How China can defuse its looming demographic crisis; Why not implement a two-child policy and undertake a ‘Big Swap’ for the fragmented pension system, writes Robert Pozen

August 19, 2013 5:59 pm

How China can defuse its looming demographic crisis

By Robert Pozen

Why not implement a two-child policy and undertake a ‘Big Swap’ for the fragmented pension system, writes Robert Pozen

One of the most notorious facets of Chinese life may be about to change: it has been reported that Beijing is considering much broader exemptions from the “one-child” policy, which limits most urban families to one child. This change cannot come soon enough: the country is heading into severe demographic problems. The share of the population that is of working age (19 to 59 years old) relative to the country’s total population peaked three years ago, and is declining rapidly. Under current conditions, the proportion of the population that is aged 65 or older is projected to double by the early 2030s. By 2050, without significant reforms, there will be fewer than 1.6 workers for every retired person in China.

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Head of Shanghai’s largest insurance agency said to have fled with 500m yuan captured in Fiji

Insurance boss said to have fled with 500m yuan captured in Fiji

By Feng Jianmin | August 20, 2013, Tuesday |  PRINT EDITION

THE head of Shanghai’s largest insurance agency has been caught in Fiji and was escorted home by police yesterday. She was said to have fled China with 500 million yuan (US$81.6 million) from the company. Chen Yi, controller of Shanghai Fanxin Insurance Agency Co, was arrested in a joint operation between Chinese and Fijian police. The arrest came four days after the China Insurance Regulatory Commission said it had found Fanxin raising funds illegally by selling “self-made,” fixed-income wealth management agreements without authorization. Read more of this post

Everbright Gets China Proprietary Trading Ban After Error; Everbright Securities, once a stock market darling, is now a sign of China’s financial market woes

Everbright Gets China Proprietary Trading Ban After Error

By Bloomberg News – Aug 19, 2013

Everbright Securities Co. (601788)’s woes worsened after erroneous trades that sparked the wildest Chinese stock swings in four years as the firm was banned from proprietary trading and said it today mispriced a bond sale.

State-controlled Everbright said yesterday it placed 23.4 billion yuan ($3.8 billion) of incorrect buy orders on Aug. 16, prompting the three-month ban and an investigation by the China Securities Regulatory Commission. The company gave the wrong price for 10 million yuan of government bonds today, it said on its website. Read more of this post

China companies face ‘credit deterioration’

August 19, 2013 4:46 pm

China companies face ‘credit deterioration’

By Robin Wigglesworth in London

China’s economic slowdown and indebtedness will cause the creditworthiness of the country’s biggest companies to deteriorate in the coming year, Standard & Poor’s has warned in a report. The credit rating agency has examined the balance sheets of 151 major Chinese companies – three-quarters of which are state-owned enterprises – and noted that the recent investment boom has left the corporate sector with “a large debt hangover”. Read more of this post

South Korean government, grappling with tax revenue shortfall, to step up clampdown on $179 billion fake oil market referred to as a ‘hotbed of tax evasion.’

Gov’t to step up clampdown on fake oil market

Kim Chung-hwan

2013.08.19 17:52:39

The South Korean government grappling with tax revenue shortfall, will toughen its oversight on the two trillion won ($179 billion) fake oil market referred to as a ‘hotbed of tax evasion.’  As early as next year, the Ministry of Trade, Industry and Energy will be authorized to request taxation-related information from the National Tax Service, Korea Customs Service, and municipalities when investigating into the route of fake oil products. This will tighten monitoring activities, which have been under question over their effectiveness as the task was diverted into the Ministry of Trade, Industry and Energy, Korea Customs Service and regional governments.  Read more of this post

Korean owners of overseas bank and securities accounts will face heavier penalties if they fail to report their assets abroad

2013-08-19 18:54

Overseas tax evasion faces heavier fines

By Choi Kyong-ae
Owners of overseas bank and securities accounts will face heavier penalties if they fail to report their assets abroad, the National Tax Service (NTS) said Monday.
This is part of the government’s follow-up measures unveiled Monday to crack down on overseas tax evasion and bolster its tax revenue.
Currently, those with overseas financial accounts worth more than 1 billion won (about $900,000) have to pay up to 10 percent in penalties of the amount they underreport or fail to report. Read more of this post

Chaebol control causes ‘side effects’; Bridgestone, Michelin expand presence at cost of large firms

2013-08-20 17:14

Chaebol control causes ‘side effects’

