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  • An inflationary kick in the US jobs market | Business Spectator
    Fed s Yellen expects 3 growth 10 Jan US jobless claims dip 09 Jan Tinker taper the Fed s cautious path More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Log in to post comments Comments They could start with Submitted by Ken not available on Wed 2013 12 11 09 50 They could start with increasing the wages of the lowest quartile No that wont happen so the only other way is to reduce QE and promote the commensurate business confidence Business obviously has no confidence with continual QE so logic states that it must be reduced right now The worlds experts are walking on water and all we can hope for is that many of them will drown Log in to post comments I don t understand what you Submitted by Eddy Ward on Wed 2013 12 11 11 05 I don t understand what you are driving at here Callum For a start I cannot see the justification in using the CPI as a good proxy for inflation anymore The CPI appears rigged and politically interfered with over the years especially in US and UK where it no longer properly represents indices of actual domestic spending patterns Take the UK for example where London is bubbling while the rest of the country is depressed High priced assets everywhere are booming QE is like a Ponzi scheme with the government fed on both sides of the arrangement What happens when tapering starts How long is a piece of string Push on it and see what happens I think Ken has it right raise the wages of the lowest quartile and they will spend it Take the Henry Ford path Log in to post comments I don t understand why QE Submitted by Dave on Wed 2013 12 11 11 45 I don t understand why QE just goes into banks and sits there Can t it be fed more directly into the active economy for example through infrastructure spending It seems like a very crude device because you can t make it work right now because you re just dumping it in banks but if it did ever start moving it could take off like a rocket like it did in 1922 Germany and again you won t be able to control it until too late Also you say that the US government is stimulating but I thought Congress was making them cut back one of the reasons QE isn t working you know one s got the foot on the accelerator and the other on the brake Also isn t there a continual fall in the participation rate If so employment isn t improving Also they seem to spend a lot of time adjusting the previous months figures in the wrong direction so I don t believe a word of it Oh and do you think anyone actually knows what they re doing

    Original URL path: http://www.businessspectator.com.au/article/2013/12/11/us-economy/inflationary-kick-us-jobs-market (2014-01-12)
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  • Callam Pickering | Business Spectator
    s web The Reserve Bank s wait and see approach to rates says less about the current domestic market and more about the Fed s taper timeline If it s not careful it could end up in interest rate no man s land by Callam Pickering 4 34pm December 03 17 comments Shoppers are gearing up for growth A higher than expected lift in retail sales suggests record low interest rates are finally doing their bit for consumer confidence If the sentiment lasts it will make Australia s growth challenge much easier by Callam Pickering 1 28pm December 03 7 comments Back to work time to taper US manufacturing is at its strongest in years and with improved construction and employment data conditions may soon be right for the Fed to move by Callam Pickering 8 32am December 03 13 comments Homing in on the drivers of growth Building approvals data showed some encouraging signs but residential investment is a small driver of the economy US payroll figures will provide more clues on how the Reserve Bank will act by Callam Pickering 2 15pm December 02 1 comment Time to stop the budget finger pointing Maurice Newman s attack on Labor for reckless spending is a flimsy argument that lacks context And the government must look past simplistic debates about high wages if it s to improve competitiveness by Callam Pickering 8 57am December 02 44 comments Maximum caution as credit growth drags Business and household credit growth remain subdued despite historically low interest rates reflecting ongoing concerns about the health of the economy and labour market by Callam Pickering 1 25pm November 29 6 comments Time the East Coast laggards got to work There are many theories but little real certainty as to what will drive future growth as mining investment falls What s very clear is Victoria and NSW must pick up the slack by Callam Pickering 12 08pm November 29 4 comments A capital surprise gives the RBA room not to move Unexpectedly strong capital expenditure and a slower than expected decline in mining investment will put less pressure on the Reserve Bank to provide relief to the non mining sector by Callam Pickering 4 11pm November 28 24 comments A calmer eurozone still faces foreign risks The eurozone s home grown turmoil is easing but external threats still loom large Fears over the effects of US tapering austerity and structural reforms have the union in dire straits by Callam Pickering 8 07am November 28 3 comments The mining sector s last hurrah Investment figures from the ABS show that engineering construction dominated in the September quarter reflecting strength in the resource rich states Just how much more does the mining sector