China Economy Forum

[CardSharp]

That is not good news.
We have solved the employment problem, but our population advantages was consumes over.

Growth will slow I think but if we can restructure around the existing labour force, hopefully growth will continue. We are now entering the period of rapid rises wages and in living standards. Look for GDP per person to shoot to 10,000 USD in 5 or 6 years.

 

[cross1993]

Growth will slow I think but if we can restructure around the existing labour force, hopefully growth will continue. We are now entering the period of rapid rises wages and in living standards. Look for GDP per person to shoot to 10,000 USD in 5 or 6 years.

Yes, now we need to expand domestic demand.

 

[中国万岁-ProsperThroughCo-]

FT

China’s passion for property lacks the bubble factor

By Henny Sender
Published: February 17 2011 14:48 | Last updated: February 17 2011 14:48
Chinese people welcomed in the Year of the Rabbit this year visiting family, playing mahjong, betting on the horses (among other things), and inspecting the latest flats for sale.

Buying property has become a national passion in China. Last week, Beijing announced further measures in its campaign to cool down both demand for property and real estate prices. It raised interest rates in an effort to induce people to keep money in the banks. It adjusted the way the property price index is calculated in much the same way it earlier adjusted the consumer price index to minimise the impact of rising food prices on inflation. It told foreigners that unless they had paid taxes for a number of years in a given city, they would be unable to buy property.

Despite these efforts, though, the betting on the mainland is that the game will continue. Virtually nobody in China thinks there is any chance of a crash in the property market, for a mix of fundamental and self interested reasons.

For one thing, there are a lot of vested interests in the government itself that have a stake in rising prices. Most local government revenue comes from land sales. If land prices fall, governments take in less money. So while Beijing announces the latest edicts in a loud voice, local governments undermine that policy in whispers.

The bankers, too, prefer to ignore Beijing’s wishes. The banks are run by bureaucrats who are all Party members and serve at the behest of the regulators. But beneath the senior echelons of the banks are staffers who wish to grow their loan books and circumvent restrictions on loan growth.

Evasive measures were very successful last year, when loan growth exceeded official targets by a wide margin. This year the voices from Beijing have become more insistent so mainland bankers are referring clients to their Hong Kong offices for arrangements to get around inconvenient limitations on the mainland and keep the money flowing.

There are other factors as well. Interest rates remain deeply negative in real terms. Everyone in China is looking for alternatives between the gambling tables of Macau and receiving half a percentage point of interest on deposits from their (unfriendly) local bank.

Today, these people can put their money out through private channels for more generous returns. For the first time there is a class of wealthy entrepreneurs with enough scale that they have become a significant source of funding, particularly for property. Developers in China cannot get loans to actually acquire land. They can only borrow after they have secured the land. That does not matter much for the larger developers who are listed and cash rich, but it does gives rise to an irritating sequence problem for developers who are not.

The problem is solved by introducing developers to well-heeled entrepreneurs who are the clients of the wealth management arms of the banks. Developers often sell shares of the unit that is responsible for a given property project to entrepreneurs via these bank networks, paying them between 10 per cent and 13 per cent a year for the money. In other cases, entrepreneurs themselves form underground banks in search of lucrative projects.

Of course, the self-interest of developers and banks does not mean there will not be a crash, just that people want to make money from property. More important from a fundamental viewpoint is the fact that the Chinese market lacks the classic symptoms of a bubble today.

One of the reasons why the US and Japanese housing booms were so fragile was the extent to which those booms were financed with borrowed money. If leverage is one of the key worrying signs, there is not much of it in China right now, either at the level of builder or buyer.

Also, in contrast again to the US and Japan, incomes in China are rising. Indeed, analysts say that, at least in China’s second tier cities such as Chengdu or Dalian or Xian, incomes are rising at a faster pace than housing prices. Moreover, many developers are producing affordable middle class housing and not just luxury flats and shopping malls. The prosperity is spreading with the infrastructure, from the outskirts of Beijing to the outskirts of the whole country.

