Chinese Economics Thread

[pla101prc]

I would have to believe that if Xi's popularity figures are so high despite an economic slowdown, it's because of the anti-corruption campaign. Funny how it flies into the face of what has been accused about it really being an enemies purge.

"Leaders in countries that hold a high DEGREE of state control over the media would naturally rate higher, the Harvard study says"

has it ever occurred to these supposedly prestigious institutions that maybe those leaders are popular simply because they are more competent and championed policies that were at least ostensibly in line with public interest? as opposed to some vapid commander-in-chief who can't make a decision to save his political career, and blames every bit of misgivings he receives on someone else.

 

[pla101prc]

China is Planning to Purge Foreign Technology and Replace With Homegrown Suppliers


China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020, stepping up efforts to shift to Chinese suppliers, according to people familiar with the effort.

The push comes after a test of domestic alternatives in the northeastern city of Siping that was deemed a success, said the people, who asked not to be named because the details aren’t public. Workers there replaced Microsoft Corp.’s (MSFT) Windows with a homegrown operating system called NeoKylin and swapped foreign servers for ones made by China’s Inspur Group Ltd., they said.

The plan for changes in four segments of the economy is driven by national security concerns and marks an increasingly determined move away from foreign suppliers under President Xi Jinping, the people said. The campaign could have lasting consequences for U.S. companies including Cisco Systems Inc. (CSCO), International Business Machines Corp. (IBM), Intel Corp. (INTC) and Hewlett-Packard Co.

“The shift is real,” said Charlie Dai, a Beijing-based analyst for Forrester Research Inc. “We have seen emerging cases of replacing foreign products at all layers from application, middleware down to the infrastructure software and hardware.”
Photographer: Tim Rue/Bloomberg

The plan for changes in four segments of the economy is driven by national security... Read More
Security Panel

China is moving to bolster its technology sector after Edward Snowden revealed widespread spying by the U.S. National Security Agency and accused the intelligence service of hacking into the computers of Tsinghua University, one of the China’s top research centers. In February, Xi called for faster development of the industry at the first meeting of his Internet security panel.

Foreign suppliers may be able to avoid replacement if they share their core technology or give China’s security inspectors access to their products, the people said. The technology may then be seen as safe and controllable, they said.

China ranks second behind the U.S. in technology spending, with outlays rising 8.1 percent to $182 billion last year, according to research firm IDC. The U.S. spent $656 billion, a 4.2 percent increase over 2012.

The push to develop local suppliers comes as Chinese regulators have pursued anti-trust probes against western companies, including Microsoft and Qualcomm Inc. (QCOM) Recent months have seen Microsoft’s China offices raided, Windows 8 banned from government computers and Apple Inc. (AAPL) iPads excluded from procurement lists.
Trade War

“I see a trade war happening. This could get ugly fast, and it has,” said Ray Mota, chief executive officer of Gilbert, Arizona-based ACG Research, who expects the issue to result in direct talks between the U.S. and China. “It’s not going to be a technology discussion. It’s going to be a political discussion.”

In September, the China Banking Regulatory Commission ordered banks and finance agencies to ensure that at least 75 percent of their computer systems used safe technology by 2019. The regulator called on financial institutions to dedicate at least 5 percent of their IT budgets towards the goal.

While the CBRC policy doesn’t make a distinction between foreign and domestic products, it says banks must favor companies who share their “core knowledge and key technology.” It also cautions banks from relying too heavily on one supplier.

Chinese firms, like Huawei Technologies Co. and ZTE Corp. (000063), have already begun to gain local market share at foreign rivals’ expense.

Inspur Group’s Inspur Electronic Information Industry Co. (000977) rose as much as 2.6 percent in Shenzhen before closing 1.5 percent higher at 39.54 yuan.

Beijing Orient National Communication Science & Technology Co. (300166), a provider of software products to phone companies and financial institutions, climbed 9.9 percent to the highest since its January 2011 listing. Sinodata Co. (002657), which provides technology services to the banking sector, added 9.8 percent.
Military Order

About 80 percent of banks’ core servers and systems are made by foreign brands, Yan Qingmin, a CBRC vice chairman, said Nov. 27 at a conference in Beijing sponsored by the news magazine Caijing.

