Chinese Economics Thread

[Norfolk]

CSRC Issues Draft Rules on IPOs, by Wang Yuqian, Caixin Online, 2 April, 2012:

(Beijing) – China's securities regulator rolled out long-awaited revisions to initial public offering rules with measures designed to increase price monitoring oversight.

The rules issued by the China Securities Regulatory Commission April 1 state that companies with price-to-earnings ratios that are 25 percent or more higher than the industrial average during the IPO inquiry are now required to publicly release pricing inquiry information and corresponding risk analyses.

More at the link. I can't tell if this is a meaningful move in the right direction, or if there is really a lot less to this than meets the eye. Full disclosure of due diligence is required only if the proposed IPO offering is 25% or more over and above the given average? And elimination of the 3-month holding requirement for institutional investors? I may well be missing something(s) important, but something here doesn't seem quite right.

[escobar]

Diseases threaten economic growth

China, the world's biggest cigarette market, may suffer slower economic growth because of cancer and other chronic diseases that are hurting the labor force, Minister of Health Chen Zhu said.

Non-communicable diseases which cause prolonged sickness are responsible for four out of five deaths in China, compared with about 63 percent globally, and absorb about 70 percent of the nation's health spending, Chen said in an interview on Monday. Fighting the threat requires tighter scrutiny of the tobacco industry, linked to 1 million deaths in China

[Equation]

Diseases threaten economic growth

I don't think anyone could ever take smoking away from many Asian men. I don't smoke myself, but I do enjoy a good cigar once awhile.

---------- Post added at 10:25 AM ---------- Previous post was at 10:20 AM ----------

Only ignorant will say China's economy is still doing well.
Many of of my posts highlight the difficulties faced by china's economy.

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Yeah, but nobody has tackled those difficulties in multiple fields better than China has in recent years. As long as the Central government and Central banks are keeping an eye on the ball and make adjustments and decisions for the best of the nation, they'll be doing fine.

[Quickie]

Measured in PPP, the figure will probably be much higher.

Economy Watch - China overtakes US as world's top grocery market

China overtakes US as world's top grocery market
Carlos Barria / Reuters

A man shops at a supermarket in downtown Shanghai in this file photograph.
By John W. Schoen, Senior Producer
The Chinese economy may have slowed from its red-hot growth pace, but that hasn’t taken a bite out of consumer demand for groceries.

China has overtaken the United States as the world’s biggest food and grocery retail market, according to a report from research firm IGD, and is expected to continue growing at a rapid clip.

IGD said the Chinese grocery sector hit 607 billion pounds ($964 billion) in 2011 versus $908 billion for the U.S.

By 2015, Chinese households will spend roughly $1.6 trillion on groceries, IGD predicted, three times the amount spent in 2006. The U.S. market is expected to hit roughly $1 trillion by 2015.

Advertise | AdChoices“This rapid expansion (in China) has been fuelled by three main factors: rapid economic growth, population and rising food inflation,” said Joanne Denney-Finch, IGD’s chief executive.

China’s appetite for groceries is being fueled by the ongoing rise in wages among an expanding middle class, part of the government’s 30-year-old plan to transform the nation’s economy.

Though the economy came back strongly after the global recession in 2007, growth has been slowing somewhat since then. After peaking in 2010 at 10.4 percent annual growth, China’s GDP is expected to expand by 8.6 percent this year, according to estimates from Goldman Sachs.

That’s still rapid enough to continue to boost the spending power of Chinese households at a healthy clip.

“Sustained, strong wage increases should support consumption, helping the government achieve one of its key aims – the rebalancing of the economy away from its dependence on exports and investment,” according to Capital Economics Asia economists Gareth Leather and Mark Williams.

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Much of the increased consumption is the result of rapid inflation, as strong demand for a variety of food and other commodities pushes up prices.

That’s expected to continue. Between 2011 and 2015, the growth of China’s grocery market will grow by 10.9 percent, double the rate of growth for the U.S.

Though China’s early stages of economic growth were largely confined to coastal cities, the demand for consumer goods such as groceries is rapidly spreading inland. By 2025, according to IGS, there will be over 200 Chinese cities with a population of over a million people.
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[bladerunner]

[QUOTE=Equation;184315]I don't think anyone could ever take smoking away from many Asian men. I don't smoke myself, but I do enjoy a good cigar once awhile.[COLOR="Silver"]
O.T.
Me to . A good cigar A Good bottle of Port after dinner , and good company. Nothing comes better.

