CottageLV
Banned Idiot
Currently China's big problem is lack of international reserve of Yuan. No body uses Yuan, so they can't collect invisible taxes like US does to the rest of the world.
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Chinese Economics Thread
- Thread starter Norfolk
- Start date
Currently China's big problem is lack of international reserve of Yuan. No body uses Yuan, so they can't collect invisible taxes like US does to the rest of the world.
escobar
Brigadier
A debt-laden Spanish construction firm became the latest European company to unload assets onto eager Chinese buyers, as Europe's debt woes force firms to look to China for cash.
State Grid Corp., China's government controlled power-grid operator, said Tuesday it would buy high-voltage electricity transmission assets in Brazil from Spain's Actividades de Construccion y Servicios SA ACS. for 1.86 billion reais ($938.2 million), including debt. The deal is State Grid's second investment in Brazil and its fourth major investment overseas, and is the most recent in a string of deals in which a European company has looked to exit an investment amid financial troubles facing the region.
ACS's standing has weaken because of its debts and the falling value of investments made during Spain's boom years. Chairman Florentino Pérez, who is also the president of Spain's soccer club Real Madrid CF, led ACS's expansion when liquidity was abundant and Spain's economy was booming on the back of a real-estate bubble that imploded about five years ago.
As credit dried up, ACS began to cut down on debt by shedding assets. ACS currently has more than €9.33 billion ($11.70 billion) in debt, about a half of what it had a few years ago...
escobar
Brigadier
After robust trade in goods over the past decade helped catapult China to become the second largest economy in the world, the country is now looking to its service sector to achieve more balanced growth amid external jitters.
Speaking at the opening ceremony of the first Beijing International Fair for Trade in Service on Monday, Premier Wen Jiabao called for increased opening up in the country's service sector and encouraged local service providers to go global to boost the industry's share in foreign trade.
"Fostering growth in the service sector is the main direction for China's economic transformation and restructuring, as well as an internal call to improve people's living standards," Wen said.
As the first international fair tailored for service trade, the event has attracted more than 22,000 service providers from 82 countries and regions to foster service trade.
The latest emphasis on service trade is part of China's efforts to drive growth in the sector to steady its trade expansion at a time when a slowing domestic economy and weak external demands are hurting demand for China-made products.
"Against the backdrop of intensifying uncertainties and risks of global economic downturns, the development of the service sector and service trade will become the new growth pole for China," said Qiu Hong, assistant commerce minister.
Although huge demands had fueled double-digit growth in the service industry over the past years, its low share in the economic output and a persistent deficit had hurt the sector.
In terms of service trade volume, China now ranks fourth in the world, with 419.1 billion U.S. dollars in 2011. But the ratio of the service trade output to total economic output, 43 percent, was still much lower than the 70 percent in most developed countries, Qiu said.
To boost the share of service industry in the economy, China stated in the 12th Five-Year Plan that it aims to bring the sector's proportion of gross domestic product to 47 percent by 2015 and to make it a strategic focus for the country's industrial restructuring and upgrading to ease reliance on traditional manufacturing.
Since China's entry to the World Trade Organization a decade ago, its foreign trade, mostly trade in goods, had seen torrid growth on the back of cheap material and labor costs. But now with rising costs, China is losing its edge in the traditional manufacturing sector.
"China's trade in goods is mostly in processing, which could easily be transferred to other countries if costs keep rising. In contrast, the service trade has ample room for growth," said Zhou Mi, an analyst with China Academy of International Trade and Economic Cooperation of Ministry of Commerce.
The sector's development plan for 2011-2015 unveiled last year targets an annual expansion of 11 percent during the period, higher than the 10 percent growth in commodities trade, and it also promised wider and deeper access for foreign businesses.
Premier Wen said Monday that China's total import of services will top 1.25 trillion U.S. dollars over the coming 5 years.
While the planned expansion offers growth opportunities for domestic service providers, it also puts them in stiff competition with their foreign counterparts as China's service trade has registered deficits for more than a decade.
In 2010, of the 12 categories of service trades defined by the World Trade Organization, China only reported surplus in construction, with other technology- and knowledge-intensive areas, such as insurance and patent use, all logging billions of U.S. dollars in deficit.
Huang Hai, vice director of China Association of Trade in Service, said China remains at the lower ends in the international service trade market such as construction, transport and tourism, and in areas of intellectual patents and financials, there is still a big gap with other developed countries.
To catch up, China has been taking steps to push forward cooperation with international service providers, and the hosting of the Beijing fair is expected to facilitate the efforts.
"While using the Beijing fair as a platform for cooperation in the service sector, we also hope to bring in advanced practices and experiences from our foreign counterparts to refine the domestic industry," said Qiu, adding that an underdeveloped service industry will hamper progress in the manufacturing sector.
Hosted by the Ministry of Commerce and the Beijing municipal government, the fair, akin to China's major commodities fair -- Canton Fair -- is an annual event offering a platform for global service buyers and sellers.
escobar
Brigadier
Nearly one quarter of European investors said they will consider shifting investment to markets outside China, while nearly three quarters said China is among their top three destinations for future investment, a survey released on Tuesday showed.
A slowing economy and rising labor costs were seen as the top risks for companies operating in China, the European Chamber of Commerce in China said in its annual business confidence survey.
"A previously reliable stream of foreign direct investment may slow and planned investments may be shifted to other emerging markets if reform continues to stall and costs rise," said Davide Cucino, president of the chamber.
FDI in China from the European Union, its largest trading partner, slumped 27.9 percent year-on-year to $1.9 billion in the first four months, according to the Ministry of Commerce.
Rising labor costs are regarded as a significant concern by 63 percent of 557 respondents, especially employers in the Pearl River Delta in South China, said the survey.
