I get a strong suspicion that too many people are too overweight in Chinese stocks now. The reason for this is that after posting the China Tax and China Labour Law changes on a number of sites, there has been absolutely no response at all on most. High profile names ignore the posts, nobody commenting at all, either pro or against.

It therefore suggests to me that lots of people are presently very overweight in China stocks, they have got caught with the market weakness, and are now holding at a loss - waiting to sell any rise.

If, and its only an "if", the market weakness continues, and more and more of these people are trapped into China plays - you can foresee, imv, a lot of weakness coming into that sector, as more and more give up and bail out.

Quite remarkable that so many got duped into buying "China" as a safety against US/EU credit fears and recessions - only to now find its not as safe as they thought, and China stocks are also falling.

My own suspicions were that the China stock dream would go into breakdown and start its fall once the 2008 Summer Olympics had passed and the government can afford the luxury of upsetting lots more people and not caring about "face" during the Olympics that the world will be watching.

Is there another boom left in them before the Olympics comes and goes ? Will the boom not happen as its sold into ? Will they all meakly fade now and continue to do so ? Will they just keep on booming and not fall back again ?

Please discuss !!

http://news.bbc.co.uk/2/hi/business/7119518.stm

Thursday, 29 November 2007, 17:13 GMT

China 'ends illegal tax breaks'

The US has been complaining about the power of Chinese exporters

China has agreed to end tax breaks for local manufacturers, which the US said gave them an unfair advantage over rivals, US trade officials have said.

Under the deal, China will remove the subsidies, which the US called "market distorting" by the end of the year.

The move is a major breakthrough for US-China trade relations, which have been strained recently, analysts said.

It ends a spat that began when the US took the matter to the World Trade Organization (WTO) in February.

US trade representative Susan Schwab said that China had agreed to remove the subsidies granted to Chinese exporters that encouraged them to sell products abroad more than they would otherwise.

The deal also would remove tax-breaks given to Chinese companies that used locally-made goods instead of imported ones.

"This outcome represents a victory for US manufacturers and their workers," said Ms Schwab.

"The agreement also demonstrates that two great trading nations can work together to settle disputes to their mutual benefit."

Tax rate changes and this mindset is going to alleviate the need for the Yuan to be revalued. Might dash a few peoples hopes, those who were expecting a fast change in the value of the Yuan (to boost sterling EPS levels). Could be the start of the change to China, and it might prove to be those buying into China were in fact (as many thought) buying the top, instead of buying the bottom some 15 years ago. The increase in tax rates is going to have some major changes to Chinese companies going forward, but, it had to be done, and so to see a start of it happening is good news for the rest of the world, and long may it continue. Now....on to Africa, the place of rapid growth in the decade ahead.




http://www.dailytimes.com.pk/default.asp?page=2007%5C12%5C02%5Cstory_2-12-2007_pg5_17

Scrapping China subsidies may ease pressure on yuan

* By agreeing at US behest to scrap a dozen tax breaks and other subsidies, China is increasing exporters cost of production to force prices higher

BEIJING: Its presumably not what Washington had in mind, but the resolution of a trade dispute with China over industrial subsidies might make a more rapid rise in the yuan a little less likely.

By agreeing at US behest to scrap a dozen tax breaks and other subsidies, China is increasing exporters cost of production to force prices higher; as such the yuans real, or inflation-adjusted, exchange rate will rise, which should eventually trim Chinas trade surplus and hence the need for faster appreciation of the yuans nominal rate.

Li Xiangyang, vice-head of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences (CASS), the governments top think-tank, said settling the row was a very smart move by Beijing.

On the nominal exchange rate, China might face less pressure from the U.S. as a result of the subsidy withdrawal, he told a forum in Beijing on Friday.

The authorities have been steadily nudging up prices for industrial users of everything from natural gas to land and wastewater treatment. Fast-rising factory wages and complying with a new labour law will also add to costs.

Beijing has taken particular aim at low-end export industries that consume huge amounts of energy to transform expensive raw materials, creating more pollution than added-value in the process.

All these measures will increase the cost of Chinese products and make exports more expensive, Li said. If all those policies are implemented well, the pressure on China to speed up the yuans appreciation will be much smaller.

Twin-track approach: Deliberately allowing prices to rise to achieve a real appreciation is not without its risks, especially when consumer price inflation is already at a decade high of 6.5 percent.

But there is no political consensus in Beijing to permit the sharp rise in the currency needed to cut the trade surplus to a level that would defuse international pressure and restore a modicum of monetary policy autonomy. The central banks hands are largely tied for now because, in order to hold down the value of the yuan, it buys most of the dollars flowing into China.

Thered be a lot of support in China for having most of the appreciation happen, over a period of time, through an adjustment of prices rather than through the exchange rate at all, said Paul Cavey, an economist at Macquarie Securities in Hong Kong. If all resources in China were properly priced, the renminbi probably wouldnt be undervalued at the moment because the trade surplus would be less, Cavey said. reuters

I was interested in the "new labour law" as mentioned in the earlier article, the massively rising wage costs was known, but the new labour law ? Well, got some info now, and put it over on TMF.

Sounds like a "power to the people" job, and making all companies be in compliance is really going to push up costs imo, which will hit those margins of quite a list of companies.



Here is the article :

http://www.chinalawblog.com/2007/11/chinas_new_labor_law_its_a_hug.html


China's New Labor Law -- It's A Huge Deal. Huge I Tell You.

Posted by Dan on November 11, 2007 at 01:44 AM

Discussion: Comments (75) : TrackBacks (4) : Linking Blogs : Add to del.icio.us

Everything is going to change on January 1, 2008, for employers in China. Well almost everything. That is the day China's new labor law goes into effect and if you have employees in China (especially if you "unofficially" have employees in China), you absolutely must take various steps to get into compliance AND to avoid being sued. And you better start taking those steps now.

CLB's Steve Dickinson has been working with many foreign companies to get them ready for the new law, called the labor contract law (LCL) and he just wrote a column for China International Business magazine on the basics involved. The article is entitled, "Power to the People," with the "people" being employees and Chinese lawyers, who are already salivating about suing foreign companies on this. And when I say salivating, I mean salivating. We have heard from Chinese lawyers who already have plaintiffs all lined up and ready to sue various foreign companies for when those foreign companies fail to comply. I kid you not.

The new labor law is going to apply to all employers, no matter how few employees (even one!) they might have. It is going to require all labor contracts be in writing and it will impose significant penalties on employers for failing to comply with this. Employees can claim double salary for months worked without a contract for up to 12 months salary. This rule is absolutely going to apply to "informal" employment relationships common to so many foreign businesses doing business in China. Expect a whole slew of lawsuits to be filed on January 1, 2009, by employees seeking double damages for the 12 months they just completed without a contract.

It is also going to require all employers maintain a written employee handbook setting out the basic rules and regulations of employment. Without an employee handbook, employers will be essentially unable to fire anyone; "the failure to maintain an employee handbook means that an employer will effectively be unable to discharge employees for cause, since cause must be determined with reference to the employee handbook." Do it.

The new law also greatly limits the use of term contracts and probationary periods, previously popular ways to skirt China's existing labor law regime:



Under Chinese law, an employee can be discharged either at the expiration of a term contract or for cause. To avoid the need to terminate for cause, employers in China have typically engaged employees under a series of short-term contracts. This practice is no longer possible under the LCL. The employer is permitted to enter into a maximum of two term-contracts with the employee.

If the employee continues on after the expiration of a second term-contract, the subsequent employment contract is deemed to be an open-term contract. Under an open-term contract, the employee is employed until he chooses to terminate the contract or reaches retirement age. The employer can only terminate the employment contract by discharge of the employee for breach. This means that once the relationship has shifted to an open-term contact, the result for competent employees is effectively employment for life.

The LCL imposes severe restrictions on the use of probationary periods in the employment relationship. Probationary periods are permitted, but the length is limited based on the term of the employment contract, with an absolute maximum set at six months. Furthermore, an employee can only be subject to a single probationary period by a single employer. Wages during the probationary period must also be no less than 80% of the contract wage.

The LCL also clarifies requirements for employee non-compete agreements and a failure to abide by those renders the non-compete ineffective. Only senior management and other employees with access to critical trade secrets can be required to enter into non-competition agreements. "The agreement must be limited in duration to two years, must be limited in geographic scope to a reasonable area and the employer must pay compensation to the employee during the period that the non-competition restriction is in effect." In other words, you must pay your employee something for the non-compete you are asking he or she to sign and you must continue paying that for the non-compete provision to remain effective.

Employers who fail to abide by the LCL face administrative fines, awards of double wages and liability for actual damages. More importantly, "virtually every violation of the law gives the employee the right to sue the employer for penalties and damages in the local employment arbitration bureau or in the local courts."

And if you think this new law is going to pass under the radar, think again:

The LCL has been actively publicized and employees are well informed about their rights under the new law. Growing numbers of Chinese attorneys are taking a strong interest in representing employees under the LCL in filing group claims against employers. It is this sort of employee self help, rather than administrative sanction, that is likely to be the greatest threat to employers under the new law. Inside Counsel magazine, in a story entitled, "Empowering the People: New labor law in China gives employees right to private action," also takes a look at this "sweeping" new law and finds US companies vulnerable:



As part of this power shift [from employer to employee], the new law allows employees to sue and seek damages from their employers. Most experts believe U.S. companies will be the prime targets of suits because of their deep pockets and the strained relationship that exists between the Chinese government and multinationals.
Bob Kwauk, managing partner at Toronto based mega firm, Blake, Cassels & Graydon (a/k/a Blakes) rightly points out that the companies must likely to get penalized under the new laws will be the "multinationals that are following the rules but arent crossing the Ts and dotting the Is, because Its sexy to go after the big multinationals in the big city.

The article goes on to note that "experts believe the new law will have some teeth" and then quotes Steve on this:

"This new law gives the individual worker and the workers union the right to go to court to independently enforce their rights, says Steven Dickinson, partner at Harris & Moure. Chinese workers are increasingly aware of their rights, and theyre likely to take full advantage of this law to vigorously enforce them.

This is a change from the past when employees werent allowed to file claims against companies. Instead they had to file a grievance with the government or state-run labor unions, which would then decide whether a claim should be brought against the offending company. Most employees were reluctant to file a grievance out of fear of retaliation. And many werent even aware they had the right to file grievances.

The article then posits that "no other area of the new law is likely to cause more litigation than the changes to regulations governing Chinas labor contracts." I agree.

This article also discusses the new term and termination requirements:

The new law allows employers to assign only two consecutive fixed-term contracts. After that the employer must offer the employee an open-ended contract, which the employer can only terminate under certain circumstances such as incompetence, serious violations of internal rules, gross negligence and fraud. Employers that violate this statute will have to pay the employee double salary for each month during which he or she had the right to an open-ended contract. Otherwise the employee can sue.
An employer can terminate an employee without cause but must pay the employee double severance. Severance equals one months pay per year of service.

The article concludes with Steve pointing out how Chinese courts heavily favor workers. I would add this is particularly true in a lawsuit against a foreign company.

To get an idea of the sort of impact this new law is already having and will have, check out this article on what Huawei has done in an effort to get around it.

This is huge.

UPDATE: Dave Parker, Founder and CEO of 9spaces.com (check out its site!) was kind enough to provide me with an English language pdf copy of the new labor law, done by 9spaces.

FURTHER UPDATE: ImageThief has an excellent post, entitled, "China's new labor law won't just make work for lawyers," noting how China PR people are also salivating.

FURTHER FURTHER UPDATE: Beijing Newspeak has an excellent post up, wonderfully entitled, "The harmonization of the Huawei debate," on the mass resignations and slightly less mass re-hirings at Huawei. Interesting information on Huawei in addition to the new law.

FURTHER FURTHER FURTHER UPDATE: Nice post on the impact the law is already having in China and some interesting predictions for the future in this post, entitled, "The Battle for Labor Rights in China: New Developments."

China stocks have been falling off, and its no surprise really, in this market, and with so many questions now being raised in and about China and its ongoing problems and outlook.


http://www.forbes.com/feeds/afx/2008/03/06/afx4744206.html

China Feb inflation likely to reach new high, prompt rate hikes - Goldman Sachs

03.06.08, 11:28 PM ET

BEIJING (XFN-ASIA) - Goldman Sachs said it expects inflation in China to reach a new decade high in February on the back of rapid money supply growth, prompting authorities to hike the reserve requirement ratio and interest rates.

In a note, Goldman Sachs (nyse: GS - news - people ) said it expects February's consumer price index (CPI) to rise 8.5 pct year-on-year, up from an 11-year high of 7.1 pct in January.

It said severe snowstorms across much of the country in January and February are partly to blame, but the main driver of the increase is money supply growth, which will likely keep prices at elevated levels in the near-term.

'While we believe the snowstorm may have contributed to the high February reading, we believe that the high and rising inflation rate has been mainly driven by rapid money supply growth,' Goldman Sachs said.

'As a result, we expect CPI inflation to remain high at elevated levels in the near-term even after the temporary weather-related impact dissipates,' it added.

It noted that Premier Wen Jiabao's report to the National People's Congress stated that containing inflationary pressures is the most urgent task in economic policymaking. As such, policies are likely to become more decisive after the parliamentary session closes on March 18.

'There is a likelihood for a hike in the reserve requirement ratio and interest rates in the coming days,' Goldman Sachs said.

China is due to release February CPI data on March 11.

Goldman Sachs added that the producer price index, due out on March 10, is also likely to have risen in February, reflecting supply constraints, transport bottlenecks and strong demand growth in several key commodities, notably coal and steel.

The brokerage said it expects PPI inflation to rise to 6.9 pct year-on-year in February from 6.1 pct in January. The PPI is likely to accelerate further in the coming months, it added.

Money supply M2 will probably show a slight moderation to 18.5 pct from 18.9 pct in January, but sequential momentum remains robust, Goldman Sachs said.

Meanwhile the trade surplus could narrow to 17 bln usd as import growth remains strong and exports gradually slow. Goldman Sachs said the year-on-year growth of exports is likely to be very low at 10 pct, largely due to a high base from last year.

January and February export growth will be robust at 19 pct, the note said.

'While the high volatility in recent export data makes it difficult to gauge the true underlying trend, we believe the slowdown in exports growth will be a gradual process,' it said.

Other data will likely show that fixed-asset investment remains strong. Goldman Sachs said it expects February FAI to grow 26 pct year-on-year.

Nominal retail sales growth is forecast at 20.5 pct and 21.5 pct in January and February, respectively, on the back of higher inflation, the note said.

It added that industrial production is likely to grow at 16.0 pct in January and February, compared with 17.4 pct in December 2007.

Retail sales, industrial production and FAI will be announced on March 12, 13, and 14, respectively.

February money and credit data can be released any time during next week.

http://www.itpro.co.uk/news/174921/vietnam-the-next-hub-for-offshoring.html

Vietnam - the next hub for offshoring?

Posted by Nicole Kobie at 12:17PM, Thursday 6th March 2008

An industry expert has predicted that Vietnam will overtake India and China for offshoring in the next four years.

Vietnam could potentially overtake India and China as a site for outsourcing by the year 2012, an industry expert has said.

At a forum on doing business in the region this week, Paul Smith, the managing director of recruitment and software firm Harvey Nash, said the country will become the most desirable place for outsourcing services - including IT - in the next few years.

"The duopoly India and China have long enjoyed within IT outsourcing is fast coming to an end - and rightly so. With deregulation, accession to the WTO and UN Security Council as well as significant overseas IT investment, Vietnam is becoming the outsourcing destination of choice for international business, not simply the poor relation," Smith said at the forum.

"Vietnam has always offered a highly skilled labour force and low costs, but this coupled with economic expansion, political stability and diplomatic acceptance means the decision ........................


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http://www.elpasotimes.com/business/ci_8422615

China's competitive edge at risk amid rising costs

Associated Press

Article Launched: 03/02/2008 12:00:00 AM MST


SHANGHAI, China -- The teddy bears selling for $1.40 in Shanghai's IKEA store may be just about the cheapest in town, but they're not made in China -- they're stitched and stuffed in Indonesia.
The fluffy brown toys reflect a new challenge for China: Its huge economy, which has long offered some of the world's lowest manufacturing costs, is losing its claim on cheapness as factories get squeezed by rising prices for energy, materials and labor.

Those expenses, plus higher taxes and stricter enforcement of labor and environmental standards, are causing some manufacturers to leave for lower-cost markets such as Vietnam, Indonesia and India.

Costs have climbed so much....................................

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What about VOF.ON AIM.

Not me PP ..... i have a long record of warning eveyone off Chinese stocks though for a different reason .... my only Chinese stock is SOLA on which I am now short again

Not keen on funds like that Baylis.


Another potential "short in the making" is ETC. Its just starting to get a little pumped up now, its a yet to turn profitable "travel agent" in China. Now, whilst their figures for 2008 might show growth due to Olympics etc..........now that inflation is biting they should start to struggle in 2009. So just watching it, hoping it gets hyped and bloated, and then, its another nice potential short for next year.

China inflation now getting out of control....... ?? Get those Olympics out of the way and there should be some really nasty shocks coming, that will bite and bite perhaps......


http://www.chinadaily.com.cn/china/2008-03/10/content_6523382.htm

China's producer prices up 6.6%, highest in 3 years

(Agencies/chinadaily.com.cn)

Updated: 2008-03-10 14:15


China's producer prices, a key inflation indicator, rose 6.6 percent year-on-year in February, the fastest rate in more than three years, suggesting consumers face more sharp price, according to data reported Monday.

Beijing is trying to rein in inflation that rose to 7.1 percent in January, the highest level in 11 years. Economists expect February's inflation rate, due to be announced Tuesday, to rise as high as 8.5 percent after snowstorms disrupted transportation and wrecked crops, causing temporary shortages of food and raw materials.