Does smoking tobacco cause cancer, or is it the additives within the tobacco?

---------- Post added at 04:32 PM ---------- Previous post was at 04:20 PM ----------

Though China’s early stages of economic growth were largely confined to coastal cities, the demand for consumer goods such as groceries is rapidly spreading inland. By 2025, according to IGS, there will be over 200 Chinese cities with a population of over a million people.
.

I dont get it. Inland people have never bought food or personal hygiene products such as tooth brush, soap, toilet paper before?

[Equation]

[QUOTE=bladerunner;184357]

I don't think anyone could ever take smoking away from many Asian men. I don't smoke myself, but I do enjoy a good cigar once awhile.[COLOR="Silver"]
O.T.
Me to . A good cigar A Good bottle of Port after dinner , and good company. Nothing comes better.

Does smoking tobacco cause cancer, or is it the additives within the tobacco?[COLOR="Silver"]

---------- Post added at 04:32 PM ---------- Previous post was at 04:20 PM ----------

It's the nicotine and other additives that makes it bad. Cigar is mostly pure tobacco, less dangerous than cigarettes and marijuana.

---------- Post added at 10:30 PM ---------- Previous post was at 10:27 PM ----------

[QUOTE=bladerunner;184357]

I dont get it. Inland people have never bought food or personal hygiene products such as tooth brush, soap, toilet paper before?

LOL...I guess inland people or country folks can always do the Asian squat and banana leaves for wiping. Hey biodegradable and it's green concept right?

[escobar]

Expanded QFII quotas signal of faster opening up


Chinese regulators are promoting the opening-up of the capital markets by expanding quotas for foreign investment at a record pace, aiming to attract more overseas funds to boost the economy and accelerate the market-based reform of the financial system.

These moves might be the starting point for an accelerated capital account opening, and more foreign money inflows are expected to be involved in China's long-term investment projects in the coming months, analysts said.

The China Securities Regulatory Commission has decided to raise the amount available for qualified foreign institutional investors, or QFII, by $50 billion, the largest increase since the launching of the pilot program in 2002.

The total QFII quotas now stand at $80 billion, a statement from the CSRC said on its website on Tuesday.

A surge of inward foreign investment could boost the country's economic development, which is being affected by slowing exports and a cooling property sector, said Cao Yuanzheng, chief economist with the Bank of China Ltd.

"It is a signal of the further liberalization of China's capital account, which is laying the foundation for the complete convertibility of the yuan and pushing a deeper reform of the financial system," Cao said.

The government may continue to improve the QFII investment program to draw more foreign long-term funds into the domestic capital market, said the CSRC statement.

Premier Wen Jiabao said on Tuesday in Fujian province that slower GDP growth and the potential expansion of companies' losses might figure prominently in this year's economic situation.

Wen stated a goal at the start of this year to draw international investment into the domestic capital market.

"The country should ensure certain liquidity in the financial market and maintain a proper amount of bank loans," said Wen, who pointed out that the current economic situation is "steady and sound".

Since 2003, China's regulators have approved a total of $24.6 billion to allow 129 foreign institutes to launch investment services in the mainland.

As of March 23 this year, 74.5 percent of the investment volume under the QFII program had been injected into the domestic stock market, with 13.7 percent in bonds and 9.6 percent in bank deposits, the CSRC statement said.

About 1.1 percent of the A-share market's value comes from QFII investment, the statement said.

"Good days are coming, thanks to the large expansion of QFII quotas," said Philippe Couvrecelle, executive chairman of the board with La Compagnie Financiere Edmond de Rothschild Banque, a French asset management company.

In January, the company doubled the total amount under the QFII program to $200 million, compared with the level when it obtained its investment license in 2006. "We are seeking a permanent, effective mechanism with support from China's regulators to invest in the A-share market," said Couvrecelle.

China's regulators approved QFII licenses for 19 new foreign investment institutions between Jan 1 and March 9, granting a record high $2.91 billion in quotas, according to the State Administration of Foreign Exchange.