have to give by Callam Pickering 4 54pm November 27 2 comments Wobbly numbers paint a mixed US picture America s consumer confidence remains weak but house prices are growing despite a decline in pending home sales by Callam Pickering 11 55am November 27 16 comments Get smart or face infrastructure chaos With budgets getting squeezed tighter and tighter governments are likely to shy away from funding large scale infrastructure projects For Philip Lowe the key is not avoiding debt but spending more wisely by Callam Pickering 4 03pm November 26 10 comments Not just a bump but a permanent economic thump The Reserve Bank s Philip Lowe has described a painful and enduring adjustment to Australia s fortunes which productivity gains are unlikely to alleviate by Callam Pickering 11 25am November 26 13 comments How to stem a health care haemorrhage Swelling health care costs are at the centre of Australia s looming budget blowout Improving productivity gains and pushing towards evidence based procedures may help to relieve pressure on the budget by Callam Pickering 2 05pm November 25 20 comments Page 2 The EU s financial pinch has turned to poverty The human fallout of the global financial crisis has reached worrying proportions in Europe with a quarter of the union s citizens now facing poverty risk And these figures likely underestimate the extent of the problem by Callam Pickering 1 57pm December 09 15 comments Slowing inflation tempers payrolls triumph While strong payrolls data raises the possibility of a December taper disinflationary pressures may see the Federal Reserve hold off for a time by Callam Pickering 8 07am December 09 17 comments Is America getting ahead of itself Stronger than expected US GDP mostly reflected growing inventories Manufacturers and retailers are stocking up but the figures suggest consumers aren t yet opening their wallets by Callam Pickering 7 59am December 06 17 comments RBA caution to cushion a Fed fallout Forecasting is patchy at the best of times but with the massive ramifications of an impending taper the Reserve Bank has little choice but to wait for the Fed to make up its mind by Callam Pickering 2 02pm December 05 5 comments The RBA s case for intervention gains currency September s soft GDP figures show that domestic demand is struggling If the US taper doesn t start soon the stubbornly high dollar might need more than the Reserve Bank s war of words by Callam Pickering 3 42pm December 04 14 comments Prepare for a house price plateau Low interest rates are likely to support house prices in the year ahead but subdued household income growth means investors shouldn t count on them rising much further by Callam Pickering 11 26am December 04 42 comments The RBA is stuck in the Federal Reserve s web The Reserve Bank s wait and see approach to rates says less about the current domestic market and more about the Fed s taper timeline If it s not careful it could end up in interest rate no man s land by Callam Pickering 4 34pm December 03 17 comments Shoppers are gearing up for growth A higher than expected lift in retail sales suggests record low interest rates are finally doing their bit for

    Original URL path: http://www.businessspectator.com.au/contributor/callam-pickering?page=1 (2014-01-12)
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  • Paper tiger: China's potential debt disaster | Business Spectator
    including official debt explicit and implicit loan guarantees amount to 19 6 trillion yuan or about the third of China s GDP However it is improbable that all of these officially guaranteed debts will turn sour leaving local governments to pick up the tabs The audit office calculates that local governments are expected to cough up only a small percentage of these guaranteed amounts in the event of default 19 per cent for the explicitly guaranteed loan and about 15 per cent for implicit debts The central government debt which is far more transparent and less controversial is about 9 7 trillion yuan including explicitly and implicitly loan guarantees The total debt level both central government and local government is about 54 per cent of China s GDP which is below the 60 per cent threshold set by the European Union for admitting new members under the Maastricht Treaty China s debt picture looks much rosier if we accept the National Audit Office s assumption that local governments only need to a pay small percent of their contingent liabilities which include both explicit and implicit debt guarantees The audit office estimates China s total debt to GDP ratio is about 40 per cent Whatever the size of debt be it 40 per cent or 54 per cent the total amount is concerning but not on the verge of implosion The total debt level falls somewhere between the worst case scenario of optimists and best case scenario of pessimists Chinese stock markets posted modest gains on the news of the audit office s report Shanghai index increased 0 88 per cent and Shenzhen stock exchange was up by 1 53 per cent The Chinese market is relatively comfortable with the overall debt level However the biggest risk factor is the rapid growth rate of debt which is outpacing both China s economic growth and its increase in tax revenue Despite an official crackdown on the local debt binge since 2010 after China unleashed the 4 trillion yuan stimulus package which is partly credited for saving Australia from a recession local debt levels surged nearly 60 per cent in the last two and half years If such trend