tag:blogger.com,1999:blog-54582093041282323672024-03-13T11:35:26.955-07:00China Economics BlogA place to find news, observations, statistics, information on undergraduate (BSc and BA economics) postgraduate (MSc economics) and academic analysis of important issues for China's economy including economic growth, inequality, stockmarket, shares, exchange rates, the environment, foreign direct investment, WTO and much moreAnonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.comBlogger662125tag:blogger.com,1999:blog-5458209304128232367.post-86004936111402836272016-03-11T06:15:00.001-08:002016-03-11T06:15:21.771-08:00The End of the Chinese Miracle (FT)<br />
According to the FT, China's economic miracle is under threat from a slowing economy and a dwindling labour force.<br />
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Apologies for the long absence in posting - my main social media engagement is now through twitter at "@RobertJRElliott" where I post very regularly on China economics related issues.Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-51080629593462430612014-05-21T00:43:00.003-07:002014-05-21T00:43:19.975-07:00Conducting field work in ChinaUseful post from <a href="http://sinograduate.com/">Sinograduate</a>. Click the link to see expanded descriptions of each point.<br />
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<a href="http://www.sinograduate.com/comment/articles/conducting-fieldwork-china?utm_source=SinoGradList&utm_campaign=0a42742437-Sinogradient_Issue_No_4&utm_medium=email&utm_term=0_117a6b2a57-0a42742437-341831733">Conducting Field Work in China</a><br />
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<i><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;">If you</span><span style="font-family: Candara; mso-ansi-language: FR; mso-bidi-font-family: "Times New Roman";">’</span><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;">re
a masters or Ph.D. student conducting social science research on China
for your thesis or dissertation, at some point you might find yourself
in China for fieldwork. Having recently spent a year in China for my own
dissertation fieldwork, here are some suggestions for a successful (or
at least not overwhelmingly painful) fieldwork experience in China.</span></i></div>
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<i><strong><span style="font-family: Candara; mso-bidi-font-family: "Times New Roman";">1) <em>You’ll need an affiliation.</em></span></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"> </span><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"></span></i></div>
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<i><strong><span style="font-family: Candara; mso-bidi-font-family: "Times New Roman";">2) <em>Don’t necessarily affiliate at the top universities.</em></span></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"> </span><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"></span></i></div>
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<i><strong><em><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;">3) Load up on your guanxi.</span></em></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;">
</span><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"><br style="mso-special-character: line-break;" /> </span><span style="font-family: Candara; mso-bidi-font-family: "Times New Roman";"></span><strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;">4) <em>Have copies of an affiliation letter from your institution for cold calls.</em></span></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"> </span><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"></span></i></div>
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<i><strong><span style="font-family: Candara; mso-bidi-font-family: "Times New Roman";">5) <em>It’s easier to say no on the phone than it is in person.</em></span></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"> </span><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"></span></i></div>
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<i><strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;">6) <em>Hire a Chinese research assistant to bring to meetings with you.</em> </span></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"></span></i></div>
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<i><strong><span style="font-family: Candara; mso-bidi-font-family: "Times New Roman";">7) <em>Come bearing gifts.</em></span></strong><span style="font-family: Candara; mso-bidi-font-family: Ayuthaya;"> </span></i><span style="font-family: Candara; mso-bidi-font-family: "Times New Roman";"><br /></span></div>
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Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-86113211277639856922014-05-12T01:39:00.001-07:002014-05-12T01:39:12.404-07:00What Should Economists Know about the Current Chinese Hukou System?Research paper. Impacts on all aspects of research on the Chinese economy.<br />
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<h1 class="svTitle" id="ti0005">
<a href="http://www.sciencedirect.com/science/article/pii/S1043951X14000388"><span style="font-size: small;">What Should Economists Know about the Current Chinese Hukou System? </span></a><sup><a class="intra_ref" href="http://www.sciencedirect.com/science/article/pii/S1043951X14000388#item2" id="bitem2"></a></sup></h1>
Yang Son<br />
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<b>Abstract</b><br />
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<div class="abstract svAbstract " data-etype="ab">
<div id="sp0005">
This article explains the current <em>hukou</em> system in China and provides the most recent evidence on the impact of the <em>hukou</em> system on the Chinese labor market and economy. By a comprehensive literature survey, this paper shows that the <em>hukou</em> system plays in two major roles in current China. First, workers with different <em>hukou</em>
face different costs of living in cities and have different access to
government-provided public services and welfare programs in the urban
areas. Migrants with rural and non-local <em>hukou</em> working in the
Chinese big cities have no or little access to welfare programs provided
by local city governments. Second, there exists labor market
discrimination against rural <em>hukou</em> holders in cities, especially in the urban high-wage sector such as state-owned enterprises. The current <em>hukou</em>
system has a negative impact on rural-to-urban migration in China as
well as on economic efficiency and equality by reducing the expected
benefits associated with migration.</div>
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Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-63550628485904709742014-05-09T03:33:00.000-07:002014-05-09T03:33:20.280-07:00Are China's Financial Markets Deep and Liquid enough for RMB internationalisation?Could China internationalise the RMB?<br />
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This paper examines the case for China and concludes it is not there yet. How long? Perhaps not as long as you might expect. Obstacles in China have a way of disappearing when they need to.<br />
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<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2431616">"The People's Republic of China's Financial Markets: Are They Deep and Liquid Enough for Renminbi Internationalization?" </a></div>
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<i><span style="color: #003366; text-decoration: none; text-underline: none;">ADBI Working Paper 477</span></i></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><b><span style="color: #003366; text-decoration: none; text-underline: none;">PRINCE CHRISTIAN CRUZ</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">Asian Development Bank</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<b><span style="color: #003366; text-decoration: none; text-underline: none;">YUNING GAO</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">Tsinghua University</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<b><span style="color: #003366; text-decoration: none; text-underline: none;">LEI LEI SONG</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">Asian Development Bank</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
</span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;"><span style="color: #003366; font-size: 9.0pt; text-decoration: none; text-underline: none;"> </span></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;"><a href="mailto:lsong@adb.org"><span style="color: #003366; font-size: 9.0pt; text-decoration: none; text-underline: none;"><br /></span></a></span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;">Domestic
financial market development is a key determinant of a currency’s international
status, and financial depth and market liquidity are two essential attributes
for an international currency. This paper discusses the status of the People’s
Republic of China’s (PRC) financial markets and their depth and liquidity
conditions. The paper also compares the PRC’s financial markets with those in
developed and emerging economies, contemporaneously and historically. The paper
finds that the PRC’s financial markets are not as deep and liquid as those in
developed economies, and are much less so than those with international
currencies. To support the internationalization of the renminbi, the PRC needs
to remove several major obstacles to deepen its financial markets and improve
their liquidity conditions.</span></div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-25567740324804860692014-04-11T02:57:00.000-07:002014-04-11T02:57:29.027-07:00Image of the dayFor some reason I find this figure interesting.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://i.imgur.com/CK6aONG.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://i.imgur.com/CK6aONG.jpg" height="388" width="640" /></a></div>
<br />Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-56923030924329243742014-04-11T01:46:00.002-07:002014-04-11T01:46:55.225-07:00Understanding Chinese Consumption: The Impact of HukouRebalancing hinges on China increasing consumption. It has long been acknowledged that the Hukou system is an institutional blockage on consumption driven rebalancing. This new working paper looks at this important issue.<br />
<br />
<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2410216">Understanding Chinese Consumption: The Impact of Hukou</a><br />
<br />
BOFIT
Discussion Paper No. 7/2014
<br />
<div class="paperinfo">
<br />
CHRISTIAN
DREGER, <span style="font-family: Verdana; font-size: xx-small;">German Institute for Economic
Research (DIW Berlin), European University Viadrina Frankfurt (Oder),
Institute for the Study of Labor (IZA), Chinese Academy of Social
Sciences (CASS)</span><br />
<br />
TONGSAN
WANG, <span style="font-family: Verdana; font-size: xx-small;">Chinese Academy of Social Sciences (CASS)</span><br />
<br />
YANQUN
ZHANG, <span style="font-family: Verdana; font-size: xx-small;">Chinese Academy of Social Sciences (CASS)</span><br />
<br />
<br />
Capital investment and exports have driven China’s remarkable
economic growth for decades, but recent trends have put pressure on the
government to move to a more consumption-driven model of growth.
