Chinese Economics Thread


ahojunk

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By Ma Jingjing Source:Global Times Published: 2016/8/28 22:53:39

Productivity, innovation, internationalization need improvement: experts


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Pedestrians pass by the State Grid in Yichang, Central China's Hubei Province on August 23. Photo: CFP

The latest list of China's top 500 enterprises shows positive changes in the nation's industrial structure and research and development work, but experts said that these companies also need to improve their productivity, innovate more and become more international to compete with large cross-border enterprises.

The Top 500 Enterprises in China for 2016 was unveiled on Saturday by the China Enterprise Confederation and the China Enterprises Directors Association in Changsha, capital of Central China's Hunan Province, the Xinhua News Agency reported on Sunday.

The State-owned enterprise (SOE) State Grid ranked top with revenue of 2.07 trillion yuan ($310.29 billion), followed by China National Petroleum Corp (1.88 trillion yuan) and China Petrochemical Corp (1.85 trillion yuan).

According to the list, 295 enterprises are SOEs, accounting for 59 percent of the total of top 500.

"Private companies account for only 41 percent of the top 500 companies in China. In general, they account for 86 percent of all Chinese companies and contribute more than 60 percent of GDP, 50 percent of tax revenue and 90 percent of new employment," He Weiwen, an executive council member at the China Society for WTO Studies, told the Global Times on Sunday.

"Private companies made a huge leap forward in the past 15 years, as only about 100 were among the nation's top 500 companies 15 years ago," Feng Liguo, an expert at the Beijing-based China Enterprise Confederation, told the Global Times on Sunday.

However, private companies lag far behind SOEs in terms of enterprise scale, assets and profits, he said.

There are 84 central government-owned enterprises on the list, accounting for only 16.8 percent of the top 500 enterprises, but their revenue, net profit, assets and other metrics account for 50 to 70 percent of that of all the top 500 enterprises, noted the Xinhua report.

Another change was that the combined revenue of the top 500 companies dropped for the first time in the past 15 years. Revenue stood at 59.46 trillion yuan, sliding 0.07 percent from the previous year, showed the list.

"This indicates that domestic companies face a shortage of demand, and that the downward economic trend continues," He said.

However, Feng said the drop reflects China's achievements in adjusting its economic structure and achieving industrial upgrading, as indicated by the fact that companies in the heavy industrial sector involving iron and steel, coal and construction materials saw the largest drops.

Revenues in the services sector rose to 40.5 percent of the total, exceeding the manufacturing industry's 39.2 percent for the first time.

Heavy industry has always been a crucial part of the list, but enterprises in the modern services and strategic emerging sectors are increasing as part of China's economic new normal, Feng noted.

The 500 companies put an average of 1.48 percent of their revenues into research and development, up 0.19 percentage point from the 2015 survey, the People's Daily reported on Sunday.

Internet giant Baidu Inc and telecommunications giant Huawei Technologies Co spent 15.9 percent and 15.1 percent in this manner, according to Xinhua.

A total of 110 Chinese enterprises entered the Fortune Global 500 in 2016, following the US with 134 companies, according to a statement on fortune.com.

But large enterprises in China lag behind those in the US and Fortune Global 500 in terms of their industrial structure, innovation and internationalization, Feng said, noting that situation leads to low profits.

Around 72 of China's top 500 enterprises recorded losses, compared with 55 in the US, said the People's Daily.

Meanwhile, Chinese companies have low levels of internationalization compared with the US top 500 enterprises and Fortune Global 500, Feng said.

For example, large SOEs like State Grid have tremendous assets overseas but their returns on equity are lower and most of their mergers and acquisitions have failed, he explained.

"Domestic enterprises should improve their productivity, create core technologies and strengthen internationalization to compete," He noted.

 

ahojunk

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Updated: 2016-08-26 14:36
(Xinhua)


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A worker at a steel factory in Dalian, Northeast China's Liaoning province, August 10, 2016. [Photo/VCG]

BEIJING - China's major steel companies saw a profit turnaround in the first half (H1) of 2016, but the pressure of cutting overcapacity in the sector remains.

In a report filed to the Shanghai Stock Exchange, Shandong Iron and Steel Company said its net profits stood at 23.15 million yuan ($3.5 million) in H1, surging over 210 percent year on year.

Net profits for Inner Mongolia Baotou Steel Union reached 27.52 million yuan in the first half, an increase of over 117 percent year on year.

Sansteel Minguang Company in Fujian Province saw H1 net profits jump more than 233 percent year on year to 360 million yuan.