A Bank of China report said February's CPI could be as high as 8.3%. And a National Development and Reform Commission official said the consumer price index would be higher than that in January, but "be lower than a two-digit figure."

Producer prices, which measure the cost of goods as they leave the factory, rose 6.6 percent in February over the year-earlier period, the National Statistics Bureau reported. It was the highest level since December 2004.

The six-month-old spike in consumer prices has been driven by food costs and blamed on shortages of pork and other items. But Monday's data suggested pressure for across-the-board price rises is mounting as factories and households compete for resources amid a boom that saw China's economy grow by 11.4 percent last year.

February's producer price rise was driven by a 37.5 percent jump in the cost of basic oil products and a 29.6 percent rise for some steel products, the statistics bureau reported. Prices of food-related raw materials rose by 11 percent.

China is trying to boost food production to ease shortages and has been nudging up interest rates, hoping to cool growth without causing the economy to tip into an abrupt slowdown.

State-set prices of gasoline, electric power and some other consumer necessities were frozen in September. In January, food producers were ordered to get official approval for any price increases.

Fertilizer prices also have been frozen to protect farmers.

But steel mills, factories and other producers must pay market prices for coal, iron ore and other raw materials.

Economists have warned that leaving price controls in place too long could add to inflation pressures by discouraging farmers and others from raising production, which would ease shortages and lower prices.

China suffered power shortages in February when the country's worst snowstorms in decades caught utility companies without adequate coal stockpiles after they cut purchases due to controls that barred them from passing on the rising cost to consumers.

Steel mills and factories cut back production, and the government was forced to organize emergency shipments of thousands of trainloads of coal to power plants.

http://www.iht.com/articles/2008/03/10/business/10chiecon.php


Chinese trade surplus down sharply in February

ReutersPublished: March 10, 2008

BEIJING: China reported a big drop in its trade surplus on Monday as imports surged and exports sagged, but economists were wary of reading too much into the data because of distortions from the timing of the Lunar New Year.

Of more immediate significance, they said, was that the price of goods leaving factories rose 6.6 percent in the 12 months to February, the fastest rate in more than three years and pointing to a leap in consumer prices when figures are issued on Tuesday.

Premier Wen Jiabao, in his annual report to Parliament last week, declared the fight against inflation to be his top economic priority despite clouds over the outlook for global growth.

The trade surplus for February shrank to just $8.56 billion from $19.5 billion in January and $23.8 billion a year earlier, the customs administration said.

Economists, who had expected a surplus of $21.9 billion, explained away the forecasting error by pointing to the vagaries of the calendar: factories shut down at different times each year depending on the timing of the Chinese New Year.

Today in Business with Reuters
Inflation in China hits 11-year highBoeing lodges protest over air force tanker deal Burden of debt weighs heavily on the buyout industry
Fierce winter weather also disrupted production and shipment schedules this year, further clouding the picture.

"Taking January and February together certainly makes much more sense than taking the February figures on their own. So that would imply export growth has slowed a little bit and import growth has picked up a little bit, which is the trend we expect for the year as a whole," said Paul Cavey, an economist at Macquarie Securities in Hong Kong.

What that means is that China's politically contentious surplus is finally growing more slowly and may even have peaked.

Imports rose a striking 35.1 percent in February, lifted by record-high crude oil prices and a growing bill for commodities and raw materials.

Exports, by contrast, increased just 6.5 percent from a year earlier.

Zhu Jianfang, chief economist at Citic Securities in Beijing, suspected that weakening U.S. demand due to the still-spreading credit crisis was to blame.

Exports were still likely to grow by more than 15 percent in 2008 despite government policies to push up the value of the yuan and to penalize export industries that use large amounts of energy and cause pollution, Zhu said.

But he added: "Imports will grow much faster than exports this year as China needs to import more to increase domestic supply and fight inflation."

February's producer price report, released by the National Bureau of Statistics, suggested the battle against inflation would be a long one.

The 6.6 percent increase was up from 6.1 percent in the 12 months to January and a touch above economists' forecasts of 6.5 percent. It was the highest rate since December 2004.

Wholesale food prices rose 11 percent in February from a year earlier.

Soaring food bills have been the culprit for the spike in consumer prices, already at an 11-year high, but many economists are worried that inflation will ripple through the economy because China's monetary policy settings are too loose.

"This will contribute to a rise in consumer inflation. The pass-through from agricultural prices to processed food prices will continue. Inflationary expectations are also on the rise, and expectations can change consumer behavior," said Jun Ma, chief China economist at Deutsche Bank in Hong Kong.

Economists polled by Reuters expect Tuesday's consumer price index data to show an annual increase of 8 percent, up from 7.1 percent in January, as the impact of snowstorms that disrupted transport and energy passes through the supply chain and pushes up food prices in particular.

http://sg.news.yahoo.com/ap/20080311/tbs-as-fin-eco-china-inflation-6th-ld-wr-618743b.html

China's inflation jumps to nearly 12-year high, raising risk of unrest before Olympics

By JOE McDONALD,AP Business Writer AP - Wednesday,

March 12

BEIJING - China's inflation surged to a nearly 12-year high in February, the government said Tuesday, squeezing exporters and adding to the threat of unrest ahead of the Beijing Olympics.


The 8.7 percent rise in the consumer price index over February 2007 was driven by a 23.3 percent jump in food costs, the National Bureau of Statistics reported. Price rises for some individual goods were even more dramatic: Pork was up 63.4 percent and vegetables 46 percent.

Communist leaders worry about a possible backlash in a society where the poor majority spend up to half their incomes on food. Bouts of high inflation in the 1980s and '90s sparked protests.

"I think there's a high risk of popular demonstrations," said Robert Broadfoot, managing director of Political and Economic Risk Consultancy Ltd. in Hong Kong.

Premier Wen Jiabao said last week taming inflation was Beijing's top priority and set a target of 4.8 percent this year_ a goal that analysts said looked unrealistic after Tuesday's announcement.

Deutsche Bank raised its forecast for full-year inflation from 6.4 percent to 7.2 percent. Morgan Stanley raised its forecast by two full percentage points to 6.5 percent.

"Stronger expectations of higher inflation could lead to stockpiling and panic buying, which may lead to an inflation spiral," Deutsche Bank economist Jun Ma said in a report to clients.

Non-food inflation stayed low in February, with prices up 1.6 percent from the year-earlier month.

But wholesale data reported earlier show pressure for across-the-board price rises is growing. The cost of basic oil products jumped 37.5 percent in February while that of steel products was up 29.6 percent. Food-related raw materials rose 11 percent.

Such increases are squeezing exporters that have been hammered by a steady rise in China's currency, the yuan, over the past 2 1/2 years that has made their goods less attractive abroad.

Some factories in the export-driven southeast have closed, wiping out thousands of jobs. Others are struggling to stay competitive with foreign rivals by switching to new products.

Rising prices for iron ore and other materials will squeeze company profits, raising doubts about their growth prospects, said Jing Ulrich, JP Morgan's chairwoman for China equities.

"The beneficiaries of higher inflation remain the resource suppliers _ many of which are outside China," Ulrich said in a report.

Prices began to climb in mid-2007 due mostly to shortages of pork, China's staple meat, and grain.

Authorities froze prices of gasoline, electricity and other basic goods in September and said inflation should fall once the autumn grain crops were harvested. But instead of easing, the inflation rate has risen steadily in recent months.

The government responded by ordering food processors in January to get official approval for any price hikes. Fertilizer prices were frozen to protect farmers and curbs imposed on grain exports to increase supplies in domestic markets.

February inflation was China's highest since May 1996, when prices rose by 8.9 percent, according to Goldman Sachs. It was up sharply from January's percent 7.1 percent rate.

Economists say inflation should stay high possibly as late as May before it begins to ebb.

Beijing has raised interest rates repeatedly and is trying to boost food production to ease inflation pressure amid a boom that saw economic growth rise to 11.4 percent last year.

Those efforts were hampered when the worst snowstorms to hit China in five decades blanketed the south in January and early February. The snows wrecked crops, killed farm animals and paralyzed shipping. Prices of meat and vegetables soared in snow-hit areas.

Rapid growth in the total pool of money available for credit also added to pressure for prices to rise, Goldman economists Yu Song and Hong Liang said.

Inflation should stay high "even after the temporary weather-related impact dissipates," they said in a report.

Song and Liang said they expect Beijing to respond by raising interest rates, curbing bank lending and allowing the yuan to rise faster. That could help to cool inflation by narrowing China's swollen trade surplus and reducing the amount of cash flooding into the economy.

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After the disgusting and disgraceful behaviour of the Chinese government now killing Tibetans overtly, and not just covertly now, I must say well done to Richard Gere.

The whole world should boycott the Chinese Olympics. Its the only way to get these arrogant power crazy people to understand the world does not accept their behaviour in Tibet, or their sponership and protection of the Burmese junta.


http://www.reuters.com/article/sportsNews/idUSN1444309320080315

Olympics boycott if China mishandles Tibet: Gere

Fri Mar 14, 2008 9:52pm EDT

powered by SphereBy Paul Eckert, Asia Correspondent

WASHINGTON (Reuters) - China should suffer a boycott of its cherished Beijing Olympics if it mishandles protests in restive Tibet, Hollywood actor and Tibetan activist Richard Gere said on Friday.

Gere, a close follower of the Dalai Lama and chairman of the International Campaign for Tibet, stressed that neither the exiled Tibetan spiritual leader nor the ICT advocates a boycott of the Summer Olympics.

But he said it was his personal opinion that it would be "unconscionable" to attend the Beijing Games if China failed to deal peacefully with unrest in the Himalayan region -- protests that have turned to riots and already claimed several lives.

"I've not been pro-boycott, but I think if this is not handled correctly, yes we should boycott. Everyone should boycott," Gere told Reuters in a telephone interview.

Gere, a Buddhist for some 25 years, said he was grieving for "my bothers and sisters" in Tibet but "sad for both sides" in a dispute has that simmered and occasionally exploded since China annexed Tibet in 1950.

"As educated, as sensitive as the Chinese are, why they've misread the Tibetan situation from the very beginning is beyond me," he said.

"It's just so foolish and short-sighted. Everything that they want is destroyed in moments like this," said Gere, referring to the Chinese quest for international respect and recognition they seek in hosting the Olympics.

Gere's Tibetan contacts have all described the uprising as spontaneous, he said, adding that he did not believe the marches were linked to the Olympics. Continued...................

http://www.forbes.com/home/columnists/global/2008/0324/030.html

Companies, People, Ideas

China's Inflation

Carl Delfeld 03.24.08, 12:00 AM ET

In addition to recent blizzards, a different kind of storm is brewing in China: inflation. The key component of the Chinese economic growth story has been its ability to keep prices low and top-line sales growth high. It has never been about profit margins. Thus the ability of China to serve as a giant global manufacturing platform was a boon for leaders in Beijing as well as for export markets like America, which viewed lowcost Chinese imports as a way to keep a lid on inflation.

But the deflationary impact of China on world markets is now turning into an inflationary red flag with important implications for global investors. Wages have started rising rapidly, energy prices remain high and food demand is exploding. Fresh evidence emerged in February as Chinas National Bureau of Statistics said that inflation jumped to an 11-year high of 7.1%. Rising inflation is forcing Chinese manufacturers to try to defend their slim operating margins by raising prices for exported components, which, in turn, will compress multinational margins, since it is difficult in a weak economy to pass on higher input prices (such as energy, components and raw materials) to consumers in markets like Japan, the U.S. and Europe.

Just take a look at recent reports by Japan Inc.s big exporters. Canon, the worlds biggest digital camera maker, warned that earnings this year will fall short of market expectations. Sonys 5% operating margin goal was also recently revised downward. So what does all this mean for investors in the Asia-Pacific region?

First, avoid the large exporters of consumer products such as the already mentioned Sony and Canon, which are being squeezed by lower global demand and higher input and component prices. A stronger yen has not helped either.

For your Japan allocation, take a look at the Tokyo Stock Exchanges second section for smaller listed Japanese companies that are more domestically oriented and are trading at very attractive valuations. Rather than try to pick some specific companies, why not use the shotgun approach with the WisdomTree Japan SmallCap Dividend (DFJ) exchange-traded fund. The fund holds roughly 500 stocks, and assets are widely diversified. Industrial and consumer cyclicals are the top sector weights at 28% and 25%, respectively.

Second, lean toward countries that are net exporters of commodities rather than net importers like China. A good choice would be the iShares MSCI Brazil (EWZ) exchange-traded fund. Brazil recently passed China as the top-weighted country in the MSCI Emerging Markets index.

In addition, Chinas inflationary trend will create substantial opportunities for other emerging market countries to gain a competitive edge and pick up the slack. The recent disappointing IPO of Vietnams largest brewery, Sabeco, could provide investors with a great opportunity when the company begins trading on the Ho Chi Minh Stock Exchange. Vietnams hot market has cooled considerably this year, and it will be interesting to see how the market values Sabecos shares. Critics point to a too-high minimum price as the primary reason the IPO was undersubscribed.

In India, take a look at some export-oriented companies that have already weathered the impact of a strong rupee. I agree with India specialist Atyant Capitals suggestion of Gokaldas Exports ($5.38, 532630), which has revenues of $250 million and a market cap of $185 million. Wage inflation in China, coupled with an appreciating currency and reduction in export subsidies, will give companies like Gokaldas Exports significant pricing power. Blackstone recently purchased a controlling 50% stake in the company, then upped it to 68%. Investors should also target quasi-monopoly companies that can perform well in an inflationary environment because of both pricing power and a product or service whose demand is inelastic. Indonesias Telekomunikasi Indonesia PT ($1.03, TLKM) and the Philippines PLDT ($69.67, TEL) are two excellent choices.

Lastly, instead of focusing on the downside of rising energy and commodity prices, consider the flip side of higher demand for cleaner alternatives such as geothermal energy. This means more business for Ormat Technologies ($43.69, ORA), which operates throughout the world from Nevada to the Outback and recently signed an agreement for a project in Indonesia. Its topline revenue has grown at an annual average rate of 41%, and its stock price has come down from a near 52-week high of $58.

Inflation is the cruelest tax of all, but smart investors can soften the blow to their portfolios.

Carl Delfeld represented the U.S. on the Asian Development Bank board and heads the global investment advisory firm Chartwell Partners. He is editor of Chartwell Advisor Global ETF Report ( www.forbesnewsletters.com/chartwell).

Hi Papalpower, I can see you are working hard to crush chinese shares like SOLA, WCC, ACH, FTO, etc with the above articles.

hyleo ..... an unwarranted snipe at PP ...... he is merely publishing articles .... whether you or anyone else chooses to agree or disagree with the sentiments is very much a free choice ...... personally, i have different reasons for disliking chinese-controlled stocks, which do not need repeating yet again.

a more interesting comment could be shown in a graph, perhaps using AIM or FTSE 350 as the benchmark, to check how the stocks you highlight above have performed comparatively over say the last 6 months.

hyleo, its not about crushing anything, its about very clear and present/future that are going to have an impact on things Chinese.

Some people try to portray China as zero risk, cannot lose stuff...........that is very much not the case.

Therefore, its good to make available access to articles which give a balancing view of things.

PP best ignored - EK lackey but a great contrarian indicator.

Reserve ratio up again, and interest rate rises coming soon it looks like.


http://www.nytimes.com/2008/03/19/business/worldbusiness/19yuan.html?ex=1363579200&en=13dc1892a3f601ca&ei=5088&partner=rssnyt&emc=rss

China Moves to Stem Inflation and Calm Investors

By DAVID BARBOZA
Published: March 19, 2008

SHANGHAI Stock prices plummeted in China on Tuesday over inflation fears and growing concerns about the ripple effects of an economic slowdown in the United States. Showing its determination to hold down prices, the Chinese central bank then moved to tighten lending.

Shares on the Shanghai Stock Exchange tumbled nearly 4 percent, with the composite index ending at 3,668.90. The index is down nearly 40 percent from its record high last October. The fall in the Shenzhen composite index was even steeper Tuesday off 6.6 percent, to close at 1,082.28.

Shares appeared to be recovering somewhat in early trading on Wednesday, after the United States central bank cut interest rates in a bid to rekindle growth.

In Hong Kong, shares rose on Tuesday by 1.42 percent. Other Asian markets, including Japan, Taiwan, South Korea, India and Indonesia, also rebounded modestly after a sharp sell-off Monday. Some of those markets appeared to be extending those gains on Wednesday.

The Tuesday sell-off in China came after Prime Minister Wen Jiabao said at a televised news conference on Tuesday morning that inflation this year would probably exceed the governments target of 4.8 percent, after a sharp rise last year. Continuing inflation is regarded as a sign that the Chinese economy may be overheating.

Officials in Beijing now say that fighting inflation is the governments top priority. That could mean raising interest rates, a step that often discourages investors from buying stocks.

After the markets closed, Chinas central bank said it would increase the reserve ratio for banks to 15.5 percent. The move, effective March 25, will force the banks to set aside slightly more money with the government, a step expected to tighten lending and slow inflation.

The central bank has repeatedly increased the reserve ratio over the last few years, taking it to 15.5 percent from about 7 percent in 2004.

Tuesdays stock sell-off is part of a wave of troubling economic and political news that appears to be striking this country at a time the government is preparing for the Olympic Games in Beijing and to celebrate the 30th anniversary of the start of Chinas market-friendly economic changes.

While the Chinese economy is still sizzling and investment continues to pour into the country, analysts are beginning to worry that if rising inflation does not cut Chinese growth, then weakening demand in the United States for Chinese-made goods will.

If the U.S. is falling into recession, and we think it is, it will mean downside pressure on exports from China and on economic growth, said Huang Yiping, chief Asia economist at Citigroup. This could be a bigger threat than inflation."