Bridgestone, Michelin expand presence at cost of large firms
By Kim Tae-jong
The government’s shared growth policies are producing unintended side effects without achieving their original goals.
In September 2011, the government prohibited conglomerates from further expanding on a list of industries where small and medium-sized enterprises (SMEs) could thrive. Under the policy, big companies are limited by the number of products they are allowed to sell, and are not allowed to open new stores in any industry on the list.
The underlying idea of the policy was simple: limiting the expansion of conglomerates would give more room for SMEs and promote shared growth. However, for the past two years, foreign firms have been taking up the market share that conglomerates were not allowed to enter, making it much more difficult for local SMEs to survive.
One case is the market for recapped tires. Read more of this post

Can Korea take New York by fashion?

2013-08-20 18:22

Can Korea take New York by fashion?

By Jane Han

NEW YORK ― Korean fashion was covered pretty often by the media here this month. Apparently, it did quite well at the Intermezzo Collections, one of the city’s major fashion trade shows.
Emmy-winning ”Sex and the City’’ costume designer Patricia Field got her hands on styling models wearing Korean labels such as Buckaroo Jeans, Ugiz, and Culture Call.
Honestly, brands that I’m not familiar with. So I checked out some photos of the looks online. Again, I honestly, wasn’t too impressed.
I’m no fashion expert, so if New York City’s biggest fashion insiders say Korean fashion is all that. By all means, I’m sure it is.
Besides, this isn’t the first time Korean fashion has received rave reviews. Read more of this post

Moral hazard, the Chinese way

Moral hazard, the Chinese way

Kate Mackenzie

| Aug 19 10:44 | 3 comments | Share

China’s “bad bank” debts from the 1990s are being paid off by the government,increasingly rapidly of late. What this means for China’s big banks depends on which perspective you come from. It’s arguably a rather good thing in the near-term. What it means for the broader economy is more complicated. Firstly, some more on the fiscal financing of the “bad banks” which were setup in 1999 with the intention of sorting out a big chunk of the big four banks’ non-performing loans (other chunks were directly taken on by the Ministry of Finance and the PBoC). As we know, those bad banks — asset management companies or AMCs — didn’t seem to make much progress repaying the banks from whom they had bought the bad loans at face value for a good decade. But since 2009 they have been paying them off much more quickly — and the AMCs themselves have expanded into numerous other financial services, and are heading towards public listings. (Cinda is likely to be first cab off the rank, later this year.) Read more of this post

China’s urbanization may produce ghost towns

Urbanization may produce ghost towns

By Wang Yong | August 20, 2013, Tuesday |  PRINT EDITION

AS China expands many of its suburbs into new cities to boost economic growth, the American story of a shift from suburban prosperity to suburban poverty in about half a century warrants our attention.

In today’s lead opinion article, we read this: “When the suburban boom took off in the US in the 1950s, many middle class families moved to those communities as a way to escape the country’s increasingly crowded, dirty and financially strapped cities. But now, as many American cities are gradually being revitalized and the suburbs have expanded outward, some of these former refuges for the middle class are becoming more and more like the places that early suburbanites were trying to escape.” Read more of this post

Chinese strikes over tyre deal reveal new risk for multinationals

August 19, 2013 4:55 pm

Chinese strikes over tyre deal reveal new risk for multinationals

By Tom Mitchell in Beijing and James Crabtree in Mumbai

China was supposed to be an opportunity, not an obstacle, for Apollo Tyres. The Indian company, which is trying to swallow a larger American rival in a highly-leveraged takeover deal, has encountered determined resistance from 5,000 striking Chinese workers in eastern Shandong province. Apollo and its target, Ohio-based Cooper Tire , insist that the transaction will be completed by the end of the year. But even if the workers do not succeed in sinking what would be the biggest Indian takeover of an American company to date, they have revealed a new area of risk for multinationals in China – potentially fierce opposition to cross-border deals that do not directly involve a Chinese party. Read more of this post

Crunch Time for Camp Operators as Australia Resources Sector Slows

August 19, 2013, 2:47 a.m. ET

Crunch Time for Camp Operators as Australia Resources Sector Slows

By Rhiannon Hoyle

SYDNEY–For years, Australia’s Fleetwood Corp. (FWD.AU) developed caravan parks for sunseekers wanting a beach vacation. Then global commodity prices shot up and the units catered to an entirely different crowd: contract workers jetting in from as far as away as Bali to work on the state’s mega-pits or big gas-export projects. But the recent slowdown in Australia’s resources industry is hurting companies like Fleetwood as profits slump and accommodation goes unlet, prompting some to focus on holidaymakers once more. On Monday, Fleetwood shares fell 17% after it warned demand for its worker camps remained low. Read more of this post

