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Friday, January 23, 2015

Don't worry about China slowdown !


Last evening, Beijing time, Premier Li gave the most anticipated speech at Davos. One day after China's GDP came in at 7.4 percent, Li assured the packed audience, of international business and government leaders, that China will avoid a hard landing, continue its ongoing reform and restructuring and ensure a prolonged period of sustainable future medium-to-fast growth.

Even before the release of the GDP numbers, a number of Western media and policy pundits were predicting a China stall. Issues with the real estate sector, local government debt, SOE intransience, shadow banking, over capacity and a weak global economy were cited as the factors which would continue to push growth rates lower in the future. But even amongst the hardened doubters, there were signs of dissension, with the Wall Street Journal grudgingly indicating respect for China's handling of its economic affairs.


Premier Li: Don't worry about a China slowdown

The 2014 results represented the slowest growth in 24 years and the first time the government has missed its target on the downside. But Li was in no way defensive, while acknowledging China's 10-trillion-dollar economy will continue to face downward pressures in 2015, Li indicated that the country will avoid systemic financial risks and will improve its quality of growth to ensure an "appropriate" pace of expansion. The rise in urban and rural employment numbers, rising real income levels, moderate inflation, a 50 percent individual savings rate, a 5 percent decrease in energy per unit of GDP, significant growth in China's tertiary industries/services and record numbers of new businesses, added meat to his assertions.

Li, in essence continued the line of thought he voiced at the Summer Davos in Tianjin, where he indicated China's actions are predicated on the realization that its economic growth pattern wasn't sustainable and that to avoid the "Middle Income Trap" China's economic engine needed to be restructured to be more efficient and competitive.

Highlights

"We will continue to pursue a proactive fiscal policy and a prudent monetary policy," Li said. "We will step up anticipatory adjustment and fine-tuning as well as targeted macro-regulation, in order to stabilize economic growth, upgrade its structure and achieve better quality and performance."

Li is clear that China does not regard the fiscal and monetary policy tools Western governments are limited to, as an effective means of transforming its economy.

"For the Chinese economy to maintain medium-to-high speed of growth and achieve medium-to-high level of development," Li said, "China must properly use the hand of the government and the hand of the market, and give full scope to both the traditional and new engines of growth."

This highlights a sharp contrast between China's "Big Hand" (government) over the "Invisible Hand" (market) approach, and Western democratic/capitalist models, which put the market on top and government as a kind of enabling and clean up mechanism.

"To foster a new engine of growth," Li said, "we need to encourage mass entrepreneurship and innovation, and mobilize the wisdom and power of the people."

The word innovation was repeated 33 times during Li's Summer Davos speech and it continues to be central to Li's vision of a more prosperous China. With 3 of the top 5 mobile phone manufactures and a host of other technological innovators like Alibaba and Tencent, there is a new sense of confidence within and outside about China's future.

"To transform the traditional engine of growth, we need to focus on increasing the supply of public goods and services, and strengthening the weak link of the economy," the premier said.

This references the need to make China's SOEs, government and financial sectors more efficient and responsive to the needs and pressures of the market.

China, he added, "will continue to promote trade and investment liberalization and facilitation, and open up its service sector, central and western regions as well as the capital market wider to the outside world."

This is a list of areas which China will be opening up to more investment internally and externally. The Shanghai FTZ has been used as a model and will be extended to Fujian, Tianjin and Guangzhou. They represent the cutting edge of a new kind of economic development platform which will be extended inland once the models have been proven.

"China will encourage its companies to explore the international market, and work for common development with other countries through greater openness towards each other," Li said.

Premier Li is signaling strong support for globalization and indicating a desire to work regionally and internationally to create better trade mechanisms. The New Silk Road, extension of transportation infrastructure into Southeast Asia, AIIB, BRICS Bank etc… are strong indicators of this desire which is essential to China's resources imports and finished goods exports.

So, what can we expect from China, the second largest economy in the world in 2015?

