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Why Are Items Pricier in China? From iPads to Starbucks to ice cream and cars, the price of many goods is far higher in China than in many other countries. But consumers there are wising up

September 3, 2013, 7:43 p.m. ET

In China, Veil Begins to Lift on High Consumer Prices

Resistance to Prices Grows Amid New Ways to Comparison Shop

LAURIE BURKITT

BEIJING—In China, consumers pay nearly $1 more for a latte at StarbucksSBUX +1.53% than their U.S. counterparts. A Cadillac Escalade Hybrid Base 6.0 costs $229,000 in China, compared to just over $73,000 in the U.S. Welcome to China’s modern retail world, where the price of many goods is far higher than in many other countries, a disparity that is all the more stark considering the income differences. A basic iPad 2 is priced at $488 in China, where average per capita income is around $7,500. The same tablet is $399 in the U.S., where average per capita personal income totals $42,693. Clothing and other apparel is on average 70% more expensive for consumers in China than in the U.S., according to data from SmithStreet, which compared the prices of 500 items of 50 brands in both countries. Read more of this post

When a Beijinger Owns 1,000 License Plate Numbers to rent out for profit; Flawed public policy can only be avoided through transparent decision-making and the use of judicial review

09.03.2013 12:40

When a Beijinger Owns 1,000 License Plate Numbers

Flawed public policy can only be avoided through transparent decision-making and the use of judicial review

By Wang Yong

Beijinger Wang Xiuxia should be in the Guinness World Records book for holding 1,000 license plate numbers, equivalent to 5 percent of new Beijing numbers issued monthly. She rented them out for profit. The case, exposed in late August, involves a number of legal and public policy questions worth analyzing. Wang’s rental business had two models of operation. Before a purchase limit was enacted by the Beijing city government in 2011, she rented identity cards to people from outside Beijing so they could register license plates. After the purchase limit came into effect – a limit that requires locals to enter a lottery system to get a plate – she rented out plates under her own name. Read more of this post

State Council Counselor Xia Bin noted that results of the ongoing nationwide auditing of local government debt could be quite “striking”, with substantial part of debts having gone sour, proposes “bailout” package to deal with the problems

State Council Counselor Suggest Tough Ways Against Local Debt

09-04 15:33 Caijing

Xia Bin says Beijing should punish those who spends recklessly and lavishly on offical buildings.

A counselor of the State Council in China suggested tough ways in reining in local government’s addition to debt, including sales of government’s assets like the usually fancy office buildings. “Local governments who spend recklessly and extravagantly in office building, while shouldering high debt burden, should be ordered to move out from their luxurious offices….and sell them along with other good assets to repay debts,” Xia Bin, who is also honorary director of the Finance Institute of the State Council Development Research Center, told media on Tuesday. Read more of this post

New Chinese Luxury: Pairing Wine With Duck, Not Sprite

New Chinese Luxury: Pairing Wine With Duck, Not Sprite

By Bloomberg News – Sep 3, 2013

Can’t tell a Monet from a Van Gogh? Christie’s International’s China staff can help. Mixing a pricey Chateau Petrus or Chardonnay with Sprite? Sommeliers at Shanghai wine retailer Sarment will explain why not. As growth in China’s luxury industry slows and consumers turn more selective, high-end brands are boosting efforts to educate consumers on the finer points of haute couture and vintage wines to persuade them to pay up. Read more of this post

Don’t Trust a Chicken Nugget That’s Visited China; Would you willingly eat a chicken nuggets processed in a country that has no intention of meeting U.S. food-safety standards? Most Americans likely wouldn’t

Don’t Trust a Chicken Nugget That’s Visited China

Would you willingly eat a chicken nuggets processed in a country that has no intention of meeting U.S. food-safety standards? Most Americans likely wouldn’t.

That may explain why the U.S. Department of Agriculture waited until Friday — the day before a long holiday weekend — to announce that it had ended a ban on Chinese chicken imports by approving four Chinese poultry processors to ship processed (“heat-treated/cooked”) chicken to the U.S. The report on the approved poultry plants noted that the audit set out to “to determine whether the People’s Republic of China’s (PRC) food safety system governing poultry processing remains equivalent to that of the United States (U.S.), with the ability to produce products that are safe, wholesome, unadulterated, and properly labeled.” Needless to say, the Chinese plants passed. Read more of this post

Chinese local governments need cash so badly they’re beating, kidnapping and killing to get it

Chinese local governments need cash so badly they’re beating, kidnapping and killing to get it

By Gwynn Guilford @sinoceros 11 hours ago

Chinese local governments have taken on scary levels of debt—12.1 trillion yuan ($1.9 trillion), by some estimates. That’s scary for the central government, which will be on the hook to bail out any Chinese Detroits. But it’s scary for residents, too. Take, for example, Hong Xiaorou, a four-year-old girl bulldozed to death in Fujian province on August 29. Or Xu Haifeng, whose family members have been kidnapped on 18 separate occasions, as Reuters reports. Read more of this post

China PMI may not signal rising commodity demand: Clyde Russell

China PMI may not signal rising commodity demand: Clyde Russell

Tue, Sep 3 2013

(The author is a Reuters columnist. The opinions expressed are his own.)

