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KINA - En økonomisk kjempe
16:01 03.08.2006

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ANALYSIS-Risk rears its head in China's corporate bill market

SHANGHAI, Aug 3 (Reuters) - A corruption probe touching one of Shanghai's largest private investment companies has raised questions about the risk involved in China's fledgling short-term corporate debt market and the accuracy of local rating agencies.

The central bank gave approval in May 2005 for firms to issue corporate bills with maturities of up to one year as part of its efforts to wean companies off excessive reliance on bank loans, which account for nearly 90 percent of their funding.

In March this year, Shanghai-based Fuxi Investment Holding Co. became the first private company to issue such debt, selling 1 billion yuan ($125 million) of one-year bills.

But last week Fuxi stunned the market by announcing that its chairman, Zhang Rongkun, was cooperating with an official investigation. It did not elaborate beyond saying that company operations were continuing as normal.

Suddenly, analysts say, investors who had blithely assumed that corporate bills would move in line with the short-term government debt market were confronted with the notion of credit risk.

"The Fuxi incident has rung a warning bell for the corporate bill market," said bond analyst Qu Qing at Shenyin & Wanguo Securities. "Corporate bills are a product that do not require guarantees. Once issuers fail to pay, investors will face heavy losses."

The price of Fuxi's bills on the interbank market plunged in response to news of the investigation, with the yield surging to 4.1898 percent last Friday from 2.4095 percent a week earlier.

16:25 03.08.2006

Guangfa's Chen Buys Winemakers to Lift Small-Cap Fund (Update1)

Aug. 3 (Bloomberg) -- Chen Shide is beating all mutual funds investing in China by buying shares of Shanxi Xinghuacun Fen Wine Factory Co. and Yantai Changyu Pioneer Wine Co., which are benefiting from growing personal incomes.

Chen's 1.69 billion yuan ($212 million) Guangfa Small Cap Growth Equity Fund has returned 101 percent over the past 12 months. That is more than double the gain, including reinvested dividends, of the Shanghai Composite Index. It is the top mutual fund among 346 open-end China equity funds that are tracked by Bloomberg.
``My sole criteria for selecting small-cap stocks is stable earnings growth,'' said Chen, 40, a fund manager with GF Fund Management Co. in Guangzhou, in a telephone interview. ``The earnings growth for consumer stocks will be quite sustainable and impressive in the coming couple of years.''

``Consumer stocks are a buy this year, with the economy becoming more reliant on domestic spending as the major driver,'' said Chen.

To avoid potential risks, Chen makes an average of 20 company visits a year and diversifies his investments. Chen currently invests in 43 stocks.

``I never invest more than 3 percent of the assets in a single stock, and I pay much heed to corporate governance issues and the integrity of management,'' said Chen, a basketball fan who earned a master's degree from Guangzhou-based Jinan University in 1994. ``If you know enough about them, they carry no risks at all.''

China's wine market, worth more than 7 billion yuan, is expanding at an annual pace of more than 10 percent, according to China Wine Online, an Internet-based beverage publication. China is the world's sixth-biggest winemaker.

``The most difficult thing facing fund managers is to know about the transparency of small-cap companies,'' said Zhang Xuejun, who manages the $270 million Desheng Small-Cap Fund at Guotai Junan Allianz Fund Management Co. in Shanghai. ``You need to have good communication with management executives of these companies.'' Zhang's fund has returned 42 over the past year.

A government program to make tradable more than $200 billion of mostly government-held stocks also has helped end a five-year slump that almost halved China's market value.

16:36 07.08.2006

Pitfalls for advertisers in Chinese market

Dusseldorf, Germany - German businessmen's eyes light up when they think of China and the unlimited possibilities presented by Asia's biggest market.

But promoting their products poses a major challenge because most of the 1.3 billion Chinese cannot read the advertising slogans if they are written in Latin script.

Translating into Chinese is difficult. The foreign language and the Asian culture are fraught with pitfalls that could easily turn a company's debut in the new market into a disaster.

China presents a whole new challenge. Slick but empty phrases that advertisers love to conjure up for the European and North American markets are not possible in Chinese.

'Each character or pictogram has a meaning. It's not possible to compose anything without the help of native speakers and tests in different dialects,' according to Kircher.