was allowed to grow unchecked China s local debt problem could very easily turn from a tamed beast into an unshackled monster During the same period China s GDP growth decelerated from the customary double digital growth to 7 6 per cent Similarly growth in tax revenue collection also slowed from 24 8 per cent in 2011 to a mere 7 5 per cent this year China s slowing economy casts further doubt on the ability of local governments to service their debts Apart from the worrying trend of rapid debt growth certain local areas and industries of China are more heavily indebted than others For example the audit report reveals that three provinces 99 cities 195 counties and 3465 townships have a debt to GDP ratio of more than 100 per cent and are likely to experience hardship in repaying their debts The audit office is also expecting debtors who have borrowed heavily to build China s extensive highway system to come under acute pressure as well It must also be noted that Chinese local governments are also heavily dependent on land sales to service their debts It is estimated that more than one third of the 9 3 trillion yuan local debt will be paid for by proceeds from land sales China s total debt level is manageable at the moment and is still below the internationally accepted red line of a 60 per cent debt to GDP ratio However we don t have to go back that far in history to know that such threshold is far from infallible during a crisis Ireland had a very respectable debt to GDP ratio of 25 per cent before the sub prime crisis in 2007 However when the global financial tsunami swept across the former Celtic tiger the debt level soared reaching 121 5 per cent in 2012 The country s bank guarantee alone amounted to 40 per cent of GDP This is the first part of a series of articles exploring China s burgeoning debt problem Print this page More from Peter Cai 10 Jan Australia is not the key to China s resource prison 09 Jan China s shock and ore at the Australian way 08 Jan Australia s brave new world for Chinese investors 03 Jan Mao s proletariat paradise lost 30 Dec The latent danger in Abe s amnesia Related articles 10 Jan Korea China jostle for Aust resources 10 Jan China trade balance contracts 10 Jan Volvo Cars sales up in 2013 10 Jan China s Fosun buys Portuguese insurer in privatisation 10 Jan Australia is not the key to China s resource prison More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Dave Tue 2014 01 07 10 30 Important topic thank you The fact of the audit itself makes me cautiously optimistic as many of China s official statistics have been suspect in the past and it is yet another piece of evidence that Xi is very serious about market reform after a decade of inaction This audit appears to put them in a better position than the West was in 2008 if they know who owes what to whom China is even now ahead of the EU in transparency about debt hopefully the EU s stress tests later this year will finally get around to producing reliable figures about its banks There are many worries including private debt and the tangle between private and public debt given the extent of corruption but at least they seem to be trying to do something about it Linda Jones Tue 2014 01 07 14 50 As a busy mom working from

    Original URL path: http://www.businessspectator.com.au/article/2014/1/7/china/paper-tiger-chinas-potential-debt-disaster (2014-01-12)
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  • Mao’s proletariat paradise lost | Business Spectator
    earn 47 per cent more Then comes the shocker the nominally communist China has one of the worst socially mobility rates of the 23 countries surveyed including basket cases of socially inequitable countries like Brazil and Argentina In China children of the higher income family will earn 60 per cent more So what happened to Mao s classless proletariat paradise David Dollar senior fellow at the Brookings Institute and a former US Treasury representative in Beijing explains why The first issue is China s hukou registration system which operates more or less like an economic apartheid system that separates the population into urban and rural residents China must end its economic apartheid December 17 Hukou makes it difficult for people to move around especially from countryside to cities If you were born into a farming family a relatively low income occupation it limits your opportunities significantly Many good jobs in Beijing and Shanghai specify local hukou registration Secondly China s educational resources are skewed toward major urban centres Shanghai schools stood out on recent tests as among the best in the world Famous British private schools like Harrow even boast campuses in Beijing In China schools are usually locally funded which means prosperous areas can afford to lavish more resources on education while poor and especially rural areas lack the necessary resources Thirdly the country s growing corruption is hurting social mobility and generating widespread resentment It is easier for elite families to pass on status and income to their children For example many of China s top leaders send their children to exclusive schools such as Harvard and Oxford for education President s Xi Jinping s daughter is an undergraduate at Harvard and the son of the disgraced former senior party leader Bo Xilai went Harrow Winston Churchill s old school Oxford Harvard and Columbia law school Chinese princelings are also hogging senior positions in the commercial world Former