The analysts say that Chinese exports could also slow this year because of higher production costs and a rise in the value of the currency, the yuan, against the dollar in recent months.

Analysts are already lowering their growth forecasts for China, with an eye toward the financial troubles of Wall Street firms.

Stock prices in Shanghai are going through an extraordinary reversal of fortune. After a spate of feverish investing that sent the Shanghai composite index up more than 350 percent in the last few years, the market has gone into a tailspin.

New public offerings both here and in Hong Kong have dried up after two years of spectacular initial stock issues that swelled the ranks of Chinas billionaires.

Wall Street banks, which late last year boasted of their exciting pipelines of stock offerings, have shelved deals or delayed offerings.

Oddly, while the American economy seems headed toward recession, and Chinas economy is booming, the stock markets here have fallen more sharply than those in the United States, even though many investors in China seemed to think that the government would do whatever was required to keep stock prices high before the Olympics.

Great numbers of Chinese are involved in the market, some speculating with their life savings.

David M. Webb, a shareholder activist who is an independent director of Hong Kong Exchanges and Clearing, remarked, There was an urban myth that the stock market would not go down until after the Olympics, and how much has it gone down?

ZSCROOGE ....perhaps your point would have far more validity if you also published the highs of these shares and/or their performance against the AIM .... this is especially so given that markets have fallen perhaps 20% (happy to know the correct figure) in the last 6 months or so.

cynic, it would be even better if they could list for each one when I went long, when I went short, when I purchased, and sold, and brought again and sold again..........

Of course, its a pure piece of fiction, but hey, if the idiots enjoy it and it makes them happy, so be it.......let them have their fantasies....

LOL :)

Rampers never give the game away!

halifax - perhaps you should say BB posters never give the game away. Not seen many people posting when they buy and sell, on the day they do it ?

i am happy to nail my colours to this mast ... have just shorted SOLA at around 256, half with a guaranteed stop ..... their figures will be out before 13:00 today, so it will be interesting to see what the analysts make of SOLA's prognostications for the coming year

http://www.thanhniennews.com/business/?catid=2&newsid=36640


China-based foreign firms contemplating move to Viet Nam: study

Last Updated: Wednesday, March 12, 2008 14:12:03 Vietnam (GMT+07)

Nearly one in five foreign-owned or invested manufacturers in China have firm plans to relocate or expand operations outside China, with low-labor-cost Viet Nam a top alternative, a study of 66 firms in China has found.

The study, jointly conducted by management consulting firm Booz Allen Hamilton and the American Chamber of Commerce in Shanghai (AmCham Shanghai) and released last week, said more than half of the foreign companies surveyed in China believed that the country is losing its competitive edge in manufacturing to other low-cost nations.

According to almost two thirds of respondents in the study, titled China Manufacturing Competitiveness 2007-2008, the top alternative to China is Viet Nam, while India was nominated by the remaining respondents as their first choice for relocation.

Although 88 percent of corporations in the study say they originally chose China for its lower labor costs, they are finding that cheaper labor and better tax incentives are on offer elsewhere.

Asked to compare China to other countries, respondents cited lower labor costs as the greatest difference, indicating that Chinas reputation as a source of cheap manufacturing labor is diminishing.

However, according to the opinions gathered in the study, other countries lag behind China in terms of market potential and infrastructure.

The study also found that while a stronger Chinese currency and rising wages are exerting pressure on manufacturing margins, failure to deploy the best operational practices and exploit China thoroughly as both a growth market and source of labor and products are also limiting profits.

Seven out of 10 respondents cited the rising RMB (yuan) as a major reason for Chinas decline, while wage inflation was cited by 52 percent of those polled, according to the study.

The study said wages for white-collar managers and blue-collar workers have jumped by 9.1 percent and 7.6% respectively.

Staff retention is also a major concern, with 33 percent of respondents citing it as a reason for lost competitiveness.

At the same time that costs are increasing, China is lagging behind global standards in many operational dimensions, most notably in logistics infrastructure, the trade environment, access to technology, management capabilities, and intellectual property protection, AmCham Shanghai said in its report.

The manufacturing philosophy employed by many foreign multinationals in China in recent decades is in need of an overhaul, Booz Allens Deputy President Ronald Haddock said.

Booz Allen and the AmCham Shanghai surveyed 66 foreign-owned or foreign-invested manufacturers in China, representing more than 10 percent of the 600 Manufacturers Business Council members in Shanghai, including some of the largest foreign-owned or foreign-invested manufacturers.

The study was conducted between September and November 2007 on businesses which have their origins in the US and western Europe.

The manufacturers were from consumer, industrial, healthcare, and material industries. (TN)

http://www.wsws.org/articles/2008/mar2008/chin-m17.shtml

Rising costs throw Chinese manufacturing into crisis
By John Chan

17 March 2008

For years, Chinas cheap labour has helped global corporations push down the wages and conditions of workers around the world. Cheap goods churned out by sweatshops based in China also kept inflation low internationally and underpinned the low interest rate policy in the US that fuelled its financial and housing bubbles.

All this is coming to an end. Thousands of manufacturers have shut down or moved out of China because of rising raw materials costs, higher wages and the rise of the yuan against the US dollar. These processes are in turn accelerating inflationary pressures, not just within China, but internationally.

Small and medium firms (with capital under $US3 million) in Chinas light industries, such as shoes and textiles, have been hard hit. The Financial Times (FT) on March 2 reported that one in six Chinese textile companies lost money last year, even though export prices increased 8 percent. According to the China National Textile and Apparel Council, growing wages and a weaker US dollar are squeezing the textile industrys profit margins.

The textile sectors average profit margin is 3.9 percent, but the bottom two-thirds of companies are struggling on an average margin of just 0.74 percent. While textile exports grew 19 percent last year to $US175.6 billion, national textile council chairman Du Yuzhou told the FT the industry was relentless at weeding out the weak, with large corporations absorbing smaller bankrupt firms. Amid a wave of industrial restructuring, many corporations are shifting production to inland provinces or countries such as Vietnam, Indonesia and India, seeking cheaper labour.

The Asia Footwear Association estimates that about 15 percent of shoe makers in Dongguana major export hub in Guangdongs Pearl River Deltahave shut down or relocated in the past year. During that time, more than 1,000 mainly small and medium footwear factories have closed throughout the provinceout of a total of 7,000-8,000. The Federation of Hong Kong Industries predicts that 10 percent of the 60,000-70,000 Hong Kong-owned factories in the delta will close this year. Many factories chose to shut before January 1when limited new labour laws take effect, requiring employers to sign long-term contracts with workers, pay social security insurance premiums and provide higher compensation for layoffs.

A Hong Kong shoe factory owner, Leung Ka-yiu, who was planning to move his operations to Vietnam told Asia Times that since 2006 the Chinese government had been implementing polices that were unfavourable to the export processing. The measures included heavier taxes for foreign investors and reduced tax rebates for exports. The labour law can be said to be the last push for me to leave, he said. If the law is strictly followed, my factorys labour cost will increase by 20 percent, which many shoe factories like mine cannot afford, given our profit margin of about 8 percent. He laid off two-thirds of his workers in December.

Zhu Yongxin, a shoe factory owner in Foshan, Guangdong province, complained that the cost of steel for buttons had trebled from 20,000 yuan a tonne in 2004 to more than 60,000 yuan. Oil for sewing machines cost 75 yuan a barrelup from 60 yuan a year ago. The cost of unskilled labour had risen to around 1,200 yuan ($US168) a month from 800 yuan two years ago. Skilled workers must now be paid 1,500-2,000 yuan. Zhu said he planned to move the factory to inland Hunan province.

Many migrant workers lost their jobs when they returned to work after the Chinese New Year. Lu Yongyuan, from Guizhou province found that his employer, the Taiwanese-owned Dongguan Hongsheng Mould Factory, had closed. Lu told the FT on February 25: The government will auction the assets. Costs were just too high [to keep the business going]. A notice posted on the factory gate told its 300 workers to contact local village authorities to collect one months wage, although the new labour laws require 10 months redundancy pay.

Another factor is the rising yuan. Since the Chinese government delinked the currency from the US dollar in July 2005, it has risen by 16 percent against the dollar, placing enormous pressure on some exporters. Major Western retailers like Wal-Mart have refused to make any significant concessions on procurement prices from China. John Cheh, chief executive of Hong Kong-based Esquel, which makes more than 60 million shirts a year for major brands such as Nike and Gap, told the FT on March 2: Its very difficult to raise prices. We show [clients] the numbers and say: Hey, we are losing money on your orders.

Xu Jiangchang, general manager of a Ningbo-based garment exporter that employs 4,000 workers, told Reuters: Each percentage point rise in yuan [against the dollar] means a half percentage point loss in our foreign exchange earnings. Zhou Dewen, head of the Wenzhou Small and Medium-Size Enterprise Development Promotion Association, pointed out that Wenzhou, which is famous for its small to medium factories, saw half the companies that started in 2007 suspend operations before the end of the year. The average profitability of Wenzhou enterprises stands at only 3 to 5 percent of assets. A 3-percent yuan rise will wipe out profits in many firms here, in particular textile and shoe companies with low profitability, Zhou said.

The Chinese government has said these factory closures are part of President Hu Jintaos philosophy of Scientific Development for promoting technologically-intensive industries and moving up in the value chain. Tougher labour and environmental regulations are said to be efforts to build a harmonious society. Chinese officials have commented that large corporations should wipe out small firms with low added value and backward technology. Beijing is also encouraging factories to move to inland provinces, supposedly helping to narrow the vast economic gap between rural and coastal regions.


Global processes

The Chinese government, however, has no effective control over many factors behind the growing pressure on the manufacturing industry. Consumer demand in the US is slowing, with the subprime crisis and rising prices forcing many workers to cut back their spending. According to the Ministry of Commerce, Chinese exports to the US increased 20.4 percent in the first quarter of 2007, but the growth rate dropped to 15.6 percent and 12.4 percent in the following two quarters.

Nevertheless, Chinas rising production costs will be translated into higher consumer prices in the US and globally. Economic analysts have pointed out that China is likely to retain its position as the worlds largest low-cost manufacturing platform because its huge workforce and extensive infrastructure still enable it to provide competitive advantages over other countries. Vietnams share of the US apparel market jumped from 2.8 percent in 2005 to 6 percent this year, but Chinas share rose from 25 percent to 40 percent in the same period.

Wal-Mart vice chairman Michael Duke told the media on February 25 that his firm directly sourced $9 billion worth of goods from China in 2007. China will continue to be a major portion of direct purchases by Wal-Mart for a long time, he said, adding that although some imports from China may be decreasing, others were increasing. The largest categories of Chinese exports are now machinery and electronics, such as auto parts, computers and electrical home appliances, rather than shoes, textiles and toys.

Rising inflation in China was signalled last year by serious pork shortages. It is now clear that inflation is a far bigger world problem. There has been a wave of financial speculation in global commodities markets, from basic metals to grains. Major energy and mining corporations are demanding huge prices increases from manufacturers. In February, Asian steelmakers were forced to accept a 65 percent increase in iron ore prices, which will be passed onto other industries.

Under these conditions, Chinese workers are demanding higher wages. In an interview with Newsweek on February 14, Auret Van Heerden, head of the Washington-based Fair Labor Association, offered his impressions from a recent visit to China. He commented on the new labour law: At the factory level people are talking about it everywhere. One of the things about the law is it doesnt rely on outside labour enforcement... There have already been strikes about it; there have been employers who have been panicked by the commitment the law would require, so theyve tried to lay off or outsource workers. The workers struck, saying, No, were not going to accept that. There have been a couple of high profile cases of strikes against dismissal involving Hong Kong-listed companies. Take the richest woman in China [Zhang Yin, CEO of Nine Dragon Papers], who owns a huge paper company. She tried to outsource guards and security cleaning services, and didnt want to give contracts. The workers struck. Its been an emblematic case: if one of the richest and most powerful businesswomen in China couldnt sidestep the law, its a good indication of the signal the government wants to send.

As in the past, Beijing will not hesitate to use police-state methods to suppress unrest among workers. The real motive behind this legislation is fear of social instability. The intense exploitation of workers in sweatshops, coal mines and construction sites has created a climate for social explosions, worrying employers around the globe. Willie Fung, chairman of brassiere maker Top Form, told the Australian the biggest worry was not a cyclical US recession, but labour costs, which once jacked up, cannot go down.

While sections of manufacturers are leaving China for countries such as Vietnam, they face similar problems. A wave of unrest among Vietnamese workers demanding higher pay has shaken foreign investors, amid escalating inflation. The annualised rate was more than 15 percent in February. On February 28, 1,500 workers went on strike at a South Korean garment factory in Long An province, demanding $10 more a month. On March 5, 10,000 workers at Tae Kwang Vina, a South Korean shoe contractor for Nike in Dong Nai province, struck for higher wagesalthough they were already paid 20 percent more than the minimum wage.

The Vietnamese official statistics record that 387 strikes occurred last yearwith almost 300 in foreign-owned companies. Hanoi was forced to promise a 12 percent minimum wage increase this year. At the same time, the Vietnamese Stalinist regimes response to inflationincreasing interest rates and tightening money supplyhas led to a severe shortage of the Vietnamese currency, the dong. The global scale of inflation and the crisis in manufacturing industry demonstrates the need for workers in China, Vietnam, Asia and beyond to develop an international movement against the global capitalist system.

http://business.smh.com.au/costly-leap--pressure-on-the-factory-floor/20080314-1zip.html?page=fullpage#contentSwap2

Costly leap - pressure on the factory floor


March 15, 2008

Rising inflation and wage costs are transforming the Asian giant's industries and its role as the world's low-cost factory. John Garnaut reports from Shanghai.

The world's second largest sportswear company, adidas, is confronting a new and unexpected problem. The costs of labour, materials and red tape are spiralling upwards in its great production heartland in southern China.

It used to be that money made the rules and multinationals such as adidas could always extract a better deal by threatening to move offshore. The company runs more than 250 factories here, after all. And each clothing factory employs 3000 people, on average, while every shoe factory has seven times that number.

But the Chinese Government is no longer interested. It has recently abolished export rebates, introduced tougher environmental and labour laws and increased the minimum wage - squeezing production margins even tighter.

"The message coming from local governments and to a lesser extent the central government is very clear," says William Anderson, the head of Social and Environmental Affairs at adidas. "They're saying don't tell us about your problems, relocate."

For thousands of small and multinational manufacturers the story is the same. For them, the world economic order is turning on its head.

The endless, seemingly indomitable factories that stretch from the Hong Kong border north up the Pearl River delta in Guangdong province and through the coastal provinces of China are choking on their own success. They have exhausted what was thought to be a bottomless barrel of cheap labour. They have erected their sheds on the peasant farmland that is cheaply available. They have devoured so much oil, cotton, rubber, coal and steel that commodity prices have remained "stronger for longer" than the world has known. And they are rapidly using up China's political tolerance for filling the earth, sky and waterways with toxic waste.

There are no more obvious corners to cut and few remaining efficiency gains to extract. Low-end manufacturers are shutting down or moving out. A Hong Kong business association claims 3000 factories have shut down in the Pearl River delta this year. The Guangdong local media is full of reports and pictures of newly abandoned factory floors.

But a growing proportion of manufacturers are steeling themselves to push their rising costs through to the final stop on the production chain: the consumers.

About 100 million pairs of shoes and 125 million garments were sourced in China by adidas last year, which says it is packing up a large part of its Chinese production and moving it to the country's lower-wage but logistically challenging inland provinces. The company will not reveal any price-rise plans.

"We have no immediate plans to change the pricing policy of our products," says Anne Putz, the head of adidas corporate public relations at head office in Germany.

But other low-wage manufacturers are making their intentions clear. They are moving, skimping on inputs and fighting as to give consumers some of their pricing pain.

"The consumer, our customers, have pushed for years to get the lowest possible price and they feel because it's made in China it's got to be cheap," says Michael Morosin, who runs an electronics packaging company called PRT Manufacturing in Shenzhen. His main cost is plastic, derived from oil.

"The cost of oil is killing us," he says. "But we can never pass on more than 50 per cent because on the other end of the phone you hear these guys scream."

WESSCO International supplies a large proportion of the world's airline bags, with their disposable toothbrushes and socks, to companies such as Qantas. Last year, its managing director, Petros Sakkis, shifted his efforts from trying to squeeze ever-increasing quantities of cheap plastic goods at ever-diminishing prices out of his Chinese production lines. Instead, he's been roaming Vietnam, Thailand and India for factory space.

"Rising cost pressures are pushing us to be more aggressive in moving our production out of China," Sakkis says. "Where to? That's the big question. You've got to start from scratch because there is no paradise."

Sakkis will not talk about his prices, as each contract is negotiated individually. But Jo Austin, who edits a trade magazine called OnBoard Hospitality, spells it out.

"The rising costs will be passed on to airlines and airlines are passing them on again," she says. "But rather than pay more, airlines are reducing product, particularly at the back of the plane."

Whether consumers pay higher airfares or receive a lower-service flight, they are paying more for less. For decades, consumers have had the better of the world's manufacturers. But the tide is starting to turn. The battle between them will affect the political fortunes of leaders such as China's Premier, Wen Jiabao, who last week said inflation was the biggest concern of the Chinese people, and the Prime Minister, Kevin Rudd, who says the consumer price index is his biggest economic challenge.

This week, China's Bureau of Statistics shocked the economic world with consumer price index growth of 8.7 per cent for the year to February. Most of that was driven by food prices, but upstream inflation pressure is growing just as fast.

China's producer price index jumped 6.6 per cent in the year to February, from a virtual standing start in the middle of last year.

The United States Bureau of Labor Statistics reports import prices from China fell by about 1.5 per cent annually from 2004 through to mid-last year. But the latest annual figures show China import prices rising 2.5 per cent. Chinese statistics show its export prices are up 6.5 per cent in a year in US dollars, the currency in which most China export deals are set.