Unfortunately, China’s institutional framework does little
at the moment to spur household consumption. While the country’s weak
social security setup and highly regulated financial markets are
routinely cited as disincentives to private consumption, the role of the
hukou household registration system in depressing
consumption gets less attention. Controlling for income levels on
datasets from 2002 and 2007, we show the average propensity to consume
is significantly lower for internal migrants to cities. Official figures
suggest that China in 2013 had about 260 million
internal migrants. These individuals are often separated from their
families for long periods and denied access to public services in the
cities where they work. The government’s current urbanization strategy
calls for increasing migrant populations in cities,
which, in the absence of hukou reform, is likely to further dampen
consumption. </div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-33875601668350224642014-04-09T00:32:00.001-07:002014-04-09T00:32:33.635-07:00The Conflicted Emergence of the Renminbi as an International CurrencyResearch paper by McKinnon and Schnabl (CESifo). I agree with the sentiment expressed in this paper. Internationalization of the RMB will be a massive challenge with plenty of pitfalls along the way.<br />
<br />
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2407891">"China'sExchange Rate and Financial Repression: The Conflicted Emergence of theRenminbi as an International Currency" </a><img alt="Free Download" border="0" id="_x0000_i1025" src="http://hq.ssrn.com/Journals/Images/free_pdf.gif" /> </span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<i><span style="color: #003366; text-decoration: none; text-underline: none;">CESifo Working Paper Series No. 4649</span></i></span></div>
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<br /></div>
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><b><span style="color: #003366; text-decoration: none; text-underline: none;">RONALD MCKINNON</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">Stanford University
- Department of Economics, CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
</span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;"><a href="mailto:mckinnon@stanford.edu"><span style="color: #003366; font-size: 9.0pt; text-decoration: none; text-underline: none;"></span></a></span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<b><span style="color: #003366; text-decoration: none; text-underline: none;">GUNTHER SCHNABL</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">University of Leipzig - Institute for
Economic Policy, CESifo (Center for Economic Studies and Ifo Institute)</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
</span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;"><a href="mailto:schnabl@wifa.uni-leipzig.de"><span style="color: #003366; font-size: 9.0pt; text-decoration: none; text-underline: none;"></span></a></span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;">China
has been provoked into speeding renmnibi internationalization. But despite
rapid growth in offshore financial markets in RMB, the Chinese authorities are
essentially trapped into maintaining exchange controls — reinforced by
financial repression in domestic interest rates — to avoid an avalanche of
foreign capital inflows that would threaten inflation and asset price bubbles
by driving nominal interest rates on RMB assets down further. Because a
floating (appreciating) exchange rate could attract even more hot money
inflows, the People’s Bank of China should focus on tightly stabilizing the
yuan/dollar exchange rate to encourage naturally high wage increases for
balancing China’s international competitiveness. </span></div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-14274952048164843092014-03-27T01:54:00.002-07:002014-03-27T01:54:12.092-07:00China: Size mattersNice little IMF article. <a href="http://blog-imfdirect.imf.org/2014/03/26/china-size-matters/">http://blog-imfdirect.imf.org/2014/03/26/china-size-matters/</a><br />
<br />
<strong>"How big is China?</strong><br />
<strong> </strong><i> </i><br />
<blockquote class="tr_bq">
<i>Big. China is the world’s second largest economy. Based on PPP
exchange rates, China increased from 6 percent of global output in 1995,
to 15 percent last year (see chart). Or, if you prefer using market
exchange rates, the corresponding rise in China’s share of global GDP is
from 2 percent in 1995 to 12 percent in 2013.</i></blockquote>
<blockquote class="tr_bq">
<br />
<i>When will China surpass the US? In 2018, based on PPP exchange rates.
Later using market exchange rates—by 2019, the last year of our
projections, China’s economy would be equivalent to about 64 percent of
US GDP."</i></blockquote>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-81557931585545915882014-03-07T05:06:00.002-08:002014-03-07T05:06:18.523-08:00Chinese capitalism - first default on bond paymentsWSJ reports that Chinese state owned banks have let a company default. This might be the first company default and whilst seemingly bad news (certainly for investors in Shanghai Chaori) it shows that China is prepared to let companies go under. In the long run this has to be good news.<br />
<br />
As an aside for environmental readers - it is not surprising it is a solar company. Massive over capacity. <br />
<br />
<h1 itemprop="headline">
<span style="font-size: small;"><a href="http://online.wsj.com/news/articles/SB10001424052702304732804579424152861860372">Shanghai Chaori in Default on Bond Interest Payments </a>[Wall Street Journal]</span></h1>
<blockquote class="tr_bq">
<h1 itemprop="headline">
<i><span style="font-weight: normal;"><span style="font-size: small;">BEIJING—A Chinese solar-equipment maker on
Friday failed to meet interest payments on a bond, according to a
company official there, becoming China's first domestic corporate bond
default.</span></span></i></h1>
<div style="font-size: 15px;">
<i>Liu Tielong, board secretary of
Shanghai Chaori Solar Energy Science & Technology Co., said on
Friday that it was in default. The heavily indebted company had warned on Tuesday
that it wouldn't be able to meet interest payments totaling 89.8
million yuan ($14.7 million), citing a credit squeeze and its inability
to raise enough funds to make the interest payments.</i></div>
<div style="font-size: 15px;">
<br /></div>
<div style="font-size: 15px;">
<i>The
default, though small in size, marks the first time a Chinese company
has defaulted on a bond traded in the mainland, according to Moody's
Investors Service.</i></div>
</blockquote>
<h1 itemprop="headline">
</h1>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-61420164017590655352014-02-28T02:36:00.003-08:002014-02-28T02:36:37.295-08:00Research Paper: "How Far Can Renminbi Internationalization Go?" <!--[if !mso]>
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<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
I can only agree that the road ahead will be long and bumpy. Capital controls are key. London stands to benefit from internationalisation but there will be increased competition for this business. George needs to be on the case. </div>
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<br /></div>
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</div>
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<br /></div>
<br />
<br />
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2395825"><b><span style="border: solid #BFD0E9 1.0pt; color: #003366; padding: 0cm; text-decoration: none; text-underline: none;">"How Far Can RenminbiInternationalization Go?"</span></b></a> </span></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<i><span style="color: #003366; text-decoration: none; text-underline: none;">ADBI Working Paper 461</span></i></span></div>
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<br /></div>
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<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><b><span style="color: #003366; text-decoration: none; text-underline: none;">YU YONGDING</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">Chinese Academy of Social Sciences (CASS)</span></div>
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<br /></div>
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<i><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;">Since
the formal launch of the renminbi trade settlement scheme in 2009, renminbi
internationalization has made impressive inroads. The progress in renminbi
trade settlement is especially impressive. However, Hong Kong, China’s offshore
renminbi deposits failed to make significant progress as expected. The question
of how far renminbi internationalization can go has become a common concern in
the international financial community. This paper argues that the sheer size of
the People’s Republic of China’s (PRC) trade and the convenience of using the
renminbi for transaction settlements is one contributing factor, but that
exchange rate arbitrage and interest rate arbitrage matter also. As well, a
fundamental constraint for renminbi internationalization is the PRC’s capital
controls. Before fully opening up its capital account and making the renminbi
freely convertible, however, the PRC needs first to put its own house in order,
most importantly making the renminbi exchange rate flexible. While the renminbi
can and will become a major international currency eventually, the road to
internationalization is bound to be long and bumpy. </span></i></div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-80954229433892451202014-02-21T04:37:00.003-08:002014-02-21T04:37:44.016-08:00Opium wars, trade and precious metalsChina economics blog always keeps an eye on trade. The Opium wars are a fascinating case study. A recent article provides an interesting reminder of the issues.<br />
<br />
<h2 class="mf-single-article-title">
<span style="font-size: small;"><a href="http://modernfarmer.com/2014/02/old-time-farm-crime-opium-wars/">Old Time Farm Crime: The Opium Wars</a> [Modern Farmer]</span></h2>
<blockquote class="tr_bq">
<h2 class="mf-single-article-title">
<i><span style="font-size: small;"><span style="font-weight: normal;">"It was a major drug bust with more than 1,600 arrests and the confiscation of 11,000 pounds of a highly addictive substance.