Some say the single biggest risk for the economy is still the interlinked and rising problems associated with shadow banking, local government and corporate debts and a stagnant real estate sector. But at about 54 percent of China's GDP, China's debt is far below most developed nations. The key will be how local governments are funded and regulated. This touches on the real estate sector as well which is badly in need of reform but because it represents 25 percent of the economy it must be handled carefully.

Continued increase in consumption. Consumption now accounts for 51.2 percent of GDP in China. Though it is still considerably lower than the 70 percent average for the developed countries, it continues to move in a positive direction. The services sector has now overtaken the industrial sector as the largest segment of the Chinese economy and seems to be following the government's playbook to re-balance the economy.

China is developing more confidence in its ability to innovate and lead cutting-edge FMCG markets and this trend will continue further balancing the public-investment and export-driven, forces which drove the economy in the past.

China has also taken some steps to solve its overcapacity issues. A two pronged approach which is shifting heavy industrial capacity in areas like transportation infrastructure to projects in neighboring areas and the world stage. For example the merging of China's major railroad companies and the projects they will being doing in the Mekong delta region. The second prong is the identification and closing of first and second generation industrial plants which is how China has been able to achieve a 5 percent increased efficiency in energy use per unit of GDP.

In the financial sector expect more pressure on the big banks to be more SME focused in exchange for more liberal controls of lending and deposit rates. An example: the lifting of the deposit rate ceiling, the deposit insurance draft plan being considered and the new property registration system will standardize the markets and provide new financial product opportunities. To make things more transparent the government has adopted new budgetary laws, local government debt regulations and encouraged state-owned enterprises to adopt mixed ownership structures.

It is clear though that fiscal and monetary policy will be part of the symphony not the main players. Premier Li was clear that he opposed another monetary stimulus to push growth rates and instead, would rely primarily on structural reforms. A thought which was expressed in Davos on Wednesday, by Zhou Xiaochuan, governor of the People's Bank of China, who also expressed a willingness to sacrifice growth for stability.

"If China's economy slows down a bit, but meanwhile is more sustainable for the medium and long term, I think that's good news," he said.

China's growth cannot be delinked from the global context. As the main driver of the world's economy since the US mortgage crisis meltdown, China has taken on a new role. Just as importantly and expanding China needs access to raw materials if it intends to consume and export finished goods. A resurgent US will help China, but a stagnating EU will hurt it. These seem to be the dominant trends which WTO started and which will carry on for some years.

The premier said China will go full speed ahead with liberalizing interest rates, allowing markets to play a greater role in setting prices, in forging trade agreements and opening up its financial system.

"We will not be afraid of difficulties, and we will continue to move along the path of reform and restructuring," Li said.

All of this, he suggested, was not only in China's interests but also that of the global economy.

"China's reform and development will bring more opportunities for the world."

China Economic path firm, despite lower growth

Since China revealed its 2014 annual growth rate of 7.4 percent on Tuesday, there has been heated discussion worldwide. Some observers cited the figure, the lowest in China since 1990, as proof of the lost glory of the Chinese economy.

Several Western institutes predicted that China's economic growth would tumble to about 6.5 percent in 2015 and some even proclaimed that 2015 would be the last year that China would see growth figures above 6 percent. Last week, a column in the Financial Times said the Indian economy may outstrip China's this year.

When China's GDP growth was above 10 percent, many voices expounded that such a high rate would be harmful. However, just as China is committed to economic restructuring and a turn to the "new normal," there appears to be more catcalls and scary predictions for the future. We have to be unswerving in our commitment not to return to the GDP-oriented path.

GDP figures are so favored by the media as they are easy to grasp. But China has passed the era of GDP-fixation and Chinese people now harbor more expectations for economic development. Despite continued pursuit of wealth, we highly value safety, environmental protection, equal opportunity and explicit rules. With money, there should also be dignity.

Chinese economic and social development has entered an era of multiple targets, which will become more effective. But sometimes the effects are invisible. This makes it harder to measure than what GDP does.

It's different in India. Long overshadowed by China, it is keen to become the best in some aspects. It is in dire need of evidence to show that it is not inferior to China.

