Chinese Economics Thread

Yearender: China strives to help low-income workers, new grads find jobs
2009-01-01 09:28:27 Print

Special Report: Global Financial Crisis

BEIJING, Jan. 1 (Xinhua) -- Feng Guangping finally sees the hope of having a real house, even a rented one.

"A house means a real home," said Feng, 41, whose current "home" is a 10 sq m compartment in a residential community's vehicle shed in Yinchuan, the capital of northwestern Ningxia Hui Autonomous Region.

He applied unsuccessfully several times for a low-rent house, but he might have better luck this time, thanks to China's 900 billion yuan (about 130 million U.S. dollars) plan for low- and middle-income housing.

"I finally see hope," Fan said after community staffer Li Xuehua told him that his application was in the queue for rental houses, meaning he had qualified.

About 7.5 million low-income urban families and 2.4 million households in shantytowns are expected to benefit from the housing stimulus package over the next three years.

As economic growth slows, both the central and local governments have sought to soften the blow for low-income and unemployed households.

"Without the free skill-training class funded by the government, I'd just be killing time," said Zhang Daxue, a migrant worker who has returned to his hometown in Bijie City, southwestern Guizhou Province.

Zhang worked in a power company in northern Inner Mongolia Autonomous Region with a monthly salary of 3,000 yuan. Due to the impact of the financial crisis, his salary fell to only 1,000 yuan, which he said was difficult to live on. He went home in early November.

He joined an electric-welding class funded by the Baiyun district government of Bijie, which leads to a trade certificate.

Zhang said that even though he was good at his job, the lack of formal training kept his pay low. He said he hoped that with a certificate, he would find a job in his home province, which will start new highway and hydroelectric projects in 2009.

About 7.8 million migrant workers have returned home, partly because of factories that have closed amid the global slowdown, according to the Ministry of Agriculture.

The central government has told local governments to offer free training for unemployed migrant workers to help them find new jobs or start businesses.

In Guizhou, all returning migrant workers can get free training. The local governments will offer subsidies of 500 yuan to 800 yuan to schools that teach these workers certain skills.

"To carry out skill training for migrant workers who return home is totally for their benefit," said Liu Xiqiu, director of the employment and vocational skill development center of Guiyang, the Guizhou provincial capital.

The training will increase the competitiveness of migrant workers and help them find better jobs in eastern coastal areas in the future, said Liu. He said the center will also provide a good platform for them to work inside the province.

China has also urged companies to reduce job cuts. However, millions of college graduates are finding job-hunting hard work.

Li Yunpan, a graduate of the Ningxia-based North University of Nationalities, said he had attended many job fairs in Beijing and Shanghai, but the results were rather disappointing.

"Graduates this year seem to have fewer opportunities as many companies have no hiring plans," said Li, a finance major. "No work means no income."

Education authorities have urged graduates to take grass-roots posts in the countryside and told colleges to keep students enrolled doing research work as part of the effort to reduce employment pressure.

In February, an employment project involving 40 universities and 30 economic development zones across the country will be launched to help graduates find work. Graduates will have a transition period of doing research or working for universities and development zones, before going to career-related jobs. Experts expect the project to provide employment for about 1 million graduates.

China Manufacturing Shrinks for 5th Month on Exports (Update1)
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By Li Yanping

Jan. 2 (Bloomberg) -- China’s manufacturing contracted for a fifth month in December as recessions in the U.S., Europe and Japan sapped demand for exports, a survey showed.

The CLSA China Purchasing Managers’ Index stood at a seasonally adjusted 41.2, compared with a record low of 40.9 in November, CLSA Asia-Pacific Markets said today in an e-mailed statement. A reading below 50 reflects a contraction.

Manufacturers in industries from metals to toys are reducing production or closing down. Aluminum Corp. of China Ltd., the nation’s biggest maker of the metal, and Yunnan Tin Co., the world’s largest producer of tin, cut output as prices fell.

“Chinese manufacturing was very weak in December,” said Eric Fishwick, head of economic research at CLSA in Singapore. “With five back-to-back PMIs signaling contraction, the manufacturing sector, which accounts for 43 percent of the Chinese economy, is close to technical recession.”

