China, Australia and a hard landing

China, Australia and a hard landing

Neil Hume | Jul 04 03:53 | Comment | Share

Kevin Rudd 2.0 has been quick to highlight the dangers posed by slowing Chinese growth since he was returned as Australia’s prime minister. For example: When I look at the challenges of rest of this year, and certainly for the upcoming three-year term, the huge outstanding economic challenge for us is the end of the China resources boom. This will have a dramatic effect on our terms of trade, a dramatic effect on living standards in the country, a dramatic effect also potentially on unemployment unless we have an effective counter-strategy. And… There are a lot of bad things happening out there. The global economy is still experiencing the slowest of recoveries. The China resources boom is over. China itself, domestically shows signs of recovery and when China represents such a large slice of our own economy, our jobs and our own opportunities for raising our living standards. But just how dangerous is a Chinese slowdown? Read more of this post

Rise in mortgage rates cuts into home buyer demand

Rise in mortgage rates cuts into home buyer demand

Wed, Jul 3 2013

NEW YORK (Reuters) – Expectations the Federal Reserve will slow its economic stimulus program by the end of the year pushed mortgage rates higher last week, sapping demand from potential home buyers, data from an industry group showed on Wednesday.

Rates measured by the Mortgage Bankers Association jumped to the highest level since July 2011, which also cut into refinance activity. The share of refinance applications fell to the lowest level in more than two years. Read more of this post

Abalone price plummets in China

Abalone price plummets in China

Staff Reporter

2013-07-04

The Chinese government’s anti-corruption and frugality policy has had a significant effect on prices of luxury food products but the price of abalone and sea cucumbers have plummeted by 50%, reports the People’s Daily, the flagship newspaper of the Communist Party of China. “The food doesn’t sell well in big hotels but it is widely available, so how can it command a high price?” said a man who bought 20 abalones, a type of edible sea snails, at only 60 yuan (US$10) in a traditional market in Shanghai. In addition to abalones and sea cucumbers, other luxury items including Chinese liquor and tea leaves have seen their prices drop between 40-60% since May. An expert in aquaculture industry said that there may be two reasons to explain the drop of abalone prices, one being the government-led frugality campaign announced in December aimed at curbing consumption that uses public funds, among other purposes. While the excessive number of people raising abalones and other luxury seafood can also be seen as a cause for the oversupply this year.

Hong Kong Rents Push Out Mom and Pop Stores

July 3, 2013

Hong Kong Rents Push Out Mom and Pop Stores

By BETTINA WASSENER and MARY HUI

HONG KONG — Nam Kee Noodles is a typical Hong Kong restaurant: functional, popular and busy. A dozen plastic-topped tables offer room for about 40 patrons. Customers line up outside at lunchtime, waiting to consume spicy noodle soup, dumplings and iced soy milk amid the clatter of plastic bowls and chopsticks. In April, however, the little restaurant, in the heart of Causeway Bay, one of Hong Kong’s busiest shopping districts, nearly had to shut down after the landlord tripled the already-expensive rent. “We were paying around 200,000 dollars a month,” said Au Kei-hong, the shop’s manager, referring to an amount in Hong Kong dollars equivalent to about $25,800. “But the landlord then increased it to 600,000. It was too expensive. We cannot afford that.” Read more of this post

Investors are bailing out of China’s markets as fears grow over the slowing economy and Beijing discourages ideas that it might try to juice it back up

July 3, 2013, 11:52 a.m. ET

Investors Pull Back From China Assets

DANIEL INMAN

Investors are bailing out of China’s markets as fears grow over the slowing economy and Beijing discourages ideas that it might try to juice it back up. Global fund managers have yanked money out of Chinese stocks for sixteen of the last 18 weeks, including a net $834 million during a five-day period ending June 5. That was the largest outflow since January 2008, when the financial crisis was getting underway, according to data provider EPFR. The gloomy mood is also spilling over into the currency market. Investors are raising their bets the yuan will fall, clashing with efforts by the central bank to keep it strong. Read more of this post

It used to be that American companies were busy expanding in Asia. These days, it is the other way around

Jul 3, 2013

Asian Acquirers Change Focus

By Cynthia Koons

It used to be that American companies were busy expanding in Asia. These days, it is the other way around.