Even if the Indian economy does outstrip China's one day, the impact on the Chinese public will be far less than on its own people, since India has been waiting for the outcome for so long. The West seems to be also long expecting the day. Some Western media attach more significance to India's overtaking China than Chinese people do.

China's GDP growth is unlikely to always rank top of the global list and we won't modify our set direction in social and economic development.

The "new normal" in the Chinese economy doesn't mean stagnation nor recession, but a strategic adjustment toward quality and sustainable development. We have such a widespread capacity to push forward economic and social development and meet people's expectations for a better life.

China's growth of 7 percent maintained in the period of economic and social restructuring is no less significant than 10 percent in the past times of extensive development. While the Chinese government is capable of achieving higher growth, its choice of lowering the rate deserves more praise.

China has never been applauded by the West in its development since the end of the Cold War. We have grown used to this. We need to stay firm to achieve our target of deepening reform.

Thursday, January 22, 2015

West should end its hypocrisy on anti-terror war!

Chinese and Russian policemen attend a joint anti-terror drill in Manzhouli City, north China's Inner Mongolia Autonomous Region, Oct 20, 2014. [Photo/Xinhua]

Senior US leaders invited sharp criticism at home for not attending last week's solidarity rally in Paris against the terrorist attack on French satirical magazine Charlie Hebdo in which 12 people were killed. As a result, US Secretary of State John Kerry was in Paris this week to make up for the mistake.

However, terrorist attacks on innocent civilians in Nigeria, where Boko Haram fighters killed hundreds of, if not more, ordinary people early this month, have not received the same attention in the US and the Western world as the Paris attack. Yet such double standards and hypocrisy of the Western world is nothing new.

Over the past few years, the US and some Western countries have not responded to the terrorist attacks against innocent civilians in Beijing, Kunming and the Xinjiang Uygur autonomous region the way they reacted to the Paris attack.

On several occasions, US State Department spokespersons have used the excuse that they need more information and investigation into the incidents in China to condemn them as terrorist attacks. But they did not ask any such question after the Paris attack.

Some Western news organizations have refused to describe the perpetrators at Kunming railway station in Yunnan province as terrorists, insisting on calling them "knife-wielding attackers". And on the rare occasions that they have used the word terrorist, they put it within quotation marks as if the ruthless killers in China were any different from those in Paris or elsewhere in the Western world. One CNN report even posed the question, "Terrorism or Cry of Desperation?", as if killing innocent civilians in China can be somehow justified.

Even though China and the US have common interests in fighting terrorism, some Americans still seem to believe that only those setting off bombs in New York are terrorists while those doing the same in Beijing or any other Chinese city demand a different description.

The West's double standards are not restricted to China and Nigeria. The decade-old wars in Iraq and Afghanistan have cost the lives of hundreds of thousands of civilians, but the mainstream media outlets in the US have largely ignored the tragedies and focused on the loss of their own troops.

If the number of civilian casualties is a measure of the intensity of a terrorist attack, tragedies like the Sept 11, 2001, attacks have occurred multiple times in Iraq and Afghanistan. But the Western media don't seem to care much about them.

Some Western observers have even found excuses for West's inadequate response to the terrorist attacks in Kunming on March 1 last year in which 31 were killed and 141 injured. But by failing to immediately condemn the attacks against innocent civilians in Kunming and Xinjiang, these people have by default condoned the action of the perpetrators.

It is true that terrorists in the eyes of some could be freedom fighters in the eyes of others. That is why Osama bin Laden was a freedom fighter to the US in the 1980s but a top terrorist in the 21st century. And Nobel Peace Prize winner Nelson Mandela was still on the US terrorism watch list as late as 2008, years after stepping down as South Africa's president.

There is no doubt that the US and its allies have failed miserably in their "war on terror" despite the more than 1,000 air strikes launched against the Islamic State group. In spite of the heavy bombardments, we have seen terrorists gaining strength and spreading their tentacles to more areas across the world.

And the Western world responds to this deadly threat with double standards.