</span></span></i></h2>
<div class="mf-single-article-excerpt">
<i><span style="font-size: small;">
No, this wasn’t a DEA raid of a major meth operation, or an Interpol
investigation into international drug smuggling. It was the year 1839
and the Chinese government was cracking down on British importation of
opium. The drug issue was a powder keg that led to a series of wars
between the two countries over the course of more than 20 years and
changed both nations for generations.</span></i></div>
<div class="mf-single-article-excerpt">
<br /></div>
<i><span style="font-size: small;">
</span></i><b><i><span style="font-size: small;">To the British, the Chinese crackdown was a matter of business. It
was a perceived trade imbalance on the British end due to Chinese
officials requiring silver in trade for their goods, most notably tea,
that led the British to realize that opium could tip the scales in their
favor.</span></i></b><br />
<br />
<i><span style="font-size: small;">
</span></i><i><span style="font-size: small;">The British government, initially through its East India Company,
had tried trading everything from woolens to scientific instruments to
pottery, but the Chinese only cared about precious metals."</span></i></blockquote>
<h2 class="mf-single-article-title">
<span style="font-weight: normal;"><span style="font-size: small;"> What is interesting here is that Chinese imports of gold and silver and yet again reaching record levels.</span></span></h2>
<blockquote class="tr_bq">
<h2 class="mf-single-article-title">
<i><span style="font-weight: normal;"><span style="font-size: small;">"<b>In a 50 year period prior to 1828, Britain paid out £27m
in silver to the Chinese. During the same period they only sold about
£9m of British goods to them. That balance shifted dramatically when the
British went full bore into opium smuggling.</b></span></span></i>
</h2>
<i><span style="font-size: small;">In the decade of the 1830s, despite an imperial decree outlawing the export of silver, China exported more than seven times
more silver than it took in (an estimated $7 million in and $52 million
out) a lot of that used to buy opium. And that doesn’t include the gold
that was exported in the same decade.</span></i><br />
<br />
<i><span style="font-size: small;">
</span></i><i><span style="font-size: small;">By the eve of war British merchants were exporting about $25 million (about $245 million today) worth of opium to China from their Indian possessions."</span></i><br />
</blockquote>
Interesting how things change and yet stay the same. <br />
<blockquote class="tr_bq">
<i><span style="font-size: small;"> </span></i><br />
</blockquote>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-36449003677312993282014-02-20T05:39:00.005-08:002014-02-20T05:39:57.580-08:00China rebalancing - rural income rises suggest light at the end of the very long tunnelChina is currently getting a bad rap. Everyone from this blog to Robert Peston's documentary are highlighting doom and gloom ahead. This recent Bloomberg piece suggests there is some light at the end of the tunnel.<br />
<br />
China needs to increase consumption and rely less on exports. My view has been that the gulf is too great and that there is some serious pain ahead. I have not changed that view yet but it is always good to see some progress.<br />
<br />
Debt fuelled investment remains a major concern.<br />
<br />
I am working on a couple of projecting looking at urbanization and energy use. Urbanization in China is an interesting and in my view important topic where government policy is changing and that will impact China and the world economy. There is also a close tie in with migration and registration issues. This Bloomberg piece is a nice summary. [My <b>bold</b>]<br />
<h1 class="article_title buffer">
<span style="font-size: small;"><a href="http://www.bloomberg.com/news/2013-01-29/china-rural-income-gains-aid-shift-toward-consumption.html">China Rural-Income Gains Aid Shift Toward Consumption</a> [Bloomberg]</span></h1>
<blockquote class="tr_bq">
<h1 class="article_title buffer">
<i><span style="font-weight: normal;"><span style="font-size: small;">"Chinese incomes rose faster in the countryside
than in cities for a third straight year in 2012 as migrant workers
boosted their pay and the government strengthened the social safety net.
</span></span></i></h1>
<i> </i><i>Rural per-capita net income advanced 10.7 percent, compared with 9.6 percent for urban
dwellers, partly on the rise in migrant laborers and their wages, the
National Bureau of Statistics said Jan. 18. Rural residents’ income from
benefits payments rose 21.9 percent, almost double the urban pace, as
the government boosted its budget for health-care handouts. </i><br />
<br />
<i> </i><i>Rural
spending power has been lifted by wages earned by peasants working in
cities, underscoring the broader benefits of the urbanization drive
championed by incoming Premier Li Keqiang. Spreading gains in consumption would help sustain a growth rebound and reduce the economy’s reliance on exports, which rose last year at less than half 2011’s pace. </i><br />
<br />
<i> </i><b><i>“Rising rural incomes should definitely help boost consumption and aid rebalancing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.
“Growth will gear down a bit as rising labor costs diminish investment
incentives, but such consumption-led expansion will be more
sustainable.” </i></b><br />
<br />
<i> </i><i>The trend may persist for a while as a declining working- age population
helps push up migrant laborers’ pay and the government keeps improving
social safety-net funds including for health care in the countryside,
said Zhang, who previously worked for the International Monetary Fund. </i><br />
<i> </i><h2>
<i>Retail Sales </i></h2>
<i> </i><i>Rural
per-capita net income, which includes migrant workers’ pay, rose more
than that of urban residents in 2010 for the first time since 1997.
