China

ECFA

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At a recent American Enterprise Institute discussion of Taiwan and the ECFA, Council for Economic Planning and Development Minister Christina Liu said it would be full steam ahead if markets were reaping economic benefits and the ECFA was the right policy.  Things would completely change however, if Taiwan moved toward independence, but this probably wouldn’t be the case as most Taiwanese want to maintain the status quo which might translate to her saying the ECFA wouldn’t be accepted under Taiwanese independence or that China would withdraw benefits in such a situation.


 

Air Transport, Solar and Wind Power News

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 A Japanese airline (a conglomeration of All Nippon Airways and ANA) will begin low cost domestic flights in November and services to China next year.  According to the Civil Aviation Administration of China (CAAC) over 5 million passengers were transported during the Spring Festival through domestic carriers, organizing close to 40,000 flights to meet increased holiday travel demand.  Services will be expanded between Dalian in China’s Liaoning Province and Toyama, Japan to Beijing.  Turkish airlines has grown, as well as Air China, the latter which transported 102,500 tons of mail and cargo.  Hong Kong-based Cathay Pacific Airways – with its subsidiary Dragonair – last month transported 2.24 million passengers, 6.8 percent higher than last year.  China Southern Airlines and China Eastern Airlines likewise reported a significant increase in passenger transportation over the last year.  Spring Airlines will be using AsiaPay’s payment processing solution for its online flight booking, enabling clients to pay for tickets in local currencies.


In terms of airline partnerships, news is that first, China Harbor Engineering Company Ltd (CHEC, a subsidiary of China Communications Construction Company Ltd.) just clinched a US$1.22 billion deal for the construction of a new international airport in Khartoum, Sudan.  Second, China Telecom Corporation Limited has entered into a strategic partnership with Hainan Airlines potentially enabling the latter to be “China’s first air carrier to provide in-flight phone calls and Internet.” New services will be added to Italian airlines too and a Tibet-based air carrier (Tibet Airlines) will be the first air-carrier in the region and will start its operation launching a Lhasa-Beijing service.
 

News from solar power is that China Solar Energy Holdings Ltd. will be acquiring domestic thin-film solar photovoltaic module maker Target Samoa for US$45 million in stock and convertible notes enabling the addition of amorphous silicon thin-film module production.  Taiwanese Neo Solar Power Corp (NSP) said its revenues last month escalated over 150 percent and this trend looks set to improve.  Volthaus GmbH (German solar power developer) is due to receive 20 MWp of solar modules in an agreement with EGing Photovoltaic Technology (Chinese module maker).  There is good news in the solar cell market too in the country, with the use of Maple solar cell technology (broader and flatter silicon cells with fewer grain boundaries).


There is work on potential wind power projects via China Resource New Energy which recently stated it would put US$728 million to US$984 million in wind power developments in pursuit of 150 gigawatts of overall installed capacity by 2020.  A US company CleanTech Innovations informed of its striking a wind tower supply deal from power producer China Guodian.

Substantial Drop in Asian Shares

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Recent world events – New Zealand earthquake, Japan’s credit rating downgrade and continued Middle East and Libyan unrest – led to a significant drop in stock markets across Asia.  For example, South Korea’s Kospi, the Nikkei 225 stock and Hong Kong’s Hang Seng index all plummeted around 2 percent.  As well, Japan had trouble dealing with its huge debt following Moody’s Investors Service downgrading its outlook for the country’s credit rating, citing “increasing uncertainty” over Japan’s capacity to effectively deal with rising debt.  This doesn’t spell good news for the country which only last month had its sovereign debt rating cut by Standard & Poor.  Australia, China, Singapore and Taiwan are currently in the same boat vis-à-vis stock markets. The only good news for the region of late has been the increase in oil prices.

 

Chinese Economy and Grain Production

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Although it seems like inflation is sky-rocketing in China due to its escalating consumer price index, according to chairman of the leading food enterprise COFCO Ning Gaoning, grain prices will be stabilized because of the country’s “substantial reserves.”  While corn will probably drop, rice and wheat – two of the country’s major grains – will remain in high supply this year.  Indeed last year the country’s grain output increased nearly 3 percent with its rice inventory-to-consumption ratio being around 18 percent higher than anywhere in the world.  

Ning claimed that the escalation in world food prices was due to “global demands and extreme weather in major grain producing areas” along with general inflation and speculation.  He dismissed the claim that the price of agricultural products were behind global inflation since the recent peaks in farm produces occurred way later than those of other industrial products.  Ning also  predicted a high inflation in the next second months with a weakening from July to the end of 2011 but claimed that expectations were weaker this month because of various governmental measures to ensure market supply.  

As well, Ning noted how China still potentially has the capacit to increase the amount of grain it produces due to better rural infrastructure, and more low-yield farmland productivity.  Farmers are being encouraged to increase production and the government has invested significant funds in rural water conservation and farm irrigation projects.