Some of the more successful translations are, according to Kircher: Siemens (xi-men-zi 'gate to the west'), BMW (bao-ma 'valuable horse') and Mercedes-Benz (ben-shi 'fast and safe driving').

Pharmaceutical concern Hoechst, on the other hand, experienced major difficulties with its name.

An initial version came across to many Chinese as 'I want to cheat you,' while a second variation was very similar to the Chinese pronunciation of 'Hitler.'

US concern Pfizer also ran into trouble marketing its potency drug Viagra. The closest translation was under copyright to a competitor, so it opted for 'wan-ai-ke,' which means 'guest who makes love 10,000 times,'

This was frowned on by many Chinese who considered it too provocative.

'The art of finding the correct phrase lies in choosing characters that have a positive meaning and fit the product being marketed. The pronunciation also has to have an association with the Western brand,' Kircher says.

22:18 08.08.2006

China's many roads to prosperity

HONG KONG - Build it and they will come. But it is not a field of dreams that the Chinese government is building for the country's 1.3 billion people; it is a highway - or, rather, a grand network of highways that by 2035 is scheduled to expand to 85,000 kilometers. That's 10,000km longer than the United States' Interstate highway system, currently the world's biggest.

Called "7-9-18", the network will be formed by seven lines emanating from Beijing, nine running through the country north tosouth, and 18 going east to west. It will cover an area with a population of 1 billion and connect all towns and cities with populations above 200,000. It will also link all major transport hubs for aviation, railway, shipping and automobiles and trucks.

The country is investing 2 trillion yuan (US$241.9 billion) in the massive project. Once it is completed, residents in the more developed eastern part of the country should be able to access the nearest expressway in an average of 30 minutes, while those living in central provinces will need an hour. In the remote and underdeveloped west, the closest expressway will be an average of two hours away.

The government considers the project a key part of its development strategy, claiming that it will allow as many as 400 million people to work their way out of poverty and into the middle class in the next 15 years. Despite more than two decades of soaring economic growth, more than 200 million people continue to live on less than $1 a day in China. The country's economic miracle has taken place mainly in the nation's urban centers and remains out of reach for many of its 800 million rural dwellers.

Expressway construction is different in China than in most other countries in that the 7-9-18 links are toll roads largely financed, built and operated by private companies under contract from provincial governments. The contracts establish a period of private ownership during which the companies recoup their investment. After that, local governments take over. This has meant that roads go up fast and furious in the more populous and prosperous regions of the country, while it remains to be seen how truly connected remote western provinces will wind up.

As with so many things in China, the vision is greater than the reality. But the two are coming closer together all the time.

16:36 09.08.2006

Auto sales drop 16 per cent in July

www.chinaview.cn 2006-08-09

BEIJING, August 9 -- China's July passenger vehicle sales dipped 16 per cent from the previous month, an industry association said yesterday.

"The decline is a normal seasonal adjustment in the industry," Zhu Yiping, the spokeswoman for the Beijing-based auto association told China Daily.


However, the auto association said that July sales of passenger vehicles gained 5.39 per cent year-on-year, mainly boosted by strong car sales.


Compared to the same period last year, auto sales enjoyed healthy growth in the first seven months of 2006.

Statistics showed combined sales of passenger vehicles jumped 32.14 per cent year-on-year to 2.85 million units from January to July.

Les mer her
21:04 09.08.2006

China's growth: How fast is too fast?

For plenty of Chinese, times have never been better.

But along with the prosperity, there are the worriers - the authorities in Beijing and experts in financial capitals - who say there are signals that the world's fourth-biggest economy is in danger of racing out of control.

What really alarms them is an accelerating orgy of investment in apartment buildings, shopping malls, roads, steel mills, factories, mines, ports and theme parks. Much of the money is coming in the form of loans from mainland Chinese banks, whose balance sheets would make an examiner in the West blanch.

"Investment is skewed towards fixed assets. That is where the problem lies," said Connie Leung, chief economist at Hong Kong-based ERA Economic Research Analysis, a research advisory business specializing on China.

"There are a lot of sectors where producers and suppliers can't raise prices because there is lots of competition. An economy like that can't be overheated," Leung said.

"I think the consequences would manifest themselves first of all in the financial sector," said Frank Harrigan, assistant chief economist at the Asian Development Bank. "Bank balance sheets would deteriorate; non-performing loans would rise quickly."