By Clyde Russell

LAUNCESTON, Australia, Sept 3 (Reuters) – Commodity producers and traders have no doubt been cheered by the recent recovery in China’s key manufacturing sector, but the boost may be more to sentiment than actual demand. This is because there is a fairly weak correlation between movements in China’s official Purchasing Managers’ Index (PMI) and imports of key commodities such as crude oil, iron ore and copper. Read more of this post

China has a choice – short-term growth or sustainability; The elimination of a subsidy that encourages feckless borrowing is overdue

September 2, 2013 4:23 pm

China has a choice – short-term growth or sustainability

By Michael Pettis

The elimination of a subsidy that encourages feckless borrowing is overdue, says Michael Pettis

Years of artificially low interest rates have been key both to China’s rapid growth and to its notorious domestic imbalances. The role of financial repression – manipulating the financial system to divert money from savers to producers – in the Chinese growth model is widely recognised. But the improvement in the country’s interest rate structure is not. As a rule when nominal lending rates are broadly in line with nominal gross domestic product growth rates, the rewards of expansion are efficiently distributed between savers and users of capital. When they are substantially lower, however, as they have been in China for the past 30 years, net lenders – mainly household depositors – in effect pay a hidden subsidy to net borrowers. In China these include state entities, manufacturers, state-owned enterprises and real estate developers. Read more of this post

As Return of Chinese Gov’t Bond Futures Nears, Experts Pore over Details; Nearly two decades after market was suspended because of short sellers’ scam, traders and analysts wonder if new approach will protect investors

09.03.2013 17:09

As Return of Gov’t Bond Futures Nears, Experts Pore over Details

Nearly two decades after market was suspended because of short sellers’ scam, traders and analysts wonder if new approach will protect investors

By staff reporters Fan Junli, Zheng Fei and Cao Wenjiao

(Beijing) – Securities traders and analysts are going over the details of the new government bond futures that will hit the market soon – after a hiatus of nearly two decades – to see if they can better protect investors against fraud and other risks. The first batch of three contracts, all based on five-year government bonds, will be opened for trading from September 6 on the China Financial Futures Exchange (CFFEX), the securities regulator said last month. Read more of this post

“Tiny Times 2,” a popular film about four Shanghai students who celebrate the luxe life, is causing consternation in China

September 3, 2013

A Film-Fueled Culture Clash Over Values in China

By SHEILA MELVIN

“Tiny Times 2,” a film about four Shanghai students who celebrate the luxe life, is causing consternation in China

BEIJING — Amid the usual crop of Western-imported blockbuster fare (see “Jurassic Park 3D,” “Monsters University,” “Pacific Rim”), two homegrown movies about four fashion-obsessed girlfriends at a Shanghai university have unexpectedly made their way to the top of China’s box office here this summer. The first, “Tiny Times 1,” beat Hollywood’s “Man of Steel” when it opened here in late June, grossing more than $43 million its first week, according to Entgroup, a film industry research company. The sequel, “Tiny Times 2,” which opened on Aug. 8, grossed more than $47 million in its first three weeks. (“Tiny Times 1” opened in select North American markets in July, and its sequel opened in New York on Friday.) Ticket sales for both movies qualified them as major hits in China. Read more of this post

Tongyang Group is facing deeper financial trouble as it will have difficulty in rolling over maturing debts worth 200 billion won due in the coming months

2013-09-03 17:49

Tongyang burrows deeper into trouble

By Kim Tae-jong
Tongyang Group is facing deeper financial trouble as it will have difficulty in rolling over maturing debts worth 200 billion won due in the coming months. The situation became worse after two credit ratings agencies recently lowered their ratings on affiliates of the mid-tier conglomerate, following the issuance of corporate bonds worth 75 billion won by Tongyang Inc., the holding company of the group, on Aug. 29. With restructuring efforts delayed, the group’s affiliates have issued corporate bonds worth 576 billion won this year ― 426 billion won for Tongyang Inc. and 150 billion won for Tongyang Cement & Energy ― to secure liquidity for business operations and repayment of maturing corporate bills and bonds. Read more of this post