In the space of a few weeks, Chinese meat producer Shuanghui International Holdings Ltd. struck a $4.7 billion agreement to buy Smithfield Foods Inc. and Apollo Tyres Ltd. made a $2.5 billion offer to purchase Cooper Tire & Rubber Co. Those deals, one at the end of May and the other in mid-June, are the biggest Chinese and Indian acquisitions of U.S. companies on record. Bankers say the moves show that Asian buyers not only increasingly believe they can manage foreign companies, they are also confident about the underlying U.S. economy. Read more of this post

Major Chinese shipbuilder Rongsheng Bows to Demand Slump and has laid off about 40% of its workforce in recent months

July 3, 2013, 12:12 p.m. ET

Chinese Shipbuilder Bows to Demand Slump

COLUM MURPHY And DINNY MCMAHON

BEIJING—A major Chinese shipbuilder has laid off about 40% of its workforce in recent months, in a sign that China Inc. CHA 0.00% is under increasing strain from the slowdown in the world’s No. 2 economy.

Lei Dong, secretary to the president ofChina Rongsheng Heavy Industries Group Holdings Ltd., 1101.HK -10.17%said the company has let go of about 8,000 people, of whom more than half were subcontracted workers and the remainder full-time Rongsheng employees. He said there are currently about 12,000 employees at the shipbuilder, which is based in Rugao, Jiangsu province, north of Shanghai. Read more of this post

The Ambivalent Would-Be Hegemon: China is far too angry, lonely, mercantilist and domestically insecure to be considered a true global power

July 3, 2013, 12:55 p.m. ET

The Ambivalent Would-Be Hegemon

China is far too angry, lonely, mercantilist and domestically insecure to be considered a true global power.

DAVID ZWEIG

To what extent has China gone global in its diplomacy, support for global governance, trade and investment, soft power and military reach? David Shambaugh, a professor of political science at George Washington University and one of America’s leading China watchers, attempts to answer this question by drawing on a multitude of interviews with key players in China and around the world, as well as an extensive research effort. The result is a first-rate book that the nonacademic world will savor.

Mr. Shambaugh opens with a valuable synopsis of China’s internal debate about its global identity. Chinese academics remain uncertain about their state’s “international personae,” resulting in a conflicted identity. This scholarly elite is composed largely of a “left wing” with a strong nativist streak and a realist bent—meaning they believe security comes from across-the-board self-strengthening. Read more of this post

Indonesian Outflows Spur Pressure for Further Policy Tightening; “There was a time window in which the government could ride on the positive momentum and push through more concrete measures, but it’s now gone,”

Indonesian Outflows Spur Pressure for Further Policy Tightening

Indonesia’s policy makers delivered the country’s first benchmark interest-rate increase since 2011 and first fuel-price boost in five years in June. Capital outflows since then have spurred pressure for further moves.

The rupiah remains among the worst performers in Asia in the past year, falling about 0.8 percent after Indonesia on June 13 became the region’s first major economy to raise rates this year. Global funds sold 2.5 trillion rupiah ($250 million) of local-currency government bond holdings in the week after the June 22 fuel adjustment, aimed at containing a current-account deficit that has hurt the currency. Read more of this post

High-flying luxury: battle for Asia’s jet-set is hotting up

High-flying luxury: battle for Asia’s jet-set is hotting up

5:23pm EDT

By Anshuman Daga

SINGAPORE (Reuters) – With limousine pick-ups and on-board chefs, Asia’s premium airlines are investing hundreds of millions of dollars on luxury services in a bet on a rebound in business from the wealthy, even as low-cost carriers fly high with the booming middle class.

Although business and first-class traffic has fallen significantly in the last few years as companies cut costs, carriers such as Singapore Airlines Ltd (SIA), Cathay Pacific Airways Ltd and Qantas Airways Ltd are estimated to still earn about 35 to 40 percent of passenger revenue from the high-margin segment. Read more of this post

China’s Visit-the-Parents Law Also Affects City Buildings

China’s Visit-the-Parents Law Also Affects City Buildings

China will accelerate development of standards for functions and designs that accommodate the elderly in buildings and public facilities to comply with the same new law under which people can be forced to visit their parents.

China’s revised and broadened Law for the Protection of the Rights and Interests of the Elderly includes a chapter aimed at ensuring comfortable living environments, the official Xinhua News Agency reported yesterday. Read more of this post

China Said to Suspend Release of Steel Industry PMI Data

China Said to Suspend Release of Steel Industry PMI Data

China suspended the release of a set of data on the country’s steel industry after the National Bureau of Statistics decided to change how the figures are compiled, a person involved in producing the numbers said.

The June Purchasing Managers’ Index for the steel industry won’t be released, said the person, who asked not to be identified as he wasn’t authorized to speak publicly about the matter. It isn’t yet clear what changes will be made and in what time frame, or if the data for July would be released next month, the person said. Read more of this post