Traffic jams in Southeast Asia: the entrepreneur’s white whale

Traffic jams in Southeast Asia: the entrepreneur’s white whale

August 19, 2013

by Anh-Minh Do

Lately I’ve been meeting a few teams here and there around the tech scene who are very interested in the topic of traffic in Vietnam. Probably one of the more advanced players is DiChung.vn, which is working on a carpool-like service for people living in the city. There has also been a few teams at Vietnam’s latest hackathons that wanted to tackle the traffic problems of Ho Chi Minh city with apps. On top of this, the municipal authorities have also been redirecting traffic with electronic signs for the past year. It’s a big problem for Vietnam’s biggest and most populous city. Read more of this post

Indonesia Stocks Fall 20% From Peak as Outflows Spur Rupiah Drop

Indonesia Stocks Fall 20% From Peak as Outflows Spur Rupiah Drop

By arry Suhartono & Yudith Ho on 2:45 pm August 20, 2013.
Indonesian stocks headed for the biggest four-day plunge since 2008, sending the benchmark index down more than 20 percent from its peak, amid growing concern that capital outflows will accelerate. The rupiah tumbled. The Jakarta Composite Index declined 5 percent to 4,097.18 as of 11:36 a.m. local time, extending its four-day slide to 13 percent. The gauge has dropped 21 percent from its record closing high on May 20. The rupiah fell 2 percent to 10,704 per dollar, the weakest level since April 2009, prices from local banks show. Read more of this post

No Bollywood ending for the rupee, down 16 per cent since the start of May; in 1997 the Thai baht more than halved in six months

August 19, 2013 7:47 pm

No Bollywood ending for the rupee

By James Mackintosh

India exposed as fears grow that the Fed will reduce cash flow

Raghuram Rajan, the new Indian central bank governor, has an impressive pedigree. But investors wanting to know the direction of India’s rupee would probably be better off watching Ben Bernanke and his successor as chairman of the US Federal Reserve. The rupee, with Brazil’s real, has led the emerging market sell-off since talk of the Fed “tapering” its bond purchases began in May. This makes perfect sense, since the Fed’s attempt to flood US markets saw large amounts of cash spill over into emerging markets. As fears grow that Mr Bernanke will reduce the flow, the countries with the biggest current account deficits – Brazil, India, South Africa and Indonesia, among others – have been hit the hardest. Read more of this post

More Than Half of India’s Rivers Too Polluted to Drink

More Than Half of India’s Rivers Too Polluted to Drink

Raw sewage and industrial waste rendered water in more than half of India’s 445 rivers unfit for drinking, according to the Central Pollution Control Board. The report compared pollution levels from 1995 to 2011 including the rivers as well as 154 lakes and 78 ponds in the second-most populous nation. Water from at least a quarter of the rivers surveyed can’t even be used for bathing, it said. India will need “considerable” investments in waste management to meet demands of growing urban populations. Only 29 percent of municipal wastewater is treated by Indian cities of 38 billion liters (10 billion gallons) generated every day, according to the report. By 2050, 100 billion liters may come from Indian cities each day, it said. India’s per capita fresh water resources have fallen to 1,845 cubic meters in 2007 from 6,042 cubic meters in 1947, according to the report. This is expected to drop to 1,000 cubic meters by the end of the century, it said. Indian cities use 50 billion liters of municipal water a day, the report said. Although the nation isn’t facing immediate water scarcity issues, several river basins including the Sabarmati in western India are under severe stress, according to the report made public last month.

To contact the reporter on this story: Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net

Why the God of Jobs Doesn’t Smile on India

Manish Sabharwal: Why the God of Jobs Doesn’t Smile on India

by Manish Sabharwal | Aug 20, 2013

There is a dire need for policy and politics to combine to build a serious narrative around non-farm formal job creation

Manish Sabharwal
Profile: Manish Sabharwal is co-founder and chairman of TeamLease Services. He has a management degree from Wharton and sees himself as a crusader for labour reforms in India. Since its inception in 2002, TeamLease has placed more than half a million people in temporary and permanent jobs.
There is a curious acceptance of a hung parliament from the 2014 polls. Even more painful is the omission of a narrative around jobs in the various election narratives being polished and readied: Secularism, socialism, corruption, national security, food and so on. Could these two tragedies be related? Indian policy and politics desperately, urgently and forcefully need to pray to one god—jobs.  Read more of this post

India gripped by commodities exchange woes

August 19, 2013 6:36 pm

India gripped by commodities exchange woes

By James Crabtree in Mumbai

India’s government would seem to have enough to worry about with its diving currency and growing concerns about economic stability.