Although there is an assumption that the government will bail out state- owned banks as it has in the past, the continued accumulation of bad loans increases the danger of a financial crisis.

However, Ren Zhiqiang, one of the highest-profile property developers in Beijing, dismisses fears of a debt explosion from residential property.

Ren, president of the Beijing Hua Yuan Group, flips through glossy brochures of some of his futuristic residential and retail complexes while sitting at his boardroom table. With a laugh he declared: "The banks are always asking me to lunch.

"Housing loans are the best kind of loans in China," he said. "Less than 2 percent of borrowers can't pay their loans on time. Even for those that can't pay, it doesn't mean the banks can't get their money back. They still have the house."

The cost of raw materials have been rising at phenomenal rates in recent months and there are signs that wages are now beginning to rise, at least in the manufacturing centers.

Yet other statistics suggest all is well with manufacturing. Profits were up 28 percent in June from a year earlier as exports continued to power ahead.

But some economists say the official profit data is misleading because the government keeps on increasing the number of companies included in the sample. Walker, the CLSA economist, said the sharp rise in salaries and commodity prices is putting a serious squeeze on profits. By correcting for the number of companies in the sample, year-on-year profit growth comes down to about 6 percent, he said, not 28 percent.

10:41 18.08.2006

Brazil, Russia, India, China Stock Funds Beat Emerging Markets

Aug. 17 (Bloomberg) -- Funds investing in Brazil, Russia, India and China are outperforming emerging markets by combining the world's two most populous nations with two countries feeding their expansion.

``The four countries all have high economic growth and there seems to be virtuous cycle between them,'' said Grant Yun Cheng, who co-manages the $491 million dit-BRIC Stars fund in Frankfurt. Demand for commodities and building materials in China and India is injecting money into the economies of oil- producing Russia and natural resources-rich Brazil, he said.

10:37 22.08.2006

Aug. 22 (Bloomberg) -- Profit at Chinese industrial companies grew 28.6 percent in the seven months through July from a year earlier as surging energy and raw material prices boosted earnings at miners and oil companies.

Combined net income rose to 967.9 billion yuan ($121 billion), the Beijing-based National Bureau of Statistics said today in a statement. Growth accelerated from 28 percent in the first half and 20.6 percent in the same period last year. Total sales jumped 26.4 percent to 16.5 trillion yuan.

Earnings are improving as faster economic growth boosts demand for copper and coal and as makers of consumer goods start to pass on higher costs. Higher profits are complicating government measures to curb an investment boom that drove economic growth to 11.3 percent in the second quarter.

``A lot of investments are currently financed by profits, not just by the private sector, but from the state enterprise sector,'' said Bert Hofman, chief economist at the World Bank in Beijing. The government should ``look much more at instruments such as monetary policy, taxation and subsidization'' to control investment.

10:39 22.08.2006

Aug. 22 (Bloomberg) -- Southeast Asian ministers began discussions today aimed at dismantling market barriers as they seek to increase investment and trade in the region amid rising competition from China and India.

Economic and trade ministers from the 10-member Association of Southeast Asian Nations, or Asean, meeting in the Malaysian capital of Kuala Lumpur must agree on lowering regional tariffs and standardizing rules as they move toward forging a single market by 2015. They also seek to bridge their differences on drawing up trade accords with countries from the U.S. to China.

``The economic challenge facing Asean is to get investors to view Asean as a single, cohesive, economic entity,'' Malaysia's trade minister Rafidah Aziz said today. ``Developments in the world economic environment make it imperative for Asean to deepen economic integration and strengthen linkages with other major trading partners.''

10:44 22.08.2006

BEIJING, Aug 21 (Reuters) - China's environmental chief has blamed fraudulent environmental approvals and patchy installation of control equipment for rises in pollution, state media reported on Monday.

Pollution discharges increased in 17 provinces in the first half, despite a government pledge to cut emissions 2 percent by the end of the year, the Shanghai Daily newspaper quoted Zhou Shengxian, director of the State Environmental Protection Administration (SEPA), as saying.

"Fraud in project approval was prominent, with many projects passing their environmental assessment without fulfilling the necessary criteria," Zhou said.