Retail sales in rural regions rose 14.5 percent last year, exceeding the
gain in urban areas, which increased 14.3 percent, for the first time
in three years. That compares with 17.2 percent growth for urban
consumption in 2011 and a 16.7 percent advance for rural dwellers.</i><br />
<br />
<i> </i><i>Rural spending, at 2.78 trillion yuan
($447 billion) last year, was still less than one-fifth of what urban
households spent. Urbanites account for about 52.6 percent of China’s
population of 1.35 billion, according to the statistics bureau. </i><br />
<br />
<i> </i><i>The
central government’s transfer-payment budget for rural health-care
coverage in 2012 increased 36 percent to 106.3 billion yuan, according
to the Ministry of Finance. </i><br />
<br />
<i> </i><b><i>“Income and wealth reallocation
favoring rural households should definitely help boost consumption, as
the lower-income households normally have higher propensity to consume,”
said Ren Xianfang, a Beijing-based analyst with researcher IHS Inc. “This should help rebalancing.” </i></b><br />
<i> </i><h2>
<i>Registration System </i></h2>
<i> </i><i>The
situation highlights the urgency of measures such as overhauling a
household-registration system that keeps 642 million rural dwellers from
permanently joining the urban workforce, limiting their ability to
contribute to the economy. </i><br />
<br />
<i> </i><i>The State Council, or cabinet, said
in February 2012 it will implement a policy of helping people register
as urban residents in small and medium-sized cities and small townships
and ensure equal benefits for countryside residents who have an urban
registration. At the same time, the government will continue to
“reasonably control” the population of bigger cities including Beijing
and Shanghai. </i></blockquote>
<br />
<blockquote class="tr_bq">
<i> </i><i><b>China had about 230 million people by the end of 2011 who lived in cities without permanent residence, </b>Chen Xiwen,
China’s top rural-policy adviser, said Nov. 29. The Chinese government
has a huge challenge in providing education, health care and jobs for
these people, Chen said. </i><br />
<i> </i><h2>
<i>Major Tasks </i></h2>
<i> </i><i>Strengthening consumption’s role in boosting economic growth is one of the major tasks this year, the government said after the annual central economic work conference in December. Stephen Roach, former non-executive chairman for Morgan Stanley in Asia,
said in a Project Syndicate opinion article this week that “without
rebalancing and reforms, the days of the automatic Chinese soft landing
may be over.” </i><br />
<br />
<i> </i><i>A resurgence in optimism for China’s economy has given stocks a boost. The Shanghai Composite Index (SHCOMP),
the nation’s benchmark gauge, advanced 20 percent through yesterday
since its 2012 low on Dec. 3, a threshold used by some investors to
signal a bull market. The index fell 0.1 percent as of 1:08 p.m. local time today. </i><br />
<br />
<i> </i><i>While
economic growth for the full year was the weakest since 1999, expansion
rebounded in the fourth quarter to a 7.9 percent year-on-year pace
following a seven-quarter slowdown. </i></blockquote>
<blockquote class="tr_bq">
<i>Gree Electric Appliances Inc. (000651),
China’s biggest air- conditioner maker, may benefit from growing sales
in the countryside, China International Capital Corp. analysts said in a
Jan. 21 note. Gree said Jan. 18 that its 2012 profit may have increased
41 percent.</i><i></i></blockquote>
[...]<br />
<blockquote class="tr_bq">
<i></i><h2>
<i>Bigger Cake </i></h2>
<i> </i><i>Even with the
gains in China, per capita rural net income last year was 7,917 yuan,
less than a third of per capita urban disposable income of 24,565 yuan,
statistics bureau data showed. Ma Jiantang, head of the agency, said
Jan. 18 that China must on one hand, “make the cake bigger, and on the
other hand, we must do a better job in sharing the cake.” </i><br />
<br />
<i> </i><i>Under President Hu Jintao and Premier Wen Jiabao,
both set to retire in March, the government since 2003 has abolished
agriculture taxes, expanded health-care coverage and increased minimum
purchase prices of grains under efforts to boost rural development. </i></blockquote>
<blockquote class="tr_bq">
<i>The difference between rural and urban income growth was smaller in 2012 than the 3 percentage-point gap in 2011. </i></blockquote>
<blockquote class="tr_bq">
<i><b> “As
the narrowing of the gap in the pace of gains shows, more needs to be
done to reduce income disparities, and I expect the new government to
move in this direction,” </b>said Dariusz Kowalczyk, senior economist and
strategist at Credit Agricole CIB in Hong Kong."</i><br />
<h1 class="article_title buffer">
<span style="font-size: small;"><i> </i></span></h1>
</blockquote>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-70466228590878418172014-02-04T05:45:00.001-08:002014-02-04T05:45:18.029-08:00Scared of shadows? You should be - China's shadow banks<h1 class="pub">
<span style="font-size: small;"><span style="font-weight: normal;">China economic watch article. There are warning signs written all over the Chinese economy at the moment.</span></span></h1>
<h1 class="pub">
<span style="font-size: small;"><a href="http://blogs.piie.com/china/?p=3755" rel="bookmark" style="text-decoration: none;" title="title">Meet China’s Biggest Shadow Bank [</a></span><a href="http://blogs.piie.com/china/?p=3755" rel="bookmark" style="text-decoration: none;" title="title"></a><span style="font-size: small;">The Peterson Institute for International Economics]</span></h1>
<blockquote class="tr_bq">
<h1 class="pub">
<i><span style="font-weight: normal;"><span style="font-size: small;"> Shadow banks in China come in
a variety of forms and guises. The term is applied to everything from
trust companies and wealth management products to pawnshops and
underground lenders. What surprising is that China’s biggest shadow bank
is actually a creation of the central government and receives billions
in financing directly from the banks. Even more interesting, this
shadow bank recently pulled off a successful international IPO where it
raised billions of dollars.</span></span></i></h1>
<i>First, let’s deal with the terminology. The “shadow” in shadow
banking doesn’t imply nefarious doings, although it frequently involves a
bit of regulatory arbitrage. At the most basic level, shadow banking is
borrowing funds and extending credit outside of normal banking
structures.</i><br />
<br />
<i>So what is this mysterious shadow bank that has such tight government
connections? It’s none other than Cinda Asset Management Company, a
creation of the Ministry of Finance (MoF) and the beneficiary of a
recent 2.5 billion U.S. dollar IPO in Hong Kong. In terms of total
assets, Cinda is more than 15 times as large as any of the country’s
trust companies.</i><br />
<br />
<i>The normal business of a distressed asset management company (AMC) is
not shadow banking. It involves purchasing troubled loans at a discount
and trying to collect a higher amount from the debtors. Cinda was one
of the four AMC’s created by the central government to bailout the
banking sector in the 1990s. The initial round of bad debt purchasing
was policy-directed, starting in the late 1990s and lasting through the
mid-2000s. In the second half of the 2000s, the big four AMCs began to
purchase NPLs from banks on commercial terms and in the process tried to
transform themselves into market-oriented businesses.</i></blockquote>
<br />
<blockquote class="tr_bq">
<i>Over the last three and a half years, Cinda’s business has diverged
from this model. In addition to purchasing bad debts from banks and
other financial institutions, it has accumulated a vast stock of
distressed debt assets directly from non-financial corporations.</i></blockquote>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-10960022202140883992014-02-02T14:13:00.000-08:002014-02-02T14:13:02.126-08:00China currency crisis to cause "global meltdown"The Telegraph do a good global crisis story. My <b>bold</b>.<br />
<br />
It appears that Chinese firms have been borrowing a lot of foreign money. The question is why given they have enough money of their own (this is another story). The risk is that US rate rises will lead to serious problems for Chinese borrowers and then "meltdown".<br />
<br />
China should be able to print enough money to solve most problems so fears are likely to be overdone but it is interesting to highlight the extent to which China is now borrowing from abroad.<br />
<br />
<h1 itemprop="headline name">
<span style="font-size: small;"><a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10612451/Currency-crisis-at-Chinese-banks-could-trigger-global-meltdown.html?fb">Currency crisis at Chinese banks 'could trigger global meltdown’</a> [Telegraph]</span></h1>
<blockquote class="tr_bq">
<h1 itemprop="headline name">
<i><span style="font-weight: normal;"><span style="font-size: small;">The growing problems in the Chinese banking system could spill over into a
<b>wider financial crisis</b>, one of the most respected analysts of China’s
lenders has warned.
</span></span></i></h1>
<div class="secondPar">
<i>
Charlene Chu, a former senior analyst at Fitch in Beijing and now the head of
Asian research at Autonomous Research, said the rapid expansion of
foreign-currency borrowing meant a crisis in China’s financial system was
becoming a bigger risk for international banks. </i><br />
</div>
<div class="thirdPar">
<i>
“One of the reasons why the situation in China has been so stable up to this
point is that, unlike many emerging markets, there is very, very little
reliance on foreign funding. As that changes, it obviously increases their
vulnerability to swings in foreign investor appetite,” said Ms Chu in an
interview with The Telegraph. </i><br />
</div>
<div class="fourthPar">
<i>
Ms Chu has been warning since 2009 about the growth of a shadow banking system
in China that has helped fuel the credit expansion seen in the country in
the wake of the Western financial crisis. </i></div>
</blockquote>
<blockquote class="tr_bq">
<i>However, fears are growing that the build-up of foreign borrowing by the
Chinese, particularly in US dollars, is creating an even greater build-up of
risk than that seen before the crisis of 2008.</i></blockquote>
<blockquote class="tr_bq">
<i>Figures published by the Bank for International Settlements (BIS) in October
showed foreign currency loans booked in China, as well as cross-border
borrowing by Chinese companies, had reached $880bn (£535bn) as of March
2013, from $270bn in 2009.