Australia does not compile country-specific import price data. But a China economist for UBS, Jonathan Anderson, says China export prices are rising into the US, Europe and Japan - so it's a fair bet they are rising in Australia, too.

"It is accelerating," Anderson says. "And the reason we expect it to continue to accelerate is that labour pressure is unabated."

So far, the Reserve Bank Governor, Glenn Stevens, has been spared the added inflationary headache of rising Chinese import prices thanks to the mercurial Australian dollar. The rising dollar means Australia's purchasing power is rising faster than China's US dollar-denominated export prices. But that relief will last only for as long as the Australian dollar out-runs the Chinese yuan.

Macquarie Bank's China economist, Paul Cavey, says it is only a matter of time. "Whichever way you look at it, Chinese export prices are moving up," he says. "At some point, it must begin to have an impact on Australian inflation."

China's cost pressures are spreading deeper and further through the system. More than half of the increase in China's producer price index was caused by coal and steel, and those shocks will be amplified by a second round of cost increases as steel and energy-intensive producers pass their pain down the production chain.

Australian consumers and businesses have enjoyed an unprecedented, sustained rise in buying power because prices for the commodities that Australia exports to China are going through the roof and, at least until now, prices have been falling for Chinese goods that are coming the other way. But booming commodities prices are starting to embed themselves in many of the manufactured goods Australia buys from China.

China's steelmakers have more than offset the huge rises in iron ore and coking coal costs by simply pushing them down the line. Steel-intensive users, in turn, are pushing those costs on to the next line of producers.

An employee at Morimatsu Industry, a Japanese company that manufactures in Shanghai, says steel accounts for half of the costs of the huge steel tanks it makes for chemical and mineral processing. He said he will add the 20 per cent rise in steel prices this year directly onto his product prices - and charge it to customers that include BHP Billiton in Australia.

The tyre maker Goodyear, which also sells to Australian mining companies, says it is lifting productivity to absorb rising rubber, energy and shipping costs. Nevertheless, it is also asking customers to pay.

"But yes, eventually consumers bear the brunt, just like they pay for increases of other products from raw materials or natural resources," says Goodyear's regional communications director, Ron Castro.

It helps resource-intensive producers that they can easily point to record commodities prices in order to explain their cost problems to customers. It also helps they tend to sell to other producers, such as mining and Asian construction companies, which are flush with cash.

Philip Kirchlechner, a marketing director at West Australia's Aurox Resources, says prices for iron ore processing equipment such as crushers and ball mills have jumped about 30 per cent in three years and delivery times have doubled.

"This price and delivery situation will get worse by the end of this year,' he says.

Tom Ren, a Shanghai businessman who runs a chemicals company called FineKing, says his inputs are derived from oil and therefore getting more expensive. He sold the world Yuan300 million ($45 million) in polyurethane gap filler products last year - the stuff that builders use to seal the cracks between windows and walls.

Ren writes his key financial variables on the back of a notebook to show how rapidly his costs are rising. They are not rising as fast as his efficiency gains.

"Our cost keep going up and up and up, but so is our productivity," Ren says. And then he adds a crucial detail: the prices of the products he sells are slated to rise 20 per cent this year.

Makers of heavy machinery and equipment tend to start from a less efficient base than their labour-intensive cousins, meaning they have more room to raise their productivity and preserve margins. More importantly, they have pricing power.

One observer, whose private equity fund controls $US4 billion ($4.29 billion) in the Asian region, including in China and Australia, said rising costs are sorting Chinese exporters into three groups.

"The guy who sell products that are really super-commodities are passing their cost increases on because their customers understand what's happening in the world market," he says. "The low-end manufacturers like hardware, textiles and low-end auto-part suppliers, like cooling fans, are being hammered. But those who can differentiate on product or use a lot of technology are OK. Anybody who has a bit of technology in their product can pass that on."

It turns out that cost pressures are far from defeating China.

Meguri Aoyama, who is the head of China affairs at Keidanren, Japan's top business association, says China's labour-intensive manufacturers will struggle. But prices for resource-intensive products such as cement, paper and steel will keep going up. But the overriding theme of Chinese industry, he says, is that rising costs are pushing the world's most competitive manufacturers to scramble faster up the technology chain.

For Toyota, he says, rapidly improving technology will easily counter rising steel costs. The car maker, which is likely to overtake General Motors as the world's top car maker this year, is helping to turn cities such as Guangzhou from low-wage manufacturing centres into high-wage, high-tech capitals.

"Guangzhou's becoming the Detroit of Asia. In five years the situation has totally changed," says Atsuo Kuroda, who is responsible for China trade and investment at Japan's Ministry of Economy, Trade and Industry.

Other leading brands such as Canon, and Panasonic are steering clear of rising costs by using ever-improving technology to produce increasingly high-tech digital cameras, flat-screen TVs and industrial machinery.

It is a little more than a decade since China cemented its name as "the world's factory" for being the home of simple, low-wage manufacturing. But the country is moving on.

Rising costs are igniting yet another round of creative destruction. They are forcing some firms out of business, others deeper into China or into southern or South-East Asia, while giving others the impetus to advancing up the technology ladder.

The Chinese Government is encouraging the transition. "They're saying, 'We want to move up-market, upscale, we prefer auto to apparel,"' says Anderson at adidas. And so his company is shifting its China manufacturing inland, where it can provide jobs to China's remaining low-wage workers and direct its products towards the country's rapidly growing domestic market.

China is treading a similar path to Japan, Korea and Taiwan before it, albeit on a much larger scale. With these precedents, economists expect consumers might hurt a bit during the transition but will end up back on top.

"Cost pressures are rising so everybody is talking about whether China will push up the prices of its products and therefore inflation everywhere," says Huang Yiping, the chief Asia economist at Citigroup. "But I don't think that will happen. If China succeeds in exporting autos, for example, then China will remain a deflationary force for a long time to come."

The times of an ever-falling "China price" for labour and resource-intensive manufactured goods is probably over. But the era of a new China price for cars, sophisticated electronics and even aircraft is probably around the corner.

Seems PP is a nuisance everywhere.

http://www.advfn.com/cmn/fbb/thread.php3?id=16752016&fav=add

no idea and don't care .... i actually can't be bothered to read most of the stuff he posts, but that is just because i am lazy and/or my senile brain falls apart in the effort.

for all that, you will note that SOLA was a very profitable short (for me) today.

Cynic well done quite extraordinary considering the numbers produced by SOLA.

Well done cynic if you've made a profit....at the moment it doesn't matter what I pick it goes down the spout !

Frankly...I think shorting will be the only thing to do now !

LOL, I cannot read the thread as its creater is in my filtered list, however, given the multiple alias nature of ADVFN's worst, its likely to contain posts from 2 or 3 people who are logging in under 30 different names each......LOL :)


zscrooge - 19 Mar 2008 15:33 - 28 of 32
Seems PP is a nuisance everywhere.

http://www.advfn.com/cmn/fbb/thread.php3?id=16752016

My estimations way back were of major problems for China in 2009.........the "end of Olympics" effect. Too much speculation that will eventually come to end, and normally at the top of the bubble. Bad news is normally worked into the markets via the official mouthpieces of the Communist Party, so its worth taking note that one of the official mouthpieces is now warning......... They were happy for it to pile in and make certain parties lots of money....but they know its going to have to depart before too long....thats the warning imv.



http://www.chinadaily.com.cn/bizchina/2008-03/18/content_6546681.htm

China warned of sudden retreat of hot money

By Ding Qi (chinadaily.com.cn)
Updated: 2008-03-18 16:30

A huge amount of speculative capital has poured into China over the past few years, and its sudden retreat could wreak financial havoc, warned a research report from an unnamed authoritative institution in China.

The report, acquired by 21st Century Business Herald, said that over US$460 billion worth of speculative money from overseas poured into China last year. The figure is four times larger than that of 2006 or twice the total from 2002 to 2006.

At the end of last year, China's foreign reserves totaled US$1.53 trillion, up US$461.9 billion over the end of 2006. According to the report, there is a large part of speculative money entering China via fake trade and non-trade channels.

The changing foreign exchange rate between the yuan and the US dollar, the China-US interest rate gap, and a potential US economic recession are three major reasons behind the huge capital influx, it said.

However, there are possibilities that this huge amount of funds may simultaneously leave China in a very short period of .....................................

http://english.vietnamnet.vn/biz/2008/03/774114/


Tens of electronics giants to enter Vietnam

10:21' 19/03/2008 (GMT+7)

In recent years, electronics and IT industries in Vietnam have recorded the average growth rate of 25-40% a year

VietNamNet Bridge A series of big electronics manufacturers have stated they will withdraw from China to move to Southeast Asia, including Vietnam.

In late February, the Taiwanese Printing Circuit Manufacturers Association decided to build a 300ha complex in Hanoi, which can serve 10-20 manufacturers. The project will begin this August. Some big Taiwanese companies like HannStar Board, Gold Circuit Electronics (GCE), Unimicron Technology, Tripod Technology and Compeq Manufacturing have sent representatives to Vietnam to survey.

In early March, the worlds fourth-largest LCD screen producer, Taiwans Chi Mei Optoelectronics, announced its plan to build an LCD factory in Vietnam. Chi Mei hasnt revealed the detailed plan but according to Taiwanese newspapers, Chi Mei will cooperate with Wistron Corp, a laptop producer, to invest in Vietnam, which has cheaper labour costs than China. Moreover, Chi Meis clients, Compal Electronics, Acer and Foxconn, have plants in Vietnam already.

Not only Taiwanese electronic groups are withdrawing from China. The worlds fourth-largest camera producer, Japans Olympus group, has decided to close a factory in China and open one in Vietnam to cut risks and costs. This $44.35 million project is expected to begin in late 2008.

According to the Vietnam Electronics Industry Association, the Netherlands Philips is seeking component part suppliers in Vietnam to move its factory from China to Vietnam. Philips representatives met with some member firms of the association, Mitsustar, CMS and some others in Vietnam. This group currently places orders worth $8 billion in China.

STMicroelectronics is currently organising a workshop to offer technology and solutions to Vietnamese partners. According to Do Tien Dung, STMicroelectronics Executive Manager in Asia Pacific, this group hasnt thought of building a factory in Vietnam yet but it is seeking partners to transfer technology and solutions in manufacturing fluorescent lamps, electric meters, and TV signal processors.

Canon group has stated it will build a new printer factory in Vietnam. According to Reuters, Canon will spend around $50 million on this project, which is scheduled to be erected in northern Vietnam. This plant will specialise in assembling low-cost printers to sell in developing countries.

The electronics industry of Vietnam is quite attractive to foreign investors because China, the worlds factory, is losing its advantage. Stricter laws on the environment, the revaluation of the yuan, the increase of the minimum salary and the new labour contract law which took effect in early January 2008 are creating difficulties for employers to fire workers and hindering production expansion in China, said Dung.

However, Truong Gia Binh, FPT General Director, said the move of electronic groups to Vietnam is the result of many reasons, for example Vietnams favourable geographic position, stable politics, impressive economic growth, cheap labour cost and high potentials for hi-tech development. In recent years, electronics and IT industries in Vietnam have recorded the average growth rate of 25-40% a year.

http://news.yahoo.com/s/nm/20080323/lf_nm/china_korea_dc


South Korean investors quit China over rising costs By Langi Chiang

Sat Mar 22, 8:27 PM ET

QINGDAO, China (Reuters) - Scores of South Korean-owned factories are closing surreptitiously in eastern China as their owners flee rising costs, leaving behind embittered workers like Li Hua.

Li and more than 200 colleagues have been fighting for a year to get the six weeks' wages they were owed when the owner of the toy factory where they worked fled during the 2007 Lunar New Year holidays.

"I went to work on the first day after Spring Festival, only to be told that the Korean boss had run away and the factory had been closed," Li, a 30-year-old mother of a little boy, recalled.

Her case is not a rarity in Qingdao, a major seaport and industrial city in eastern China which sits across the Yellow Sea from South Korea. A two-hour flight from Seoul and home to about 100,000 South Koreans, the city is a hub for South Korean factories benefiting from cheap labor.

But lately, a growing number of South Korean factories have abruptly closed down and the South Korean owners have disappeared as a slew of policies, including rising labor costs and an end to tax breaks, bite into their profit margins.

Many of the factories ............

PP I am worried about your state of mind. Over on a rival site you make over 200 posts a day, host 90 threads and regularly post on 5 different sites. You have set up duplicate threads for Chinese stocks, wiped many of your own posts (to eradicate any possiblility of criticism)and constantly change your mind. This behaviour would seem to be obsessional, manic and delusional. Not to mention the fact that you need to get a life.

pp is my hero ok. You can get lost, zscrooge

zscrooge, I am more worried about those people who now follow and post about posters, as opposed to discussing stocks and shares and markets and sentiment.

Although it is possible to understand that the present market falls have pushed some into financial oblivion, and with that perhaps immense personal stress, which is perhaps making them turn their "anger" on to BB posters.

Sad, but true.

As it seems "zscrooge" is going to be "stalking" me with abusive posts etc... I will add them to the "Squelch" facility. I really do not want the threads to fill up with nonsense posts by zscrooge.

What that means is I will be unable to read their posts.....so don't expect any responses to anything they post in future. If you find they are still filling the boards with nonsense posts, I would suggest emailed Moneyam support and complaining.

If anyone wishes to "Squelch" this poster then click on the link below, and add their name to your "Squelch" list.

http://www.moneyam.com/InvestorsRoom/squelch.php

An interesting article that highlights the ongoing changes and challenges :

http://www.chinatradeinformation.net/macro-economy-report/next-generation-of-light-industry-in-china-2.html


Next generation of light industry in China

For three decades, China has reaped the benefits of the decision to open up its economy. In many years, exports grew more than 20 percent and large swathes of south China became developed and affluent in the process.

But this very successful model faces an array of challenges, foreign and domestic, in a changing world. What worked in 1978, and for so many years thereafter, isnt working the same way anymore and China has the task of reshaping its economy to generate the next round of growth.

Processing trade, which provided jobs for as many as 35 million to 40 million workers, many of them migrants, has accounted for 51percent of Chinese exports. Its role and structure are about to change.

Exports have been hailed as one of the three economic growth engines, together with consumption and investment, of Chinas development. Exports contributed 2.5 percentage points, or 22 percent, to gross domestic product growth last year.

The trade engine is running more slowly. The monthly trade surplus came to 8.56 billion U.S. dollars in February, less than half the January figure of 19.49 billion U.S. dollars. Certainly, some of the decline was caused by an unusual convergence of events.

The Lunar New New holidays and the severe winter weather that disrupted transportation contributed to the sharp decline in February, but the trade gap had been narrowing since October, according to official figures.

THE NEXT GENERATION OF LIGHT INDUSTRY

Chinese exporters face a new round of challenges. Just as China once took over from former cheap manufacturers in Japan or the Republic of Korea (some of whose manufacturers themselves came to China for lower costs), a new group of competitors is making itself felt: Vietnam, Bangladesh, even some nations in Africa. Some manufacturers in China, foreign and domestic, will end up going overseas to cut costs.

Other challenges include labor, which is becoming costlier and could become scarcer within a few years; higher costs for all manner of inputs as world commodity prices surge; a stronger currency and higher interest rates, and weakening economies in major overseas markets.

Many of these factors were at work when deals were signed at the 18th East China Fair held in Shanghai earlier this month. Orders at this annual event, seen as a barometer of foreign trade trends for the coming year, only grew 3.52 percent year-on-year to3.67 billion U.S. dollars. Orders from the United States even contracted, by 1.5 percent.

Our company got only slightly more than 800,000 U.S. dollars worth of contracts, barely half that of last year. It was my worst experience since I began attending the fair three years ago, said Ma Tao, a salesperson for a glassware maker from east Chinas Shandong Province.

Theres little that export-oriented garment manufacturers and ceramic makers can do. They have become used to doing processing trade, which means taking orders from overseas companies looking for a cheaper place to produce. Costs in China have been kept low primarily through cheap labor.

But labor is no longer so cheap. A new labor law, which took effect on Jan. 1, has already significantly raised wages. Companies in Guangzhou are paying 1,160 yuan (about 165 U.S. dollars) per month, 13 percent more, for new staff this spring.

The traditional cost advantage has been further eroded by the faster appreciation of Chinas currency. Exporting companies have had to raise their prices.

Another issue is higher input costs: inflation and surging world prices for commodities are hitting light industry hard. The producer price index for Chinas industrial products rose by 6.6 percent in February over the same month last year. The overall cost of raw materials, fuel and power surged 9.7 percent from a year earlier. Analysts forecast that textile prices would rise another 5 percent to 10 percent after March as a result of more expensive cotton and nylon yarns.

Now that Made in China is no longer so cheap, old clients are looking for new suppliers in surrounding countries. The pressure is particularly severe on the textile industry, a typical labor-intensive business that depends largely on exports. Equipped with few advantages but low prices, garment makers have been trapped between two unpalatable choices: losing orders or taking lower profits.

Chinas textile and garment exports in February dropped 32.9 percent from 10.3 billion U.S. dollars in the previous month, largely due to weakening U.S. and European demand and the severe winter storms, customs authorities said. The total for the first two months was 25.6 billion U.S. dollars, up only 9.6 percent from a year earlier, compared with an increase of about 20 percent in the past years.

There are so many choices. Companies can move overseas or go to cheaper locations in Chinas inland areas. They can try to re-orient their sales toward domestic consumers, whose incomes are rising. They can go into other lines of business. Or they can go out of business, as many already have.

In only half a year, our export cost was pushed up by 10 percent and profit reduced by 40 percent, said Shen Yaoqing, vice-president of Shangtex Holding Co., a major Shanghai-based textile manufacturer that exports about 2 billion U.S. dollars worth of products annually.