"It is clear the conflict between economic growth and environmental growth is coming to a head."

17:06 22.08.2006

Jeg tror man foregriper begivenhetene noe all den tid det også rapporteres at det er flere hundre millioner kinesere som man ikke har arbeid til. At det er noe press i noen av de mest utviklede områdene er en annen sak. Et annet pussig fenomen sett med mine øyne er kineseres hang til å fråtse i amerikansk junk food. De elsker det. I Shanghai så jeg blant annet en av restaurantene til Pizza Hut ha en konstant kø av gjester utenfor som ville inn til alle døgnets tider. Jeg gikk forbi denne restauranten mange ganger på forskjellige tider av døgnet og på forskjellige dager over et lengre tidsrom. Alltid kø. Alltid.

China is facing the prospect of an increasingly ageing and obese population that could adversely affect the country's economy, according to new reports.

A newspaper report on Monday blamed the Communist government's one-child policy for labour shortages that could undermine the so far endless supply of cheap workers that has underpinned China's extraordinary economic boom.

About 25 percent of boys between the ages of seven and 18 in urban China are overweight, up from just 0.2 percent in 1985, the China Daily said, citing a survey of 400,000 students across the country.


[Endret 22.08.06 17:07 av grong2]
17:23 22.08.2006

China's quest for oil in the Middle East is threatening US energy and security interests in the region and increasing the risk of a conflict between both nations, analysts say.

Flynt Leverett, senior fellow at the New York-based Saban Centre for Middle East Policy, told Aljazeera.net: "Theres a force of increasing tensions in the Sino-American relationship and if you carry that trend out long enough, you do begin to run a more serious threat."

As the dominant geopolitical power in the Middle East and the Arabian Gulf, America's main concern is not only the acquisition of cheap fossil fuel but also the growing involvement of China's energy sector in a number of ''problem" states such as Iran, Sudan and lately, Syria.

18:05 22.08.2006

China water projects to get big investment

BEIJING The Chinese government plans to spend 1 trillion yuan by 2010 to build waste-water treatment plants and upgrade water distribution systems around China, the Ministry of Construction said Tuesday.

Of that amount, which is equivalent to $125.5 billion, as much as 330 billion yuan will be spent on the water projects in urban centers. As many as 278 cities lack proper treatment facilities and at least 30 cities have plants that operate at less than 30 percent capacity, the ministry said.

"We welcome water companies from all over the world to participate in the Chinese market," Qiu Baoxing, deputy minister for construction, said Tuesday at a press briefing in Beijing. "Companies including Veolia and Suez have already done very well in China's water treatment and recycling sector. This is proof that China's water sector is open."

China's biggest water shortages may still be ahead because its urban population is expected to continue growing by as much as 15 million annually, bringing potential "regional water crises," Qiu said. Urban water users jumped by 78.7 million between 2000 and 2005 to 327 million, the ministry said.

10:01 23.08.2006

China's abject poverty population has been reduced by more than 100 million in the 20-year period from 1985 to 2005, thanks to the country's poverty alleviation efforts, a senior poverty relief official said here on Tuesday.

At the end of last year, China had 23.65 million needy people whose per capita annual income is less than 85 U.S. dollars, a poverty line set by the government. Eighty-five U.S. dollars is just 20 percent of the average annual income of the country's rural population, said Liu Jian, director of the State Council Leading Group Office of Poverty Alleviation and Development.

10:04 23.08.2006

China said on Wednesday that construction of its longest railway tunnel, Wushaoling tunnel in northwestern Gansu Province, had been completed, facilitating trade between Europe and China's booming east coast.

The Wushaoling Tunnel is a 20.05 km dual-bore railway tunnel in Gansu, north-west China.
The tunnel has reduced the distance between Dacaigou and Longgou by 30.4 km. Key to the Asia-Europe Land Bridge, the tunnel is part of the 3,651 km section linking Lianyungang in East China with Ürümqi in Northwest China.
The tunnel consists of two bores with centres separated by 40 m. It is designed to allow speeds of 160 km/h.
10:07 23.08.2006

Chinese commercial banks saw their bad loan ratios drop by 1.1 percentage points in the first half of the year to 7.5 percent end June, the China Banking Regulatory Commission (CBRC) has announced.

