Changing China
Giant on the move
from Global Investing:
Home is where the heartache is…
On a recent trip home to Singapore, I was startled to learn just how much housing prices in the city-state have risen in my absence.
A cousin said he had recently paid over S$600,000 -- about US$465,000 -- for a yet-to-be-built 99-year-lease flat. Such numbers are hardly out of place in any major metropolis but this was for a state-subsidised three-bedroom apartment.
Soaring housing prices have fueled popular discontent -- little wonder as median monthly household incomes have stagnated at around S$5,000.
For its part, the government -- which houses 80 percent of people on the densely populated island -- insists that public housing prices are shaped by 'market forces', pointing to a raft of financing schemes to help first-time buyers.
What's less contentious is that Singapore is only part of a regional real estate boom that has driven property values by as much as 70 percent since the start of 2009 in cities such as Sydney, Hong Kong and Beijing.
from Global Investing:
A shoe, a song and the promise of the West
I found myself at Selfridges this week, specifically in what the London retailer says is the world's largest shoe department.
Slightly dazed by cornucopia of women's shoes on slick display, I was roused only when the haze of muzak wafting over the PA system was suddenly dispersed by the jaunty strains of the Chinese New Year ditty 'Gongxi Gongxi'.
A 1946 composition from Shanghai, the song has gone from classic to kitsch, evolving to become the most popular festive song in the Chinese-speaking world. Its ubiquity rests on the many -- for me at least -- teeth-grindingly cloying versions played all over shops and markets in Asia. (Click here for example and don't say I didn't warn you)
from George Chen:
Winners and losers as Hong Kong rents scale new heights
By George Chen The opinions expressed are the author’s own.
When you walk around Hong Kong's Central commercial and business district these days, you may notice a number of stores are holding "removal sales", which means they can no longer remain in the same location. The reason? In most cases, just blame soaring rents.
from Jeremy Gaunt:
Splendour in China and other branding
MSCI, the index provider used by leading investors across the world, has decided it needs a name change in Greater China. In a news release this morning the firm (which is no longer owned by Morgan Stanley, the MS in its title) said its Chinese business would henceforth be branded as MSCI 明晟.
When I tweeted this @reutersJeremyG, one wag suggested this meant "MSCI small-ladder-bigger-ladder-books-on-a-picnic-table", which is what it indeed looks like to an untrained eye (like mine). But it is actually Ming Sheng, which apparently is supposed to symbolise "brightness and transparency, prosperity and splendour".
That might sound a little flowery for an index provider, but is arguably apt given the role such indices have in opening up markets to investment.
from Africa News blog:
Was South Africa right to deny Dalai Lama a visa?
By Isaac Esipisu
Given that China is South Africa’s biggest trading partner and given the close relationship between Beijing and the ruling African National Congress, it didn’t come as a huge surprise that South Africa was in no hurry to issue a visa to the Dalai Lama.
How big a gamble will China take on Europe?
By Scott Boyd The views expressed are his own.
As news broke this month suggesting it was more likely than ever that Greece was headed for default, China extended an offer of assistance that beleaguered European governments may find difficult to refuse. Premier Wen Jiabao announced that China was willing to increase its holdings of European sovereign debt at a time when several Eurozone countries are struggling to raise capital.
In return, China seeks little–simply an assurance that profligate governments promise to get their financial affairs in order, and perhaps some other small favor that, in the words of Premier Wen Jiabao, “would reflect our friendship.” The Premier even suggested that a good way to demonstrate this new-found goodwill would be to support China’s bid to be reclassified as a “market economy” by the World Trade Organization.
China’s pursuit of stability risks greater stress
By Ethan Devine The author is a guest Breaking Views columnist; the opinions expressed are his own.
While Western economies wither, China is in an entirely different predicament. Beset by high inflation and a frothy real estate market, Chinese policymakers have been trying to cool their economy for going on two years. The central bank, the People’s Bank of China, has led the charge, restricting loans to real estate and hiking the required reserve ratio 12 times in 21 months.
Thanks to this, along with slower growth in the United States and Europe, Chinese inflation is now waning. Add an incipient export slowdown, and China may soon be able to loosen credit to everything but real estate. Neither too hot nor too cold, this Goldilocks economy superficially looks just right for China.
from George Chen:
China is still waiting for inflation to peak
By George Chen The opinions expressed are the author’s own.
How time flies. It's already the end of August and speculations naturally arise about what China's inflation reading will be for this month.
Why China can’t save the global economy this time
By Nicholas Consonery The opinions expressed are his own.
When the global economy broke down in 2008, China was the savior. At that time Beijing rolled out a massive stimulus that was one of the biggest—per size of the economy—that the world has ever seen. The resulting benefits bolstered China’s economic strength at a time when the rest of the global economy was staggering under the weight of failing banks and surging public debt.
But the success of Beijing’s stimulus has masked underlying weaknesses in the country’s growth model. And the market is now waking up to the realization that global economic growth might remain suppressed for years to come.
from The Great Debate:
Can China afford to downgrade the U.S.?
By Joseph S. Nye, Jr. The opinions expressed are his own.
After the rating agency Standard & Poor’s downgraded America’s long-term debt, China said that Washington needed to “cure its addiction to debts” and “live within its means.” It must have been a delicious moment in Beijing, accustomed over the years to lectures from Washington about its management of the yuan.
But actions speak louder than words. The real test will be whether China moves away from the dollar in any significant manner. While it makes modest adjustments to its reserve holdings, there are few good alternatives to the dollar. And while it calls for an international basket of currencies to replace the dollar, there are few takers. Of course, China might move toward opening its currency and credit markets in an effort to make the yuan a reserve currency, but the authoritarian political system is unwilling and unprepared to move to that degree of economic freedom.