premier Li Peng s daughter runs the largest state owned electricity company and his colleague Zhu Rongji s son is in charge of the country s largest domestic investment bank China s low social mobility is ironic given the party still pays lip services to communist ideology It is not only unjust but also hurting the legitimacy and efficiency of a market economy China s ability to innovate is hampered if a large part of its population is not able to utilise their talents There is a glimpse of light after the bold reform package announced at the Third Plenum of the recent party congress Beijing understands the need to address the growing chasm between the poor and rich and boost the social mobility of the bottom half Translating words into actions is a different proposition altogether Print this page More from Peter Cai 10 Jan Australia is not the key to China s resource prison 09 Jan China s shock and ore at the Australian way 08 Jan Australia s brave new world for Chinese investors 07 Jan Paper tiger China s potential debt disaster 30 Dec The latent danger in Abe s amnesia Related articles 10 Jan Korea China jostle for Aust resources 10 Jan China trade balance contracts 10 Jan Volvo Cars sales up in 2013 10 Jan China s Fosun buys Portuguese insurer in privatisation 10 Jan Australia is not the key to China s resource prison More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Dave Fri 2014 01 03 12 05 Xi appears to be increasing his power through adopting some Maoist and nationalist rhetoric at the same time as he pushes through liberalising the economy and cracking down on corruption It looks like a classic feint to the left in preparation for a right hook A very smart dude I suspect On another point Australian income inequality is very wide compared to the Scandinavians although as you say intergenerational mobility compares well We do very well on Credit Swisse s calculation of equality of assets which makes us look very egalitarian but I smell a rat I d like to see an analysis somewhere in BS that looks at a wide range of different measures of equality Phil Clarke Fri 2014 01 03 14 01 Oh dear you really have a problem analysing data on the Spectators I truly feel that much of the time your analysis is there before the evidence supporting it and that some of your journalists tend to skew their comments to achieve the desired result The offending comment this time relates to the impact of your dad s income upon yours and the comment is In Australia the impact is 26 per cent so there is an advantage of being born into a high income family but not that significant and we compare well with Scandinavian countries such as Denmark and Norway which are known for their social equality No sorry but I think you have it wrong the truth is likely to be far more ominous and not at all egalitarian What is reflected is the increasing collapse of the Middle Class the inability of the nation to support the children of the Middle Class as a future and larger Middle Class Increased life expectancy has resulted in the reality that where a Middle class family has three children what was a requirement to support one middle class household has evolved within thirty years into a demand to support four That has occurred twice since the Second World War One has become four and that four has become twelve or even thirteen At the same time the protection of Middle Class business has been all but removed through Globalisation The sad reality is that Middle class families in the younger grown up generations are downwardly mobile they have been what Marxism called Proletarianised already The 26 advantaged figure is

    Original URL path: http://www.businessspectator.com.au/article/2014/1/3/china/maos-proletariat-paradise-lost (2014-01-12)
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  • Cashed-up China's massive debt problem | Business Spectator
    So what do we know about China s local debt problem so far The guesstimates range from 10 to 50 trillion yuan The last official pronouncement on the extent of local debt levels was 10 7 trillion yuan and that was back in 2010 before the explosion of growth of the shadow banking sector Because Chinese local governments can t issue bonds on their own they have been using financing vehicles akin to the kind of off balance sheet lending that froze international debts market in 2008 09 to raise money The total size of money lent to these local financing vehicles is about 10 trillion yuan as of first quarter of 2013 according to data from the China s banking regulator That is a sharp increase of 30 per cent from the fourth quarter of 2009 The large increase came about as a result of the 4 trillion yuan fiscal stimulus package unleashed by Beijing during the global financial crisis which played an important role in saving the Australian economy from recession A large part of the package was funded with debt from Chinese banks to the local governments The National Audit Office also looked at books of 36 provincial capitals early this year They have a collective debt size of 3 85 trillion yuan and nearly a third of them have a debt to GDP ratio of more than 100 per cent Though the audit office didn t release these names they are believed to be Nanjing Chengdu Guangzhou Hefei Changsha Wuhan Harbin Xi an and Lanzhou according to Caixin a respected Chinese financial magazine Haitong Securities which has one of the best research teams in China estimate the total size of China s local debt problem