Bad loans owed to Chinese banks totaled 1.28 trillion yuan (160 billion U.S. dollars) at the end of June, according to a report seen Tuesday on the regulator's website.

It is noteworthy that the drop in the bad loan ratio has been achieved during a period of rapid expansion of credit, with excessive investment driving the economy to the brink of overheating.

The latest figures from the central bank show that commercial bank loans increased by 16.3 percent in the first seven months year on year.

10:11 23.08.2006

Tata Motors Ltd will outsource automotive components for its proposed small car project from big vendors, a senior company official said Tuesday.

The Company's deputy chief of the strategic sourcing department B.B. Parekh said Tata Motors is looking for big sized suppliers of auto components so that the vendor can ramp up capacity and invest in technology whenever required.

The company has already reduced its vendor base to 700 vendors from the earlier 1,400 to move away from multiple vendor base system, which was not viable.

The company is outsourcing a major chunk of automotive components and the outsourcing is expected to go up to 80 percent in near future, he said.

India can become the auto component hub with major automotive companies like Toyota, General Motors, Dailmler Chrysler, Hyundai and Ford outsourcing from the country, the official added.

11:53 23.08.2006

LVMH Moet Hennessy Louis Vuitton SA, Burberry Group Plc and 21 other companies are trying to protect rising sales in China by asking Beijing city officials to force mall owners to shut down traders the second time they are caught selling fakes. Xiushui Clothing Market Co., owner of the 1,000-shop Silk Market, and two other centers agreed in June to enforce the ``two-strikes'' rule.

Paris-based LVMH's sales in China are rising 50 percent a year, Arnault said. Worldwide, profit increased 21 percent to 1.4 billion euros ($1.8 billion) in 2005 from 2004.

``The Silk Market case symbolizes that China can no longer tolerate counterfeit products sold so openly in the capital of a nation that is rising in global importance,'' said Paul Ranjard, a lawyer in charge of intellectual property protection at the European Union Chamber of Commerce in Beijing. ``We have to watch carefully to see if the market actually implements this accord.''

10:25 24.08.2006

HONG KONG - When toxic-chemical spills in its rivers threaten the water supply in neighboring countries, China's lax environmental record becomes a serious regional issue.

However, when researchers in California report that on a given day 25% of the pollution littering the skies above Los Angeles has wafted over from China, the country's battle to clean up its degraded environment turns into a world war. It's not just China's trade imbalance that is commanding international attention these days; the country is also increasingly known as the world's greatest exporter of pollution.

The issue has become so big that Chinese leaders are vowing to do something about it. The government has committed US$162 billion to cleaning up the environment over the next five years.

Overall, SEPA estimates pollution costs China $200 billion a year, or 10% of its GDP. According to the World Bank, 16 of the world's 20 most polluted cities are in China, where poisoned air leads to 400,000 premature deaths every year. With car ownership in the country also soaring, experts say China will overtake the United States in the next decade as the world's greatest emitter of greenhouse gases, which scientists link to global warming.

What would truly make an impact on China's efforts at environmental cleanup may be too much to ask right now: freeing up local media to report on the environmental damage that is occurring in their areas, freeing up citizens to protect their property rights through the legal system, and making sure that system has the integrity of the rule of law.

That said, even under the best of circumstances, China will not see blue skies again any time soon. Things may actually get worse before they get better. And that has become a source of worry even for people as far away as California.
11:18 24.08.2006

Aug. 23 (Bloomberg) -- When Rajat Gupta couldn't find a decent job in India after earning a mechanical engineering degree from the Indian Institute of Technology in Delhi in 1971, he did what many compatriots did. He moved to the U.S. He attended Harvard Business School in Boston, then landed a job at the New York office of McKinsey & Co. Inc. in 1973. Twenty-one years later, in 1994, Gupta, 57, became the first foreign-born chief executive officer of the consulting firm, which then had $1.3 billion in revenue.

As Gupta's rise illustrates, PepsiCo Inc., which last week named Indra Nooyi as its next CEO, isn't the first global corporation to recognize the caliber of Indian executive talent. The annual reports of many large companies show Indians are landing big jobs. Like Gupta and Nooyi, most are products of an investment in higher education the country made more than 40 years ago.