</i></blockquote>
<div class="body">
<blockquote>
<i>
Analysts say this figure is now likely to exceed $1 trillion and is continuing
to grow, raising the prospect of the potentially dangerous vulnerability of
the Chinese financial system to a rising dollar.
</i></blockquote>
<br />
<blockquote>
<i>
“It is very hard to work out the exposures of individual banks to the Chinese
financial system, but it seems to us there are some very large numbers on
some of the bank’s balance sheets,” said the analyst.
</i></blockquote>
<br />
<blockquote>
<i>
“Without a doubt, that has been on the rise [foreign currency borrowing] and
was really starting to grow fast in the latter half of last year and it’s
only going to continue. For the time being, it is only a fraction compared
to the massive size of the financial sector, but still we’re talking about a
growing amount of funding coming from offshore sources,” she said.
</i></blockquote>
<br />
<blockquote>
<i>
“You look at the exposure numbers from the BIS and the Hong Kong banks . ..
you’re going to encounter a few [foreign] institutions that are going to
have a sizeable exposure to China.” </i></blockquote>
<br />
<blockquote>
<i>
</i>
<i>
George Magnus, senior independent economist at UBS, said the Chinese banking
system resembled that of Japan during the 1980s in the years leading up to
the country’s financial crash.
</i></blockquote>
<br />
<blockquote>
<i>
“If the dollar were to appreciate it could cause problems for those banks that
have borrowed in dollars. Anywhere you have a banking system that uses a
non-domestic currency, there is a possibility of a mismatch that could cause
issues when the value of your liabilities runs away from you,” said Mr
Magnus.</i></blockquote>
<blockquote class="tr_bq">
<i>The BIS figures show foreign-currency loans are already at a decade high,
though the body said there was no reason this should mean there was a
“currency mismatch”.
</i></blockquote>
</div>
<h1 itemprop="headline name">
<span style="font-size: small;"><br /></span></h1>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-66603507830787603762014-01-31T00:35:00.000-08:002014-01-31T00:35:01.984-08:00Paper: "Consumption Based Estimates of Urban Chinese Growth" IMF paper: Urban inflation in China was pro-poor. Given rising inequality this is a ray of sunshine.<br />
<br />
It is interesting to note that consumption growth is put at 6.8% a year at a time when official growth statistics were generally over 10%. <br />
<br />
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2381858"><b><span style="border: solid #BFD0E9 1.0pt; color: #003366; mso-border-alt: solid #BFD0E9 .25pt; padding: 0cm; text-decoration: none; text-underline: none;">"ConsumptionBased Estimates of Urban Chinese Growth"</span></b></a> </span><br />
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<i><span style="color: #003366; text-decoration: none; text-underline: none;">IMF Working Paper No. 13/265</span></i></span><br />
</div>
<div class="MsoNormal" style="margin-left: 11.25pt; margin-right: 11.25pt; mso-margin-bottom-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><b><span style="color: #003366; text-decoration: none; text-underline: none;">MARCOS CHAMON</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">International
Monetary Fund (IMF) - Research Department</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
</span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;"><span style="color: #003366; font-size: 9.0pt; text-decoration: none; text-underline: none;"></span></span><br />
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"><br />
<b><span style="color: #003366; text-decoration: none; text-underline: none;">IRINEU DE CARVALHO FILHO</span></b>, </span><span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;">International Monetary Fund (IMF)</span><span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt;"></span><br />
<span style="font-family: "Verdana","sans-serif"; font-size: 7.5pt;"><span style="color: #003366; font-size: 9.0pt; text-decoration: none; text-underline: none;"></span></span></div>
<blockquote class="tr_bq">
<span style="font-family: "Verdana","sans-serif"; font-size: 9.0pt; mso-ansi-language: EN-GB; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-GB; mso-fareast-theme-font: minor-latin;"><i>This
paper estimates the household income growth rates implied by food demand in a
sample of urban Chinese households in 1993–2005. Our estimates, based on Engel
curves for food consumption, indicate an average per capita income growth of
6.8 percent per year in 1993–2005. This figure is slightly larger than the 5.9
percent per year obtained by deflating nominal incomes by the CPI. We attribute
this discrepancy to a small bias in the CPI, which is of a similar magnitude to
the one often associated with the CPI in the United States. Our estimates
indicate stronger gains among poorer households, suggesting that urban
inflation up to 2005 in China was “pro-poor,” in the sense that the increase in
the cost of living for poorer households was smaller than for the average one</i>. </span></blockquote>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-77341896662479504712014-01-24T04:34:00.001-08:002014-01-24T04:34:27.365-08:00"Air-pork-alypse"<span style="font-size: small;">I can never resit a good play on words</span> and a fine sets of images from Shanghaist. As someone who has spent sometime in Wuhan this comes as no particular surprise.<br />
<br />The flavor must be something to savour.<br />
<br />
<h1>
<span style="font-size: small;"><a href="http://shanghaiist.com/2014/01/22/air-pork-alypse_wuhan_butcher_cures.php">Air-pork-alypse: Wuhan butcher cures bacon outdoors in the smog</a> [Shanghaiist]</span></h1>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-7ZNWxm-5gZI/UuJdvlkHHiI/AAAAAAAAAGY/A-1JPRbiI9Y/s1600/bacon1.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-7ZNWxm-5gZI/UuJdvlkHHiI/AAAAAAAAAGY/A-1JPRbiI9Y/s1600/bacon1.jpg" height="451" width="640" /></a></div>
<h1>
<span style="font-size: small;"><br /></span></h1>
<h1>
<span style="font-size: small;"><br /></span></h1>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-67800603996633430172014-01-23T00:44:00.001-08:002014-01-23T00:47:35.259-08:00Journal: The Growth and Decline of the Modern Sector and the Merchant Class in Imperial ChinaInteresting paper in the most recent Review of Development Economics. Historically, guns and growth have been close companions.<br />
<h1 class="articleTitle">
<a href="http://onlinelibrary.wiley.com/doi/10.1111/rode.12066/abstract"><span style="font-size: small;"><span class="mainTitle">The Growth and Decline of the Modern Sector and the Merchant Class in Imperial China</span></span></a></h1>
<blockquote class="tr_bq">
<h1 class="articleTitle">
<span style="font-size: small;"><span class="mainTitle"> </span>Abstract</span></h1>
</blockquote>
<div id="fulltext">
<div>
<div id="abstract">
<blockquote class="tr_bq">
<div class="para">
<em>This
paper offers an explanation of why, in Imperial China, the merchant
class expanded and the economy modernized up to the 13th century, and
why it entered into decline from the 14th century onward. The
modernization of China required the accumulation of public capital and
the building of good institutions, upon which a vibrant class of
merchants and entrepreneurs could gradually emerge. This class
contributed to the enrichment of the society and the emperor, but its
activities also weakened the dominance of the emperor and the élite,
who would then prefer to block the modernization of China and to
restrict the size of the merchant class, putting the economy into
long-run stagnation. However, when the emperor faced severe foreign
military threats and when he realized that a modern sector improved the
defense capabilities of China, he made the opposite choice.</em></div>
</blockquote>
</div>
</div>
</div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-4548737970908729402014-01-21T16:24:00.004-08:002014-01-21T16:24:37.392-08:00Will China's $23 Trillion Credit bubble collapse - and collapse soon?The guys over at Zero hedge warn it might. MEGA DEFAULT ahead? A classic dismal scientist story.<br />
<br />
As an economist it is always interesting and useful to read "the worst case" scenario articles. By now we know very well that black swan events happen and more often that we care to imagine. In this case the concern is China's increase in credit from $9 trillion to over $23 trillion in 5 years.<br />