The output index fell to a record low of 38.6 last month from 39.2 in November, while the measure of new orders rose to 37 from 36.1. The index of export orders jumped to 33.6 from 28.2, CLSA said.

“Chinese manufacturers reduced the size of their workforces at the fastest rate recorded by the series to date,” today’s report said. An employment index tracked by CLSA has contracted for five consecutive months to 45.2 in December.

Economic Growth

China’s economic growth may have slipped to 5.5 percent last quarter, the weakest pace in at least 15 years, according to Shanghai-based Industrial Bank Co.

The economic slide may intensify pressure on the central bank to keep cutting interest rates after five reductions in three months and as the government rolls out a 4 trillion yuan ($586 billion) spending package announced in November.

Central bank Governor Zhou Xiaochuan pledged Dec. 31 to continue a “flexible” monetary policy. Capital Economics Ltd. forecasts the key one-year lending rate will fall by at least 81 basis points from 5.31 percent in the first half of this year.

A drastic slowdown in industrial-output growth is mainly due to companies running down excess inventory, central bank Vice Governor Yi Gang said Dec. 26. That process may continue until the end of the second quarter, Yi said.

Government Boost

Exports fell for the first time in seven years in November, imports plunged and industrial output grew at the slowest pace in almost a decade. The government has responded to the deepening slowdown with the stimulus package running through 2010, interest-rate cuts and reductions in export taxes.

It has also stalled the yuan’s gains against the dollar since mid-July. A weaker currency helps exporters by keeping down prices in overseas markets.

China needs to boost consumption and prepare more measures to tackle the global financial crisis, the central bank said Dec. 31. It reaffirmed a “moderately loose” monetary policy.

The CLSA index, started in 2004, is based on a survey of more than 400 manufacturing companies and tracks changes in output, orders, employment, inventories and prices.

To contact the reporters on this story: Li Yanping in Beijing at [email protected]
Last Updated: January 1, 2009 21:49 EST

China's 2008 fiscal revenue expected to exceed 6 trillion yuan
2009-01-05 10:46:08 Print

Special Report: Global Financial Crisis
·China's 2008 fiscal revenue is expected to exceed 6 trillion yuan.
·This represented a year-on-year increase of 19 percent.
·Finance Minister Xie expected the downward trend to continue in 2009.

BEIJING, Jan. 5 (Xinhua) -- China's 2008 fiscal revenue is expected to exceed 6 trillion yuan (about 857 billion U.S. dollars), Finance Minister Xie Xuren told a national conference Monday.

This represented a year-on-year increase of 19 percent, comparing with a 32.4 percent growth in 2007.

The country's fiscal revenue increase started to decline in the second half of 2008 because of economic slowdown, corporate profits decline and tax cuts to boost growth amid the global financial crisis, Xie said.

He expected the downward trend to continue in 2009, which wouldmake it "a difficult fiscal year" marked by falling revenue growthand surging expenditure.

The central government has decided to carry out an active fiscal policy and a moderately easy monetary policy in 2009. It has unveiled a four trillion-yuan economic stimulus package to boost growth through enhancing domestic demand.

The country's fiscal revenue rose 20.5 percent year-on-year to 5.8 trillion yuan in the first 11 months last year. The expenditure also increased in the first 11 months, up 23.6 percentto nearly 4.6 trillion yuan.

Fiscal revenue dropped 3.1 percent in November from a year earlier.

In October, the country reported 532.9 billion yuan in fiscal revenue, down 0.3 percent year-on-year, the first decline in 12 years.

According to Xie, reform and development in rural areas would be one of the government's major tasks in 2009. Financial support will be reinforced for farmers, agricultural production and rural areas this year.

The central budget has channeled 102.77 billion yuan in subsidies for farmers in 2008, more than doubled from a year earlier.

The government will continue to optimize the structure of fiscal expenditure this year, spending more money to improve people's quality of life, Xie said.

The country's fiscal expenditure on education is expected to reach 158.2 billion yuan in 2008, up 47 percent from 2007, while that on medical and health care will increase 25.5 percent year-on-year to 83.36 billion yuan. A forecast 276.16 billion yuanis spent to improve social welfare and employment last year, increasing nearly 20 percent.