Our company is on the brink of failure, Shen said.

In the Pearl River delta, companies with overseas investment, mainly those from Taiwan, Hong Kong and Macao, have been leaving. According to preliminary figures from the Shenzhen Bureau of Trade and Industry, more than 500 companies, whose annual production was valued at 15 billion yuan, have left the city since 2005.

More than 1,000 smaller shoe makers out of some 6,000 went bankrupt last year, said Asian Footware Association secretary general Li Peng.

TIME FOR A NEW PARADIGM

Smarter and nimbler companies are revising their strategies. They have shifted away from quantity and to quality. Hodo Group, a garment maker in eastern Jiangsu Province that also has a domestic brand, said it had shifted last year to higher value-added garments.

Lu Li, assistant manager, said We developed new textiles and designs, which would help us lift export prices.

But even strong companies are seeing their profit margins squeezed as the government scales back preferential policies for labor-intensive and export-oriented processing industries. For example, China cut export tax rebates on garments by 2 percentage points to 11 percent, last June.

A joint study by Booz Allen Hamilton and the American Chamber of Commerce in Shanghai found that 54 percent of the overseas manufacturers that had solely-owned or joint-venture bases in China said that China is becoming less competitive, and 20 percent had already decided to move at least part of their operations in China to such places as Vietnam or India.

A few Chinese companies are also moving manufacturing to Vietnam or Indonesia, which have cheaper resources and labor costs. China Customs said that in February, outsourcing trade was 31 million U.S. dollars, or 8.5 percent of total foreign trade.

Its certainly a marked turnaround from the wave of capital that flowed into coastal China 30 years ago.

Behind all these changes lies a shift in government policy, driven by a recognition that Chinas current export structure wont support economic development the way it used to.

China encourages technical innovation, which would help reduce the high energy consumption involved in manufacturing that had drawn international criticism.

China also has a persistent gap between its well-developed east and the poor central and western regions, which could be at least partially reduced if industry moved inland.

Another issue is the changing structure and, potentially, the size of Chinas labor force. The processing trade cant provide suitable jobs for millions of university graduates, whose number is expanding every year.

We are not moving labor-intensive industry out. It is our advantage, said a senior official with the Minister of Commerce. It is true that processing trade is restricted by the rising land, power and labor costs in eastern China. But the middle and western parts of the country have cheap resources. With government support policies, it is possible to move the processing trade industry inwards.

There wont be many companies moving out of China, especially with the right policies, Wei said.

Companies do face some higher costs if they move inland, such as those for transportation. But inland regions such as Qinghai, Gansu, Yunnan and Guizhou Provinces saw more than 100 percent increases in investment in garment and textile processing trade in the first half of 2007, according to the China Chamber of Commerce for Import and Export of Textiles.

As for eastern China, the government aims at promoting services, which would provide jobs for educated workers.

One example of such trade is a software development zone established in 1998 by the government of northeast Chinas Dalian City, which is getting orders from Japan and other countries.

Chinas 10th Five-Year Plan set a target for the foreign service trade at 400 billion U.S. dollars by 2010. The figure for 2006 was already half the way there, at 191.8 billion U.S. dollars.

Chinas exporters face an increasingly complex domestic and global situation. But, as Premier Wen Jiabao stressed in his government work report this month, China should speed up the transformation of foreign trade patterns and encourage the export of higher value-added name brand products.

A challenging year lies ahead. As earlier export orders are filled, its likely that Chinese exporters will feel the pinch of a slowing world economy. But Minister of Commerce Chen Deming remains optimistic, saying that China is expected to achieve steady growth in exports in 2008 despite the trade surplus shrinking last month.

http://www.spiegel.de/international/business/0,1518,543929,00.html

March 28, 2008

MANUFACTURERS STRUGGLE TO COMPETE

China's Factory Blues
By Dexter Roberts

Rising costs and regulation have led to shutdowns and restructurings in China like those that tore through America's heartland.

Multi-national .......................

A piece on BBC's newsnight last night may be of interest to thread readers. Should be available through BBC's iPlayer until the end of the week. Basically points out the human/environmental cost of Chinas great leap forward, and the associated economic risks if things go wrong (which there may already be signs of). Given the importance of China in the global economy it's probably worth a look........

Strawbs.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0pqYaEyBKQY&refer=home

ADB Cuts Asia's Growth Forecasts, Warns of Inflation (Update1)

By Shamim Adam

April 2 (Bloomberg) -- The Asian Development Bank lowered its economic growth forecasts for the region as a global slowdown weighs on exports and..................



*********************************

http://moneynews.newsmax.com/money/archives/st/2008/4/1/110745.cfm

Chinas Inflation Obscuring Olympics

Tuesday, April 1, 2008 11:07 a.m. EDT

Investors who figure that the August Olympic Games will................................... The approximately $23 billion in Olympic-related investment wont have a big impact on the macroeconomy and total fixed asset investment, says Matthews China Fund manager Richard Gao.

Looming over other economic considerations is inflation, which threatens to become rampant despite the central bank's best efforts to control it.

China's consumer prices rose at their fastest pace in nearly a dozen years last month, climbing 8.7 percent from the same month last year and up from the 7.1 percent January rate.

Though only 5.4 percent of the 56 foreign-owned companies operating in China recently surveyed by the Nikkei Business Daily reported already feeling the ill effects of Chinas inflation rate, more than 70 percent fear they will feel it soon.

Nearly half of these firms expect China's blistering economic growth to slow after the Olympics end this summer, and almost a third are moving to shift their production outside of China due to concerns about foreign exchange rates, rising wages and employee retention difficulties.

A recent survey of 20,000 households in 50 mainland China cities showed that a record 49.2 percent of Chinese urban consumers think prices are unacceptably high, though fewer now.............................

Worth a read :

http://money.cnn.com/2008/04/02/smbusiness/rising_yuan.fsb/index.htm?postversion=2008040311

Rising yuan crunches outsourcers' bottom line

China's currency is hitting record highs against the U.S. dollar - a problem for apparel companies and others that rely on low-cost Chinese manufacturing.

Last Updated: April 3, 2008: 11:03 AM EDT

(FORTUNE Small Business) -- The Chinese yuan reached a record high against the dollar last week, the latest in a series of sharp rises that are changin............................

These from the official mouthpieces of the Communist Party, so should be taken as "official".

I do wonder if some people in the West have forgotten just how damaging inflation is.......and how long it stays with you.....and how hard it is to fight it........




http://english.people.com.cn/90001/90776/90884/6386585.html

ICBC says China inflation rate to hit 8% in Q1

April 04, 2008

The Industrial and Commercial Bank of China (ICBC) is forecasting an 8 percent increase in the country's Consumer Price Index (CPI) for the first quarter of 2008. The official government figures come out in mid-April.

The bank said in a report issued on Thursday that the CPI would hit 8.2 percent in March, sl.......................


+++++++++++++++++++++++++++++++++++++

http://www.chinadaily.com.cn/bizchina/2008-04/03/content_6590455.htm

Statistician: China risking overall inflation
By Tu Lei (chinadaily.com.cn)

Updated: 2008-04-03 15:47

China faces overheating of its fast-growing economy, as price rises could turn into overall inflation from core inflation, said Xie Fuzhan, lead economist with the National Bureau of Statistics.

To tape the inflation, Xie said, the government should strictly curb investments and proje............................

http://news.theage.com.au/china-frets-over-inflation-policy/20080408-24kh.html

China frets over inflation policy

April 8, 2008 - 3:50PM

Premier Wen Jiabao ended China's annual parliament in mid-March with a surprisingly gloomy outlook for 2008, despite the nation continuing its breakneck economic growth.

"I am afraid that this year might become the most difficult one for the Chinese economy," Wen said after the parliament endorsed his economic policies designed to curb inflation and promote more sustainable growth.

"The biggest concern is price rises," Wen told reporters. "This has made the lives of people, particularly low income groups, more difficult."

The government's long-term policy to stimulate domestic demand and reduce China's reliance on its export-oriented industries is also proving difficult to achieve, Liu Lingling, an economist at Beijing's elite Qinghua University, told Deutsche Presse-Agentur DPA.

"The prices of raw materials and labour are much lower than they should be," Liu said.

Several factors are hampering government efforts to raise domestic demand beyond the affluent cities of the east and south.

The low wages for ordinary jobs limit the purchasing power of most Chinese and food-price inflation makes consumers less likely to spend on non-essential items, while many are scared off by soaring prices in the over-valued property market.

"Chinese people haven't revolted because they were too poor in the past and so they were easy to satisfy with little money," Liu said.

"But 30 years have passed (since China launched economic reforms), and people have begun to demand wage rises," she said.

The government has moved to control prices of grain, pork, cooking oil and other key commodities amid the rising inflation, which hit an 11-year high of 8.7 per cent in February.

Many Western critics say that China's suppression of the value of its currency against the dollar is making its exports cheaper, and fuelling an annual trade surplus of more than $US200 billion ($A216.26 billion) with the United States alone.

China could help to control inflation and reduce the trade surplus by allowing the renminbi to appreciate faster, the critics argue. But Liu disagrees.

"If the renminbi rises faster, it will pull the global economy more," she conceded.

"China will buy more and other countries could export more to us ... (and) Chinese may invest more in foreign countries."

But Liu said government attempts to control inflation have had "little effect" during gradual appreciation of the currency, which has gained more than 10 per cent against the dollar over the last two years.

Prices of crude oil and other raw materials in the international market are rising faster than the Chinese currency, "so you get no benefit from the renminbi's appreciation," she said.

If China's trade surplus does fall this year, that could also reduce its demand for raw materials and hit economic growth in South-East Asia and countries such as Brazil, Liu said.

A recent report by economists from People's University in Beijing estimated that a 1-per-cent rise in global energy prices adds an extra 0.1 percentage point to China's consumer price inflation.

Slowing economic growth worldwide, the rise in the dollar against other currencies, and the effect of the US credit crunch on Chinese capital markets "will add more uncertainties to China's economic outlook this year," the report said.

The report forecast gross domestic product (GDP) growth of 10.5 per cent this year and state media quoted economist Liu Fengliang, one of the authors, as saying there were "signs of relief" from the risk of overheating.

The World Bank in February forecast slightly slower but "solid" economic growth of 9.6 per cent for China this year, following 11.4-per cent growth in 2007, the highest rate since 1994.

"The slowdown in the global economy should affect China's exports and investment in the tradable sector," David Dollar, the bank's China director, told reporters.

"However, the momentum of domestic demand should remain robust and a modest global slowdown could contribute to rebalancing of the economy," Dollar said.

Despite the ruling Communist Party encouraging private enterprise and foreign investment since the early 1980s, it is still trying to maintain credibility with ordinary people through the price controls and measures to help poor rural areas, redundant state workers and other social groups.

Government price subsidies for coal, electricity, gas, food and other commodities, which are relics of 60 years of tight state planning, continue to distort the economy, Liu said.

"The change in the mode of production, for every country in the world, takes decades," she said.

"But our government promised to restrain inflation in a few years, as well as to maintain economic growth. It is very difficult."

Nice piece from Eunice Yoon

http://business.blogs.cnn.com/2008/04/15/is-china-losing-its-edge/

April 15, 2008

Is China losing its edge?

Americans are used to hearing about the growing influence of China. Every week seems to bring another screaming headline about how the communist nation is an economic juggernaut set to dominate the world. Yet the country may be in danger of losing its competitive edge. Over the past two decades, China has transformed itself into a manufacturing machine. The country has been able to convince companies to set up factories there with its cheap labor, huge market potential, and business-friendly rules. Chinese manufacturers have been churning out everything from T-shirts and toys to television sets for cheap, helping to keep global consumer prices down. These exports have been fueling Chinas economic boom, accounting for roughly 40 percent of gross domestic product.


New labor laws are likely to make China less competitive.
However, soaring costs are now threatening Chinas manufacturing might. Prices of fuel and raw materials are up, eating into manufacturers dwindling profit margins. Surging prices of food staples such as pork have propelled Chinese inflation to an 11-year high, driving up workers wages. Wages, by some estimates, are already growing by up to 30 percent every year as companies compete for skilled labor.

In addition, a new labor law, requiring stronger employment contracts, is complicating the hiring and firing process for manufacturers. A dispute arbitration law comes into effect in May. Employers say the new laws restrict them from laying off substandard workers even in times of economic difficulty. They say the rules shifts the bargaining power in favor of employees at a time when factory owners are already facing labor shortages and the possibility of a U.S. recession. These laws, combined with tougher environmental standards, higher corporate taxes, and an appreciating Chinese currency which makes goods from China more expensive overseas are adding to manufacturers financial woes.

These changes are due largely to the Chinese governments recent campaign to start prioritizing human welfare over speedy industrial growth. For decades, authorities emphasized the need for rapid economic development, often overlooking poor working conditions or pollution. The new labor and environmental policies are meant to address those problems, by prodding manufacturers into better corporate behavior. Beijing authorities are also looking to encourage Chinese manufacturers to move away from producing basic goods towards advanced products. They want China to follow in the footsteps of Japan, South Korea, or Taiwan and step up the global manufacturing ladder.

Yet China may not be ready for this economic transition. Unlike its exporting Asian rivals, China has to consider the welfare of over a billion people, many of whom are still unemployed. Low-end manufacturing is a labor-intensive industry, requiring tens of millions of workers. A shift of support away from this sector could lead to an unwelcome loss of jobs at a time when the government is desperately trying to raise the standard of living for the nations poor and prevent social unrest.

Chinas economy, though growing fast, is also said to be at a less developed stage than the economies of Japan, South Korea, or Taiwan when those countries started to rely less on light manufacturing. Some pundits say consumers in those nations had greater purchasing power than the Chinese do now, allowing governments to rely more on domestic spending as a driver of economic growth. China is in the midst of deploying the same tactic encouraging citizens to shop yet the average Chinese consumer is still inclined to save.

Moreover, the competitive environment for countries has dramatically changed. Companies can open and close factories more swiftly than they have been able to in the past as governments compete aggressively to attract investment by offering tax breaks and other financial incentives. In other words, nations can gain and lose competitiveness more quickly than in years prior.

China has already started losing thousands of manufacturers. According to an industry body, the Federation of Hong Kong Industries, over 10-percent of the 70,000 factories operating in the Pearl River Delta, the countrys manufacturing belt, will shut their doors this year. Some manufacturers are investing heavily in new equipment and technology, thereby reducing their workforce, but many are moving operations to lower-cost countries such as Vietnam. Beijings frequent trade rows with Washington are also prompting manufacturers to look to diversify their production bases. Some U.S. politicians, fairly or unfairly, criticize the Chinese for their safety standards and their currency, the yuan. These lawmakers argue the yuan is artificially cheap, contributing to Americas ballooning trade deficit.

However, that criticism may soon subside. With the threat of inflation growing in China, authorities there have little choice but to allow the yuan, which only de-pegged from the U.S. dollar in 2005, to appreciate further. A stronger yuan would help reduce import costs and curb economic growth by muting demand for Chinese goods. Chinas efforts to protect workers rights and the environment could also silence Beijings critics in Washington. And though China will likely remain a formidable player in manufacturing due to its economies of scale, the country is no longer the mecca for manufacturers it once was. Other nations stand to benefit if investment is diverted away from China.

China, in the coming years, may appear to be less of a threat to the U.S. economy than it is today.

Looks like the bubble on the Chinese markets is will and truly over for now :


http://www.marketavenue.cn/upload/NEWS_36285.htm

Sell China stocks, Morgan Stanley: Credit Suisse

Updated: 2008-04-28 Source:ChinaPost

Keywords: Shanghai Composite Index.. mutual fund.. central bank.. deposits.. China Enterprises Index.. inflation.. investment..

China's shares are a "sell" even after the government stepped in to support the world's fourth- biggest stock market, according to Morgan Stanley and Credit Suisse Group.

Corporate earnings growth this year may disappoint, Morgan Stanley analysts Jerry Lou and Allen Gui said in a report Friday. Chinese companies' Hong Kong-listed 'H shares' are more attractive than yuan-denominated 'A shares,' Credit Suisse's Vincent Chan wrote in a separate note.

The 17-year-old Shanghai Composite Index fell 0.7 percent Friday. It surged 9.3 percent Thursday, the most since Oct. 23, 2001, after the government lowered the tax on stock trading in the latest action to stem a market slump that wiped out US$1.7 trillion of market value.

"Given earnings deceleration, we do not think such a rally can last," Morgan Stanley's Lou and Gui wrote. "The government's cut of the stamp duty seems to suggest that it is running out of silver bullets."

The benchmark CSI 300 Index plunged as much as 39 percent this year to become the world's second-worst performer amid speculation government steps to quell inflation would hurt corporate profits. The Shanghai Composite tumbled as much as 41 percent in that time. The slump sparked official moves to bolster equities. China in December tripled to US$30 billion the amount overseas institutions can invest in yuan-denominated stocks and bonds. Two months later, regulators ended a five-month freeze on the sale of new mutual funds.

Regulators on April 20 required shareholders selling more than 1 percent of a stock to do so in single trades, to keep the transactions off the open market. The government had initially tripled the stamp duty last May in an attempt to cool a rally driven amid optimism an expansion in the world's fastest-growing major economy will boost profits.

The CSI 300 Index surged almost sixfold in the two years through 2007. China analysts this month are still the most bullish they've been since November, according to data compiled by Bloomberg.

The 300-member CSI 300 is still valued at 22 times estimates for this year's earnings, more than the Hang Seng China Enterprises Index's 16 times. The Hang Seng index tracks 42 H shares traded in Hong Kong.

"There is no compelling reason for A shares to be more expensive than H shares," Credit Suisse's Chan, Hong Kong-based head of China region research, wrote in his report. The A shares are "even more vulnerable to China's inflation problem."