“Most of China’s financial IT systems are from foreign countries,” Yan said. “From the perspective of national security, it poses potential threats to us.”

The CBRC may start accounting for banks’ use of Chinese technology in its regulatory reviews, the Shanghai Securities News reported Dec. 4.

Xi’s Central Military Commission issued a similar, although less detailed, order in October, according to a report in the party-run People’s Liberation Army Daily. That document described information security as key to winning battles.

Intel, Microsoft, HP, Cisco and Qualcomm declined to comment. IBM said it isn’t aware of any Chinese government policy against using its servers in the banking industry.

Industrial & Commercial Bank of China, the country’s biggest bank, deployed a new IBM mainframe in August, the two companies said.
Jilin Trials

Chinese companies have faced similar pressure overseas. A 2012 U.S. Congressional report said Huawei and ZTE, the country’s largest phone-equipment makers, provide opportunities for Chinese spies to tamper with U.S. communications networks. Huawei has since been shut out from several U.S. deals.

In May, the U.S. Department of Justice accused five men in the People’s Liberation Army of allegedly hacking into the computer systems of U.S. companies to steal information. The Chinese government called the charges “absurd.”

The orders from Chinese banking and military commissions coincided with the trial of domestic computer systems in Siping, a city of 3.4 million people in Jilin province. Other cities and agencies in Jilin will now begin testing whether NeoKylin, a Linux-based operating system from China Standard Software Co., can substitute for Windows and servers made by Inspur can replace IBM’s, the two people familiar with the plan said. The trial will then expand across the country, they said.
Domestic Software

Similar efforts were confirmed by one provincial-level worker and two local government workers in Jilin’s capital of Changchun, who asked not to be named while discussing internal matters. The two local government workers said some specialized software was swapped for domestic versions, including a tax program designed by the Harbin Institute of Technology.

China faces obstacles in replacing foreign software and hardware on a national scale. Almost three decades after paramount leader Deng Xiaoping approved his State Hi-Tech Development Plan, Chinese companies hold a fraction of global market share. They’re still unable to match the most advanced products, such as high-end bank servers.

“A key government motivation is to bring China up from low-end manufacturing to the high end,” said Kitty Fok, China managing director for IDC.

National security provides China a powerful rallying cry, particularly within its sprawling state sector. China National Petroleum Corp., the country’s largest energy producer, announced Nov. 26 -- during China’s first Cybersecurity Week -- that it had replaced its Microsoft e-mail with the homegrown eYou program to improve security.

“The technology gap is closing,” said Mota, who advises Cisco and HP, as well as Huawei and ZTE. “In China, they have the patience to figure it out.”

good news for Chinese communication equipment manufacturers and software companies,albeit only a selected few. the public sector is definitely a huge market, and it is kind of hard to make a case for protectionism when it is practiced in a few standard setting nations. i wish the Canadian government would do the same to prop up bombardier and blackberry, though it is somewhat unfair to the former to be cast in the same light as a near-bankrupt company.

 

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By Bloomberg News Dec 19, 2014 5:53 PM GMT+1300 9 Comments Email Print

China revised the size of the economy by $308.8 billion, adding almost the entire output of Malaysia.

The gross domestic product of the world’s second-largest economy was 58.8 trillion yuan in 2013, according to the results of a nationwide economic census announced today. That’s 3.4 percent larger than the previously reported figure. Malaysia’s 2013 GDP was $312 billion.

The size of the revision was smaller than the last time China made a similar change in 2008, reflecting more accurate counting of a rapidly expanding services industry. The larger GDP makes China’s debt look smaller by comparison, which may give policy makers more room to maneuver as they seek ways to bolster growth set to be the lowest since 1990 this year.

“Investors should be looking at broader indicators than just GDP,” said Pauline Loong, managing director at Asia-analytica Research Pte in Hong Kong. “Chinese economic growth will continue on its downward trend in 2015, whatever the revisions.”

The revision will barely affect the 2014 GDP growth rate, the National Bureau of Statistics said in a statement today. Tertiary industry’s share of GDP is revised to 46.9 percent from 46.1 percent, it said, reflecting a more active services sector.

More Balanced

“The economic structure is shown more balanced after the census,” analysts at China International Capital Corp. including chief China economist Liang Hong, said in a report today. They said consumption would be higher and the growth rate in the past five years will probably be revised up.