But the deepening anxieties are being compounded by a more local worry: the shutdown of a commodities exchange that has left prominent domestic brokerages facing potentially heavy losses and has led to broker demands for a government rescue package for the bourse. Read more of this post

In Hong Kong, Inflation Worries Spook the Spirit World; Comfort in the Afterlife Requires Lots More ‘Ghost Money’; A $1 Trillion Bill

August 19, 2013, 11:09 p.m. ET

In Hong Kong, Inflation Worries Spook the Spirit World

Comfort in the Afterlife Requires Lots More ‘Ghost Money’; A $1 Trillion Bill

TE-PING CHEN

Deep in China’s spirit world, an inflation crisis is brewing that would give central bankers chills. For hundreds of years, Chinese have burned stacks of so-called “ghost money” for their ancestors to help ensure their comfort in the afterlife. The fake bills resemble a gaudier version of Monopoly money, emblazoned with the beatific-looking image of the Emperor of the Underworld. Traditionally, paper money burned in China came in small denominations of fives or tens. But more recent generations of money printers have grown less restrained. The value of the biggest bills has risen in the past few decades from the millions and, more recently, the billions. The reason: Even Hong Kong’s dead try to keep up with the Joneses, and their living relatives believe that they need more and more fake bucks to pay for high-cost indulgences like condos and iPads.

Read more of this post

J.C. Penney: The reality show; Thanks to a motley cast of characters, the department store has somehow become a real-time tableau for virtually everything that’s wrong with American business

J.C. Penney: The reality show

August 19, 2013: 9:05 PM ET

Thanks to a motley cast of characters, the department store has somehow become a real-time tableau for virtually everything that’s wrong with American business.

By Jennifer Reingold

FORTUNE — You’ve seen them on Big Brother, The Real Housewives, and The Bachelorette: the walking disasters and oversimplified personas that make a show both repellent and fascinating at the same time. And now you see them in the last place you’d expect — at the lurid reality show that is J.C. Penney (JCP). Thanks to a motley cast of characters, the $13-billion-in sales middle-brow department store has become a real-time tableau for virtually everything that’s wrong with American business. Read more of this post

Heineken Dilutes Beer With Lemonade to Bolster Europe Sales; “Unless you innovate, you’re not going to grow your business”

Heineken Dilutes Beer With Lemonade to Bolster Europe Sales

When a stagnant European economy and picky consumers gave Heineken NV lemons, the world’s third-largest brewer decided to mix them with beer.

The company this year rolled out a line of radler drinks, a blend of lemon soda and lager, to 23 markets in its biggest product introduction. It’s venturing that the drink, sweeter and less alcoholic than beer, will win over the ever-elusive female drinker as well as young men who prefer wines or spirits.

Brewers are stepping up efforts to find alternatives to beer amid changing customer preferences. Market leader Anheuser-Busch InBev NV has produced a lime-flavored variety of its Bud Light brand, while Heineken has added tequila to beer to create Desperados. Heineken is reducing its reliance on its eponymous global brand after six years of beer market declines in western Europe, to which it has a greater exposure than peers. Read more of this post

Furniture Brands, one of America’s largest home furniture makers, has tapped restructuring lawyers and advisers to deal with its debt load

August 19, 2013, 4:18 p.m. ET

Struggling Furniture Brands Taps Restructuring Advisers

EMILY GLAZER And PATRICK FITZGERALD

Furniture Brands International Inc., FBN -10.13% one of the nation’s largest home furniture makers, has tapped restructuring lawyers and advisers to deal with its debt load, people familiar with the matter said. The advisers are examining several alternatives, one of which could be a Chapter 11 bankruptcy restructuring, though the situation is still fluid, these people said. Representatives for Furniture Brands, which sells under the Broyhill, Lane, Drexel Heritage and Thomasville names, didn’t respond to requests for comment. St. Louis-based Furniture Brands had sales of about $1 billion in 2012, roughly half of what the company brought in a decade ago. The company cumulatively lost more than $91 million in its last two fiscal years, and analysts are forecasting another loss in 2013. It hasn’t made a profit since 2006. Read more of this post

For some two decades, major German breweries have allegedly been fixing beer prices. They now face hundreds of millions of euros in fines

08/20/2013 12:21 PM

Major German Brewers Allegedly Fixed Prices

For some two decades, major German breweries have allegedly been fixing beer prices, according to a media report this week. They now face hundreds of millions of euros in fines.