<br />
But China has been growing rapidly so it is not a problem right? Not so simple.<br />
<br />
I agree with Michael Snyder here (author of the Zerohedge article) - many Chinese companies are in deep - way too deep. <br />
<br />
Other posts have considered local government debt.<br />
<br />
The date suggested - 31st January. Of course this is scaremongering and not a reason to sell everything and buy gold (as many would suggest).<br />
<br />
In reality the Chinese government have enough firepower to prevent catastrophic collapse but it might be worth watching the indices carefully on the 31st January.<br />
<br />
<b> <a href="http://www.zerohedge.com/news/2014-01-21/guest-post-23-trillion-credit-bubble-china-starting-collapse-%E2%80%93-what-next">The $23 Trillion Credit Bubble In China Is Starting To Collapse – What Next?</a></b> [Zerohedge]<br />
<br />
<br />
<br />Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-34998977564699946092014-01-21T16:02:00.001-08:002014-01-21T16:03:02.743-08:00China's elite and their "offshore" assetsAn open secret is that large numbers of Chinese have assets outside of the country and money is leaving China at a significant rate. Now CBCnew have written a nice article on the subject that is sure to raise some eyebrows.<br />
<br />
Things could get ugly. Worth reading in full. My <b>bold</b>.<br />
<br />
<h1 class="story-title">
<span style="font-size: small;"><a href="http://www.cbc.ca/news/world/offshore-assets-of-china-s-elite-revealed-in-leaked-records-1.2504987">Offshore assets of China's elite revealed in leaked records </a>[CBCnews]</span></h1>
<h1 class="story-title">
</h1>
<blockquote class="tr_bq">
<i>"Close relatives of China's top leaders have used secretive offshore
companies in tax havens that helped shroud the Communist elite's wealth,
according to a massive cache of leaked financial records, posing a
formidable challenge for President Xi Jinping, the country's avowed anti-corruption leader.</i><br />
<i>
</i><br />
<i>The confidential files include details of a real estate company
co-owned by Xi's brother-in-law, as well as British Virgin Islands
corporations set up by former premier Wen Jiabao's son and son-in-law,
plus dozens of more cases of people tied to high-level officials."</i></blockquote>
<br />
../<br />
<blockquote class="tr_bq">
<i>CBC News has exclusive access in Canada to the files, which show that
<b>nearly 22,000 people with addresses in mainland China and Hong Kong are
involved in offshore dealings </b>in locales such as the British Virgin
Islands and the Cook Islands, places usually associated with hidden
wealth. Among them are some of China's most powerful men and women —
including at least 15 of China's richest, members of the National
People's Congress and executives from state-owned companies entangled in
corruption scandals.</i></blockquote>
<h1 class="story-title">
<span style="font-size: small;"><br /></span></h1>
<h1 class="story-title">
</h1>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-33572847663306381642014-01-17T05:57:00.001-08:002014-01-17T05:57:07.790-08:00Academic Paper: Sector-Level Productivity, Structural Change, and Rebalancing in China<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
<a href="https://www.blogger.com/blogger.g?blogID=5458209304128232367" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a>The future of China depends to large extent to some degree of structural re balancing. Export driven growth will be harder to achieve in a sluggish global economy. This new IMF working paper is a province level study that considers productivity in the services sector. Services have been growing rapidly - this will help GDP growth in the future. Will the change happen quick enough?</div>
<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
<br /></div>
<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
</div>
<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2371651">Sector-Level Productivity, Structural Change, and Rebalancing in China"</a>
</div>
<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
<br />
IMF
Working Paper No. 13/240</div>
<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
<div class="paperinfo">
MALHAR
NABAR, <span style="font-family: Verdana; font-size: xx-small;">International Monetary Fund (IMF)</span><br />
<span style="font-family: Verdana; font-size: xx-small;"><a class="email" href="https://mail.bham.ac.uk/owa/redir.aspx?C=eh9P5Ml6QkyV9y-O-wzHf8hiCyAd59AIfzyzrriLaf7BL2zylB32TDoN52OtBb7hMk8Pt0dUzEs.&URL=mailto%3amnabar%40imf.org" target="_blank"></a></span><br />
<br />
KAI
YAN, <span style="font-family: Verdana; font-size: xx-small;">Yale University</span><br />
<span style="font-family: Verdana; font-size: xx-small;"></span><br />
<br />
<br />
This paper studies structural changes underlying China's remarkable
and unprecedented growth in recent years. While patterns of structural
transformation across China's provinces are broadly in line with
international experience, one important difference
is in labor productivity differentials between services and the rest of
the economy. Specifically, the gap between labor productivity in the
rest of the economy and services has widened across China's provinces as
they have moved from low to middle income,
which is contrary to the trend observed in cross-country experience.
Evidence from a panel of China's provinces suggests that credit and
labor market frictions have inhibited labor productivity growth in
services relatively more than in the rest of the economy.
Reducing these frictions is essential for achieving the next stage of
China's development, one in which the service sector will need to play a
more prominent role as an engine of growth. The evidence also suggests
that improving labor productivity in services
will lift the consumption share of GDP, thereby advancing the needed
rebalancing of domestic demand in China.
<br />
</div>
</div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-53594880501440395952014-01-17T05:19:00.000-08:002014-01-17T05:19:22.788-08:00Academic Paper: "Local Government Financing Platforms in China: A Fortune or Misfortune?"New IMF working paper. Local government "issues" <span style="font-size: small;">are a key element of </span>China's future success (or failure). Bad debts and poor investment decisions need careful examination. Land to sell is running out.<br />
<br />
<div style="color: black; direction: ltr; font-family: Tahoma; font-size: 10pt;">
<span style="font-size: small;">"<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2375564">Local Government Financing Platforms in China: A Fortune or Misfortune?</a>" <img alt="Free Download" />
</span><br /><br />
IMF
Working Paper No. 13/243<br />
<div class="paperinfo">
<br />
YINQIU
LU, <span style="font-family: Verdana; font-size: xx-small;">International Monetary Fund</span><br /><br />
TAO
SUN, <span style="font-family: Verdana; font-size: xx-small;">International Monetary Fund (IMF)</span><br />
<br />
<br />
China’s rapid credit expansion in 2009–10 brought local government
financing platforms (LGFPs) into the spotlight. This paper discusses
their function, reasons behind their recent expansion, and risks they
are posing to the financial sector, local governments,
and sovereign balance sheet. This paper argues that LGFPs were a
fortune for China in the past, but would turn out to be a misfortune if
the causes of the rapid expansion of LGFPs are not addressed promptly.
In this context, the paper proposes ways to avoid
misfortune by: acknowledging and addressing the revenue and expenditure
mismatches at the local government level; establishing a comprehensive
framework to regulate and supervise local government budgets; ensuring
the sustainability of the financial resources
obtained from the sale of land use rights; and developing local
government bond markets and promoting financial reforms.
<br />
</div>
</div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-54311701302902761402014-01-15T03:44:00.000-08:002014-01-15T03:44:14.914-08:00The Middle DreamLauren Johnston explains "the Middle Dream" on the China Policy Institute Blog. <a href="http://blogs.nottingham.ac.uk/chinapolicyinstitute/2014/01/14/the-middle-dream/">Link</a>.<br />
<br />
A small flavour. <br />
<br />
<blockquote class="tr_bq">
<div style="text-align: justify;">
<i>Soon after becoming Chinese President in November 2012 Xi Jinping spoke of his belief that “The Great Revival of the Chinese nation is the greatest Chinese dream”.