is between 20 and 30 trillion yuan or in other words 40 to 60 per cent of the country s GDP To put that in some perspectives the debt to GDP ratio in the United States is about 73 per cent according to the Congressional Budget Office In the case of Japan its national debt is about more than 200 per cent of its GDP For the record Australia s GDP to debt ratio is only 23 3 per cent We don t have a debt crisis at least in comparison to other major economies Xu Yifan the chief economist of Haitong and a former economist at the World Bank says cities with a good fiscal outlook usually carry between 20 and 40 per cent debt In comparison cities that are in trouble usually have a debt level between 80 and 120 per cent On average China s local debt level falls between these two camps It is neither bad nor good However some local government entities are already struggling to repay their debts and have already requested extension of their loans Apart from the size of the local debt problem the structure of the debts is another looming problem In 2011 the National Audit Office reported that 53 per cent

    Original URL path: http://www.businessspectator.com.au/article/2013/12/19/china/cashed-chinas-massive-debt-problem (2014-01-12)
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  • China must end its economic apartheid | Business Spectator
    on average 15 2 per cent per year The country also managed to attract a large inflow of foreign capital on the back of what Qin describes as a low human rights globalised model of development whereby foreign multinationals take advantage of cheap labour with limited rights in developing countries Foreign multinationals earned handsome rewards from their investment For example American investment in South Africa yielded an 18 per cent return in 1979 compared to 14 per cent elsewhere General Motors subsidiary is China is just about the only highly profitable division in the loss making global empire The second similarity is an obsession with infrastructure development The white minority government was able to ignore the rights of black South Africans and compulsorily acquired their lands without compensation to build roads In 1980 the country boasted the third largest road network after the US and Germany This sounds awfully similar to what is taking place in China where peasants land is forcibly acquired without compensation and protests are crushed with brute force Consequently China can boast a modern infrastructure that even outshines many developed countries Most controversially Qin compares China s rural and urban divide with that of the apartheid system in South Africa China s household registration system which is known as Hukou divides its citizens into rural and urban residents Urban citizens enjoy vastly superior rights in education social welfare health care and property rights than their country cousins It is one of most divisive social issues plaguing the country Beijing only started talking about giving limited property rights to farmers a few months ago Qin argues China s discriminatory household registration system operates pretty much like the apartheid system which provides an ample supply of cheap labour and land for accelerated economic development South African white minorities and Chinese urban residents reap a disproportionate share of the economic benefits Though black South Africans and Chinese peasants also benefit from the rapid development the wealth disparity is getting wider and wider In this regard Qin says China s situation is much worse than the wealth disparity in South Africa even during the darkest days of the apartheid regime both in absolute and relative terms The most crucial lesson for Qin is to see the limits of the South African model of development under the apartheid regime which is eerily similarly to China s at the moment Though it enabled rapid development it is not capable of resolving destabilising social divisions South Africa became democratic only after the unsustainable economic and social systems imploded with international pressure also playing an important catalytic role China s hitherto successful economic model is also under enormous strain at the moment not dissimilar to South Africa in the 1980s Qin warns emphatically that if China does not want to go down the South African path it must reform while the economy is still sound and it can t afford to start the process when the system implodes like South Africa If China reforms while the economic miracle is still happening we can avoid the situation South Africa is experiencing today However if China is forced to become democratic like Indonesia in 1997 when the economic miracle disappeared into thin air we are no longer talking about a South African dilemma but a Russia dilemma in 1914 wrote Qin in his new book about South Africa lesson for China Follow peteryuancai on Twitter Print this page More from Peter Cai 10 Jan Australia is not the key to China s resource prison 09 Jan China s shock and ore at the Australian way 08 Jan Australia s brave new world for Chinese investors 07 Jan Paper tiger China s potential debt disaster 03 Jan Mao s proletariat paradise lost Related articles 10 Jan Korea China jostle for Aust resources 10 Jan China trade balance contracts 10 Jan Volvo Cars sales up in 2013 10 Jan China s Fosun buys Portuguese insurer in privatisation 10 Jan Australia is not the key to China s resource prison More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Rick