Germans like their beer, and they like it cheap. But according to a report in news weekly Focus this week, German breweries have been conspiring to fix prices in their favor for some 20 years. Details of the investigation into the alleged beer cartel have been leaking for some time, but the latest information reveals just how broad the scope may have been. According to a Federal Cartel Office document seen by Focus, leading German brewery conglomerates have been illegally colluding on prices for nearly two decades. Read more of this post

Curious consumers check out ‘destination shopping’

Last updated: August 16, 2013 8:32 pm

Curious consumers check out ‘destination shopping’

By Duncan Robinson in Watford

At 4pm on a wet Thursday, Watford’s latest attraction is rammed. One pair of middle-aged women say they have come to see what the fuss is about, while more than a few are taking photographs. The venue? A renovated Tesco. Curious Watfordians nibble samples from the artisan bakery, while small children tuck into sundaes at Giraffe – the family-friendly restaurant that Tesco bought for £50m this year. Next door in Harris + Hoole, tattooed baristas serve coffee to buggy-wielding mothers as Tesco attempts to make its stores less of a chore and more of a day out. Read more of this post

J.P. Morgan Set to Launch Sale of Commodities Business

August 19, 2013, 12:52 p.m. ET

J.P. Morgan Set to Launch Sale of Commodities Business

Bank Plans to Kick Off Process in September

CHRISTIAN BERTHELSEN

J.P. Morgan Chase JPM -2.74% & Co. has told potential buyers of its commodities assets that it expects to kick off sale efforts in early September. The bank plans at that time to circulate a memo that details the balance sheets and profitability of its physical-commodity assets, according to people familiar with the sale process. J.P. Morgan said in July it was pursuing strategic alternatives for these assets, which range from metal warehouses to pipeline leases and power plants, including a possible sale. The bank hopes to sell the assets as one package, but depending on the interest of buyers it may have to sell them piecemeal. Read more of this post

Glencore Xstrata hit by $7.7bn writedown of its mining assets following the complex merger that created the diversified commodities trader and miner

Last updated: August 20, 2013 8:42 am

Glencore Xstrata hit by $7.7bn writedown

By James Wilson

Glencore Xstrata knocked $7.7bn off the value of its mining assets following the complex merger that created the diversified commodities trader and miner this year. The hits to the value of Xstrata’s mines show the gloom surrounding the mining industry as prices for many key commodities have fallen amid oversupply and slowing growth in demand.

Glencore took over Xstrata in May following a year-long acquisition process. Ivan Glasenberg, chief executive, reiterated on Tuesday that Glencore believed it would be able to get more synergies and cost savings from the deal than the $500m originally promised. Read more of this post

‘Perverse Effects’: How green subsidies often increase carbon emissions

August 19, 2013, 7:22 p.m. ET

‘Perverse Effects’

How green subsidies often increase carbon emissions.

Anticarbon central planning was bound to distort markets, but it turns out that the planners often increase emissions as they try to engineer President Obama’s “new energy economy.” So concludes the National Academies, whose major report on energy subsidies deserves more attention than it has received since its June release.

By some miracle, Congress in 2008 created a National Research Council special committee to comb the tax code to figure out how specific provisions increase or decrease greenhouse gases. As chairman William Nordhaus of Yale and his colleagues note, there is very little empirical literature on these programs. What they did learn is that “several existing provisions have perverse effects, while others yield little reduction in greenhouse gas emissions per dollar of revenue loss.” Read more of this post

E&P Investors Fear the Oil Party Hangover; Oil-Company Stocks Disconnect from Crude Price

August 19, 2013, 1:34 p.m. ET

E&P Investors Fear the Oil Party Hangover

Oil-Company Stocks Disconnect from Crude Price

LIAM DENNING

There comes a point in a boisterous night out when you order that drink that ensures the following day will be a write-off. Investors toasting the oil-and-gas sector this summer seem to have reached that moment of realization. Near-month crude-oil futures on the New York Mercantile Exchange have rallied almost 17% since the start of June. Goldman SachsGS -1.26% added fuel to the fire Monday by raising its Brent forecasts for this year. For much of the summer—indeed, most of the year—stocks of exploration-and-production companies have done even better than oil prices. Read more of this post