The total amount of QFII quotas in 2011 was $1.9 billion.

[Quickie]

I dont get it. Inland people have never bought food or personal hygiene products such as tooth brush, soap, toilet paper before?

You've stated the most basic of daily necessities with little room of growth. Food items form the major part of groceries and this is where we should see further growth as consumers' income increases and more consumers prefer to shop in convenience in shops and supermarkets in preference to going to the wet market.

[Norfolk]

A bit of a daily news round-up.

GM's China sales hit record high, AFP, South China Morning Post, 5 April, 2012:

US auto giant General Motors said on Thursday that its China sales set a record for March, despite an overall slowdown in the world's biggest car market.

The company, the world’s biggest automaker by sales, sold 257,944 vehicles in March, up more than 10 per cent from the same month last year, and its highest total for the month, according to a company statement.

China May Broaden Property Tax Base as its Effects Limited, by Bao Jiji and Hu Junying, Caijing Magazine, 5 April, 2012:

The current scheme of property tax has not included stockpiles of houses, or second-hand homes, which could have limited the role of the tax, and led analysts and researchers to anticipate a broader tax base.

Growth Slows for White Goods Makers In 2011, Caixin Online, 5 April, 2012:

Qingdao Haier Co. (SSE: 600690), the listed unit of China's largest home appliance manufacturer, Haier Group, reported 20.1 percent growth and net profit of 2.7 billion yuan in 2011. However, the growth rate dropped 57.4 percent from a year earlier.

A similar trend can be found with other major white goods makers such as Guangdong Midea Electric Appliances Co. (SZSE: 000527) and Gree Electric Appliances Inc. of Zhuhai (SZSE: 000651), whose profits grew last year, but at much slower paces.

Smaller firms felt even more pain in 2011. Hefei Meiling Co. (SZSE: 000521) saw a 67.3 percent fall in net profit to 106.6 million yuan, while net profits shrank 61.2 percent at Hisense Kelon Electrical Holdings Co. (SZSE: 000921). Television maker Konka Group (SZSE: 000016) expected net profit to fall by up to 88.1 percent.

This last piece is probably at least somewhat indicative of overall recent economic conditions on the ground. Guess we'll know one way or another in either a few or several more month's time.

[bladerunner]

You've stated the most basic of daily necessities with little room of growth. Food items form the major part of groceries and this is where we should see further growth as consumers' income increases and more consumers prefer to shop in convenience in shops and supermarkets in preference to going to the wet market.

Oh Right ... gotcha

Quick somebody, translate all the literature on the dangers of eating processed food into Chinese (wink)

OT. One of my cousins uncle was the first to introduce processed Chinese food into the consumer market in the early 1960's.in NZ

A couple of examples of the many products on offer were "Instant Rice"...... yuk. Another was "Frozen Pork Dim Sims." It was served up and eaten by many Chinese in Cafeterias with heaps of tomatoe sauce ( ketchup?)

[Quickie]

Oh Right ... gotcha

Quick somebody, translate all the literature on the dangers of eating processed food into Chinese (wink)

OT. One of my cousins uncle was the first to introduce processed Chinese food into the consumer market in the early 1960's.in NZ

A couple of examples of the many products on offer were "Instant Rice"...... yuk. Another was "Frozen Pork Dim Sims." It was served up and eaten by many Chinese in Cafeterias with heaps of tomatoe sauce ( ketchup?)

Supermarkets sell fresh farm produce too, sometimes cheaper than you would find in wet markets.

[escobar]

China becomes Russia's top trade partner in first two months of 2012

China has become Russia's top trade partner in the first two months of 2012, according to a report released by the Russian Federal Customs Service on Friday.

According to the report, in the first two months of this year, China-Russia trade turnover rose 21.1 percent year-on-year, reaching 13.3 billion U.S. dollars.The report also showed that Russia posted a trade surplus of 42. 5 billion dollars for the first two months of 2012, a 26.9-percent year-on-year increase.

Recent years have witnessed a rapid growth of Sino-Russian trade volume. China became the largest trade partner of Russia, overtaking Germany, in 2010 for the first time. In 2011, bilateral trade reached a record high of 80 billion dollars.The two countries have set a goal of lifting bilateral trade to 100 billion dollars by 2015 and to 200 billion by 2020.