The analyst on April 3 predicted in a Bloomberg Television interview that A shares would decline. China's inflation stayed close to an 11-year high of 8.3 percent last month, prompting the central bank to ask commercial lenders to set aside a record 16 percent of their deposits in reserve last week.

Analysts may also downgrade their estimates for Chinese earnings, Chan said. The average market expectation for earnings growth of 34 percent in 2008 leaves "ample room" to disappoint investors, as companies face a slowdown in investment income and higher costs, Morgan Stanley's analysts wrote.

China Watchers may be interested in this Economist article :

http://www.economist.com/displayStory.cfm?story_id=11290833

Economics focus

An aberrant abacus

May 1st 2008

Coming to terms with China's untrustworthy economic numbers

AS CHINA'S importance in the global economy increases, investors are paying more attention to its economic numbers. Yet the country's official statistics are notoriously ropy. Some commentators accuse China's government of overstating GDP growth for political reasons, others complain that the official inflation rate is fraudulently low. So which data can you trust?

One reason to be suspicious of GDP figures is...............

You have to love the way China works sometimes. Rather than combat inflation (cannot do that as it might upset the masses before the Olympics, so its a nice nice happy worker policy until the Olympics are over) they are now going to feed inflation by increasing wages even more to compensate for inflation (keeps those workers happy).

You can understand it, the last time inflation was rampant was 1989 - and the problems then are not forgotten (Tienanmen), so they want no riots prior Olympics....too many people watching.

Wages have already risen a lot this year, due to the new labour laws, and forget the official numbers you see advertised, China has a very good statistical way of avoiding showing how much labour costs are now, its simply that "wage" figures given out in the media are only state run firms. All private firms wages are not taken into account when you see the "average wage" figures in the media. :) Clever ain't they :)

However, these short term measures on inflation and easing the pain are only going to lead to more and longer pain further down the road...........it will all catch up before too long.........




http://news.ino.com/headlines/?newsid=20080507001521

China Plans Wage Hikes; Could Threaten Inflation - Economists
5 hours ago

BEIJING (AFP)--Southern China's Guangdong province is the latest area in the nation to unveil plans to raise wages, state media said Wednesday, a move economists worry runs counter to endeavor to rein in inflation.

Guangdong provincial labor authorities said in a 2008 plan that they aimed to establish a regular salary-increase system and raise wages of all employees in the region by 12% or more this year, the China Youth Daily reported.

Other areas in China have announced similar polices, including the financial hub of Shanghai, where a salary-rise guideline for this year called on companies to lift employee wages between 5% and 16%.

This is meant to help households, especially low-income families, cope with the country's surging inflation, which has fueled government fears of potential social unrest.

China's inflation reached 8% in the first quarter. In February, it climbed to 8.7%, the highest in almost 12 years, before easing slightly to 8.3% in March.

But analysts voiced concern that salary increases risk exacerbating the inflation problem that they are supposed to alleviate.

If companies are told to pay higher wages, they may have to raise prices to stay out of the red, economists argued, warning this could be the beginning of a vicious cycle.

"The problem will get worse if salaries and price rises take turns," Ma Qing, a Beijing-based analyst for the think tank CEB Monitor Group Ltd, told AFP.

He argued this would lead to social tensions by widening income disparities.

http://ap.google.com/article/ALeqM5i_GnchsrOsWq07cOXj7f17XcUnjQD90K3V102

China's April inflation near decade-high levels

By JOE McDONALD 12th May 2008

BEIJING (AP) China's inflation rose in April to near decade-high levels, according to data released Monday, increasing pressure on Beijing to cool rapidly ascending prices and avert possible unrest ahead of the Summer Olympics.

The government also released data showing China's trade surplus fell by 1 percent in April. That could help to ease inflation by reducing the amount of money flooding into the booming economy.

April's consumer prices rose 8.5 percent compared with the same month last year, the National Statistics Bureau said. That was up from March's 8.3 percent rate and just short of February's 8.7 percent, the highest inflation in 12 years.

"It is still far too early to claim success in the battle against inflation," Goldman Sachs economists Yu Song and Hong Liang said in a report to clients.

Consumer prices have jumped since mid-2007, driven by food costs that hit 22.1 percent in April. The government has been trying to slow down the rising cost of pork, grain and other items by boosting supplies and placing a ceiling on the price of basic goods.

Meanwhile, the government ordered Chinese banks to increase the amount of money they hold in reserve, the fourth time this year, to curb lending and control inflation. The central bank raised the amount of deposits that banks must keep in reserve by 0.5 percent to 16.5 percent the highest level to date.

Economists say Chinese bank deposits are growing so fast that the increased reserves have had no direct impact on lending, but are meant as a signal to bankers to reduce credit.

Soaring food prices are especially worrisome to Beijing because they hit China's poor the hardest.

There have been no reports of demonstrations, but inflation in the 1980s and '90s set off protests an embarrassment that communist leaders want to avoid ahead of August's Beijing Olympics, which they hope will showcase China as a prosperous, stable society.

A senior economic official, Vice Premier Wang Qishan, said Friday that Beijing will stick to tight monetary policies to cool inflation, but announced no new initiatives.

Beijing has raised interest rates repeatedly over the past two years.

Prices began to rise in mid-2007 as China ran short of pork, grain and some other basic goods.

The government has attempted to assure the public that China has enough grain and is paying farmers to raise more pigs. Efforts to boost food supplies, however, were hampered by the most severe winter storms in decades, which wrecked crops and disrupted shipping.

The sharpest inflation has been limited to food but costs of raw materials and energy are edging up.

April's nonfood inflation was 1.8 percent, matching March, which was the highest in more than a year, according to the government data.

Producer prices rose 8.1 percent in April, driven by rising energy costs, according to the government.

April's 22.1 percent rise in food costs was fueled by a 68.3 percent jump in the price of pork, a 46.6 percent increase in that of cooking oil and a 13.6 percent increase for fresh vegetables.

China's global trade surplus in April fell by about 1 percent from the same month last year to $16.8 billion amid weaker global demand for Chinese goods, according to government data.

The trade surplus with Europe jumped by 34.8 percent to $12 billion (7.8 billion euros) while that with the United States saw much slower growth, rising by 4 percent to $13 billion, according to the Chinese customs agency.

The growing Chinese trade gap with the 27-nation European Union has prompted the EU to join Washington in lobbying Beijing to ease currency controls and import barriers.

The recent hike in oil price can only add to thier problems,i think the bubble will burst,its a case of when will it hapen.

The more they let the boom continue to protect sentiment ahead of the Olympics, the bigger and more violent the bust could be after the Olypmics (and its media spotlight) is gone.


http://business.smh.com.au/chinas-growing-inflation-threat-20080602-2kmn.html

China's growing inflation threat

June 2, 2008

Page 1 of 2

Six months after the People's Bank of China signaled a stepped-up battle against inflation, it has only fallen further behind in the fight.

With inflation the highest in almost 12 years, central bank Governor Zhou Xiaochuan has.....................

http://www.china.org.cn/business/highlights/2008-07/03/content_15950947.htm

CCB: Future tightening should keep stagflation in mind

Chinese government should tighten macro-economic policies while simultaneously watching out for signs of a major economic downturn and possible stagflation, China Construction Bank (CCB) said in a recent report, the official Shanghai Securities News reported Thursday.

According to the report, China is now facing new challenges the possible emergence of high inflation, an overheated economy, and an economic downturn.

Guo Shikun, head of the research department of CCB, told the newspaper that the Chinese government needs to take a balanced approach when coping with multiple economic problems. He said that, under the current circumstances, expansionary or prudent macro-economic policies may be able to sustain economic growth, but their side-effects would cause further increases in commodity prices; tightening measures would help keep down prices and curb inflation, but would hurt the domestic economy which is already facing the risk of a downturn.

"Preventing the economy from overheating and preventing the current structural price hike from turning into major inflation remain the major goals of Chinas current macro-economic controls, said Guo, but we should also be alert to the danger of a possible economic slump and stagflation.

For more details, please read the full story in Chinese

(http://paper.cs.com.cn/html/2008-07/03/content_15941742.htm).

(China.org.cn by Yan Pei July 3, 2008)


+++++++++++++++++++++++++++++++

http://www.wsws.org/articles/2008/jul2008/chin-j04.shtml

Inflation worsens as China lifts petrol prices

By John Chan

4 July 2008

In a major shift, the Chinese government raised retail fuel prices by 16-18 percent on June 19. The move will inevitably stoke further inflation and follows similar meas................

http://www.asia-inc.com/index.php/china/100-may-june-2008/160-move-up-out-or-shut-down

.....................Today, Cheng faces another disaster, one that is as challenging as his kidnapping 15 years ago: The Chinese yuan has appreciated 18% against the US dollar in the past 18 months, while labour costs have risen 30% in the same period after Chinas new labour contract law kicked in forcing a rise in employment benefits. Net profits have fallen from 8% to nearly zero.


We cannot possibly survive in this environment, lamented Cheng, who recently shut five factories and laid-off 2,000 workers. We either have to move our manufacturing offshore or die.................................

^^^^^^^^^^^^^^^^^^^^^^^^^^^^

http://www.industryweek.com/ReadArticle.aspx?ArticleID=16778

Welcome Back U.S. Manufacturing

It's too early to tell whether high fuel prices and the falling dollar will be enough to bring offshored operations back home, but some recent moves suggest it's possible......................

http://www.manufacturing.net/Articles-Eastern-Europe-The-Next-Big-Thing.aspx?menuid=242

Eastern Europe The Next Big Thing?

By Amy Radishofski, Features Editor

Manufacturing.Net - July 18, 2008

First manufacturers moved their operations to China. Lower wages and government incentives helped China become a key destination for manufacturing. With a large labor pool, it served as the low cost option.

However, after the manufacturing boom, the countrys raw materials and labor costs have gone up, and quality has become a concern following a series of recalls. China simply isnt as attractive for foreign companies as it had been in the past.

The number of businesses in China has caused problems .......................................

EASTERN EURO .INVESTMENT TRUSTS, EST.BEE.

Would be a bad thing for many many companies in China, ramping up costs, ramping up wage increase demands etc...


http://in.reuters.com/article/asiaCompanyAndMarkets/idINPEK34395420080723

China parliament warns on inflation, export slowdown

Wed Jul 23, 2008 10:24am

BEIJING, July 23 (Reuters) - China's inflation is in danger of worsening and the government should liberalise pricing of oil and power to reduce the risks, the country's parliament said in a report published on Wednesday.

China should adjust policies for exports of textiles and toys, to avoid any slump in the export sector, according to the report by the financial committee of National People's Congress, which was published on the Xinhua news agency website.

"The national economy is moving from the stage of 'high growth and low inflation' to a state of 'high growth and high inflation' or even 'low growth, high inflation'," the report said.

The report was written at least a week ago, since it only included economic figures of the first five months instead of the first-half figures that were released on Thursday.

The report did not specify a timeframe for the proposed policy changes, but it noted the Chinese government's current policy of keeping some prices deliberately low through price caps would only worsen inflation in the long-term.

"It is just ineffective to control inflation through price controls," it said.

The report cited Venezuela as an example to support its view: "Venezuela, an oil producing country, has kept its oil prices artificially low, but the country's inflation was still 20 percent."

Liberalising oil and electricity pricing, on the contrary, can be helpful to curb inflation because it eases demand, even though such measures can push up short-term inflation.

On the export sector, the report said China's policies aimed at curbing exports of polluting products and balancing trade were badly timed because they coincided with the economic slowdown in the United States and the EU
"We suggest to pause the launch of any new policies targeted at the processing trade to maintain stable policies and to give exporters breathing time in order to avoid big impacts on the export sector," it said.

It added that a tight monetary policy and prudent fiscal policy should be maintained, but advocated "flexibility" when carrying out the policies. (Reporting by Zhou Xin; Editing by Ken Wills)

out of curiosity, i just took a peek at TAIH, GNG, WCC and HAIK ...... in all instances, volumes were between nil and minuscule whereas a couple of months back i guess several 100 000s were being traded in each every day.

cynic, loads of people are trapped in, and the attempted ramping of them, plus CHNS and RCG and the other nasties that have people locked into losses will surely start soon.

Interesting article, the "shadow" factories are well known, as it also well known that many "auditors" get paid off to "sign off production runs" ignoring the fact they know the product comes from the "shadows"

The simple fact is, provided the buying corporation (whoever it may be) get the product at the price they want, and someone else has given them the "get out of jail free" card of a "compliant production run", and provided the supplier makes profit on the production - then who is going to complain ?

The local government often officials get kickbacks to ignore the shadow factory which are not labour law complaint, the auditor sent by the overseas corporation gets kickbacks to sign that "all is well" - and so it continues.

Its good to see someone bringing it more into the public spotlight, what it needs really is for a major corporation to be caught out by Panorama or similar to really bring all this shady business into the limelight.

If they continue to get away with eye, and blind eyes are turned, then why not go back to a Prison labour system......thats nice and cheap too.

IMO.



http://sify.com/finance/fullstory.php?id=14729737&cid=20742

Revealing the dirty secret behind the low 'China Price'

Vivek Kaul/DNA MONEY |

Saturday, 02 August , 2008, 11:49

From pitchkaris and colours used to play Holi in India, to mobiles, PCs and laptops used the world over, everything seems to be Made in China.

How did China become the factory of the world? The answer is obvious: China produces goods at such a low cost that no country can seem to compete with it.

Given that, 'profit-hungry' corporations across............. ...........

Also an interesting article on the rising cost of shipping :



http://www.nytimes.com/2008/08/03/business/worldbusiness/03global.html?_r=1&oref=slogin

Shipping Costs Start to Crimp Globalization

By LARRY ROHTER
Published: August 3, 2008

When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for ............................

Very interesting article to read in full, link below and a snippet from it, and this is written by a Chinese. :

http://seekingalpha.com/article/89641-the-great-bubble-of-china-next-to-pop

The Great Bubble of China: Next to Pop?

by: Frank Rong posted on: August 07, 2008


.........................China is well known for its corruptions. I was told by someone that in Shanghai, realtors, buyers, builders and bankers are all colluded to make big money. Banks lend to anyone who applies and to any builder who builds, as long they get piece of the pie. Banks belong to the government and corrupted bureaucrats are in charge of handing out loans

Subprime in the U.S. was a disgrace, but in China, its lending standards are much worse the subprime. Banks lend to who they know or lend to anyone for social reasons. The primary lending decision is not based on whether borrowers can repay.

I dont have the figures, but l know too many foreigners are investing in China, reminiscent of the Gold Rush in 1849. Decisions to expand manufacturing capacities in China are not based on economics, rather for social reasons. One indication of excessive capacity is this: now you can buy a 52 Hitachi (HIT) LCD TV for $1,500 in store, I dont know how the manufacturers can make any money in making that TV.

The commodity bubble is fueled by the Chinese construction bubble. Building roads, skyscrapers and expanding manufacturing plants take lots of steel and energy. But underneath every bubble, theres a pin. I think it will burst very soon. China's stock market bubble has already burst. When the real estate bubble bursts, then the whole economy might fall into a very deep recession.

When you have a true bubble, nobody sees it. We only recognize it when the bubble is over. The American housing bubble is small scale when compared to China. Everyone warned about the American housing bubble for years before it popped; therefore, I dont think it can be called a housing bubble.

China is a true bubble. No one believes that a slowdown is even possible.

Investing in China is a sure thing to many foreigners. Yet history has told us that foreigners are the dumb money and they have been very consistent: buying high and selling low...........................

http://www.nationalpost.com/opinion/story.html?id=710744

The coming Chinese slowdown

David Frum, National Post

Published: Saturday, August 09, 2008

The leaders of China have carefully planned an imposing Olympics. They have bought new stadiums, new airports, new facilities of every kind -- in fact, just about everything available to an authoritarian state with a full treasury and low labour costs.

They overlooked only one possibility: that the Olympics would arrive at the same time as China's economy braked to a stop.

To understand what is happening in China, compare two statistics. In the 12 months ending ...............

Taking this Times article :

http://business.timesonline.co.uk/tol/business/economics/article4492816.ece


From The Sunday Times August 10, 2008

The dream is over as China wakes up to global downturn

The stock markets are falling and exporters are going to the wall - Michael Sheridan in Shenzhen

IT IS RARE to see an estate agent running out of his office after a prospective client, but the young........................






When taking in with this article :

http://seekingalpha.com/article/89641-the-great-bubble-of-china-next-to-pop




Starts to lead to, as the writer said, the pin thats under the bubble. The construction boom in China has employed many people, though its corrupt ways its left banks holding far too much NPL's (Non Performing Loans) - the real NPL figures would frighten people, even the official statistics are worrying.

The building has gone on because it could even though it was not needed, because people made loads of money and at the end of the day nobody cared if the property remained empty as the "book value" could be kept high and was rising so nobody knew about all the corruption that went into it.

This has been happening for years and years now, and as I have often said if you are in China then go around at night and see just how many buildings are completely empty.

Lots of "analysts" have been imo hyping away about so many people going to migrate to cities.........but how can they.

They need a job and money to move........and with unemployment rising how are all these "rice farmers and peasants" going to be moving into these luxurious new apartments being built everywhere.... It was always a load of nonsense but in bull markets people overlook it and ride the wave.


If, as its suspected, that a property collapse is coming, it would be devastating for the Chinese economy. As the writer said a true bubble is one where people cannot see it ever stopping - and when it does, the effect is stunning.

Wonder what people in China know.......... ?????? Perhaps they are not getting ramped into the hype about their own country....... ?


http://money.cnn.com/2008/08/11/markets/china.ap/index.htm?postversion=2008081107

China shares fall to 19-month low

Benchmark Shanghai Composite Index tumbles 5.2% on economic fears.