The government would also spend more money to help boost employment this year, he said.　

China pledges to boost employment in 2009 amid global job cuts
2009-01-06 11:29:55 Print

Special Report: Global Financial Crisis


BEIJING, Jan. 6 (Xinhua) -- Amid waves of job cuts worldwide, China has embarked on active measures to minimize job cuts and has pledged to boost employment this year.

The financial crisis continues to hurt the fourth largest economy and pushed many enterprises to cut their headcounts.

The following provinces are among the many in the country that have striven to stabilize their job markets.

South China's Yangtze River Delta, a major manufacturing center, has been hit unexpectedly hard. Job vacancies in the manufacturing sector stood at 41.43 percent of the total in the eastern Zhejiang Province in the third quarter, a record low in recent years.

The same situation occurred to manufacturers in the eastern Jiangsu Province with job vacancies in the sector accounting for 50.15 percent of the total, down 0.94 percent over the same period last year, and down 4.16 percent from the second quarter.

To cushion the regions from the effects of the global crisis, the Yangtze Delta has set up an early warning system to conduct monitoring of the job situation. At present, six cities including Nanjing, Hangzhou and Ningbo are the trial areas.

The system is designed for regional labor and social security offices to collect employment information, such as the possible job cuts and the planned new recruits in the following week and the actual cuts.

Zhejiang Province will do this in 11 cities this year.

At the end of November, Zhejiang also cut back enterprises' payments of social security funds for employees to mitigate their burden.

Another focus of most cities in the region is to encourage people to start businesses. Jiangsu and Zhejiang provinces pledge to kick in favorable measures including free skill training for laid-off workers.

Officials and experts said the region expects a tougher job picture in the first quarter of this year as the global financial turmoil continued to spread.

Shanghai has launched programs to provide graduates and migrant workers with subsidies for skill training. On Dec. 30, the first employment service base was set up in Shanghai for graduates to gain internship experiences.

The Shanghai government also encouraged business start-ups to increase jobs. The city pledged to limit the registered unemployment rate to below 4.5 percent.

Hong Kong posted its registered unemployment rate at 3.8 percent between September to November, up from 3.5 percent between August and October, an extra 4,600 jobless.

Donald Tsang Yam-kuen, chief executive of Hong Kong Special Administrative Region, said the current government work aimed at guaranteeing stability of job markets.

In early December last year, the Hong Kong government took a series of steps to create more than 60,000 posts in 2009. For example, the spending on infrastructure would be raised to about 40 billion Hong Kong Dollars, which would provide 55,000 jobs, 12,000 more than last year. The government would also add 7,700 public servant jobs.

China's economic powerhouse Guangdong told to tighten belt
2009-01-06 13:39:48 Print

Special Report: Global Financial Crisis

GUANGZHOU, Jan. 6 (Xinhua) -- Despite a 10.1-percent growth in GDP last year, China's economic powerhouse of Guangdong Province was warned of belt-tightening ahead as concern mounts over the effects of the international financial crisis.

"We should tighten our belts and be thrifty in everything this year," Guangdong Governor Huang Huahua was quoted as saying by Guangzhou Daily on Tuesday.

The financial situation for Guangdong would be tough this year as it would face new challenges brought about by the global financial crisis, said Huang.

He added the province would spend money "saved over the past few years" to boost domestic demand this year, while continuing to improve living standards.

Huang made the remarks after briefing a meeting of the provincial Communist Party of China committee that Guangdong was expected to realize 3.57 trillion yuan (522 billion U.S. dollars) in GDP last year, a 10.1 percent increase.

He said thrift was essential even in celebrating the 60th anniversary of the founding of the People's Republic of China, saying the printing of elaborate invitation cards to events and celebrity performances would be viewed as a waste of money.

Guangdong was an agricultural province before China launched the reform and opening-up drive in 1978. At that time, its economic output was about 20 billion yuan, or 5 percent of the national economy.

However, it grew at an average annual rate of 13.45 percent in the past three decades, 3.5 percentage points higher than the national level, and accounted for one-eighth of the national economy in 2007.