Attempts to understand the concept of “Chinese dream”, inside and
outside of China, have followed extensively since. This post reflects on
the evolution of Chinese leaders’ political lexicon since Deng, and
finds that Xi’s China dream is a lexical shift, but a policy continuum,
allowing for greater aspirational convergence among China’s own poor and
rich, and also in China’s foreign relations with developed as well as
developing countries.</i></div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<i>Reformist leader Deng Xiaoping famously
employed the slogan “opening and reform”. Enduring to now have become
the commonly used phrase capturing China’s remarkable program of
economic reforms since 1979. Lesser-known of Deng’s lexicon however, and
directly sharing more in common with the essence of the contemporary
Chinese dream, is his 1978 call for the “invigoration of China” (zhenxing zhonghua).
In sum, the “invigoration of China” was arguably Deng’s national
vision, while “opening and reform” served as the umbrella policy
direction that would be used to move the nation toward that vision.</i></div>
</blockquote>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-55769953715792172902014-01-14T08:25:00.003-08:002014-01-14T08:25:58.265-08:00Will the Renminbi Emerge as an International Reserve Currency? Academic paper published in the most recent issue of World Economy.<br />
<br />
<a href="http://onlinelibrary.wiley.com/doi/10.1111/twec.12092/abstract">Will the Renminbi Emerge as an International Reserve Currency?</a> [World Economy]<br />
<br />
<div id="fulltext">
<div>
<div id="abstract">
<h3>
Abstract</h3>
<blockquote class="tr_bq">
<h3>
<i><span style="font-weight: normal;"><span style="font-size: small;">The
global reserve system can be strengthened by increasing the role of
alternative currencies. A gradual evolution to a multicurrency system
reduces pressure on a single reserve currency issuer from an
ever-growing balance-of-payments deficit. It also allows countries to
better diversify their foreign exchange holdings. Given the continuing
strong economic growth in the China and its growing influence on the
world economy, the renminbi will likely emerge as a new international
currency. However, this is contingent on the China accepting a more
convertible capital account and developing an efficient financial
system. Internationalising the renminbi will likely be a gradual and
drawn-out process. Simulations show that, with greater convertibility,
the renminbi could gradually become an international currency within
Asia and beyond – sharing from 3 to 12 per cent of international
reserves by 2035.</span></span></i></h3>
</blockquote>
</div>
</div>
</div>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-71424442044763922852014-01-11T14:38:00.001-08:002014-01-11T14:38:54.765-08:00China's runnaway train - crash ahead?Bloomberg give an impressively bleak outlook on China. <a href="http://www.bloomberg.com/news/2014-01-02/china-s-runaway-train-is-running-out-of-track.html">Link</a>. The key is the "debt" - this is a real problem. <span class="author">Patrick Chovanec</span><span class="divider"> does a great job.</span><br />
<br />
<span class="divider">My <b>bold</b>. </span><br />
<span class="divider"><br /></span>
<span class="divider">I have real concerns about a liquidity crisis - the issue is local government debt. The newspaper headlines are usually about how much money China has. How can debt be a problem?</span><br />
<span class="divider"><br /></span>
<span class="divider">I have included the whole article given how good it is. The interesting questions and first, what can China do to address these issues and second, what should the West and investors around the world do to protect themselves from a possible crisis (and in the case of hedge funds - profit from it).</span><br />
<span class="divider"></span><br />
<h1 class="article_title buffer">
<span style="font-size: small;"><a href="http://www.bloomberg.com/news/2014-01-02/china-s-runaway-train-is-running-out-of-track.html">China’s Runaway Train Is Running Out of Track </a>[Bloomberg]</span></h1>
<blockquote class="tr_bq">
<h1 class="article_title buffer">
<i><span style="font-weight: normal;"><span style="font-size: small;">"A financial drama is unfolding in
China as the new year begins. Last week, for the second time in
six months, interest rates in the critical interbank lending
market spiked above 10 percent, <b>prompting fears of a liquidity
crisis that would trigger mass defaults and cripple the world’s
second-largest economy</b>. </span></span></i></h1>
<i>Western investors largely ignored the cash crunch and
failed to grasp its potential significance. Although the
situation has largely eased after the People’s Bank of China
hastily injected at least $55 billion into the market, that
isn’t the end of the story. These repeated crises are a sign
that the foundations of China’s investment-driven growth model
are crumbling -- with unsettling implications for the rest of
the global economy. </i><br />
<br />
<i>To those who wrote off China’s first banking seizure in
June as a fluke, this latest episode appeared to come out of
nowhere. They cast about for explanations: Perhaps some seasonal
surge in cash withdrawals was to blame, or the U.S. Federal
Reserve’s decision to taper its bond-buying policy. Optimists
assumed the PBOC was tightening credit on purpose, as a warning
to banks to rein in unsafe lending practices. With inflation at
manageable levels, they reasoned, the People’s Bank of China had
plenty of room to loosen monetary policy again and ease the cash
crunch. </i><br />
<br />
<i>In fact, loose monetary policy is the problem, not the
solution. <b>Two simple words -- bad debt -- are the key to
understanding why China has too much money, yet not enough. </b>In
the years since the global financial crisis, China has racked up
impressive growth in gross domestic product by engineering an
investment boom, fueled by a surge in easy credit. Total debt
has risen sharply, from 125 percent of GDP in 2008 to 215
percent in 2012. <b>Credit has spiraled to $24 trillion from $9
trillion at the end of 2008. That’s an additional $15 trillion </b>-
- the size of the entire U.S. commercial banking sector -- lent
out in just five years. </i><br />
<br />
<i><b>A lot of that money has gone into projects whose purpose
was to inflate the country’s economic statistics, not to
generate a return.</b> Officially, China’s banks report a
nonperforming loan ratio of less than 1 percent. In reality,
they are rolling over huge amounts of bad debt, both on their
own books and by repackaging it into retail investment products
-- many of them extremely short-term -- that promise ever higher
rates of return. </i><br />
<br />
<i>China’s banks can hide bad debt by playing this shell game,
yet that doesn’t change the fact that they’re not getting their
money back. With their capital locked up in existing projects,
the only way they can finance the next round of big investments
-- and keep China’s GDP growth rates from collapsing -- is by
expanding credit. More and more of that new credit is now eaten
up paying imaginary returns on the growing pile of bad debt. </i><br />
<br />
<i>This year, total credit in China grew about 20 percent,
from an extremely high base -- hardly tight money. Yet the cash
needs of China’s banks aren’t what they seem. In addition to its
declared balance sheet, each bank is juggling a host of dubious
assets and hidden cash obligations (in the form of quasi-deposits) on what amounts to a “shadow” balance sheet. Rein in
credit growth, even modestly, and there isn’t enough to go
around. </i><br />
<br />
<i>That’s what Chinese authorities discovered in June, and
again last week. In both instances, the People’s Bank of China
didn’t take away the punch bowl by tightening credit, it merely
tried to resist handing over an even bigger punch bowl. The
result, both times, was a near-meltdown in the interbank lending
market that threatened to unleash a cascade of defaults
throughout the economy. Nor have the signs of financial stress
been limited to the interbank market: Over the past few months,
yields on Chinese government and corporate bonds have steadily
risen, even as the economy slows. </i></blockquote>
<br />
<blockquote class="tr_bq">
<i>The PBOC could, and did, halt the immediate liquidity
crisis by injecting more cash. But in doing so, it effectively
cedes control over monetary policy to the shadow banks. Runaway
lending continues, bad debts mount even higher, and the need for
more cash to paper over losses becomes that much more acute. Far
from solving the problem, pumping in more cash just kicks the
can farther down a dead-end street. </i><br />
<br />
<i>The implications of this brewing storm are bigger than many
global investors realize. China’s credit-fueled investment boom
has been a driver of metals prices and machinery exports. China
has become the world’s largest automobile market, its largest
oil importer, and its largest buyer of gold. Although foreign
banks have relatively little direct exposure to Chinese
financial markets, capital flows into and out of the mainland
are potentially large enough to have a significant impact on
asset classes not normally associated with China. <b>A financial
train wreck would send tremors through global markets. </b></i></blockquote>
<br />
<blockquote class="tr_bq">
<i>The detailed blueprint for market reform published by the
Communist Party in November encouraged many. <b>China’s leaders
clearly recognize that its economy needs to move in a new
direction. But the first crucial step, weaning China away from
its addiction to debt-fueled stimulus, is proving a lot harder