 

Future of NTU

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NANYANG Technological University (NTU) is to become a “Univer-City with a soul,” meaning that the University itself will basically be an entire city.  This is expected to happen within the next 14 years.

Basically the Yunnan Garden Campus Master Plan is set to be so large that it will ultimately comprise “numerous informal meeting points dotting its green landscape to encourage cross-faculty and industry interaction.”  Since there are so many overlaps between disciplines, the encouragement of inter-disciplinary cohesion is crucial for general advancement.

At the pinnacle of this cohesion will be the Campus Centre – NTU’s focal point.  It will comprise shops, eateries, a cinema – everything that together makes up a city, resembling Holland Village.

Getting the Best of Both Worlds: China and Israel Join Hands

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China-Israel InvestmentsSince China has the cash and Israel has the techno-know-how, Shanghai-born investor Jay Young saw an opportunity. She began seeking out high-tech opportunities in Israel for Chinese investors to make everyone a winner. Educated in China and the West, Young has worked extensively in the fields of pension funds and investing in the Chinese government market. She is now moving into the Israeli economy.

Young is helping those Chinese high net worth individuals (the country today ranks number four in the world) make some great Israeli investments. Israelis don’t have to worry about the Chinese stealing their ideas though; they simply want to jump on the bandwagon from investing with them. The Chinese simply don’t want to waste the time and resources it takes to constantly update and develop technology, especially if Israelis are already doing it so well. In this way, Young has hit the nail on the head; Israel can continue working on R&D without worrying about the finances while China can sit back and give it the necessary funds, ensuring a generous outcome for both partners.

Areas where the two countries are joining forces today are renewable energy (water purification and desert farming) and advancements in production technology, health and education.

Global Sources Says That Rising Chinese Prices Drive Away Buyers

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chinese-pricesGlobal Sources conducted a survey of 385 business buyers. According to the survey, a majority of purchasers pay prices that are too high for Chinese products. Chinese exports are losing their competitive edge against lower-cost countries, especially for low-price goods.

Sixty-eight percent of those answering the survey said that the yuan’s appreciation has changed their sourcing strategy regarding Chinese goods.

One-third of respondents predict that the yuan to will rise to 6.5 to the U.S. dollar during the next half year.

In response to the rising yuan, 54 percent said that they will import from less expensive countries such as Vietnam and India. However, buyers will still purchase from China for goods that have short delivery schedules or detailed specifications.

Global Sources’ President of Corporate Affairs, Craig Pepples said that “Given the changing price point of China products, China exporters must work harder to market themselves and justify higher prices in terms of service, product quality or production volume.”

Inflation Linked Bonds Are The Hit In Asia

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The head of Fidelity’s institutional business in Hong Kong, Carlo Venes, said that international inflation-linked bonds are becoming more sought after by professional investors in Asia. They want to protect themselves against inflation and to balance their portfolios with non-dollar based investments.

Some analysts predict that Western central banks are following monetary policies which are too risky. Other analysts predict that deflation will follow the International financial crisis.

Verns explained that “The dispersion of views on inflation is huge.” “You have the camp that believes still that the western world will be in a Japan scenario for a decade. You also have the view that with all the printing of money, and all the central bank support, there is risk that, all the money that now sits on corporate balance sheets in cash, will accelerate the risk of inflation picking up.”

China’s inflation went up to a 25-month high of 5.1% in last November.

First Branch of Chinese Bank Established In France

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The first French branch of the Industrial and Commercial Bank of China (ICBC) was opened in Paris this Tuesday.

Industrial-and-Commercial-Bank-of-ChinaAt the inauguration, French Finance Minister Christine Lagarde and ICBC President Jiang Jianqing mutually pressed a button to symbolically launch the Chinese bank’s new subsidiary.

Lagarde said “France is very glad to welcome the biggest bank of the world, ICBC.”

Jiang said that the tremendous potential of mutual business transactions between France and China, which was over 40 billion U.S.D last year, stimulated companies to increase their mutual investments.

On Monday, the ICBC announced the establishments of five subsidiaries in Europe: in Madrid, Milan, Amsterdam, Brussels and Paris.
The ICBC global services are have operations in 28 regions and countries including 203 branches around the world.

Medical Innovation Moving To Emerging Economies

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A PricewaterhouseCoopers report indicates that emerging countries like Brazil, India and China are emerging as leaders in medical innovation and may well surpass the U.S.

According to the report, medical technology innovators are more frequently going overseas to “seek clinical data, new-product registration and first revenue.” This may lead to a situation where Americans are the last to receive new medical technology. Emerging markets are quickly becoming “the leading markets for smaller, faster, more affordable devices that enable delivery of care anywhere and help bend the health-care cost curve downward.”

According to the report, the emerging nations are not hindered by “entrenched health-care system infrastructure that seeks to maintain the status quo.” The report’s co-author, a managing director at PwC, Christopher Wasden, said that it is important to “rethink our reimbursement system” to the medical tech industry. This may stimulate companies to stay in America.