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PapalPower
- 04 Dec 2007 00:19
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 !!
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 !!
PapalPower
- 04 Dec 2007 00:20
- 2 of 131
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."
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."
PapalPower
- 04 Dec 2007 00:21
- 3 of 131
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
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
PapalPower
- 04 Dec 2007 00:22
- 4 of 131
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."
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."
PapalPower
- 08 Mar 2008 10:53
- 5 of 131
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.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.
PapalPower
- 08 Mar 2008 11:05
- 6 of 131
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 ........................
**************************
**************************
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....................................
***************************
***************************
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 ........................
**************************
**************************
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....................................
***************************
***************************
BAYLIS
- 08 Mar 2008 16:38
- 7 of 131
What about VOF.ON AIM.
cynic
- 08 Mar 2008 17:53
- 8 of 131
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
PapalPower
- 09 Mar 2008 05:39
- 9 of 131
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.
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.
PapalPower
- 11 Mar 2008 05:52
- 10 of 131
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.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.
PapalPower
- 11 Mar 2008 06:32
- 11 of 131
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.
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.
PapalPower
- 14 Mar 2008 16:52
- 12 of 131
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.
___
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.
___
PapalPower
- 15 Mar 2008 11:59
- 13 of 131
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...................
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...................
PapalPower
- 15 Mar 2008 17:24
- 14 of 131
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).
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).
hlyeo98 - 15 Mar 2008 17:59 - 15 of 131
Hi Papalpower, I can see you are working hard to crush chinese shares like SOLA, WCC, ACH, FTO, etc with the above articles.
cynic
- 16 Mar 2008 09:35
- 16 of 131
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.
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.
PapalPower
- 16 Mar 2008 09:47
- 17 of 131
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.
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.
zscrooge
- 18 Mar 2008 15:08
- 18 of 131
PP best ignored - EK lackey but a great contrarian indicator.
PapalPower
- 19 Mar 2008 04:07
- 19 of 131
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?
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?
cynic
- 19 Mar 2008 07:35
- 20 of 131
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.
PapalPower
- 19 Mar 2008 08:43
- 21 of 131
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 :)
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 :)
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