Chinese imports from Russia are mainly those of energy sources, such as crude oil, which is mostly transported by rail, and electricity exports from neighboring Siberian and Far Eastern regions. China’s main export to russia are machinery and electronic goods.

[Equation]

Here's an interesting read on the ECONONOMIST this week issue. I bought it and read it and it covers a lot of thing that this forum has already discussed about too. Check it out.

Starbucks Digital Network in partnership with Yahoo!


China’s military rise

"NO MATTER how often China has emphasised the idea of a peaceful rise, the pace and nature of its military modernisation inevitably cause alarm. As America and the big European powers reduce their defence spending, China looks likely to maintain the past decade’s increases of about 12% a year. Even though its defence budget is less than a quarter the size of America’s today, China’s generals are ambitious. The country is on course to become the world’s largest military spender in just 20 years or so (see article).

Much of its effort is aimed at deterring America from intervening in a future crisis over Taiwan. China is investing heavily in “asymmetric capabilities” designed to blunt America’s once-overwhelming capacity to project power in the region. This “anti-access/area denial” approach includes thousands of accurate land-based ballistic and cruise missiles, modern jets with anti-ship missiles, a fleet of submarines (both conventionally and nuclear-powered), long-range radars and surveillance satellites, and cyber and space weapons intended to “blind” American forces. Most talked about is a new ballistic missile said to be able to put a manoeuvrable warhead onto the deck of an aircraft-carrier 2,700km (1,700 miles) out at sea."

[SampanViking]

Reading a large proportion of the media regarding China is a profoundly boring and quite depressing experience. On the one hand when the economy powers ahead its out of control, overheating and about to crash and burn, while when the brakes are applied its slowing down, running out of steam and about to collapse.

I have however noticed something and wonder if there is a truth here that dare not speak its name.

Just over a year ago many of the world economies were in recovery mode and China was enjoying double digit growth albeit with to high for comfort inflation. The answer was to apply the brakes and take out the head steam, reduce inflation and take growth to a more steady 7 - 9% range with inflation taken back to about 3%. Just as these measures were taking effect however the other major economies suffered a slowdown with crises in the US over Federal dept levels and in the EU a debt crisis in some Euroland countries that threatened to become a full blown currency crisis.

The slow down in the US and EU caused a sharp drop in export output in the PRC which has prompted Beijing to start easing off the brakes and increase liquidity plus consider a range of further reforms, including some to allow Private Enterprises access to a wider range of sources of finance.

So question. The PRC has been running the throttle since 2008 to keep the world economy going and to give some space to the US/EU to recover and provide its share of momentum to allow China to keep moving forward when the brakes were applied. When the time came though the Western recovery faltered and China found itself slowing too quickly.
Has China just been unlucky in timing or is the global relationship now far more symbiotic than people are prepared to admit and that China is indeed the main driver of the world economy and not any longer the USA?

[plawolf]

Interesting theory there Sampan. It has been well established for a number of years now that China is the main engine for world economic growth, and the symbiotic relationship between China and the US/EU is indeed extremely strong.

However, in this instance, I think it is just a co-incidence that the economies of the US and EU suffered terrible crashes just as China managed to ease the rate of it's own growth.

The problems that the US and EU faces are pretty much exclusively home grown, with too much personal and national debt and 'clever' bankers having a free-for-all with complex derivatives that not even they themselves truly understands.

The slowdown of Chinese growth would not have had much of an impact on US or European financial sectors, as Chinese growth merely slowed modestly, and did not stop, so few people playing the market would have anything from their investments.

Besides, with the western media the way it is as you have observed yourself, and especially with the US elections coming up, China-bashing and China-Blaming has pretty much become the favorite US national past time. Do you think that none of the US media outlets or politicians would be trying to pin the blame for the US financial collapse on China if there was a way to plausibly to do it?

If there was a 'smoking gun', you would not have 'experts' trying to blame the financial collapse on China saving too much money and giving Americans the opportunity to borrow way more than they could ever afford. I don't think even the most rabid China hater really buys that line of 'reasoning'. Might as well blame supermarkets having too much food on their shelves for obesity.