True, official statistics suggest that fixed asset investment accounts for 70 per cent of economic activity and much of that figure comes from property investment. That suggests that the supply of everything that China builds will one day vastly exceed demand. But, as with so many statistics, many analysts dismiss this fear. For example, they point out that when an American buys a car, the purchase counts as consumption but when a Chinese household does so, it counts as investment.

Next year is the year of the Dragon, a particularly auspicious year in China. Property owners, if not potential buyers, are betting they will be even more prosperous when that time comes.

 

[Brotherhood]

Sina Weibo valuation triples to $5.8 billion - People's Daily Online February 18, 2011

Ye Fangzhao, a 25-year-old freelance brochure editor for auto companies, abandoned his Twitter account a year ago to start using Sina Weibo, a Chinese equivalent. Now he's on the micro-blogging service 10 hours a day to connect with motoring experts and keep up with trends.

"I don't need to go to bookstores or buy magazines," says Ye, who lives in Xiamen, Fujian province. "It saves me time and money."

Sina Corp is targeting people such as Ye to win more attention from China's Internet users. Chief Executive Officer Charles Chao says he hopes Weibo's popularity will help Sina transform from a news portal to a social networking environment that lures outside developers.

Sina has 87 percent of the Chinese micro-blogging market by the time spent browsing, according to Eric Wen, an analyst at Mirae Asset Securities Co in Hong Kong. That helped triple its value to $5.8 billion on the Nasdaq Stock Market in New York by Tuesday. The Weibo service alone may be worth $2 billion, half of it from advertising potential, Wen said in a Jan 25 report.

"Weibo is the best opportunity for Sina to transform into an Internet platform," says Ma Yuan, a Beijing-based analyst with Bocom International Holdings Co, who has a buy rating on the company. "It is becoming the next killer application on the Internet and mobile phones."

"Our strategy is to build a platform that is open to everybody," says Chao. "We hope people will join and create content and applications for all to use."

Sina Weibo's posts are limited to 140 characters. Twitter was the model for Sina as it built on its popularity as a news portal and celebrity blogging site to expand into social networking, Chao says. Innovations added by Sina include allowing users to comment on other people's posts, as well as upload videos and pictures.

Sina started its micro-blogging service at least four months before its three main rival portals: Tencent Holdings Ltd, Sohu.com Inc and Netease.com Inc's163.

"In China, Weibo has become synonymous with Sina," says Sabrina Dong, an analyst at Analysis International, a research company in Beijing. "It has the strongest brand."

Sina hasn't released the number of its Weibo users since claiming 50 million by last October.

Source:China Daily

 

[Brotherhood]

China to spend $1.3t on new rail, road infrastructure - People's Daily Online February 19, 2011

A booth for Daqin Railway Co at a railway equipment expo in Beijing. Shares of Daqin Railway may rise as the nation's transport infrastructure is upgraded, according to Morgan Stanley. (Photo / China Daily)


China plans to spend at least $1.3 trillion over the next five years to ease transport and freight bottlenecks, creating a windfall for companies such as Daqin Railway Co and Anhui Expressway Co.

Rising wages and land costs in the coastal provinces that have underpinned China's industrial development for three decades are forcing manufacturers, including Ford Motor Co, Pfizer Inc and Foxconn Technology Group, to move production inland to cut costs. That's strained China's ability to transport goods within the country, prompting a spending program the size of the Swiss economy during the past two years on roads, railways and airports.

"A huge part of China hasn't been part of the global economy," said Brian Jackson, an emerging-markets strategist at Royal Bank of Canada in Hong Kong. "As that changes, it's going to have a similar effect to what you saw with coastal China joining the world economy."

The development of inland provinces, such as Shanxi and Anhui, is driving an expansion of rail capacity that may help shares of Datong-based Daqin Railway rise 86 percent to 16.03 yuan ($2.4), according to Morgan Stanley. Hefei-based toll road operator Anhui Expressway may rise 44 percent to HK$9 ($1.2) as inland growth is boosted by companies moving from the east coast, says Macquarie Capital Securities.

China has spent $569 billion on fixed-asset investment in railways and roads over the past two years. That may help to more than double the country's share of world exports to 23 percent in the next decade, according to China International Capital Corp economist Zhang Zhiwei.