Subaru’s Anti-Crash Feature Lures Japanese Seeking Safety

Subaru’s Anti-Crash Feature Lures Japanese Seeking Safety

Inching forward in heavy traffic toward the ski slopes of Niigata, Japan, Tomohiro Azuma cursed as the car in front stopped suddenly, forcing him to slam on the brakes of his Subaru Legacy. “There was a voice in my head saying, ‘Damn, too late!’” Azuma, 46, said of the near-collision in February. “Then my car stopped with a jerk and for a moment I didn’t know what had happened.” The information technology manager from Tokyo had averted a pileup thanks to a feature called EyeSight, which stopped his car when the gap with the vehicle ahead became perilously small. The technology has helped Subaru build a reputation as a leader in safety — typically the domain of high-end brands like Mercedes-Benz and Volvo (VOLVB) — and buck falling sales in its home market. Read more of this post

Overseas Equity Investors Head to Japan for ‘Abenomics’ Clues

September 4, 2013, 12:31 PM

Overseas Equity Investors Head to Japan for ‘Abenomics’ Clues

By Kana Inagaki

Following a sleepy August, a record number of foreign investors are now flocking to Japan in search of fresh clues to whether “Abenomics” is still a good reason to buy Japanese stocks. While the stock-market rally from mid-November has recently flagged, with trading volumes low, foreign investors remain focused on whether Prime Minister Shinzo Abe’s economic policies can really lift the economy out of deflation. Both Japanese and foreign brokers are tailoring their investor conferences to address this increasing demand for a better understanding of Japanese politics by inviting members of Mr. Abe’s Cabinet and his close advisers as keynote speakers. Read more of this post

Kao’s Kanebo continued shipping skin-whitening cosmetics even after its top managers endorsed a decision to recall the products following consumer complaints of white blotches

Kanebo shipped cosmetics after recall decision

KYODO

SEP 3, 2013

Kanebo Cosmetics Inc. continued shipping skin-whitening cosmetics even after its top managers endorsed a decision to recall the products following consumer complaints of white blotches, sources said. The subsidiary of Kao Corp. delayed halting shipments for almost a week through July 4, when the company announced the recall, a delay that increased the number of people affected, the sources said Monday. Cosmetics retailers were alerted to the recall only on the day of its announcement. Read more of this post

Almost half of Japanese charitable foundations, some of which have sizable assets, think Abe will need to increase his economic stimulus measures to get the country onto a sustainable recovery path

Japan foundations see limited economic boost from Abenomics: survey

2:10am EDT

TOKYO (Reuters) – Almost half of Japanese charitable foundations, some of which have sizable assets, think Prime Minister Shinzo Abe will need to increase his economic stimulus measures to get the country onto a sustainable recovery path, according to a survey. A survey by Mizuho Securities of more than 400 such non-profit foundations, a relatively little known group of investors, also showed they were eager to boost foreign stocks while planning to cut holdings in structured notes and Japanese investment trusts called toshins. Read more of this post

Abe Seen Facing Stock Rout in Case of Suspending Japan Tax Rise

Abe Seen Facing Stock Rout in Case of Suspending Japan Tax Rise

Japanese shares could plunge 10 percent or more if Prime Minister Shinzo Abe fails to carry through on a plan to raise a sales tax in April. Postponing an increase would have a large and negative impact on Japan’s financial markets, said 22 of 32 economists in a Bloomberg News survey. JPMorgan Chase & Co. Senior Economist Masamichi Adachi said a delay could push stocks down 10 percent, wiping out $418 billion in market capitalization, while UBS AG Economist Daiju Aoki predicted a sell-off as steep as 12 percent in the Nikkei 225 Stock Average. Read more of this post

Once-Hot Indonesia Loses Allure as Prices Chill Buyouts

Once-Hot Indonesia Loses Allure as Prices Chill Buyouts (1)

By Klaus Wille September 04, 2013

Indonesia has lost much of its allure for private equity as steep valuations restrain buyouts in a country that two years ago was, in the words of one investor, “probably the sexiest destination in the emerging markets.” International private-equity firms have acquired stakes in four Indonesian companies this year, down from 10 in 2011 and seven last year, according to data compiled by Bloomberg and the Asian Venture Capital Journal. Total transaction values fell from $649 million for the nine deals in 2011 where terms were disclosed to $324 million for the six deals last year for which prices were available, the data show. Read more of this post

Low Cash, Slowing Sales: Double Whammy for Indonesia’s Retailers

Low Cash, Slowing Sales: Double Whammy for Indonesia’s Retailers

By Janeman Latul & Andjarsari Paramaditha on 1:01 pm September 4, 2013.
As Indonesia’s economy boomed in recent years, its retailers had a simple formula: open more stores. And more. And more. Minnows became leviathans. That strategy is now haunting them as the rupiah currency tumbles, inflation accelerates, interest rates rise and growth slows. The country’s three biggest retailers are in their weakest cash position since the 2008 global financial crisis, just as consumers are tightening their wallets. Strains on cash flow at Indonesia’s biggest high-end retailer Mitra Adiperkasa, its largest low-end department store group Ramayana Lestari Sentosa and top mid-tier retailer Matahari Department Store, along with interviews with shoppers and store managers, suggest a significant slowdown in consumer spending, the main engine of Southeast Asia’s biggest economy. Read more of this post

KPK Delves Into Public Servants’ Wealth, Begins Demanding Proof; Indonesia has about five million civil servants, some of whom live in conspicuous luxury way above that which could be afforded on their official incomes

KPK Delves Into Public Servants’ Wealth, Begins Demanding Proof

By Novianti Setuningsih & Carla Isati Octama on 11:05 am September 3, 2013.

