt, according to the central bank.

The market demand for yuan cross-border use is expected to climb along with the increasingly close integration between China and the global economy, according to a statement on the central bank's website.

The PBOC said it would pay close attention to how yuan trade settlement affects monetary policy, interest rates and the exchange rate. It will also research the relationship between yuan settlement and the international balance of payments, management of foreign exchange reserves and capital account convertibility, according to the Wall Street Journal.

China has been expanding pilot programs for cross-border trade yuan settlement since last year. The bank has expanded the trial scheme to 20 provincial regions so far.

China expanded its cross-border yuan trade settlement from the original 365 firms to about 67,000 exporters at the end of last year. China's banks handled 506.3 billion yuan, or 8.57 billion U.S. dollars, of cross-border trade settlements last year.

By People's Daily Online

 

[Brotherhood]

China, Israel pledge to enhance economic cooperation - People's Daily Online March 03, 2011

Israeli President Shimon Peres and visiting Chinese Commerce Minister Chen Deming held a meeting Wednesday, pledging to enhance economic cooperation between the two countries.

China is now playing a constructive and increasingly important part in global economy, Peres said, adding that Israel sees great opportunity in China's development. He expressed Israel's willingness to join hands with China to further expand the mutual- benefit cooperation between the two countries.

Peres highlighted the key role of technology innovation in economic development of Israel and China, and said his country is ready to expand economic, trade, agricultural and technological collaboration.

Chen said he appreciates Peres' effort in promoting Sino- Israeli relations. China will step up communication and cooperation with Israel, and work together to enhance the technological collaboration, Chen said, adding that he and his delegation aim to strengthen economic partnership with Israel and further expand and deepen the bilateral cooperation in practical terms.

The two sides also exchanged views on major regional and international issues of shared interest.

During his four-day visit, Chen held a meeting with Israeli Prime Minister Benjamin Netanyahu on Monday.

Noting the traditional friendship and mutual interest between Israel and China, Netanyahu said his government expects to enhance bilateral cooperation in economy, trade and other fields.

Sino-Israeli trade volume reached 7.65 billion U.S. dollars in 2010, nearly 150 times of the volume of 1992, when the two countries established diplomatic relations. Chen said China hopes to import more high-tech products from Israel, so as to optimize the composition of bilateral trade.

Chen, who is heading a trade delegation of Chinese entrepreneurs to Israel, said Chinese enterprises and financial institutions are more than willing to collaborate with their Israeli counterparts.

Source:Xinhua

 

[Brotherhood]

China Mobile ready for 4G rollout - People's Daily Online March 04, 2011

China may soon start the commercial use of its homegrown fourth-generation (4G) telecommunication technology, providing the system is fully developed.

That's according to comments by Wang Jianzhou, chairman of China Mobile Communications Co, the parent of world's largest telecom carrier by subscriber numbers.

Wang made the remarks during a break of the ongoing Fourth Session of the 11th National Committee of the Chinese People's Political Consultative Conference, the nation's top advisory body.

He also said Softbank Telecom Co is planning to deploy the first commercial Time Division-Long Term Evolution technology (TD-LTE) network in Japan by the end of the year.

TD-LTE is the next generation telecommunication standard which has been in development by China Mobile since late 2007. It provides a radical increase in the speed of data transmission through a 4G network.

China will finish large-scale testing of the TD-LTE network by mid-2012, according to the Ministry of Industry and Information Technology. However, Wang pointed out that this is simply a time frame for the testing process, and even when the technology is deployed, it may still be subject to tests.

"When TD-LTE goes into commercial use in China depends on when the technology is mature," Wang told China Daily.

In January, China began wide-ranging tests of TD-LTE technology in six major cities; Shanghai, Hangzhou, Nanjing, Guangzhou, Shenzhen and Xiamen.

However, Wang revealed on Thursday that there are now seven cities conducting large-scale tests, but did not disclose the name of the additional location.

"TD-LTE will converge with the Frequency Division Duplex (FDD) - where one frequency band is used to transmit and another to receive - which is the other 4G standard that has been widely adopted by foreign carriers," Wang said.

The major task of the "Global TD-LTE Initiative", which was launched last month in Barcelona, Spain, is to develop mobile phones with combined TDD - Time Division Duplex, where a single frequency channel is assigned to both the transmitter and the receiver - and FDD facilities, according to China Mobile.

"I hope in the era of 4G, nobody will have to talk about which wireless standard to choose, because everyone will be able to access both TDD and FDD by using the same handset," Wang said.

Major international chip makers, mobile phone manufacturers and telecom carriers have reached a consensus to accelerate the convergence process. Manufacturers of mobile phone semiconductors, or chips, such as Qualcomm Inc and Samsung Electronics Co have already developed chips that support both technologies.

The rapid development of the telecom industry globally means that the spectrum for signal receivership has become limited. Wang said TD-LTE is well placed to quicken the pace of becoming a global technology as the majority of the spectrum auctioned worldwide has been allocated to TDD.

Source: China Daily