The economic census is conducted about every five years to gather information on the manufacturing and services industries. Over 10 million businesses and about 60 million enterprises were visited early this year by about 3 million census takers, according to the official Xinhua News Agency.

The past two censuses led to a 16.8 percent boost to 2004 GDP and a 4.4 percent increase in 2008. Ma Jiantang, the head of the National Bureau of Statistics, said Dec. 16 that China would revise 2013 GDP upward by “a bit more than 3 percent.”

A Bloomberg survey of 12 economists showed a median forecast of 1 percent to 3 percent for the revision to 2013 GDP.

It isn’t clear whether NBS used an upgraded accounting method, which includes research and development as investment, and prices self-owned residency on estimated rental costs. Analysts including CICC’s Liang, Rhodium Group LLC’s Beibei Bao and Capital Economics Ltd.’s Mark Williams said the statistics bureau didn’t apply the new standard to the revision, and that output will probably be revised up again.

“Today’s revision is not the end of the story,” said Williams in a note. “The NBS has also been adjusting the national accounts data to bring them into line with international best practice. These changes now seem likely to be introduced early next year,” he said, adding that the change of methodology could lead to another increase of 3 to 5 percent in GDP.

 

[antiterror13]

or 1.6x Vietnamese economy or 1.1x the Philippines economy

 

[Equation]

WTO appeals panel sides with China in US anti-dumping duties row

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The World Trade Organization strengthened its support Thursday for China in a final ruling in a dispute over punitive duties imposed by the United States on a range of Chinese products.

A WTO appellate body upheld a panel ruling from July that Washington had "acted inconsistently" with global rules when it imposed extra import duties on a number of Chinese products.

The United States has slapped additional tariffs on products ranging from paper to tyres, magnets, chemicals, kitchen fittings and solar panels, arguing they were being dumped on its market to help Chinese companies grab business.

The July ruling charged that the US duties had "nullified or impaired benefits accruing to China".

"We recommend that the United States bring its measures into conformity with its obligations," that ruling added.

China said at the time that the annual export value of the affected products was around $7.2 billion.

Thursday's appeals body ruling went even further in its support for China.

It slapped down an appeal by the United States charging that China's initial complaint and request to set up a panel on the issue in 2012 was inconsistent with WTO rules.

Responding to an appeal by China, it also reversed the few findings by the panel that had sided with the US in July.

The WTO polices global trade accords in an effort to provide its 160 member economies with a level playing field.

Members have the right to impose extra duties when goods are being "dumped" on them or sold at below market prices to corner a share of business unfairly.

But hand in hand with that right, they are obliged to prove that their domestic producers are suffering as a result of dumping, and that the duties are not simply being deployed to protect them against foreign competitors.

Wrangling over dumping is common at the WTO, whose panels can authorise retaliatory trade measures against a guilty party that fails to fall into line.

Thursday's ruling cannot be appealed.

 

[Equation]

China's economy is worth $300 billion more than it thought

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[no_name]

or 1.6x Vietnamese economy or 1.1x the Philippines economy

Interesting I've always assumed that the Vietnamese economy was larger than the Philippines. The scale of the two countries' armed forces certainly make it seems that way.

 

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Ditching US dollar: China, Russia launch financial tools in local currencies
Published time: December 29, 2014 14:03
Edited time: December 29, 2014 14:42 Get short URL
A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei (Reuters/Stringer) and Russian ruble banknotes (Reuters/Ilya Naymushin)A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei (Reuters/Stringer) and Russian ruble banknotes (Reuters/Ilya Naymushin)
6.4K6207
Tags
Banking, China, Currencies, Russia and the global economy
China and Russia have effectively switched to domestic currencies in trading using financial tools as swaps and forwards, as they seek to reduce the influence of the US dollar and foreign exchange risks.

The agreement signed in the end of October comes into force Monday, December 29, and provides a currency swap of CNY150 billion (up to US$25 billion).

READ MORE: Defying the dollar Russia & China agree currency swap worth over $20bn

The country’s Foreign Exchange Trade System will carry out similar transactions with the Malaysian ringgit and the New Zealand dollar.

From now on yuan swaps are available for 11 currencies on the foreign exchange market.