``There is a huge demand for Indian executives,'' says Rana Talwar, 58, former CEO of Standard Chartered Plc in London who runs Sabre Capital, a buyout firm. ``The quality of the education is very good. And Indians can adapt to any environment. When we grew up, we got used to adverse conditions such as power outages.''

20:07 24.08.2006

Asian trade bloc would rival NAFTA, EU

GEOFFREY YORK, Globe and Mail
August 24, 2006

BEIJING Backed by the economic muscle of Japan and China, a new free-trade zone representing almost half of the world's population could soon be emerging in Asia to challenge the older spheres of the Western world.

The free-trade idea, spearheaded by a Japanese promise of 10-billion ($95-million) for a detailed study of how to make it work, won support yesterday from the Association of Southeast Asian Nations (ASEAN) at a meeting in Malaysia.

Plans for the trade zone, originally aimed for completion in 2020, are now being accelerated. The new goal is to have the trade zone established by 2015. It would cover 16 nations -- the 10 members of ASEAN plus China, Japan, South Korea, India, Australia and New Zealand.

The zone would have a combined population of 3.1 billion, almost half of the global population. Its total economic output would be almost $10-trillion (U.S.) -- about a quarter of the world's GDP.

It could become a natural rival to the power of the European Union and the North American free-trade agreement. The United States and Canada would be conspicuously absent from the new Asian trade zone, despite their close links to Asian countries and their own status as Asia-Pacific economies.

Japan is pushing the idea hard. It estimates that a free-trade zone would increase the total economic output of the 16 countries by $215-billion. Formal negotiations could begin by 2008.

"ASEAN countries expressed their interest and support," Japanese Economy Minister Toshihiro Nikai told reporters after his talks with ASEAN members in Kuala Lumpur yesterday. "It will be discussed in detail between now and the end of the year."

After unveiling Japan's proposal for the 16-nation free-trade agreement, Mr. Nikai said it was a "main pillar" of Japan's policies in the region. "If we are able to create an amicable grouping for the development progress of Asia, we are certain that this will bring benefit for all the countries in the region."

Some ASEAN countries, however, want the association to focus on its existing talks with Japan over a bilateral deal between the two sides. The association already has trade agreements with China and South Korea, and it doesn't want to lose momentum on its Japan negotiations.

Another potential problem is the rivalry between Japan and China. Although both are in favour of free trade in the region, China has backed a slightly different version of the trade zone. It remains to be seen if both countries will fully throw their weight behind a plan that both can agree on.

The free-trade idea has been gaining political support since last December, when the 16 nations held their first-ever East Asia Summit. The summit heard a growing chorus of support for the idea of an East Asian community, similar to the early phases of the European Union.

The collapse of the World Trade Organization's multilateral trade talks has also bolstered the level of support for an Asian free-trade zone.

But the idea has had economic momentum for much longer. Trade among the 16 nations has been growing steadily for many years. Intraregion trade now accounts for 56 per cent of all trade by the 16 countries, compared with just 33 per cent in 1984.

The member nations of ASEAN include Malaysia, Singapore, Thailand, the Philippines, Indonesia, Brunei, Vietnam, Myanmar, Laos and Cambodia.

Proposed Asian group

Members: Japan, China, India, Australia, South Korea, New Zealand and the 10-member ASEAN group: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, the Philippines and Vietnam

Population: 3.1 billion

Total GDP: almost $10-trillion (U.S.)


Members: Canada, United States, Mexico

Population: 430.5 million

Total GDP: $12.9-trillion

European Union

Members: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, the Netherlands, United Kingdom

Population: 460.1 million

Total GDP: $11.7-trillion
10:33 26.08.2006

China's economy poised to overtake US: Fischer

Aug 25, 2006
By Tim Ahmann

JACKSON HOLE, Wyoming (Reuters) - China's economy could be the world's largest within 25 years, although it won't be able to keep up its current break-neck pace forever, Bank of Israel Governor Stanley Fischer said on Friday.

Fischer, once the IMF's No. 2 official, said growth was likely to ease when Beijing took the necessary step of letting its yuan currency rise.

"If the Chinese economy were to continue to grow in real terms at a rate 7 percent greater than that of the United States economy at a constant exchange rate -- as it has for over 20 years -- its GDP would indeed overtake that of the United states in about another quarter century," he told central bankers and top academics from around the globe.