Over the next five years China will spend as much as 3.5 trillion yuan on railway construction, 750 billion yuan on rail rolling stock, 3.5 trillion yuan to 4 trillion yuan on highways, 300 billion yuan to 350 billion yuan on airports, and 900 billion yuan on ports, according to Macquarie.

The nation's 2 trillion yuan in spending on a high-speed rail network will give it almost as much track by next year as the entire rest of the world, even before the 16,000-kilometer network is completed in 2020. More than 7,000 kilometers of track have already been laid and another 6,000 kilometers are scheduled to open by 2012.
Bloomberg News

By Kevin Hamlin, China Daily

 

[casual]

China to spend $1.3t on new rail, road infrastructure - People's Daily Online February 19, 2011

A booth for Daqin Railway Co at a railway equipment expo in Beijing. Shares of Daqin Railway may rise as the nation's transport infrastructure is upgraded, according to Morgan Stanley. (Photo / China Daily)


China plans to spend at least $1.3 trillion over the next five years to ease transport and freight bottlenecks, creating a windfall for companies such as Daqin Railway Co and Anhui Expressway Co.

Rising wages and land costs in the coastal provinces that have underpinned China's industrial development for three decades are forcing manufacturers, including Ford Motor Co, Pfizer Inc and Foxconn Technology Group, to move production inland to cut costs. That's strained China's ability to transport goods within the country, prompting a spending program the size of the Swiss economy during the past two years on roads, railways and airports.

"A huge part of China hasn't been part of the global economy," said Brian Jackson, an emerging-markets strategist at Royal Bank of Canada in Hong Kong. "As that changes, it's going to have a similar effect to what you saw with coastal China joining the world economy."

The development of inland provinces, such as Shanxi and Anhui, is driving an expansion of rail capacity that may help shares of Datong-based Daqin Railway rise 86 percent to 16.03 yuan ($2.4), according to Morgan Stanley. Hefei-based toll road operator Anhui Expressway may rise 44 percent to HK$9 ($1.2) as inland growth is boosted by companies moving from the east coast, says Macquarie Capital Securities.

China has spent $569 billion on fixed-asset investment in railways and roads over the past two years. That may help to more than double the country's share of world exports to 23 percent in the next decade, according to China International Capital Corp economist Zhang Zhiwei.

Over the next five years China will spend as much as 3.5 trillion yuan on railway construction, 750 billion yuan on rail rolling stock, 3.5 trillion yuan to 4 trillion yuan on highways, 300 billion yuan to 350 billion yuan on airports, and 900 billion yuan on ports, according to Macquarie.

The nation's 2 trillion yuan in spending on a high-speed rail network will give it almost as much track by next year as the entire rest of the world, even before the 16,000-kilometer network is completed in 2020. More than 7,000 kilometers of track have already been laid and another 6,000 kilometers are scheduled to open by 2012.
Bloomberg News

By Kevin Hamlin, China Daily

that's a insane amount of money

 

[tanlixiang28776]

that's a insane amount of money

It' cheaper than trying to buy enough airplanes and cars for the country when oil prices are rising.

 

[CardSharp]

I'm glad that the Chinese government has the foresight to plan ahead unlike here in North America.

 

[no_name]

that's a insane amount of money

if you buy 300 million new cars at 10000 dollars each, You'd need 3 trillion.

 

[Brotherhood]

High-tech zone to introduce large projects - People's Daily Online
February 20, 2011

The Chengdu Hi-tech Zone in this capital of Southwest China's Sichuan province will devote major efforts to introducing large projects, according to Han Chunlin, chief of the zone's administrative committee.

During the 11th Five-Year Plan (2006-2010), the zone witnessed rapid development and a number of world-class multinationals invested there, enabling Chengdud to be an influential city in the global electronic information industry.

The added value of the electronic information was 19 billion yuan ($2.9 billion), an increase of 8.6 folds over the figure for the 10th Five-Year Plan (2000-2005), Han said.

The zone, which has drawn more than 50 Fortune 500 firms, will continue to introduce major projects during the 12th Five-Year Plan (2011-2015), he said.