By Chen Weihua China Daily/Asia News Network

The author, based in Washington, is deputy editor of China Daily USA. chenweihua@chinadailyusa.com

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Tuesday, January 20, 2015

Malaysia revised budget 2015: cuts RM5.5 bil, deficit target 3.2%, focus on manufactured goods

Prime Minister Datuk Seri Najib Razak delivers his speech on the revision of the Budget 2015 at the Putrajaya International Convention Centre today. He said a slew of cuts amounting to RM5.5 billion will take place as part of Putrajaya’s proactive measures. – The Malaysian Insider pic by Nazir Sufari, January 20, 2015.



Prime Minister Datuk Seri Najib Razak today announced a slew of budget cuts amounting to RM5.5 billion as part of Putrajaya’s “proactive measures” to align itself with plunging global oil prices and revised world economic growth projections.

The cuts would come from the Budget 2015’s operational expenditures that were initially set at RM223.4 billion, while the RM48.5 billion for development would remain untouched, Najib said in his speech today at the Putrajaya International Convention Centre.

Also, the fiscal deficit target of 3% of the Gross Domestic Product (GDP) for the year has been revised to 3.2%.

Najib said this was still lower than 2014’s fiscal deficit of 3.5%. The "proactive measures" to achieve the RM5.5 billion savings are:

“(The government will) optimise outlays on supplies and services, especially overseas travel, events and functions and use of professional services. This will result in savings of RM1.6 billion.

“Second, defer the 2015 Program Latihan Khidmat Negara (National Service) to enable the programme to be reviewed and enhanced, with savings expected at RM400 million.

“Third, review transfers and grants to statutory bodies, GLCs, Government Trust Funds, particularly those with a steady revenue stream and high reserves. This measure will result in savings of RM3.2 billion.

“Fourth, reschedule the purchase of non-critical assets, especially office equipment, software and vehicles, with an expected savings of RM300 million.”

Najib said Putrajaya’s revenue would be enhanced by encouraging companies to register with the Royal Malaysian Customs to enable them to charge and collect the goods and services tax (GST).

He estimated that broadening the tax base would contribute an additional RM1 billion.

Putrajaya would also realise additional dividends from GLCs and GLICs as well as other government entities amounting to RM400 million, said Najib.

He added that the revisions to the budget were necessary as Putrajaya would otherwise face a revenue shortfall of RM8.3 billion due to falling crude oil prices, despite savings of RM10.7 billion after doing away with fuel subsidies.

“Without any fiscal measures, the deficit will increase to 3.9% of GDP against the target of 4% for 2015.

“This requires the government to take measures to reduce the deficit, in line with the government’s commitment towards fiscal consolidation.”

Najib said the GDP growth target between 5% and 6% had been revised to between 4.5% to 5.5%.

To ensure economic growth remained strong, he said Putrajaya would boost exports of goods and services, enhance private consumption, and accelerate private investment.

Among its strategies are postponing the scheduled electricity tariff and gas price hike, and increasing nationwide mega sales.

Meanwhile, Najib announced an initial allocation of RM800 million for the repair and construction of basic infrastructures affected by the recent floods, and another RM893 million for flood mitigation projects.

These included building eight-foot high stilt houses for those who have land and whose homes were damaged by the floods, and handing over 1,000 units of low-cost homes in Gua Musang, Kelantan.

As he concluded his speech, he told Malaysians the country was not in a financial crisis or recession, but simply taking pre-emptive measures.

“We are neither in recession nor a crisis as experienced in 1997, 1998 and 2009, which warranted stimulus packages.

“The strategies announced by the government are proactive initiatives to make the necessary adjustments following the challenging external developments which are beyond our control.

“This is a reality check following, among others, declining global crude oil prices,” he added. – January 20, 2015.

By ANISAH SHUKRY The Malaysian Insider

Focus on Malaysian-manufactured goods




PETALING JAYA: The impact of the reduction in global oil prices from US$100 to US$40 per barrel can be offset by a rise in demand for Malaysian-manufactured goods, said Prime Minister Datuk Seri Najib Tun Razak (pic) on Tuesday.

Najib, who announced revisions to the 2015 Budget which was tabled in October 2014, said that this could be done as crude oil only makes up 4.5% of the nation's total exports.