than many imagined. China’s leaders are riding a runaway train
that they don’t quite know how to stop. And they’re running out
of track. </b></i><br />
<br />
<i>(Patrick Chovanec is managing director and chief strategist
at Silvercrest Asset Management, and a former associate
professor at Tsinghua University’s School of Economics and
Management. Follow him on Twitter at @prchovanec.) </i><br />
<br />
<i>To contact the writer of this article:
Patrick Chovanec at pchovanec@silvercrestgroup.com."</i></blockquote>
<h1 class="article_title buffer">
<span style="font-size: small;"><br /></span></h1>
Anonymoushttp://www.blogger.com/profile/08649345297844206449noreply@blogger.com0tag:blogger.com,1999:blog-5458209304128232367.post-39487818406642841602014-01-10T09:08:00.004-08:002014-01-10T09:08:39.840-08:00China's Coal BOOM<!--[if gte mso 9]><xml>
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<![endif]--><span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">China approved the construction of more than 100 million tonnes of new
coal production capacity in 2013 – six times more than a year earlier. <a href="http://www.reuters.com/article/2014/01/07/china-coal-idUSL3N0K90H720140107">Reuters Link</a>. Airmageddon!</span><br />
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;"><br /></span>
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">The problem is of course that coal is cheap and despite great progress on renewables and nuclear these can never increase fast enough to outpace economic growth - for now.</span><br />
<br />
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Cheery Friday post bit next.... </span><br />
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;"><br /></span>
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Of course when the Chinese bubble bursts as wages rise, productivity falls, energy costs rise and the construction boom collapses after the housing bubble bursts, things may change and pollution may improve. Until then - airmageddon will continue.</span><br />
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;"><br /></span>
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">What is interesting (from academic paper perspective) is to map the "closed mines" relative to the newly "opened mines". I suspect this will match population densities and lobbying power of cities and provinces. This means a large shift in jobs (and detrimental health impacts). The winners in terms of jobs may well be the losers in terms of health.</span><br />
<span style="color: #202020; font-family: "Trebuchet MS","sans-serif"; font-size: 10.5pt; mso-ansi-language: EN-GB; mso-bidi-font-family: Arial; mso-bidi-language: AR-SA; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;"><br /></span>
<br />
<h1>
<span style="font-size: small;">China approves massive new coal capacity despite pollution fears [<a href="http://www.reuters.com/article/2014/01/07/china-coal-idUSL3N0K90H720140107">Reuters</a>]</span></h1>
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText">"BEIJING, Jan 8 (Reuters) - <a href="http://www.reuters.com/places/china" title="Full coverage of China">China</a>
approved the construction of more than 100 million tonnes of new coal
production capacity in 2013 - six times more than a year earlier and
equal to 10 percent of U.S. annual usage - flying in the face of plans
to tackle choking air pollution.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_4"></span>The scale of the increase, which only includes major mines,
reflects Beijing's aim to put 860 million tonnes of new coal
production capacity into operation over the five years to 2015,
more than the entire annual output of India.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_5"></span>While efforts to curb pollution mean coal's share of the
country's energy mix is set to dip, the total amount of the
cheap and plentiful fuel burned will still rise.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_6"></span>According to data compiled by Reuters, the National
Development and Reform Commission (NDRC), China's top planning
authority, approved the construction of 15 new large-scale coal
mines with 101.3 million tonnes of annual capacity in 2013.<br />
<span id="midArticle_7"></span>"Given that China's total energy consumption is still
growing along with the economy, then coal production will
continue to grow," said Helen Lau, senior commodities analyst
with UOB Kay Hian in Hong Kong.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_8"></span>"While China is trying to foster consumption from other
sources like hydro and nuclear, we expect actual coal production
to grow 2-3 percent a year in the next five years."<br />
<span id="midArticle_9"></span>Chinese coal production of 3.66 billion tonnes at the end of
2012 already accounts for nearly half the global total,
according to official data. The figure dwarves production rates
of just over 1 billion tonnes each in Europe and the United
States.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_10"></span>Much of China's new capacity is in regions like Inner
Mongolia and Shaanxi, reflecting a strategy to close small mines
in marginal locations like Beijing and consolidate output in a
series of huge "coal industry bases" that will deliver thermal
power to markets via the grid.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_11"></span>While expanding output at such bases, China has shut more
than 300 million tonnes of old capacity in the last decade, but
critics say new mines are rapidly outpacing closures and the
policy merely shifts China's environmental problems elsewhere.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_12"></span>"Despite the climate change pressure, water resource
scarcity and other environmental problems, the coal industry is
still expanding fast in northwest China," said Deng Ping, a
campaigner with environmental group Greenpeace in Beijing.<br />
<span id="midArticle_13"></span>"The scale of these coal bases has been rarely seen in other
places in the world, with open-cast coal mines, coal power
plants, and coal chemical plants all combined together."</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_14"></span>The new projects involved a total investment of 54.1 billion
yuan ($8.9 billion). In 2012, the administration approved just
four coal projects with 16.6 million tonnes of annual capacity
and a total investment of 7.8 billion yuan.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_15"></span>The list of approvals does not cover all mines launched in
2013, with many smaller projects under the purview of local
authorities and not the central government. According to rules
issued in December, coal mines producing more than 1.2 million
tonnes per year need Beijing's go-ahead, while local governments
can approve the rest.<br />
<span id="midArticle_0"></span>It takes the NDRC months to announce new mine approvals, so
other projects may have been passed in the fourth quarter. One
46 million-tonne mine was approved in December but the NDRC has
yet to publish details. An NDRC spokesman was not available to comment.</span></i></span></span></h1>
</blockquote>
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_2"></span><span id="midArticle_3"></span><b>TACKLING SMOG</b></span></i></span></span></h1>
</blockquote>
<blockquote class="tr_bq">
<i> With major cities hit by smog last year, the government has
promised to ease its dependence on coal, a major source of air,
soil and water pollution as well as climate-warming emissions.</i></blockquote>
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_5"></span>It has issued guidelines to restrict mining in residential
areas, improve quality and reduce overcapacity.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_6"></span>But coal is cheaper than all the alternatives and China is
the world's biggest producer as well consumer. It is also far
more reliable than intermittant energy sources like hydropower
or wind.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_7"></span>The 2011-2015 plan said
around 860 million tonnes of new coal production capacity will be
brought into operation, as well as 300 more gigawatts of coal-fired
power, twice the total generation capacity of Germany.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_8"></span>While Beijing said in September that it would cut the share
of coal in its primary energy mix to "less than 65 percent" by
2017, down from 66.8 percent in 2012, consumption will still
rise in absolute terms, with total energy demand set to grow 4.3
percent a year over the 2011-2015 period.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_9"></span>"The replacement of coal hasn't been as fast as expected,
and other sources of energy are not only expensive but also face
a lot of technical and environmental problems," said UOB's Lau.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_10"></span>The government's 2011-2015 energy plan put coal production
capacity at 4.1 billion tonnes by 2015, but Lau said it may be
much higher.</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_11"></span>"We estimate China's total coal production capacity will be
4.7 billion tonnes by 2015 - I think the government figure is a
big underestimation."</span></i></span></span></h1>
</blockquote>
<br />
<blockquote class="tr_bq">
<h1>
<span style="font-size: small;"><span style="font-weight: normal;"><i><span id="articleText"><span id="midArticle_12"></span>($1 = 6.0506 Chinese yuan)
(Reporting by David Stanway; Editing by Richard Pullin)"</span></i></span></span></h1>
</blockquote>
<br />
. <br />
<br />
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