lastName Tue 2013 12 17 12 29 One of the more insightful articles on Business Spectator for some time Keanan O Carroll Tue 2013 12 17 15 14 Word Great article R Ambrose Raven Tue 2013 12 17 16 17 As here of course there are the vested interests Far from answering pressing national issues in a socialist fashion especially since the Great Recession started China s ruling class has chosen the corporate capitalist approach Hence the infrastructure mega projects building of empty cities wage cuts and a high speed rail network no one needs when water and environmental degradation is becoming a huge problem in China Yet urbanisation is 1 5 pa Especially after 2003 a typical capitalist crisis of overproduction was prevented by exporting the surplus China s economic strategy became and remains a devalued currency minimal social provision sweatshops wage cutting and a policy bias for production China has long been forcing households to subsidise production at the cost of consumption In effect the Chinese ruling class is relying on a remarkably unbalanced growth scheme hence empty cities and unused fast trains one with no prospect of returning worthwhile social or economic dividends to the 99 Naturally commentators ignore the importance of the fair distribution of income and the need for trade unions to help drive and maintain a less unfair distribution Two reports sponsored by important practitioners in the field the IMF and the ILO emphasise not only that deterioration in the position of wage labour was prominent in bring the good times to an end but also that real recovery is impossible while wages and conditions continue to deteriorate Greg Hull Tue 2013 12 17 17 08 Insightful I am an Australian working and living in

    Original URL path: http://www.businessspectator.com.au/article/2013/12/17/china/china-must-end-its-economic-apartheid (2014-01-12)
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  • Trujillo's parting gift for Telstra: China | Business Spectator
    profit of 70 per cent on its initial investment However had Telstra not lost its nerve back then its investment could have been much more juicy When Soufun was debuted on the New York Stock Exchange on September 16 2010 it was worth about 10 6 per share and when it closed on December 12 it was worth about 71 8 per share What a terrible loss for Telstra shareholders When Trujillo invested in internet start ups in China back in 2006 the country s venture capital market was under developed and Chinese entrepreneurs were desperate for foreign capital As a result foreign investors have been behind some of the biggest internet success stories in China Yahoo an early strategic investor in Alibaba an e commerce giant which is tipped to list soon is expected to reap as much as US36 billion from its investment according to RBC Capital It means that Yahoo s 24 per cent stake in Alibaba is actually larger than the market capitalisation of the company itself South African investor Jacobus Bekker also made billions from his investment in Chinese internet giant Tencent He bought half of the Shenzhen based company in 2001 for 32 million The company s market value surpassed 100 billion within a decade after floating in Hong Kong making it one of the largest internet companies in the world Despite China s tough foreign ownership laws foreign investors like Telstra have used clever legal mechanisms to invest in one of the biggest internet booms outside of the United States and reaped handsome profits Seek chief executive Andrew Bassat and his brother Paul Bassat are also set to profit handsomely from the proposed float of Zhaopin one of the largest job sites in China which they have an 80 per cent shareholding in When the corporate history of Telstra is written Trujillo should be given credit for his foresight in investing early into the now booming Chinese market Print this page More from Peter Cai 10 Jan Australia is not the key to China s resource prison 09 Jan China s shock and ore at the Australian way 08 Jan Australia s brave new world for Chinese investors 07 Jan Paper tiger China s potential debt disaster 03 Jan Mao s proletariat paradise lost Related articles 10 Jan Korea China jostle for Aust resources 10 Jan China trade balance contracts 10 Jan Volvo Cars sales up in 2013 10 Jan China s Fosun buys Portuguese insurer in privatisation 10 Jan Australia is not the key to China s resource prison More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Mee Teong Fri 2013 12 13 11 54 Trujillo also invested heavily in mobile and internet technology Telstra is ahead of the rest of the major Telcos in technology advancement and traffic capacity Vasso Massonic Fri

    Original URL path: http://www.businessspectator.com.au/article/2013/12/13/china/trujillos-parting-gift-telstra-china (2014-01-12)
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  • The silver lining in China’s smog | Business Spectator