"Further, the yuan is likely to appreciate over that period relative to the dollar ... reducing the length of the catch-up period," Fischer added.

He said Beijing could ill afford to let the economy continue to run at a hot 10 percent growth rate indefinitely.

"At some point -- perhaps because of inflationary pressures and the costs of the continuing reserve buildup -- the process of exchange rate appreciation that other countries in the region, including Japan, Korea and others have experienced, will have to begin," he said.

However, Fischer said that even when that happens, the yuan is likely to rise in value at a rate that allows China to continue to run a sizable current account trade surplus.

U.S. businesses have said an undervalued yuan gives Chinese producers an unfair advantage on world markets. Washington has pressed Beijing to allow for more flexibility in its currency as one way to help ease global trade imbalances.

Fischer expressed hope that a disruptive unwinding of imbalances and narrowing of the large U.S. trade gap could be avoided.

"It is easy to describe crisis scenarios, particularly with regard to the unwinding of the U.S. current account deficit -- and many delight from doing so," he said. "But overall it seems that the international economy and its market and governmental organizations have sufficient flexibility, and perhaps even the wisdom, needed to deal with the required adjustments."

[Kommentar: Idag er Kina's GDP målt i "current US$" ca. 2225 mrd. (2005-est.), mens målt i PPP-basert US$ er den ca. US$ 8.860 mrd.

Med sine ca. 1314 mill. innbyggere gir det en GDP/innbygger på ca. 1690 målt i current US$, mens den er ca. 6740 målt pr. PPP-basis.

USA med sine ca. 298 mill. innbyggere har nå en GDP på ca. US$ 12.500 mrd., tilsvarende ca. US$ 41.800/innbygger.

Med 7% høyere vekst pr. år kan man regne ut at Kina (som Fischer stadfester over) kommer til å ta igjen USA's GDP om ca. 25 år.

Med 10%/år fortsatt vekst i Kina (og 3% i USA), vil GDP være ca. $27.000 mrd. i begge land i 2031.

Ref: ''CIA: The World Factbook''

Komplett liste over PPP-faktorer (2003-tall) kan finnes hos World Bank]

[Endret 26.08.06 11:26 av OldNick]
[Endret 26.08.06 11:27 av OldNick]
00:01 28.08.2006

A Thaw Between India and China
The developing relationship between the wary Asian giants could shape the 21st century.

NEW DELHI High atop a snowy Himalayan pass, a lonely road linking Asia's two giants reopened last month after a 44-year diplomatic roadblock.

Leaders in India and China hailed the event as a sign of the growing rapprochement between neighbors that have eyed each other with distrust since a 1962 border war. Officials say the artery along the fabled Silk Road will invigorate trade between their two booming countries.

But the reopened Nathu La pass is an apt symbol of SinoIndian ties in more ways than one. The rough terrain, icy weather and extremely short list of goods approved for exchange are emblematic of the rocky path of limited engagement that Beijing and New Delhi have embarked on after decades of a political deep freeze.

"They've been a rising power for 20 years, and we didn't notice. We were so obsessed with our little world," said Mohan Guruswamy, head of the Center for Policy Alternatives in New Delhi. "The establishment in India has begun to take note, and it's slowly and lumberingly beginning to change its attitude."

Mention China here and hackles still rise. Official Indian rhetoric on the behemoth to the north remains heavily colored by the 1962 border war that led to the closing of the Nathu La pass, a conflict each side accuses the other of provoking.

In 1998, India's defense minister pointed to China as the country's No. 1 threat. That same year, the Indian prime minister infuriated Beijing by writing a letter to President Clinton citing China as one of two reasons India was conducting nuclear weapons tests.

The other reason was archrival Pakistan, a longtime ally of China whose own nuclear buildup Beijing is accused of aiding.

But demonstrating the wariness with which the two sides still regard each other, Indian merchants are allowed to export only 29 items, such as rice and flour, across the pass, and their Chinese counterparts must stick to a list of 15 approved goods, including goatskins and yak tails, which are used as fly swatters.

In January, Beijing and New Delhi agreed to work together in securing reserves abroad. Putting the deal into practice may be difficult, but analysts say both nations need to cooperate in the face of dwindling supplies.

"There isn't enough if you just go and fight for it. We need to pool our resources," said Acharya of Jawaharlal Nehru University.