"The reduction in the price of crude oil will indirectly increase demand in Malaysia-made products. We will actively promote 'import-substitution' to reduce our dependency on external sources to obtain goods and services," said Najib.

He added that the Government initiatives would be created to increase the use of the private sector.

"We will give priority to local Class G1 (Class F), G2 (Class E) and G3 (Class D) contractors registered with the Construction Industry Development Board to carry out recovery works in their local areas affected by the east coast flood," said Najib.

He added that the Government would intensify promotions encouraging the public to buy made-in-Malaysia products.

"We will increase the frequency and duration of mega sales throughout the nation, and intensify domestic tourism promotions by offering competitive airfares," said Najib.

He also said that the Government would encourage the private sector to reap opportunities created by the Asean Economic Community.

"We will also intensify programmes to boost exports of Malaysian goods in 46 nations across Asia, Europe, the Middle East and America," said Najib.

In his speech, Najib said the adjustment to the 2015 Budget was necessary to "ensure our economy continues to attain respectable and reasonable growth, and development for the nation and rakyat continues" as the 2015 Budget was based on the price of crude oil remaining at US$100 per barrel.

"Based on a crude oil price of US$100 per barrel and taking government saving measures and retail price controls into account, the Government was expected to have a fiscal profit of RM3.7bil. However, with the current price of oil at US$55 a barrel, the government will lose RM13.8bil in income," said Najib.

By Tan Ti Liang The Star/Asia News Network

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Sunday, January 18, 2015

Malaysian worked as janitor is a serious innovator

TV star: Dr Walter showing the company’s big LED television.

From Janitor to serious innovator

MALACCA: As a university student, he worked as a janitor to earn some pocket money.

Dr Gabriel Walter, 37, who studied electrical engineering at an American university, now holds about 100 patents in electronic and electrical innovations.

The Kelabit boy from Bario, Sarawak, wants to break the monopoly of foreign brands selling their products at exorbitant prices.

For example, he has introduced a big screen light emitting diode (LED) television, which includes all connecting gadgets, and priced at about RM6,000 compared to popular foreign brands that can cost almost RM20,000.

There is also a smartphone application, costing just a few hundred ringgit, that can integrate home appliances with just a cyberspace connectivity.

“I am determined to make available quality, feature-perfect appliances that can communicate with any other devices in an ad hoc network with a single connectivity.

“All these wonders are packaged and assembled here and sold at affordable prices. It is a Malaysian invention,” he said in an interview.

Dr Walter, who was a Mara scholar, studied at the University of Illinois at Urbana-Champaign where he earned a doctorate.

He was an Adjunct Assistant Professor from 2003 to 2009 at the university, where he was also once a senior research scientist.

Despite his long list of achievements, Dr Walter has not forgotten his humble beginnings where his father used to live in a longhouse.

At a tender age, he started selling groundnuts to help supplement the family income.

“Life was hard then. I used to work as a janitor when I was studying in the United States as the scholarship was only adequate to cover my education,” he said.

Several months ago, Dr Walter returned to Malaysia for good after receiving a government grant of RM2mil for research and development before setting up his own manufacturing plant in Batu Berendam.

“I must thank former Chief Minister Tan Sri Ali Rustam who was persistent that I should set up a plant in Malacca when he first met me in 2006 during a bio-tech conference in the United States,” he said.

Dr Walter established Quantum Electro Opto Systems Sdn Bhd (QEOS) and launched its first commercial product based on its patented high-speed light-emitting technology known as tilted charge dynamics in 2013.

QEOS is based here with an office in the Silicon Valley, California, where Dr Walter is the chief executive officer.

His university mentors – professors Nick Holonyak Jr and Milton Feng – are part of his team.

The QEOS website stated that Prof Nick Holonyak Jr is widely regarded as the inventor of LED.

The company, it said, wanted to “pioneer the commercial development of high speed, low-cost and power efficient fiber optics communication solutions”.