Last Updated: August 11, 2008: 7:04 AM EDT

SHANGHAI, China (AP) -- China's benchmark Shanghai Composite Index fell 5.2% Monday following the release of economic data showing wholesale price inflation jumped to its highest level in 12 years in July.

The Shanghai index closed at 2,470.07 on Monday, down 135.65 points. That was its lowest close in more than a year and a half.

The Shenzhen Composite Index of China's smaller, second market plunged 6.6% to 698.37.

Airlines, textile exporters and refiners led the decline. Two of three major publicly traded airlines dropped by the daily maximum 10%.

The government reported Monday that the producer price index rose 10% in July over a year earlier, its highest rate of increase since 1996 and a jump over June's 8.8% rate. Such increases, fueled by rising energy and raw materials costs, add to pressure on consumer prices, complicating Beijing's effort to rein in politically sensitive inflation.

Chinese investors have become increasingly jittery over the economic outlook amid signs that the malaise afflicting the U.S. and Europe might be spreading to Asia, with corporate earnings bound to suffer. Analysts said the start of the Beijing Olympics last week had quashed any lingering hopes for a games-related rally.

"Investors still think the market is weak," said Qian Qimin, a strategist at Shenyin Wanguo Securities. "They are disappointed," he said.

So-called "B-shares," which are denominated in U.S. dollars and take up only a small segment of market volume, fell sharply in Shanghai, dropping 9% and helping to pull the composite index lower.

Stricter foreign exchange controls and a strengthening of the U.S. dollar against the Chinese yuan could be leading speculative investors to pull out investments that had been targeting gains in the local currency, said Zhang Linchang, a strategist at Guotai Junan Securities in Shanghai.

"It's hard to calculate, but it's possible that hot money is leaving China because of that," Zhang said.

In share trading, a steadying of global crude oil prices failed to buoy airlines amid concern over weakening passenger demand.

Among the airlines hitting the daily downside limit, flag carrier Air China ended at 7.82 yuan and China Eastern Airlines dropped to 6.17 yuan. China Southern Airlines dropped 9.9% to 6.09 yuan.

China Eastern Airlines announced late Sunday that a deal to sell a strategic stake to Singapore Airlines and Temasek Holdings, the investment arm of the Singaporean government, was off after they failed to meet Saturday's deadline for reaching a final agreement.

Oil refiner China Petroleum & Chemical Corp. fell 5.4% and PetroChina plunged 5.54%.

Aluminum giant Chinalco also fell by the 10% limit. Property developer China Vanke slumped 5.6%.

Chinese investors dont have a clue about investing - typical buy high sell low going on...

Most were first time investors sucked in by the market, which was clearly a bubble. Is probably overshooting to the downside now.

It also has sod all to do with AIM chinese stocks as they have never enjoyed high p/e's, in fact quite the opposite.

Strange you dont mention about inflation dropping, or exports gaining 28% etc on here isnt it???

Is PP solvent?

With US, UK, Germany, Spain, Australia and Japan all facing recession, China can only be next...

Long term investors start to buy chinese stocks.

http://uk.reuters.com/article/stocksAndSharesNews/idUKARO23549420080912?feedType=RSS&feedName=stocksAndSharesNews

PP wiping all his threads now? All those low p/e threads and stock picks (all now losing heavily) all erased. LOL

Well, now even the so called "experts" are seeing and forecasting China is in trouble. Love it.

Said to everyone back in January this year to sell everything, as stocks were going to crash and got berated by the rampers and their abusive multiple alias names.

Said China was going into recession in 2009 and will suffer badly in 2009 and 2010, and now as it looks ever more firm as an event to happen, even the big boys start to acknowledge it.

I am so glad I stopped posting on AD v FN, the abusive rampers on there will now have lost so many people so much money by egging them on to buy these awful Chinese stocks with nothing but ramping, I tried to warn people but they prefer to listen to abusive rampers and not people putting out decent, if negative, opinions of stocks and markets.

Now, I can sit back and feel sorry for anyone still in stocks, or ramped into them by the uber bullishness of other posters. In this market speculative big potentials are worth a punt, certainly Chinese aim rubbish is not, anything linked with China is surely on for a very bad 2009, their credit crunch ad recession is only just starting, and the effect there will be bigger imv.

This from an article today :

http://www.telegraph.co.uk/finance/markets/3148364/Russia-and-Brazil-crumble-as-commodity-prices-crashRussia-and-Brazil-crumble-as-commodity-prices-crash.html

"""""""""Albert Edwards, global strategist at SociGenerale, said China depends on exports to US and Europe for its lifeblood, and could face banking problems of its own.

I think China is going into recession as well. This is going to catch investors off-guard. """""""""""""


I feel sorry for most caught in this mess, but a few people deserve everything that is coming their way, and hopefully some of those burned by these people, will let them know in no uncertain terms :)

Agree with you, Papalpower. SOLA, CREO, GNG, WCC, HAIK, etc all crumbling.

hyleo, it will be a double whammy effect. First they will get hit along with all other AIM stocks are liquidity is removed and people sell their shares for much needed cash.

Then, when the UK/US are over the worst, the double whammy occurs in all likelihood, and thats the China recession and credit crisis bites, so rather than rise along with other AIM stocks, they will get sold off even more as everyone scrambles out of the mess coming their way in 2009/2010.

I hope that people sold off all these Chinese stocks and have no risk weighting in them.

The headline should be "Get out of anything Chinese, before that all goes bang too"...........remember, they said UK housing would never go down...........the same idiots say China is bulletproof.................

Some reports on the issues :

http://images.businessweek.com/ss/08/10/1002_china_economy/7.htm

As I have said for years, NPL's are the problem in China, a slowdown would lead to meltdown worse than the US.

*******************

http://www.boston.com/news/world/asia/articles/2008/10/03/economic_tribulations_reverberate_in_china/

Insulated, or going to suffer badly ?

********************

http://www.bloggingstocks.com/2008/10/06/what-does-a-recession-in-china-look-like/print/

And do not forget, China needs around 8% GDP growth in order to create jobs for the ever increasing amount of school leavers.


************

And many many more............

Won't be long before PP is a buyer here.

Sadly, China is the only economic superpower left with the money to bail out the U.S. When they go into recession, the U.S. and probably the rest of us will go into a depression...

In my opinion.

Strawbs

China has no money, thats all talk and paper, what it does have is lots and lots of debt, its been run on a hyper version of the USA problems and so it will have bigger problems that the US is going through. All to come for China.

When China goes into recession, the US will be coming out of it.

Major problems ahead for anything related to China, IMO.

Anything China related must be a wonderful short for now and next year, there must be a good few percentage points still to drop, as their cash gets burned away.

That's my worry Papal. As I posted elsewhere. Governments around the world are making huge promises of bailouts.....but who's going to finance it! When China and Asia goes, we all go.... down the pan for a decade or two probably....

In my opinion

Strawbs.

China has underwritten all the US junk, thats why every man and his dog has been pumping China, the need to bump up the other side of the scales and make a balance.

Now that the US has collapsed it no longer matters, what matters is sorting the US out, before everyone gets to know the problem in China is perhaps twice as bad as the one playing out in the US presently.

Its all good, as China will probably collapse as a Communist country, and the turmoil will allow US and European companies to take the lead back and create jobs and wealth back in the western world.

The trouble is with China is that everything is controlled by the "official bureaus of statistics".

The West has learnt from Communism that sometimes its best to lie, and then correct with revisions later. So aptly done by the USA of late who say they are not in recession, only to revise figures 6 months later and so "well oh we were then but not now" kind of stuff.

China's economy has been booming along, probably in the realms of 20% GDP growth, but because those old Commies plead poverty to the rest of the world, and want exemption from WTO rules etc... they have consistently under reported their growth. You cannot plead poverty when your economy is growing at 20%.

While they said it was 8% it was probably 16%.

While they said it was 9% it was probably 18%.

They do this as it allows a "soft landing", now in decline (and unemployment is rising so forget their fairy tale) they can say its now slowed to 8%, when in fact now its likely 4%.........so they under report when its going up, and then over report when its going down.

This allows everyone to "see" a nice balanced set of figures", nothing to frighten anyone as they are averaging....................BUT.............they are now in the more serious stage of over reporting, while those in the know know that things are not good, they will spout to the world that the slow down is slight and still growing strong, but actually.........well.........its a very different story.

China is holding all the US junk, its now over reporting growth as it slides into recession, and social unrest is a major factor.

Worrying times ahead for anyone exposed to China.

Whilst the companies will still have to report their 2nd half 2008, still "bumper", everyone knows in reality that their 1st half 2009 figures will be awful.

Many people will be trying to hype up Chinese stocks on their still to be reported 2nd half 2008 figures early in 2009, but beware the 2009 figures coming later next year.

2009 and 2010, going to be some very sticky and nasty years for China in particular IMV.

Interesting read PP-thanks. Certainly not seen this angle mentioned in financial press. Plenty about Japanese companies being good value with stronger balance sheets and in position to export to China.

GNG announced today a defacto downgrade going forward. Their trading update remains in line, but the outlook is not so good now, and they admit that China is slowing down, this is what you will see, as it becomes apparent over all the hype that in fact recession is coming the way of China.

Chinese stocks certainly should be excellent shorting candidates for 2009 and 2010.

ADFN is really awful now IMO, it seems to be full of Chinese stock rampers, who all appear to have ramped themselves into buying lots of Chinese AIM stocks, and now they are trapped into them in a bear market and with China looking very very dodgy for 2009 and 2010, they are getting awful in their ramping and abusiveness.

I do not post on ADFN now, as said before, as its gone very downhill IMO, the majority of the posts are from what appear to be ramping crews,and they are so hard in trying to ramp Chinese stocks it makes you sick at times.

On top of the GNG admission that things are slowing down, today also saw ZTC (Chinese telecoms) say this which again is more evidence to say that things in China are under pressure, and those who said 2009 would be a bad year for anything China related, might well be proven correct :

"As has been widely reported, trading and credit conditions for SME's in the PRC have become increasingly difficult throughout the third quarter of 2008. This is due to deteriorating macro economic conditions outside the PRC and slowing economic growth and restrictive credit policies in China. As a consequence, our markets have become increasingly competitive, disruptive and oversupplied. ZTC has therefore achieved sales significantly below those seen in the same period last year.

As a consequence, the Company's working capital available to operate and expand its business has become constrained, as has been previously announced. The Company continues to review all aspects of its operations to reduce costs and improve efficiencies to improve the availability of working capital for new model and market development. The possible sale of assets referred to above is one example of a potential method of cash generation that is being actively considered."

Well worth a read for anyone with an opinion on or interest in, China :


http://research.standardchartered.com/researchdocuments/Pages/ResearchArticle.aspx?&R=56005


Well written and researched, and I would not argue against the opinions, in fact we are already seeing the Chinese governments knee jerk reactions to the troubles being reported by Chinese companies.

The China bubble wobbles some more - wait until it bursts.................

WHEN WILL IT BURSTS, LOOKS GOOD TO ME.

BANG POP OR A BURST

Just think, this is only the start - if it falls - the fall will be massive..........that must frighten the China bulls, who are already losing their shirts.

THE WORLD IS GOING DOWN THE DRAIN,ALL OF IT.

http://news.idg.no/cw/art.cfm?id=241B925E-17A4-0F78-315F6C837378FD5F

Skrevet av Steven Schwankert

22.10.2008 kl 10:14 | IDG News Service

Dell bullish on Asia but cautions on rising costs in China

CEO and Chairman Michael Dell expressed .....................................

The following broker's report was posted by the team at FT Alphaville. If true, growth prospects in China are very much less than are assumed in most people's global economic forecasting models:


"Our resources analysts have recently been touring China and have been talking to a wide range of companies, consultants, users etc. They have returned with a very bleak picture of the Chinese economy, even gloomier than the bearish picture being painted at the moment in the market. The picture can be extended to other sectors of the Chinese economy and will have a regional impact, especially on Australia resource companies. Highlights are:

1. There is a very surprising negative rate of change in the economy being openly vocalised by corporates and other market participants. A significant number of factories are shutting down. These are shutting down due to a collapse in overseas demand as global consumers scale back spending.

2. Trade flow is locking up rapidly - letters of credit and 90-day commercial paper are no longer being accepted or transacted. Companies are resorting to 30 and 60 day paper putting further pressure on working capital. Letters of credit not being honoured beyond 3m will be a key hurdle for foreign traders who have 1-year contracts. Liquidity pressures are being seen in 60-day paper and this is expected to seize up soon.

3. There is a significant collapse in demand with end products not being able to be sold - domestic coastal coal shipments for example have declined by 30% in the past 3 months.

4. All copper smelters are losing money at current prices but demand from power companies remains stable for now. Further closures are expected at zinc smelters, with 85% of smelters thinking prices will continue to fall. A senior advisor to CISA has just said that the steel industry faces a costs crisis as material costs exceed falling prices.

5. The property market has significantly slowed, and companies are now pinning hopes on infrastructure projects. Property prices are down at least 20% in the past few weeks, with 30-40% falls in some areas. Demand for cement, aluminuim, copper, zinc, steel, iron ore and coal have already weakened.

6. For some companies, preservation of capital will be key. Our analysts believe that there are significant risks of survival in the commodities sector.

7. Consensus amongst Chinese corporates is that they are banking on a recovery in 2H09, but in the meantime they expect a significant contraction for the remainder of this year and the first half of next year. The single biggest risk they see is an extended OECD recession post 1H09 and incremental changes to China policies.

There are great hopes being pinned on the Chinese Government to help the economy. Preservation of capital is likely to be crucial over the next
18-24 months - we expect significantly more difficult conditions ahead.

Things are bad and rapidly getting worse - there is no sign that this market is about to form a base any time soon."

SOURCE: http://ftalphaville.ft.com/blog/2008/10/27/17470/markets-live/

Output cuts spark fears over China economy

By Geoff Dyer in Beijing

Published: October 29 2008 19:04 | Last updated: October 29 2008 19:04

Signs are growing that Chinas economy could be cooling quicker than expected, with a string of big industrial companies announcing production cuts over the past week.

The cuts have come as anecdotal evidence from other companies suggests a surprising weakening of demand in October amid the global financial crisis and a local housing market slowdown.

Aluminium Corporation of China, the countrys biggest producer, said last week it would cut production by 18 per cent and a senior executive was quoted in local media on Monday saying further cutbacks were possible.

Jinchuan, Chinas biggest nickel producer, said on Tuesday it was cutting its production target for this year by 17 per cent, while several copper smelters have made large cutbacks over the past two weeks.

Metals and mining companies around the world have had to rethink production in recent months because of falling prices and weakening global demand. However, companies in China have also faced reduced orders from construction companies as house prices have dropped.

Analysts from Macquarie Securities said that in Tangshan, a big steel-making centre in north China, most mills were running at 30-50 per cent of normal capacity and many small iron ore mines had ceased production.

Orders for cars and home appliances have already begun to shrink, Xu Lejiang, chairman of Baosteel, Chinas biggest steelmaker, said last week.

Zhou Xizeng, analyst with Citic Securities, said steelmakers were trying to adjust rapidly to uncertainty about demand and an inventory build-up. The recent drop in production is a sort of psychological panic, he said.

Executives in a number of other industries also said demand had been unusually weak in recent weeks.

But some executives said the slowdown could also reflect shorter-term factors such as customers reducing their inventories because of global uncertainties.

We had been expecting this to pick up a bit after the end of Olympics restrictions on factories, but things have been very quiet, said the chief executive of the China operations of a large paints company. We are trying to work out how much is due to weak demand and how much to destocking.

Economists are predicting growth next year of 8-9 per cent, down from nearly 12 per cent in 2007. Several have downgraded their numbers in recent weeks and more cuts are expected.

In September and October, there has been an acceleration in the slowdown in consumption and in exports that has not yet showed up in the official data, said Stephen Green, economist at Standard Chartered in Shanghai.

Despite fears of a sharp slowdown, a number of companies remain upbeat about growth prospects in China. I do not see this as the start of a significant decline, said Nick Reilly, president of General Motors Asia.

Paul French, a retail industry consultant in Shanghai, said the holiday week in early October had been strong for retailers. For now, things seem to be all right for retailers but when the market does slow, it does so very quickly, he said.

Local sentiment may be boosted by the central banks willingness to trim interest rates repeatedly, as demonstrated by Wednesday's move to cut the benchmark one-year deposit rate from 3.87 per cent to 3.60.

Additional reporting by Patti Waldmeir in Shanghai and Mure Dickie in Beijing

http://www.ft.com/cms/s/0/35e79c6c-a5eb-11dd-9d26-000077b07658.html

Worth a read for background China info/opinon going forward :

http://www.investegate.co.uk/invarticle.aspx?id=58707

.

Proselenes = PP =one sad troll

The markets should continue to tank.

Democrat president.
Democrat majority in the Senate.

Lots of lots of " trade and job protective" legislation to come in imv, its going to mean Asia will be hit with less export work, and its going to mean US companies will struggle to make higher profits.

Republicans like to make money at any cost - Democrats are more job protective, and now the markets must start to price in the fact the money maker glottalization loving Republicans are not there any more.

Recession, Democrats in control - one could say Wall Street is in for some lean years ahead.

The main thing and relative to this thread is that China (and India and other Asian countries) will be hit and hurt now, imo, with the Democrats in control and the likely move to "job protectionism" that will come.

Worth a read ahead of the Nov figures coming out soon :


http://www.forbes.com/reuters/feeds/reuters/2008/11/07/2008-11-07T081234Z_01_PEK6605_RTRIDST_0_CHINA-ECONOMY-POLL.html


.

Chinese Communist Party remains telling large porky pies about 9% growth ???????