Of the 19 steel companies that have already released their profits in the first half of the year, 13 companies reported profit rises, with eight seeing profits more than double.

The total net profits of the 19 steel companies reached 2.3 billion yuan in H1, compared with a loss of 1.57 billion yuan during the same period last year.

Both Shandong Iron and Steel Company and Inner Mongolia Baotou Steel Union said that rising steel prices in the second quarter contributed to profits.

Steel makers have faced difficulties over the past few years, due to shrinking demand and excessive capacity building up during decades of rapid expansion.

However, steel price have risen in the past few months amid temporarily strained supply as some producers scaled back output to avoid losses.

The Complex Steel Price Index released by the China Iron and Steel Association hit 67.83 at the end of June, up 11.46 points on the beginning of the year.

But the pressure of cutting overcapacity still remains for the steel sector, with progress slow in some regions.

In the first seven months of the year, China only achieved 38 and 47 percent of its annual reduction targets for the coal and steel sectors, respectively.

China plans to cut steel and coal capacity by about 10 percent - as much as 150 million tons of steel and 500 million tons of coal -- in the next few years, with 100 billion yuan set aside to help displaced workers.

The government aims to reduce steel production by 45 million tons and cut coal capacity by 250 million tons this year.

In July, China's cabinet called for all-out efforts to meet overcapacity reduction targets in the steel and coal industries.

The market mechanism should be used to advance capacity reduction, which is a major task in the country's supply-side structural reform drive, according to a statement released by the State Council.
 

ahojunk

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China plays a critical and important role in the world's economy. The world needs China to be successful economy wise.

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Source:Xinhua Published: 2016/8/30 14:09:54

Despite concerns about the slowdown of the world's second-largest economy, China remains the single largest contributor to global economic growth, a US expert said on Monday.

If China's economy grows at 6.7 percent in 2016, in line with the government's official target, it would account for 1.2 percentage points of global GDP (gross domestic product) growth this year, said Stephen Roach, a senior fellow at Yale University and former chairman of Morgan Stanley Asia.

With the International Monetary Fund (IMF) currently expecting the world economy to expand at only 3.1 percent this year, China would contribute nearly 39 percent of the overall global growth, dwarfing the contribution of other major economies, Roach wrote in an analysis on news site Project Syndicate.

The US economy, the world's largest economy, is expected to grow at 2.2 percent this year, contributing just 0.3 percentage points to overall global GDP growth, or only about one-fourth of the contribution made by China, according to the expert.

"China's contribution to global growth is, in fact, 50 percent larger than the combined 0.8-percentage-point contribution likely to be made by all of the so-called advanced economies," he said.

Moreover, no developing country comes close to China's contribution to global growth, according to Roach. For example, India is expected to grow by 7.4 percent this year, but it would likely contribute just 0.6 percentage points to global growth as the country accounts for only 7.6 percent of world output.

"No matter how you slice it, China remains the world's major growth engine," Roach said, noting that global economic growth "remains heavily dependent" on China even if the economy is transitioning to what the Chinese leadership has dubbed the "new normal."

Highlighting a "China-centric global growth dynamic," Roach believed the global economy stands to benefit greatly from a successful rebalancing of China's economy towards services and household consumption.

"A successful Chinese rebalancing scenario has the potential to jump-start global demand with a new and important source of aggregate demand -- a powerful antidote to an otherwise sluggish world," he said, noting that Chinese domestic demand has the potential to become an increasingly important source of export-led growth for China's major trading partners.

"Despite all the focus on the United States, Europe, or Japan, China continues to hold the trump card in today's weakened global economy," Roach said. "The world needs a successful China more than ever."
 

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Global Growth – Still Made in China
AUG 29, 2016
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Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm's chief economist, is a senior fellow at Yale University's Jackson Institute of Global Affairs and a senior lecturer at Yale's School of Management. He is the author of
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.


NEW HAVEN – Despite all the hand-wringing over the vaunted China slowdown, the Chinese economy remains the single largest contributor to world GDP growth. For a global economy limping along at stall speed – and most likely unable to withstand a significant shock without toppling into renewed recession – that contribution is all the more important.

A few numbers bear this out. If Chinese GDP growth reaches 6.7% in 2016 – in line with the government’s official target and only slightly above the International Monetary Fund’s latest prediction (6.6%) – China would account for 1.2 percentage points of world GDP growth. With the IMF
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only 3.1% global growth this year, China would contribute nearly 39% of the total.

That share dwarfs the contribution of other major economies. For example, while the United States is widely praised for a solid recovery, its GDP is expected to grow by just 2.2% in 2016 – enough to contribute just 0.3 percentage points to overall world GDP growth, or only about one-fourth of the contribution made by China.