By People's Daily Online

 

[Brotherhood]

Three Chinese airports rank among world's best - People's Daily Online February 18, 2011

Hong Kong International Airport

Airports Council International (ACI) announced recently the results of its airport services survey for 2010, and five Asia-Pacific airports swept the "Global Best Airport" award, including Incheon International Airport, Singapore's Changi International Airport, the Hong Kong International Airport, Beijing Capital International Airport and Shanghai Pudong International Airport.

Beijing Capital International Airport

Airports Council International gave awards according to 250,000 air passengers' evaluations last year, which rated airports in 34 categories, such as airport services, facilities and business. The Airports Council International is the highest aviation authority in the aviation field, and it has made airport service quality evaluations on more than 1,700 airports worldwide each year since 1993.

Shanghai Pudong International Airport.

By People's Daily Online

 

[SpArK]

Jaguar, Land Rover and Great Wall explore China tie​

Beijing: Tata Motors’ Jaguar and Land Rover unit is in talks with top Chinese sport utility vehicle maker Great Wall Motor Co. about a potential China tie-up, two executives said on Monday.

Jaguar and Land Rover are among a very few top-line global brands that do not have manufacturing arrangements in China, where BWM, Audi and others have already racking up stellar sales.

“The two companies are exploring opportunities for a cooperative effort. Senior executives of Jaguar and Land Rover came over and visited our plant earlier this month,” a Great Wall executive said.

“It’s fair to say that contacts between the two parties have already passed the initial stage, but no final decision has been reached so far,” a second executive with direct knowledge of the talks said.

Great Wall chairman Wei Jianjun met with Jaguar and Land Rover’s senior executives during their China tour, said the second executive.

The Jaguar and Land Rover unit, which Tata bought from Ford Motor Co. in 2008 for $2.3 billion, was initially loss-making, but it made a turnaround in the last few quarters and posted a profit of Rs. 19.58 billion for the three months ended December.

A tie-up in China, the world’s top auto market, would help solidify Jaguar and Land Rover’s longer term growth, industry insiders said.

Tata Motor units have had contacts with other potential partners in China, including Chery Motor and Jiangling Motors Corp.

Fuji Heavy Industries, Japan’s smallest carmaker, said late last year it was in talks with Chery to make Subaru vehicles in a planned $360 million plant in northern China.

A partnership with Jaguar and Land Rover would also be complementary for Great Wall, which currently makes mass-market products, including sedans and pickup trucks.

Jaguar, Land Rover and Great Wall explore China tie - Corporate News - livemint.com

 

[Arslankhan]

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[Brotherhood]

Beijing-Shanghai high-speed train starts test run - People's Daily Online February 21, 2011

A new high-speed train steamed into Zaozhuang West Station in Zaozhuang City, east China's Shangdong Province on Feb. 20. The new generation of the Beijing-Shanghai high-speed railway started a test run on its Shanghai section that runs from Zaozhuang West Station to Shanghai Hongqiao. The Beijing-Shanghai high-speed rail service will provide a four-hour link between the twin cosmopolitan cities in China and become fully operational late 2011.(Source: Vip.people.com.cn)

 

[Brotherhood]

Nation to be world's top grocery market - People's Daily Online February 21, 2011

China will overtake the US to become the world's biggest grocery market next year and by 2015 it will be joined in the top five by Russia, as well as India and Brazil, according to a study published Saturday.

International food and grocery analyst IGD forecasts China's grocery market would top 1 trillion euros ($1.4 trillion) in 2015.

That compares with 2010 figures which saw the US rack up $911 billion in grocery sales, ahead of China's $817 billion.

By 2015, India will be in third place, with a grocery market worth about $586 billion, ahead of Russia on $539 billion and Brazil on $452 billion, IGD said, adding its forecasts assumed exchange rates remained at their average levels for 2010.

That would see Japan, third placed in 2010, drop out of the top five, India move up from fourth to third and Russia from seventh to fourth.

Brazil is expected to retain the fifth position it captured in 2010 by overtaking France.

"In 2015, the combined grocery markets of Brazil, Russia, India and China will be worth $3 trillion and they will have a collective population of over 3 billion people," said IGD's Joanne Denney-Finch.

Source: Global Times