    growth in the industry its profitability has taken a nose dive Chinese steel mills were earning healthy margins of around seven to eight per cent before the global financial crisis In 2009 it dropped to 2 9 per cent According to figures from the China Steel and Iron Association margins for steel mills stood at a razor thin 0 41 per cent for the first three quarters of 2012 Shen Wenrong chairman of Shagang Group the country s largest private steel producer said the profit for a tonne of crude steel was less than a simple stir fried meat dish Despite miniscule profit margins Chinese steel mills have kept on producing Some have reportedly even been churning out steel at a loss Their actions seem to defy common sense China s peculiar political economy has contributed to this strange state of affairs A lot of steel mills in less economic developed regions are some of the largest employers and contributors of tax revenues to cash strapped local governments Production decisions are often intertwined with the need to preserve social stability at all costs a top priority for local officials So Beijing s efforts to clamp down on the steel industry have been thwarted by powerful vested interests in local government and banks This impasse is likely to break soon as a result of China s rapidly deteriorating environment Chinese citizens are getting increasingly restive with the problem and some have even taken to the streets to protest the polluting projects The rising environmental awareness is putting the government on notice Premier Li Keqiang has pledged to phase out polluting industries in a bid to put the country on a more sustainable economic growth path In October the State Council the Chinese cabinet said it wanted to phase out 80 million tonnes of steel production capacity in the next five years To put that in perspective Australia produced about five million tonnes of steel in 2012 according to the Australian Steel Institute Chinese analysts believe this new directive is likely to be more effective this time due to mounting public displeasure over the worsening environmental problem Hebei one of the largest steel making provinces in China just announced its own ambitious goal to reduce its steel production capacity by 60 million tonnes and coal consumption by 40 million tonnes in the next four years Seven out of ten of the country s most polluted cities are in the province The steel industry is a big contributor to the problem Officials there have been under pressure to clamp down on polluting steel production facilities Hebei s geographical proximity to Beijing has made the need to act even more urgent The provincial government forcibly closed down ten steel mills recently The combined capacity of these mills was about 6 8 million tonnes One local official said we prefer blue skies over tax revenue and we want to preserve a good environment for future generations rather than just keep growing the GDP according to Chinese media Follow peteryuancai on Twitter Print this page More from Peter Cai 10 Jan Australia is not the key to China s resource prison 09 Jan China s shock and ore at the Australian way 08 Jan Australia s brave new world for Chinese investors 07 Jan Paper tiger China s potential debt disaster 03 Jan Mao s proletariat paradise lost Related articles 10 Jan Korea China jostle for Aust resources 10 Jan China trade balance contracts 10 Jan Volvo Cars sales up in 2013 10 Jan China s Fosun buys Portuguese insurer in privatisation 10 Jan Australia is not the key to China s resource prison More from Business Spectator Technology Adapt or die Commercial The Future of Energy Family Business Alan Kohler s Family Business China China Spectator Please log in or register to post comments Comments on this article Comments Policy Richard Campbell Tue 2013 12 10 11 48 Well done Peter there has been far too little attention to these over capacity issues Accompanying them is the debt build up Somehow the Australian media seem to imagine that all the over capacity in steel cement solar shipbuilding and the rest came for free James lastName Tue 2013 12 10 12 25 Global Times has even claimed that the thick smog which reduces visibility to a few metres is conducive to missile defence The Global Times should claim that with China being such a polluted hell hole that they ll never have to worry about anyone invading It just shows how stupid their populous is that their press could even consider publishing such statements James lastName Tue 2013 12 10 12 27 One local official said we prefer blue skies over tax revenue and we want to preserve a good environment for future generations rather than just keep growing the GDP I m not sure anyone would be gullible enough to believe a CCP official would believe that Pat Williams Tue 2013 12 10 13 36 This is an excellent piece in explaining the complexity and contradictions in the world s biggest steel industry Comments such as the above go a long way in demonstrating the common misconceptions and prejudices that still abound about China s state dominated industries This article demonstrates clearly that the multi layered state has conflicted interests Provincial governments promote distorted inefficient and subsidised growth resulting in both overcapacity and pollution whilst the central state tries to push reforms that would solve locally created problems But solving China s steel overcapacity and pollution problems will be very difficult exactly because it pits the different levels of state interests against each other Phil Clarke Tue 2013 12 10 14 13 On the contrary I think James has got it right I have similar trouble believing Peter s quote which reads far more like regime propaganda I would be interested in knowing which Chinese media items it appeared in most especially if they were widely distributed Chinese language publications internally available In a totalitarian

    Original URL path: http://www.businessspectator.com.au/article/2013/12/10/china/silver-lining-chinas-smog (2014-01-12)
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