A sclerotic European economy is expected to add a mere 0.2 percentage points to world growth, and Japan not even 0.1 percentage point. China’s contribution to global growth is, in fact, 50% larger than the combined 0.8-percentage-point contribution likely to be made by all of the so-called advanced economies.

Moreover, no developing economy comes close to China’s contribution to global growth. India’s GDP is expected to grow by 7.4% this year, or 0.8 percentage points faster than China. But the Chinese economy accounts for fully 18% of world output (measured on a purchasing-power-parity basis) – more than double India’s 7.6% share. That means India’s contribution to global GDP growth is likely to be just 0.6 percentage points this year – only half the 1.2-percentage-point boost expected from China.

More broadly, China is expected to account for fully 73% of total growth of the so-called BRICS grouping of large developing economies. The gains in India (7.4%) and South Africa (0.1%) are offset by ongoing recessions in Russia (-1.2%) and Brazil (-3.3%). Excluding China, BRICS GDP growth is expected to be an anemic 3.2% in 2016.

So, no matter how you slice it, China remains the world’s major growth engine. Yes, the Chinese economy has slowed significantly from the 10% average annual growth recorded during the 1980-2011 period. But even after transitioning from the “old normal” to what the Chinese leadership has dubbed the “new normal,” global economic growth remains heavily dependent on China.

There are three key implications of a persistent China-centric global growth dynamic.

First, and most obvious, continued deceleration of Chinese growth would have a much greater impact on an otherwise weak global economy than would be the case if the world were growing at something closer to its longer-term trend of 3.6%. Excluding China, world GDP growth would be about 1.9% in 2016 – well below the 2.5% threshold commonly associated with global recessions.

The second implication, related to the first, is that the widely feared economic “hard landing” for China would have a devastating global impact. Every one-percentage-point decline in Chinese GDP growth knocks close to 0.2 percentage points directly off world GDP; including the spillover effects of foreign trade, the total global growth impact would be around 0.3 percentage points.

Defining a Chinese hard landing as a halving of the current 6.7% growth rate, the combined direct and indirect effects of such an outcome would consequently knock about one percentage point off overall global growth. In such a scenario, there is no way the world could avoid another full-blown recession.

Finally (and more likely in my view), there are the global impacts of a successful rebalancing of the Chinese economy. The world stands to benefit greatly if the components of China’s GDP
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from manufacturing-led exports and investment to services and household consumption.

Under those circumstances, Chinese domestic demand has the potential to become an increasingly important source of export-led growth for China’s major trading partners – provided, of course, that other countries are granted free and open access to rapidly expanding Chinese markets. A successful Chinese rebalancing scenario has the potential to jump-start global demand with a new and important source of aggregate demand – a powerful antidote to an otherwise sluggish world. That possibility should not be ignored, as political pressures bear down on the global trade debate.

All in all, despite all the focus on the US, Europe, or Japan, China continues to hold the trump card in today’s weakened global economy. While a Chinese hard landing would be disastrous, a successful rebalancing would be an unqualified boon. That could well make the prognosis for China the decisive factor for the global economic outlook.

While the latest monthly indicators show China’s economy stabilizing at around the 6.7% growth rate recorded in the first half of 2016, there can be no mistaking the headwinds looming in the second half of the year. In particular, the possibility of a further downshift in private-sector fixed-asset investment could exacerbate ongoing pressures associated with deleveraging, persistently weak external demand, and a faltering property cycle.

But, unlike the major economies of the advanced world, where policy space is severely constrained, Chinese authorities have ample scope for accommodative moves that could shore up economic activity. And, unlike the major economies of the developed world, which constantly struggle with a tradeoff between short-term cyclical pressures and longer-term structural reforms, China is perfectly capable of addressing both sets of challenges simultaneously.

To the extent that the Chinese leadership is able to maintain such a multi-dimensional policy and reform focus, a weak and still vulnerable global economy can only benefit. The world needs a successful China more than ever.
 

ahojunk

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2016-08-31 14:50Ecns.cn |
Editor: Wang Fan

(ECNS) -- Beijing will shut down 300 companies and 90 markets this year amid massive efforts to refocus the capital through integration with neighboring regions.

Wang Haichen, executive deputy director of Beijing's Leading Group for Beijing-Tianjin-Hebei Integrated Development, said the capital would accelerate the pace by transforming wholesale markets and improving services.

He said Beijing has already suspended production at 174 manufacturing companies thought to run counter to the city's repositioning and also upgraded 25 markets.