Yet another Chinese AIM stock warns over the troubles of recession, sorry, must not say that we must say warns of the problems of just 9% growth.........LOL

Recession................ :) Wonder what they will be saying if the Communist Party reports growth of 8%, or 7% even..... ;)



RNS Number : 8793H
Et-china.com International Holdings
11 November 2008

ET-CHINA.COM INTERNATIONAL HOLDINGS LIMITED

('Et-china', 'the Group' or 'the Company')

Trading Update

Et-china, a leading travel services group in the fast growing region of South China, announces the following trading update. The Group is being affected by the reduced level of economic growth in China and the current cautious approach by the Chinese to leisure and business travel spending as well as considerable price cutting in the travel industry. As a result, the Company is not expecting to meet market expectations but the Board is optimistic that current conditions will prove to be short lived and the market will recover soon.

The Company remains liquid with RMB267m (approximately 22m) in cash and believes that the Chinese economy is fundamentally sound. The Company will seek to speed up its expansion via selective acquisition at this opportune time and provide an update to the market as soon as possible.

Wonder who has been saying this, for many months.....


http://news.yahoo.com/s/afp/20081113/ts_afp/financeeconomychinawen_081113044914


Impact of financial crisis on China 'worse than expected': Wen

2 hrs 47 mins ago AFP/File

Chinese Premier Wen Jiabao at a press conference in Beijing. Wen Jiabao has said the effect of the global BEIJING (AFP)

China's Premier Wen Jiabao said the effect of the global financial meltdown on the country was "worse than expected," state media said Thursday, in a sign of growing concern at the impact of the crisis.

Wen was quoted as making the assessment by the director of the National Bureau of Statistics Ma Jiantang when he briefed his staff on Tuesday, according to the website of the bureau's newspaper China Information News.

"The impact of the global financial crisis on the Chinese economy is much worse than many had expected," Ma said according to the website, passing on remarks made by Wen.

China initially said the global financial crisis would not cause too much harm to its economy, but in recent days the signals from Beijing have changed markedly.

Wen's comment comes after the Chinese government unveiled a four trillion yuan (586 billion dollars) economic stimulus plan on Sunday aimed at boosting domestic consumer demand in the face of flagging exports.

A good article to read - if you are not so exposed to Chinese AIM stocks that you cannot see the wood for the trees.

I must admit that presently everything in China is going as I thought it would, and thats into "crisis" for 2009. Some key months ahead now, but 2009 is certainly looking to be a real problem for China.


http://www.boxun.us/news/publish/china_comment/Chinese_Economy_Turning_Point.shtml


.

How are LEAD doing since our psychopath ramped it? Not to mention the prediction of oil at $200.

YAWN. Mendacity is best filtered.

Rumours around China's growth figure for Q4 could be less than 6%.

It seems the "panic" measure of interest rate cuts and massive "proposed" spending is because fears are the slowdown is accelerating and they see "contraction" and therefore real recession in 2009.

This explains the panic measure being made by the Chinese government, for negative growth in China would potentially lead to massive social problems.

The action they are taking is not sustainable, and can only make things worse long term.

Will it work ? and can they bump up the growth figure for a long enough time to see demand return from the US and Europe and therefore stave of a contraction ? It seems people think there will be a contraction in 2009, but it will not be "released" and the Ministry of Fudge will pump out lower, but not that low growth figures.

I wonder who has been saying China is in real trouble, more than was being let on.........


http://www.telegraph.co.uk/news/worldnews/asia/china/3525052/China-slashes-interest-rates-as-panic-spreads.html

China slashes interest rates as panic spreads

The People's Bank of China cut interest rates by more than 1pc point as the economy crumbles and millions of jobs are predicted to go ahead of Christmas.

By Malcolm Moore in Shanghai
Last Updated: 12:48PM GMT 26 Nov 2008


........................

http://livenews.com.au/articles/2008/11/28/ChinaJapan_Slumping


China slumping, recession looms for Australia

28/11/2008 6:19:00 AM.

All those people who still believe Australia won't dip into recession in 2009, as the IMF, OECD, Federal Treasury and Reserve Bank predict, should think again.

China, whose 'solid' demand for our resources was supposed to help keep us out of recession in 2009, is getting worried.

So worried that it slashed interest rates Wednesday night by the biggest margin in 11 years, once again it proving that it pays to watch what central banks do, not what they say.

Bloomberg reported yesterday that a senior Chinese economic official had warned that "Some economic indicators in China showed a "faster decline" in November, the.........................full article on the link.

China in trouble........


http://www.bloomberg.com/apps/news?pid=20601087&sid=aVRGLHihqJtM&refer=home

Chinas November Manufacturing Contracts by Record

By Nipa Piboontanasawat

Dec. 1 (Bloomberg) -- Chinas manufacturing shrank by the most on record and export orders plunged, adding to evidence that recessions in the U.S., Europe and Japan are dragging down the ................

.

I hate to give you the I told you so, but all those talking and ramping about "China's Domestic Demand"..........its all nonsense. Its not strong enough and not mature, and we have seen the old Commies reach for the faithful, "lets boost exports again as domestic demand is not there" with tax cuts, tax concessions, subsidies etc...

This devaluing again confirms that process is happening, and domestically they are in trouble.

China was built on corruption, all its figures are total nonsense, and anyone believing any data coming out of China about growth, employment, cash reserves etc... is being very silly.


http://www.telegraph.co.uk/finance/economics/3546471/Chinese-economy-1930s-beggar-thy-neighbour-fears-as-China-devalues.html

Last Updated: 11:13PM GMT 03 Dec 2008

1930s beggar-thy-neighbour fears as China devalues

China has begun to devalue the yuan for the first time in over a decade, raising fears that it will set off a 1930s-style race to the bottom and tip the global economy into an even deeper slump............

The central bank has shifted the central peg of its dollar band twice this week in a calculated move that suggests Beijing aims to offset the precipitous slide in Chinese manufacturing by trying to gain further export share abroad.

The futures markets are pricing in a 6pc devaluation over the next year. "This is clearly a big shift in policy and we are now on alert," said Simon Derrick, currency chief at the Bank of New York Mellon.

The move follows a Politburo speech by President Hu Jintao warning that China is "losing competitive edge in the world market"....................

http://business.smh.com.au/business/chinas-industrial-output-growth-stalls-20081215-6ys8.html


China's industrial output growth stallsDecember 15, 2008 - 3:34PM .

China's industrial production grew at the weakest pace in almost a decade as export growth collapsed, increasing pressure on the government to do more to revive a slumping economy.

Production rose 5.4% in November from a year earlier, the statistics bureau said today. None of 14 economists surveyed by Bloomberg News predicted such a small increase. Output............................

.

A Chinese AIM companies bites the dust few what appears to be rather "dodgy" goings on ??????

http://www.investegate.co.uk/article.aspx?id=200812221014325813K&fe=1


.

LED today suspended.

BSST today reports a poor trading update and that the Financial Crisis is having an effect in China. Bangkok system woes these must also effect GNG going forward imo.

China - 2009 ?

Looks to be just what was suspected, China has been a ramp (mostly by the ADVFN BB rampers) and its in big trouble, and those attempting to ramp most Chinese stocks have lost loads and loads as they have all crumbled.

Some interesting articles to read :


http://www.vancouversun.com/news/Shine+China+world+cheapest+factory/1103093/story.html

Shine is off China as world's cheapest factory

B.C. manufacturers do a reality check on low-cost country

By Joanne Lee-YoungDecember 29, 2008

When Richmond-based Holey Shoes first started making its signature clogs in 2002, it used a manufacturer in Quebec. But as its foamy, colourful shoes became ..................

&&&&&&&&&&&&&&&&&&&&&&&&&&&&

http://en.epochtimes.com/n2/content/view/9346/

Part 1

China’s Economy Is in a Deep Freeze and Unable to Recover (Part I) By Cheng Xiaonong

Sound of Hope Dec 29, 2008

The following is Part I of Dr. Cheng Xiaonong’s report regarding China’s economy, broadcast on Sound of Hope Radio on December 17. Dr. Cheng was a former advisor to China’s past premier Zhao Ziyang. He holds a Ph.D. in sociology from Princeton, and is Editor-in-Chief of Modern China Studies.

Rich Own Majority of China’s Wealth

We mention polarized income distribution in society. The government, by all means, protects a small group of privileged people so................


++++++++++++++++++++

http://en.epochtimes.com/n2/content/view/9485/

Part 2

China’s Economy Is in a Deep Freeze and Unable to Recover (Part I) By Cheng Xiaonong



-----------------------


Well worth reading.

http://en.ce.cn/Business/Macro-economic/200901/03/t20090103_17856844.shtml

China manufacturing shrinks for 5th month

Last Updated(Beijing Time):2009-01-03 11:32

China's manufacturing contracted for a fifth month in December as recessions in the US, Europe and Japan sapped demand for exports, a survey showed.

The CLSA China Purchasing Managers' Index stood at a seasonally adjusted 41.2, compared with a record low of 40.9 in November, CLSA Asia-Pacific Markets said on Friday in an emailed statement. A reading below 50 reflects a contraction.

Manufacturers in industries from................................


&&&&&&&&&


http://news.theage.com.au/world/china-warns-economic-woes-could-trigger-major-unrest-20090107-7btj.html

China warns economic woes could trigger major unrest

January 7, 2009 - 4:58PM

China's state media has issued an unusually candid warning of the risk of mass riots this year, in what observers said Wednesday reflected increasing jitters about the global economic crisis.

Outlook magazine, an authoritative weekly published by the Xinhua news agency, said in this week's edition that the economy might become so bad in the coming months that China's social fabric could start unravelling.

"Due to deepening economic difficulties and social security problems since the second half of 2008, enterprise closedowns, layoffs and labour disputes have significantly increa...............

Yet more confirmations of what some have been trying to deny for far too long. It even appears over on the "dark side" of ADF*N that I have a few poor imitators and some of the "China ramping brigade" who have been proven so very wrong are accusing almost any poster of being me...... :) How quaint. For the record, the "quality" of the BB's of that place has gone so downhill IMO that I do not post there anymore, under any name, regardless of what a hysteric small proportion may try to mislead people with.




http://news.bbc.co.uk/2/hi/business/7825573.stm
Page last updated at 05:20 GMT, Tuesday, 13 January 2009

China's exports in record decline

China's exports have dropped into their biggest decline in a decade.

Exports in December were down 2.8% from the same time last year, a bigger decline than November's 2.2% drop, the China Daily said.

The numbers provided fresh evidence of a serious trade slump that has caused a wave of factory closures and staff layoffs, analysts said.

The communist leadership has expressed fears of social unrest as economic problems worsen.

The BBC's correspondent in ............................................

Couple more new articles.

The most interesting thing, for me, as I have said before, is that China cannot afford for property prices to fall, so much corruption has gone on in construction and bank loans, that if property were to collapse in price, then the effect would be far worse than is being seen in the USA.

Interesting times in 2009.


http://www.financialpost.com/story.html?id=1168575

Weaker economy chops China's home prices
Duncan Mavin in Hong Kong, Financial Post
Published: Monday, January 12, 2009

HONG KONG - Shenzhen in Southern China has been a potent symbol of the country's rapid economic growth over the past three decades. Now it is also home to some of the sharpest effects of the country's economic slowdown, including, according to a report.................


-------------------


http://www.time.com/time/business/article/0,8599,1871014,00.html?imw=Y

The Last Pillar of the Chinese Economy Falls
By 24/7 Wall St. Monday, Jan. 12, 2009

The way in which the Chinese GDP was going to roll forward to become the No. 1 economy in the world was relatively simple. An expanding global need for cheap goods would drive a massive export machine. An expanding middle-class would become rabid co................


.

http://www.telegraph.co.uk/news/4240202/China-warns-against-protest-as-unemployment-rises.html

China warns against protest as unemployment rises

Fears of mass unemployment and social unrest in China have prompted the Communist Party to issue a stern warning over protests.

By Richard Spencer in Beijing and Malcolm Moore in Shanghai

Last Updated: 5:09PM GMT 14 Jan 2009

Protester in China Government leaders are promising tough measures against demonstrations and corruption as the world's fastest growing economy faces its worst crisis for a decade.................


*************************

http://www.abc.net.au/news/stories/2009/01/14/2466048.htm?section=justin

Dissident warns unemployment fuelling Chinese discontent

Posted Wed Jan 14, 2009 4:02pm AEDT

The Chinese Government risks collapsing under the economic downturn, stuck between helping the rich and risking a rebellion or backing the poor and risking a coup, a leading dissident says.

Wei Jingsheng warned in an article in Britain's Times newspaper that the economic crisis was fuelling growing discontent across China, among both the poor - 300 million live on less than a dollar a day - and the super-rich.

"The Chinese government is trapped............................

An interesting read :

http://www.theaustralian.news.com.au/business/story/0,28124,24922215-18544,00.html

Piggyback ride over as China's growth engine stalls - Rowan Callick

January 17, 2009 Article from: The Australian

AUSTRALIA can't count on China to drag us out of our economic woes this year, for it is now becoming clear that China is in double trouble itself.

It is not just the global downturn, which is slashing export orders. There is also a home-grown hole, caused by the failure of its leaders to act on their rhetoric and broaden the economic base during the decade-long double-digit boom that...........

http://www.economist.com/world/international/displaystory.cfm?story_id=12948617

China's trade

Surplus to requirements
Jan 15th 2009 | HONG KONG
From The Economist print edition

Why is Chinas trade surplus growing when its exports have collapsed?


THIS week revised figures revealed that China overtook Germany in 2007 to become the worlds third-biggest economy. At the start of last year China also looked set to become the worlds biggest exporter, but a slump in exports in the final months of the year meant they remained smaller than Germanys. Chinas exports tumbled by 13% (in dollar terms) in the fourth quarter, leaving them 3% lower in December than a year

http://www.mg.co.za/article/2009-01-24-china-warns-of-economic-distress-and-longterm-ills

China warns of economic distress and long-term ills

BEIJING, CHINA Jan 24 2009 08:05

China must do more to ease public distress as it battles a slowing economy and rising unemployment, a leadership meeting said, warning officials the global slowdown was colliding with the nation's reckless mode of growth.

The warning came from a meeting on Friday of the ruling Communist Party's Politburo, a 25-member elite council, the official People's Daily reported on Saturday.

The report from the meeting cha............................

http://www.irishtimes.com/newspaper/finance/2009/0206/1233796244298.html

Friday, February 6, 2009

China may be centre of next Great Depression

SERIOUS MONEY : As globalisation falters, the possibility of a 1930s-style meltdown cannot be dismissed

GLOBAL DECOUPLING emerged as a dominant investment theme 12 months ago among esteemed professionals as the developing world proved largely immune to the growing subprime virus in the US, enabling global growth to exceed 5 per cent in 2007, comfortably above the long-term average of 3.7 per cent.

The notion that the emerging economies of the Far East could withstand an economic recession in the western world was built primarily on the dubious logic that....................................

http://news.bbc.co.uk/2/hi/business/davos/7882816.stm

Wednesday, 11 February 2009

China's exports see sharp decline

China's exports are falling as world demand slows China's exports fell more than expected in January, down 17.5% from a year earlier, marking the biggest drop in ............

Worth a read :

http://www.nakedcapitalism.com/2009/02/china-showing-signs-of-recovery.html


.

Couple of interesting reads :

http://www.chicagotribune.com/business/sns-ap-as-china-economic-jitters,0,3832634.story

Chinese officials grow quiet amid economic woes in once-booming southern region

By WILLIAM FOREMAN | Associated Press Writer
7:19 AM CST, February 27, 2009


...........The professor also wondered whether economic planners were being practical considering the ongoing financial turbulence overseas.

"Are they being realistic when looking at what's happening in the world?" Li said. "Are they using this plan as an instrument to overshadow the problems in Guangdong?"


++++++++++++++++++++++++++++++++++++++++++++++++++++


http://wsws.org/articles/2009/feb2009/chin-f27.shtml

China’s stimulus package threatens more economic turmoil
By John Chan
27 February 2009


...........Far from representing a new brand of "command capitalism," the Chinese regime, like capitalist governments everywhere, is powerless before the global economic meltdown. Its stimulus package to prop up the Chinese economy is fuelling new financial turmoil, economic difficulties and political tension, while offering little relief for working people. All this is creating the conditions for an eruption of political and social unrest.

although as i also read Q4 2008 still showed growth of 6.8%

cynic, yes, but the cynic out there says that those figures are from the "Commy Dept of Fudged Statistics that always show Communism is the best".......and the Chinese Dept of Fudged Statistics is well known for being totally manipulated.

Put it this way, if millions upon millions have lost their jobs, and unemployment is zooming upwards how the hell can you have 6.8% growth ????????

6.8% growth = no increase in unemployment at all, even taking in new graduates.

So someone must be telling rather large porkies........so the cynic in anyone should say........

http://english.china.com/zh_cn/business/economy/11021617/20090305/15357071.html

Chinese premier says economic slowdown becoming major problem in China

2009-03-05 11:22:47

NPC, CPPCC Annual Sessions 2009

BEIJING, March 5 (xinhua) -- Chinese Premier Wen Jiabao admitted Thursday that the country is facing unprecedented difficulties and challenges, with continuous drop in economic growth rate due to the impact of the global financial crisis becoming a major problem.

When delivering a government report to the an.............

http://www.iht.com/articles/ap/2009/03/11/business/AS-China-Economy.php


China's export decline accelerates in February

The Associated PressPublished: March 11, 2009

BEIJING: The decline in China's exports accelerated in February as a slump in global demand worsened, adding to pressure on Beijing to pump up the world's third-largest economy with its massive stimulus plan and avert more job losses.

Exports plunged 25.7 percent from a year earlier in February, compared with January's 17.5 percent fall, the Chinese customs agency said Wednesday. Imports fell by 24.1 percent — smaller than January's stunning 43 percent plunge but still a blow to China's trading........................

Papal pratt and alter egos -your threads all blanks to me

China doing well now -can I have my money back?