"Competition is bound to emerge, particularly since we're looking at the same markets, the same sources of technology and energy," she said. "But this is precisely why [China] is the most important potential partner as well. You could clash on energy if you don't work with China. You could clash on U.S. markets if there's not some kind of understanding there. We are both too big to be competing for the same things, in the same neighborhoods, at the same time."

22:46 29.08.2006


Measured in terms of purchasing power parity, China now ranks as the second largest economy in the world while India trails at number four. Compared directly, Chinese economy is already three times larger than the Indian one. China has seven times more Internet users and ten times more mobile phone users. While China has a trade surplus amounting to $200 billion with the USA alone, India's entire external trade amounts to the same figure. While China is registering trade surplus every year, India's trade deficits are growing to disastrous levels. And most importantly, Inflation in China is almost zero while in India even the government figures put it at 5+%, while the public estimates are anywhere above ten per cent.

Chinas excessive authoritarianism and obsession with state power and control, along with its controlled media, may seem to be stifling settlement of contentious issues, but the fact remains that the system has been working wonders. It has brought prosperity to its citizen, it has kept them happy, and it has allowed them to have dignity of human beings - something often not available in India. No doubt there must be many problems in China as well - there is no Shangri-La in this world - but that doesn't mean the world must equate David with Goliath.

What I wish to achieve by writing this article is simple: India and China cannot be - and should not be - clubbed together. They were in the same boat fifty years back; when India was just freed from the colonial rule and China was reconstructing after the Second World War. But as of today there is only one valid comparison among them: that the two have the largest populations to support. Apart from this there is nothing which forms a common denominator among the two nations. The way things are progressing in India, Bangalore will never become another Beijing and Bombay will never become another Shanghai. It is time the international media readjusts its perspective and present a more honest view to its readers.

This also means that during the coming decades while the Chinese commodity consumption may continue to rise, the Indian one may stagnate and may well fall. After all commodities are getting more expensive, and there will be a time only the highest bidders will be able to lay claim to them.


22:32 30.08.2006

China's greed culture

The growing storm in China over serious misconduct at Shanghai's municipal pension fund is far from the first financial scandal to engulf an arm of its state. Nor, it can be confidently predicted, will it be the last. But in a country where official corruption and malfeasance at all levels are rampant, it is nonetheless particularly striking.

One reason is that the affair has attracted unusually close attention from the central government. The explanation probably has less to do with the scale of wrongdoing, which is still unknown, than with the opportunity it provides China's leadership to discredit and undermine the politically once-powerful "Shanghai faction" linked to Jiang Zemin, the country's former president.

But this incident also stands out because Shanghai is China's financial and commercial capital and a powerful symbol of its economic modernisation drive. The city has made much of its efforts to promote good governance and public probity. If management of its pension fund can be found so badly wanting, what does it say about standards in the rest of China?

The answer is all too clear from the continuing toll of skulduggery and abuses across the country. They range from countless cases of embezzlement and fraud to the predatory excesses of local Communist party officials. Concerned that rising public protests could threaten its grip on power, the party has responded by launching repeated anti-corruption drives and meting out rough justice to suspected offenders.

However, such measures are unlikely to stop the rot, because its causes are systemic. The party's position as the supreme organ of state means all accountability comes from above, while attempts to exert it from below are suppressed. Conduct is subject not to the rule of law, but to the political dictates of those higher up in the hierarchy. While the absence of checks and balances gives the party great power, it inhibits its responsible exercise.

Lack of independent institutions robs China of the disciplines needed to uphold standards in public life. Intolerance of popular scrutiny allows official misdeeds to go undetected and insulates those in power from grassroots pressures. That makes them often slow to recognise and respond to serious threats to national welfare, such as environmental degradation. Furthermore, by making the pursuit of material enrichment the nation's priority above all else, Beijing has sanctioned the growth of a greed-is-good culture in which corruption flourishes.

It would be rash to predict that the tensions between China's embrace of greater economic freedom and its autocratic political system will lead soon to the latter's downfall. But its closed and rigid methods remain a dead weight on the nation's development at a time when it faces growing challenges. If it is to continue to master them, its rulers must start to open up.


[Endret 30.08.06 22:32 av grong2]
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