Chinese Economics Thread

Discussion in 'Members' Club Room' started by Norfolk, Jan 10, 2008.

  1. Norfolk
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    Norfolk Junior Member
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    PPI shoots up to 3-year high, by Katherine Ng, The Standard, Tuesday, February 19, 2008:

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    A little bit of news; important news, but not a lot of news. However, although some of the inflationary rise is due to New Year's festivities, there is longer-term inflationary pressure still at work, and that of course is what is of concern here. It could easily take six months, or rather a year, to truly gauge the strength and potential for persistence of the inflationary pressures, as well as their long-term impact upon the economy. External factors, such as the mortage bubble in the U.S. and bank losses and tax-fraud in Europe will not help any.
     
  2. Schumacher
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    Schumacher Senior Member

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    As far as short term influences, I think the pork situation plays a bigger part than any new yr festivities. For long term, the pressure is definitely there, just look at the world prices for anything from oil to agricultures like wheat & soy etc.
    Read from financial sources that the USN's design for their new ships is factoring in oil price of US$225.
    Being a financial source, there was no details on the types of ships or timeframe.
     
  3. Schumacher
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    Schumacher Senior Member

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    With recent posts abt inflation, China has chosen has interesting time to implement a long planned tax on fuel oil as part of its policy to reduce wastage in energy intensive sectors.


    Title : China charges full consumption tax for fuel oil
    By :
    Date : 20 February 2008 1652 hrs (SST)
    URL : http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/330012/1/.html

    SHANGHAI: China began charging the full consumption tax on fuel oil and three other oil products retroactively from January 1, tripling the previous level of taxation, state media reported Wednesday.

    The government raised the consumption tax for fuel oil to 0.1 yuan (one US cent) per litre (0.26 gallon) after having collected only 30 per cent of the tax since it was first introduced in April 2006, the China Securities Journal said.

    The paper cited a joint statement from the finance ministry and tax administration.

    Naptha, a feedstock for producing high octane gasoline and other petrochemical products, lubricants and solvent oil, would also be charged at a full rate of 0.2 yuan per litre, according to the statement.

    China started levying a consumption tax on the four oil products almost two years ago as part of efforts to encourage energy saving and curb development of highly polluting and resource-intensive sectors.

    But the timing of the latest move came as a surprise to many analysts, who pointed out China is now experiencing its worst inflation in over 11 years.

    Consumer prices were up 7.1 per cent in January from a year earlier.

    "I cannot figure out what the intention of the policy makers is in selecting such a timing to charge the full tax rate," said Wang Jing, an analyst with Oriental Securities. - AFP/ac
     
  4. Norfolk
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    Norfolk Junior Member
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    Some news reports continuing in Schumacher's vein, and then diverging to issues that do not originate in China, but will certainly have an influence (at LexisNexis.com):

    China inflation rises to 7.1%, biggest increase in a decade, by Keith Bradsher, The International Herald Tribune, February 20, 2008:


    More at the link.
    Steel firm in Russia expanding into China, by Guy Faulconbridge, Reuters, February 20, 2008:

    When it comes to heavy industry in general, and steel in particular, significant news and deals catch my eye - more at the link.

    Dollar pressured vs. most major counterparts; loonie, pound drop, by William L. Watts, MarketWatch, February 19, 2008:



    More at the link. Watch this one in the coming months.

    Inflationary pressures continue to build globally, even in the midst of economic softening in the U.s. and especially at the same time as major Western financial institutions continue to repeat bad old habits and then get ccaught out on them, adding insecurity to an already unstable econmic situation.

    And finally, by itself, just to confirm from a Mainland source:

    Inflation rises to 11-year-high as food costs soar,
    by Katherine Ng, The Standard, 20 February, 2008:


     
    #54 Norfolk, Feb 20, 2008
    Last edited: Feb 20, 2008
  5. Schumacher
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    Schumacher Senior Member

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    China looking to invest in Japan's energy sector. The strategic & military aspects of this relates to the dispute in the East China Sea.
    A possible way forward for the dispute may be a joint exploration with China holding a significant stake in the Japanese firm doing the exploration.


    http://news.asiaone.com/News/The+Straits+Times/Story/A1Story20080224-51106.html

    China state fund may invest in Japanese energy

    LONDON - CHINA'S sovereign wealth fund is poised to invest US$10 billion (S$14 billion) in Japan and is initially expected to set its sights on the energy sector, The Times newspaper reports.