To ease traffic jams, control pollution and support coordinated development, Beijing has teamed with Tianjin and Hebei to relocate industries through a slew of measures.

Wang said the capital city is also working on other measures to support regional integration such as establishing a development fund and studying the new use of land after moving its users.

Colleges under the direct administration of the Beijing government have cut enrollment by 10 percent, with new campuses planned in suburban areas.
 

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(Xinhua) 20:09, August 31, 2016


FOREIGN201608312010000332905476552.jpg
Canadian Finance Minister Bill Morneau attends a press conference in Beijing, capital of China, Aug. 31, 2016. (Xinhua/Shen Bohan)


BEIJING, Aug. 31 -- Canada announced Wednesday that it had decided to apply for membership of the Asian Infrastructure Investment Bank (AIIB), a sign of growing international confidence in the China-initiated multilateral bank.

If Canada joins the AIIB, it will be the first North American member of the bank, which already has 57 founding members including Australia and the United Kingdom.

Participation in the AIIB is "clearly Canada's best choice," Canadian Finance Minister Bill Morneau told a press conference in Beijing, saying that the bank represents the renewed approach of multilateralism, for which Canada "couldn't be more supportive."

"Canada is always looking for ways to create hope and opportunity for our middle class as well as for people around the world, and membership in the AIIB is an opportunity to do just that," Morneau said.

AIIB president Jin Liqun said Canada's membership will contribute significantly to the bank's development, noting that all countries interested in the AIIB were welcome to apply for membership.

"The decision of Canada to apply to join AIIB is very welcome and shows its confidence in the strong foundations the bank has built in our first few months," Jin told reporters.

There are now more than 20 countries waiting to join the AIIB and the door is wide open, he said.

The AIIB said that formal expressions of interest from potential new members would be welcomed before Sept. 30, 2016, and it looked forward to to welcoming the first of these new members early in 2017.

The AIIB, a not-for-profit bank initiated by China, was officially established last December and started operating in January.

With authorized capital of 100 billion U.S. dollars, it prioritizes investment in energy, power, transport, rural infrastructure, environmental protection and logistics.

In June, the bank approved its first four loans, totalling 509 million dollars, to fund power, housing and transport projects in Bangladesh, Indonesia, Pakistan and Tajikistan.

Canada's move shows the international community's deepening understanding of and strengthening confidence in the AIIB, said Huang Wei, a researcher at the Chinese Academy of Social Sciences.

"More and more countries are optimistic about the bank's future," she said.

With a healthy financial market, Canada can bring its rich experience in financial management and governance to the AIIB, while membership in the bank will benefit the country's own infrastructure and help it expand international influence, according to Huang.

For Canada, helping fund high-quality infrastructure in Asia will contribute to global economic growth and help Canadian companies explore new commercial opportunities, Morneau said.

China is now Canada's second largest trading partner. Trade between the two countries was over 67 billion U.S. dollars in 2015, a 10.1 percent increase year on year, according to Canadian statistics.

At Friday's press conference, Jin said the AIIB will operate in line with international standards, have zero tolerance over corruption and be vigilant about possible redundant positions.
 

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(Xinhua) 20:09, August 31, 2016


View attachment 31434
Canadian Finance Minister Bill Morneau attends a press conference in Beijing, capital of China, Aug. 31, 2016. (Xinhua/Shen Bohan)


BEIJING, Aug. 31 -- Canada announced Wednesday that it had decided to apply for membership of the Asian Infrastructure Investment Bank (AIIB), a sign of growing international confidence in the China-initiated multilateral bank.

If Canada joins the AIIB, it will be the first North American member of the bank, which already has 57 founding members including Australia and the United Kingdom.

Participation in the AIIB is "clearly Canada's best choice," Canadian Finance Minister Bill Morneau told a press conference in Beijing, saying that the bank represents the renewed approach of multilateralism, for which Canada "couldn't be more supportive."

"Canada is always looking for ways to create hope and opportunity for our middle class as well as for people around the world, and membership in the AIIB is an opportunity to do just that," Morneau said.

AIIB president Jin Liqun said Canada's membership will contribute significantly to the bank's development, noting that all countries interested in the AIIB were welcome to apply for membership.

"The decision of Canada to apply to join AIIB is very welcome and shows its confidence in the strong foundations the bank has built in our first few months," Jin told reporters.

There are now more than 20 countries waiting to join the AIIB and the door is wide open, he said.

The AIIB said that formal expressions of interest from potential new members would be welcomed before Sept. 30, 2016, and it looked forward to to welcoming the first of these new members early in 2017.