By R.S. N. Murali The Star/ANN

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Thursday, January 15, 2015

Chinese women's marriage criteria,logical search for a mate

72% of women consider housing as a key requirement for a marriage partner, says the latest report of the Chinese Marriage Status Survey 2014, issued by China’s leading marriage service provider Baihe.com on Jan.11, 2015.

Researchers collected the results of 73,215 online questionnaires and held in-depth off-line interviews with 200 single men and women from 34 provinces, municipalities and autonomous regions.

Why still single?

The report shows that 63% of single men and women spend an average of more than six hours alone on their rest days; and 32% spend more than 10 hours alone. Surfing the internet, hanging out with friends, and just “quietly” staying at home have become the top three activities for single people.

32% of single women follow TV dramas while 67% of men scan websites, killing their private time at home.

The report concludes that the main reasons for remaining single is too much time spent alone - too few social contacts is the top obstacle to meeting the right person. 80% of single women report this.

Gender differences in marriage requirements

Nowadays, love is no longer the only passport for two people to enter marriage. The report says that more than 40% of single men and women are only willing to get married with a person in a suitable situation. People are becoming ever more rational and realistic when choosing their spouses.

The top three concerns for single men are appearance, physical health, and emotional experience. Single women attach more importance to a partner’s financial situation, physical health, and career.

33% of single men and 27% of single women have experienced interference from parents in their relationships.

Focus on housing

The report shows that 71% of women view housing as a key requirement for a potential marriage partner. 18% of women counted car ownership as one of the basic requirements, a rise of 9% compared with 2012. Both men and women said that a stable income and some savings were important factors.

Nearly 60 percent of women do not intend to have a second child, according to the report, although China has relaxed its birth control policy to allow couples to have a second child if either parent is an only child.

The report also shows that 33% of women think that Chinese men do not deserve Chinese women, in terms of "self-accomplishments and ability to care for themselves." - (People's Daily Online)

The logical search for a mate

‘Love’ takes a back seat when seeking prospective life partners

LOVE is not the only criterion for marriage in China. A recent survey shows that more than 40% of Chinese look to marry someone who suits them in appearance, educational background, social status, income and other characteristics.

Baihe.com, a major dating portal in China, released its 2014 Chinese Marriage Status Survey Report on Sunday.

The site has tracked marriage trends in the country since 2007.

The latest results show that 44.4% of male and 49.7% of female respondents said the reasons for their choice of a marriage partner include their prospective mate’s coming from a family of equal social rank.

“This means people are much more rational when it comes to the marriage decision,” the report said.

“They would like to match each other under every single standard. Love is no longer the only pass.”

The report also said that more than 70% of female respondents said they would consider marriage only if the male partner owns property.

And more than 70% of the women hoped their future husband’s income would be double their own.

Zhou Xiaopeng, the chief marriage consultant at Baihe.com, characterised the phenomenon as “supermarket marriage”, where people come with “money in hand” and want to select the best “products” after shopping around.

Tu Ying, a researcher at the portal, said that seeking a partner with quantifiable requirements is efficient.

“In everyday life, it is more and more difficult to find the right person and get to know him or her – not to mention the cost it comes with,” Tu said. “If people start with quantifiable standards, and then develop their relationship based on that, it is more likely to be a stable relationship.

“Starting marriage with money cannot guarantee stability from the beginning.

“Every relationship needs cultivation from each side.”

Zhou Xiaozheng, a professor of sociology at Renmin University of China, attributes the new approach to marriage choices to changes in society.

“Chinese people’s view of choosing a mate has undergone many changes,” Zhou said.

“In the past, marriage was arranged by parents, which reflected the will of family or country. Then it became a personal choice, or socalled love choice. And now it is more related to material standards, or what we call materialism in marriage.”

“This is simply because people live in a materialistic world: A couple needs an apartment to live in, which costs a lot; the couple needs to find a good school for their children, which costs a lot; the couple who live far away from their parents need to find a way to support them, which also costs a lot,” Zhou said. “It is a vicious circle.”

Zhou said to reverse the materialistic trend, the country needs to continue its anti-corruption campaign and improve social welfare, and young people need to know that money is not the solution to everything. - China Daily/Asia News Network