“China won’t stop yuan globalization or capital account opening because of the volatility in emerging market currencies,” Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg.

China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, Xinhua News reported in July.

A swap is a financial tool to ease transactions by exchanging certain elements of a loan in one currency, like the principal or interest payments into an equivalent loan in another currency.

Currency forward is an obligation of two parties to convert an agreed amount of one currency into another by a certain date at an exchange rate specified at the moment of signing the deal.

Russia and China have long been looking for ways to cut the dollar’s role in international trade. The question is significant for China as 32 percent, or $4 trillion of its foreign exchange reserves are in US bonds, which means there is a vulnerability to fluctuations in the exchange rate.



READ MORE: Russia’s biggest bank launches financing in Chinese yuan

Russia’s foreign exchange reserves are worth $398 billion, and the US dollar accounts for about $162.45 billion.

The country’s economic growth has slowed amid a standoff with Western countries over the Ukrainian conflict. After the country’s financial sector faced EU and US sanctions it became hard for Russian businesses to raise finance in the West.

Chinese authorities are particularly interested in currency swap lines with developing countries, mainly from the Asia-Pacific region. Australia, New Zealand, Brazil, Singapore, Hong Kong, Argentina, and Malaysia are actively involved in transactions with China.

 

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Ditching US dollar: China, Russia launch financial tools in local currencies
Published time: December 29, 2014 14:03
Edited time: December 29, 2014 14:42 Get short URL
A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei (Reuters/Stringer) and Russian ruble banknotes (Reuters/Ilya Naymushin)A bank clerk counts Chinese yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei (Reuters/Stringer) and Russian ruble banknotes (Reuters/Ilya Naymushin)
6.4K6207
Tags
Banking, China, Currencies, Russia and the global economy
China and Russia have effectively switched to domestic currencies in trading using financial tools as swaps and forwards, as they seek to reduce the influence of the US dollar and foreign exchange risks.

The agreement signed in the end of October comes into force Monday, December 29, and provides a currency swap of CNY150 billion (up to US$25 billion).

READ MORE: Defying the dollar Russia & China agree currency swap worth over $20bn

The country’s Foreign Exchange Trade System will carry out similar transactions with the Malaysian ringgit and the New Zealand dollar.

From now on yuan swaps are available for 11 currencies on the foreign exchange market.

“China won’t stop yuan globalization or capital account opening because of the volatility in emerging market currencies,” Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg.

China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, Xinhua News reported in July.

A swap is a financial tool to ease transactions by exchanging certain elements of a loan in one currency, like the principal or interest payments into an equivalent loan in another currency.

Currency forward is an obligation of two parties to convert an agreed amount of one currency into another by a certain date at an exchange rate specified at the moment of signing the deal.

Russia and China have long been looking for ways to cut the dollar’s role in international trade. The question is significant for China as 32 percent, or $4 trillion of its foreign exchange reserves are in US bonds, which means there is a vulnerability to fluctuations in the exchange rate.



READ MORE: Russia’s biggest bank launches financing in Chinese yuan

Russia’s foreign exchange reserves are worth $398 billion, and the US dollar accounts for about $162.45 billion.

The country’s economic growth has slowed amid a standoff with Western countries over the Ukrainian conflict. After the country’s financial sector faced EU and US sanctions it became hard for Russian businesses to raise finance in the West.

Chinese authorities are particularly interested in currency swap lines with developing countries, mainly from the Asia-Pacific region. Australia, New Zealand, Brazil, Singapore, Hong Kong, Argentina, and Malaysia are actively involved in transactions with China.

Was it ten years ago that the foreign reserves of all countries consisted for more than 80% in US$? Now it is about two third and falling despite the huge production of dollars by the FED. For China its is a mere 32 %, for Russia slightly more than 40 % according to this article so when something drastic were to happen to the dollar they will not be the main victims.

 

[pla101prc]

i give it until the end of Li Keqiang's tenure, presuming that he will stay the entirety of the two turns slated for him, to establish a dominant status for RMB within the sphere that China calls "the periphery". but even then i still can't picture it replacing the dollar, or even ten years onward from that point. today's economy will be better served if we forgo a system that is overly reliant on one particular currency. a mult-ipolar arrangement is as desirable in the financial domain as it is in the geostrategic domain.