By making proactive use of money laundering and anti-corruption laws, Indonesia’s graftbusters are managing to snare a greater number of corrupt officials, and just as importantly, return to the public purse a fortune in stolen funds. Prosecutors in corruption cases are comparing officials’ compulsory personal wealth reports (LHKPN) and personal bank account data collected by the Financial Transaction Reports and Analysis Center (PPATK) with official wage income, often finding wild discrepancies. Read more of this post

India’s scientists return as opportunities beckon

India’s scientists return as opportunities beckon

Wednesday, September 4, 2013 – 03:00

Krittivas Mukherjee

The Straits Times

INDIA – In returning to India to work as a scientist two years ago, Dr Praveen Kumar Vemula achieved two things in one stroke: one, to work in the virtually virgin market for biomedics and the other, to repay a debt to his motherland. “I came back with a scientific vision,” says the 39-year-old former Harvard Medical School-Massachusetts Institute of Technology fellow, who left India in 2006 to research biomedical technologies. Read more of this post

India Moves Bill Favoring FDI in Pension Funds for First Time

India Moves Bill Favoring FDI in Pension Funds for First Time

India’s Finance Minister Palaniappan Chidambaram moved a bill allowing overseas investment in the country’s pension funds for the first time, as the government tries to revive economic growth and stem the rupee’s slide. He introduced an amendment in parliament today recommending 26 percent ownership by foreign companies in local businesses selling pensions. The threshold for foreign direct investment in pensions will be kept in line with the cap for insurance, which was opened to overseas companies in 2000. The legislation needs the approval of the lower and upper houses. Read more of this post

Germans Hide Cash in Diapers as Swiss Secrecy Crumbles

Germans Hide Cash in Diapers as Swiss Secrecy Crumbles

Germans who avoided taxes by keeping money in Switzerland are bringing wads of cash home and hiding it in odd places. With Swiss banks the target of an international crackdown against tax evasion, the government wants the industry to stop managing undeclared funds. This requirement, combined with high-profile cases such as Bayern Munich President Uli Hoeness, who is charged with using a Swiss account to evade paying taxes, and the purchase of client data by German officials, has frightened tax cheats into action, according to customs agents. Read more of this post

Emerging Nations Save $2.9 Trillion Reserves in Rout

Emerging Nations Save $2.9 Trillion Reserves in Rout: Currencies

Developing nations from Brazil to India are preserving a record $2.9 trillion of foreign reserves and opting instead to raise interest rates and restrict imports to stem the worst rout in their currencies in five years. Foreign reserves of the 12 biggest emerging markets, excluding China and countries with pegged currencies, fell 1.6 percent this year compared with an 11 percent slump after the collapse of Lehman Brothers Holdings Inc. in 2008, data compiled by Bloomberg show. The 20 most-traded emerging-market currencies have weakened 8 percent in 2013 as the Federal Reserve’s potential paring of stimulus lures away capital. Read more of this post

Myanmar’s 2015 Stock Exchange Deadline at Risk: Southeast Asia

Myanmar’s 2015 Stock Exchange Deadline at Risk: Southeast Asia

Myanmar is running behind schedule for starting a stock exchange by 2015 after delays in getting the legal framework in place, said an executive at Japan Exchange Group Inc. (8697), which is assisting on the project. “We’re pressed for time,” Koichiro Miyahara, senior executive officer at Japan Exchange, said in an interview in Tokyo on Aug. 27. He said the late approval of a capital markets bill has delayed the project, and it’s up to the Myanmar government as to how fast it can set up related organizations such as a securities regulator. Read more of this post

Thousands of Thai rubber farmers, reeling from steep price declines of 50% since Feb 2011, vowed to continue protests now in their second week after the government’s latest financial aid measures fell short of their demands

September 3, 2013, 2:38 p.m. ET

Rubber Farmers in Thailand to Continue Protests

Thai Exporters Report Cargo Delays

NOPPARAT CHAICHALEARMMONGKOL and HUILENG TAN

BANGKOK—Thousands of rubber farmers, reeling from steep price declines, vowed to continue protests now in their second week after the government’s latest financial aid measures fell short of their demands. Slowing growth in China and other major economies has sapped demand for rubber, resulting in a 50% price decline since February 2011 that has stirred unrest in major commodity exporters. Read more of this post