The AIIB, a not-for-profit bank initiated by China, was officially established last December and started operating in January.

With authorized capital of 100 billion U.S. dollars, it prioritizes investment in energy, power, transport, rural infrastructure, environmental protection and logistics.

In June, the bank approved its first four loans, totalling 509 million dollars, to fund power, housing and transport projects in Bangladesh, Indonesia, Pakistan and Tajikistan.

Canada's move shows the international community's deepening understanding of and strengthening confidence in the AIIB, said Huang Wei, a researcher at the Chinese Academy of Social Sciences.

"More and more countries are optimistic about the bank's future," she said.

With a healthy financial market, Canada can bring its rich experience in financial management and governance to the AIIB, while membership in the bank will benefit the country's own infrastructure and help it expand international influence, according to Huang.

For Canada, helping fund high-quality infrastructure in Asia will contribute to global economic growth and help Canadian companies explore new commercial opportunities, Morneau said.

China is now Canada's second largest trading partner. Trade between the two countries was over 67 billion U.S. dollars in 2015, a 10.1 percent increase year on year, according to Canadian statistics.

At Friday's press conference, Jin said the AIIB will operate in line with international standards, have zero tolerance over corruption and be vigilant about possible redundant positions.
one of the most important news recently in my opinion.
 

taxiya

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2016-08-31 14:50Ecns.cn |
Editor: Wang Fan

(ECNS) -- Beijing will shut down 300 companies and 90 markets this year amid massive efforts to refocus the capital through integration with neighboring regions.

Wang Haichen, executive deputy director of Beijing's Leading Group for Beijing-Tianjin-Hebei Integrated Development, said the capital would accelerate the pace by transforming wholesale markets and improving services.

He said Beijing has already suspended production at 174 manufacturing companies thought to run counter to the city's repositioning and also upgraded 25 markets.

To ease traffic jams, control pollution and support coordinated development, Beijing has teamed with Tianjin and Hebei to relocate industries through a slew of measures.

Wang said the capital city is also working on other measures to support regional integration such as establishing a development fund and studying the new use of land after moving its users.

Colleges under the direct administration of the Beijing government have cut enrollment by 10 percent, with new campuses planned in suburban areas.
I just hope together with OBOR and "Developing the west", these production capacity can be shifted westwards to further develop the inland regions and from the western provinces to spread a web to incorporate central Asian countries. That will uplift the living standards of the people both in western China and the neighboring countries, by doing so China's strategic depth would be secured.

All these must be done with the lessons learnt from the east including the negative ones, namely environmental lessons.
 

Ultra

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2016-08-27 17:23:34 CRIENGLISH.com Web Editor: Zhang Xu

View attachment 31222
Logo of State Grid. [Photo: Baidu]


A 2016 list of top 500 Chinese enterprises has been released by the China Association of Enterprises.

State Grid, China's dominant electrical utility service provider, tops the list for the first time, replacing Sinopec, which has held that position for the last ten years.

Total revenue of the service industry takes up 40.2 percent of the whole economy, exceeding the 39.3-percent of the manufacturing industry for the first time.

Vice president of the China Association of Enterprises, Li Jianming, explains the reasons, "One of the reasons for these new features and trends in Chinese economy, is that the government has made efforts to improve policies on promoting large enterprises and bring the relevant institutions and mechanisms to further perfection. The other reasons is that Chinese large enterprises are vigorously facing up to challenges, strengthening innovation-driven measures, deepening structural readjustment, improving efficiency upgrading, making full use of both overseas and domestic markets and their resources in an effort to thoroughly integrate with the global value chain."

The top 500 enterprises own some 50,000 subsidiaries and 12,600 branch companies in total, with their operations closely related to the everyday lives of almost all Chinese citizens.


WTF. That's terrible State Grid is at the top of China's top 500.
Low tech low innovation state enterprise sucking up resources simply because it has a choke-hold on the market that's closed off to other competitors. These behemoth continue to be at the top of China's top 500 list is just a sad reminder of why China is still behind.
 

Equation

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WTF. That's terrible State Grid is at the top of China's top 500.
Low tech low innovation state enterprise sucking up resources simply because it has a choke-hold on the market that's closed off to other competitors. These behemoth continue to be at the top of China's top 500 list is just a sad reminder of why China is still behind.
Don't knock on China's SOE unless you read up more about it. At least none of China's large banks whether state own or private have to use tax payers bail out money in the Trillions of dollars lately, like those incompetent Freddie Mac, Fannie Mae, and others.o_O

Here's a good article about why SOE are so different in both China and India than in the OECD countries.


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