Cost reduction is becoming a more frequently used strategy by European companies to sharpen their competitiveness. The survey showed a growing number of companies looking to cut costs rather than increase revenue in China....
escobar
Brigadier
China plans to launch global crude oil futures within the year and allow global players to join in the trade, a top official said yesterday, as the world's second largest oil consumer aims to increase its influence over global pricing.
"The launch of the crude oil futures symbolizes the innovation and gradual opening-up of China's commodities futures," Wang Lihua, chairwoman of the Shanghai Futures Exchange (SHFE), said at a forum in Shanghai yesterday.
Wang said the bourse had already completed a draft proposal, which includes regulations on offshore trading, oil benchmark, as well as related supervision rules.
It had started recruiting experienced professionals from around the globe, he said.
"This is a necessary step for China to increase its say in the pricing of global crude oil in a bid to cope with fluctuating oil prices, as the country is even more dependent on oil imports than before," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times yesterday.
Domestic private refineries, which have limited access to crude oil, also welcomed the launch of the futures trading.
"It is long-expected news for us, as we can directly engage in crude oil transactions via the futures bourse," Chen Peng, a manager at Shandong Shtar Science & Technology Group, a refinery run by China University of Petroleum, told the Global Times yesterday.
The private refineries in China account for 30 percent of the country's oil refining capacity, but are not permitted by the government to import crude oil directly. Only the State-owned refineries like Sinopec have the import rights.
But Lin of Xiamen University said it will take at least five to 10 years to develop a mature crude oil futures bourse, which its initiator expects will compete with other well-known international futures like the Brent Crude Oil Futures.
"Global investors will hesitate to join in the trading in the initial period if crude oil imports continue to be highly controlled by the State-owned refineries, as it may cause problems when the futures are due to be delivered," Lin noted.
The limited convertibility of the yuan is another technical challenge for foreign players' participation. Wang Lihua of the SHFE said the futures contract could be priced in the yuan or the US dollar, but did not specify how it will work.
"The biggest challenge for the launch of the new futures is close and systematic cooperation among different official departments, including the State Administration of Foreign Exchange and National Development and Reform Commission," Li Zhoulei, a petroleum analyst from Shanghai Cifco Futures, told the Global Times yesterday.
The SHFE plans to launch more futures in the steel sector, including steel plates and iron ore. Other financial instruments like government bond futures are also under study, so as to hedge risks for enterprises, according to Wang.
escobar
Brigadier
China's top economic planner has dismissed speculation that a large-scale stimulus package is being prepared, amid calls from analysts for greater focus to be placed on growth stabilization rather than sharp investment in emerging industries.
The National Development and Reform Commission (NDRC) told the Global Times yesterday that they have not released any information about a new stimulus plan.
The denial came amid mounting speculation that China plans to unveil a massive new stimulus plan - similar to the 4-trillion-yuan ($631 billion) drive launched in 2008 during the global economic recession - to spur its slowing economy.
Luo Guosan, a deputy director of the investment office at the NDRC, said earlier this week that it was unlikely Beijing would approve another big spending plan to boost the economy as "it is not sustainable," the Chongqing Commercial Daily reported.
"There's little chance for another large-scale stimulus package since the last round has left lingering problems, such as mounted debt for local governments and blind expansion in some industries," Li Weisen, a deputy dean of the School of Economics at Fudan University, told the Global Times yesterday, adding that both domestic and overseas markets are sensitive to any policy change.
After 30 years of growth, it is "inevitable" that China is easing the brakes on its economy, Li said, adding that local governments should focus on stabilizing the slowdown.
Despite this, the country is accelerating reviews and approvals of major projects. More than 100 projects were approved on May 21 alone, the NDRC said on its website.
Two iron and steel projects in Guangdong Province and the Guangxi Zhuang Autonomous Region were approved days ago with more than 130 billion yuan in investment, fueling speculation that the central government could be on the verge of releasing another stimulus package.
Li noted the government faces a dilemma, saying that on one hand it could not launch large-scale stimulus measures for fear of turbulence in the banking sector, while on the other hand must act to boost production and ensure steady growth.
Industrial output expanded at its slowest annual pace in April in nearly three years, while fixed asset investment growth dipped to its lowest in almost a decade, according to Reuters.
Local governments are craving new projects to boost their economies. A photograph of Wang Zhongbing, mayor of Zhanjiang, Guangdong Province, kissing documents approving a 70-billion-yuan investment for a steel plant in front of an NDRC building attracted widespread attention.
He Jun, a senior analyst with Beijing Anbound Intelligence Company, told the Global Times yesterday that local governments would swarm to invest in industries with high-energy consumption, such as steel and mining, to satisfy local demand.
He noted that the central government should keep a sober mind on its overall industrial layout by limiting investment in outdated industries.
"The government should moderately step up policy-making favoring emerging strategic industries, which will spur innovation and future growth," He said, adding that the government should also push for reforms to solve fundamental problems hindering China's economy by allowing private investment in major industries and breaking the monopoly of State-owned enterprises.
The State Council yesterday adopted a plan to boost the development of seven strategic emerging industries, including environmental protection, information technology, biology, advanced equipment manufacturing, new energy, new materials and clean-energy vehicles, according to the Xinhua News Agency.
Kurt
Junior Member
Currently China's big problem is lack of international reserve of Yuan. No body uses Yuan, so they can't collect invisible taxes like US does to the rest of the world.
Who would buy an undervalued currency?
Who would buy an undervalued currency?
You BUY undervalued currencies because it's more likely to go up in value. You don't buy overvalued currencies because they are more likely to fall in value. That goes for pretty much everything you buy undervalue things in hope they would go up in price so that you could make money. You don't buy things that are overvalued because the chances are they would fall in price. Unless you're short selling them of course.
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