    Sun, Feb 24, 2008
    The Straits Times
    LONDON - CHINA'S sovereign wealth fund is poised to invest US$10 billion (S$14 billion) in Japan and is initially expected to set its sights on the energy sector, The Times newspaper reports.

    Sources in the Japanese government told the British newspaper the China Investment Corporation (CIC) may be considering a 'sizeable stake' in one of the country's largest oil and gas companies, Inpex.

    But the investment could be controversial as 'Inpex is among a handful of listed groups that are of critical strategic importance to Japan', said The Times.

    Inpex, said the newspaper, is also expected to be Japan's 'national champion' as the country pushes to develop resources in the East China Sea.

    A dispute over gas exploration rights in the East China Sea has been a sticking point in Sino- Japanese ties.

    Analysts have speculated that the discussion of a possible CIC stake in Inpex might portend a 'friendship' investment ahead of the upcoming visit to Tokyo by Chinese President Hu Jintao.

    The investment plans are understood to have been formed after a trip by CIC's senior management to Tokyo - the US$200 billion fund's first official visit to Japan since its creation in September last year.



    Copyright ©2007 Singapore Press Holdings Ltd. Co. Regn. No. 198402868E. All rights reserved.
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  6. Autumn Child
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    Autumn Child Junior Member

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    Bad news for Chinese banks...

     
  7. Autumn Child
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    Autumn Child Junior Member

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    Sooner than I expected...
     
  8. Norfolk
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    Norfolk Junior Member
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    A couple of news items:

    China inflation at an 11-year high, City Bulletin, The Daily Telegraph, Monday, March 10, 2008 (via LexisNexis News):

    A news blurb, stating little more than this, other than to say that food prices, which rose 22% over last years' level, was to blame.

    CIC dispels fund concerns, by Katherine Ng, The Standard, Monday, March 10, 2008:

    More at the link. Sovereign Wealth Funds are quite controversial these days, but as The Standard's article relates, the first $8 billion dollar interest payment will be almost entirely met by the %7.8 billion dollars in dividends generated by the Funds investments. It is certainly a concern for other Governments when large SWF's are present in strength in their economies; after all, an SWF is an instrument of the policy of a foreign Government. That said, given the behaviour of any number of private financial institutions and large corporations and the serious economic consequences of their mistakes and malfeasances, it would seem that the scrutiny that is attaching to SWFs should be applied in at least similar measure to known problem areas. Economics may be global these days, but politics is still quite local when it finds itself at the service of particular interests.
     
  9. SampanViking
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    SampanViking The Capitalist
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    Those figures do not make a huge amount of sense to me.

    Assuming that the US maintains an average growth rate of about 1.5% pa, then we have China making about 10% pa and on target to overtake the US bu 2025. For China then to only grow only another 30% in the subsequent 25 years:confused: means a sudden plummit in the growth rate to between 2 and 3% per annum.

    Surely the article means being 130% bigger than Americas, which would mean a rather more believable average growth rate of 5% per annum?
     
  10. Norfolk
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    CHINA Western turmoil hits trade surplus, by Richard Spencer, The Daily Telegraph, Tuesday, March 11, 2008 (via LexisNexis News):

    More at the link. China is in a bit of a quandary here, as the economy continues to expand rapidly, while both consumption and price inflation (especially for food, fuel, and other vital commodities) rise quickly as well, placing the economic system under increasing strain. The earnings from foreign exports and investments, whilst modest in comparison to the domestic economy, provide a modest margin of additional "safety" against internal domestic economic pressures; as foreign exports decline in response to deteriorating economic conditions elsewhere, and imports of vital commodities (especially) increase in both volume and price, this "safety" margin shrinks.

    US slowdown ripples through to mainland, by Gita Dhungana, The Standard, Tuesday, March 11, 2008:


    More at the link. Just to add to the previous article from another perspective.

    China's strong growth to continue after Olympics, by Rupa Damodaran, New Straits Times, Tuesday, March 11, 2008 (via LexisNexis News):

    More at the link. All is not gloom and doom, as this article reports that a frenetic 10% growth rate is still on the table for China this year, despite an apparent decline in exports. There are some countries that would love to have a "Problem" like this. Add to that the potential future earnings afforded by Sovereign Wealth Funds (drawing upon China's stupendous foreign reserves), the country is positioned to turn itself into the financial nexis of Asia, if not the world.
     
    #60 Norfolk, Mar 11, 2008
    Last edited: Mar 11, 2008
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