A report released by the Guangdong Academy of Social Sciences last week said other provinces, autonomous regions and municipalities were unlikely to replace or overtake Guangdong in economic output in the near future.

China's 2008 trade surplus about $290 billion, total trade $2.55 trillion



BEIJING, Jan 4 (Reuters) - China's trade surplus was about $290 billion in 2008 as total foreign trade reached $2.55 trillion, rising 18 percent from 2007, Xinhua said on Sunday, citing a report by the General Administration of Customs.

That would make the December trade surplus about $34 billion as Xinhua said China had a surplus of $255.95 billion in the first 11 months of the year.

In the first 11 months of 2008, external trade was $2.38 trillion, rising 20.9 percent from a year earlier, but the growth rate fell from 2007, said Xinhua.

The report predicted that as the financial crisis affects the economy and external demand shrinks, China's exports would decline further, said Xinhua. (Reporting by Kirby Chien; Editing by David Holmes) ($=6.84 yuan)

Yuan-settlement test to start

Source: Xinhua | 2009-1-7 | NEWSPAPER EDITION


CHINA'S central bank said yesterday that it plans to implement a pilot program that would settle overseas trade with the Chinese currency instead of the US dollar.

The People's Bank of China will expand financial cooperation with overseas economies and "properly deal with the global financial crisis," the central bank said.

"We'll actively join international efforts to tackle the global financial crisis while safeguarding national interests," the central bank said.

It pledged to implement a pilot program that the State Council announced last month.

China will allow the yuan to be used for settlement between Guangdong Province and the Yangtze River Delta, China's two economic powerhouses, and the special administrative regions of Hong Kong and Macau, according to the central bank.

Meanwhile, exporters in the Guangxi Zhuang Autonomous Region and Yunnan Province in southwestern China will be allowed to use the yuan to settle trade payments with members of the Association of Southeast Asian Nations.

Those moves are expected to facilitate overseas trade, as Chinese exporters might face losses if they continue to be paid in US dollars, analysts said.

The dollar's exchange rate has become more volatile since the global financial crisis began.

The central bank said it will make the exchange rate of the yuan more flexible and keep it "basically stable on a reasonable, balanced level."

There has been speculation that the yuan's appreciation will slow down, which would help Chinese exports maintain price advantages in overseas markets.

Long article from Newsweek.



The Rise of Chinese Banks

Excerpt:

"The global economic contagion has spread to China, sending shudders around the world. Chinese leaders are worried about domestic social unrest, while U.S. leaders are worried about whether China will continue loading up on Treasury securities as our budget deficit explodes.

Yet one of the few bright spots is the surprising strength of China's banking system. Remember when that system seemed on the verge of collapse? That's where the banks stood until the reforms of the past 10 years.

But now the picture is completely different. As former World Bank official Pieter Bottelier, now a professor at Johns Hopkins, notes, "The irony is that 10 years ago, China's banks were among the weakest in the world and today they are among the strongest, however primitive their system."

How did they turn things around?"

Will they outgrow American financial institutions?

(click to read further)

crobato said:

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Yuan-settlement test to start

Source: Xinhua | 2009-1-7 | NEWSPAPER EDITION

...snip...

Click to expand...

Can't help but think this is a shot across the bow for Obama, or for something else...

Chinese PC giant to cut workforce

One of the world's largest computer manufacturers, Chinese-based Lenovo, says it is to cut about 2,500 jobs around the world.

Lenovo blamed the cuts, which amount to nearly 11% of its total workforce, on the global economic downturn and a fall in demand for PCs.

It said the cuts were part of efforts to save $300m (£200m) in the coming financial year.

They were, it argued, essential if the company was to remain competitive.

"As hard as this news is for all of our Lenovo employees, we believe the steps we are taking today are necessary for Lenovo to compete in today's economy," said chief executive William J Amelio.

The company also said it expected to see losses in the final quarter of the financial year.

The statement said Lenovo had been hit by "the unprecedented global economic challenges facing the world, resulting in a reducing demand for personal computers and related products".

It also said that a reduction in demand from China, historically a major Lenovo market, had affected the company's fortunes.

Lenovo's net profits dropped 78% in the three months until the end of September.