President Obama heralded the case as a landmark when he announced it at the White House on Tuesday morning, signaling that the United States and its allies would require China to play by international trade rules.“Our competitors should be on notice: You will not get away with skirting the rules,” he said.But international trade officials, industry leaders and specialists in China and the West noted that Beijing would have a strong hand of cards as it seeks to defend its export policies on rare earths.The metals are needed for making an array of sophisticated products, from smartphones to smart bombs, as well as wind turbines and other green technologies. China is the source of more than 90 percent of the world’s processed rare earth metals.Even if the West and Japan overcome the stiff challenges of winning their case at the World Trade Organization, it could still take several years before Beijing changes its policies — by which time companies in the West and Japan could have moved even more of their factories that use rare earth metals to China.“The filing was too late,” said Karl A. Gschneidner Jr., a rare earths specialist at the Energy Department’s Ames Laboratory in Iowa. China was “cutting off supplies and controlling things in the past couple years,” he said.He noted that this year the reopening of a long-idle American mine at Mountain Pass, Calif., and the opening of another mine in Australia would start putting more rare earths into the global supply chain — potentially enough to meet more than half of the demand outside of China. But many rare earth metal users, including computer hardware manufacturers and producers of energy-efficient lighting, have already shifted operations to China and are unlikely to move soon.But some specialists say that the West has benefited indirectly from China’s quotas, because they drove rare earth prices up by as much as 30 times. That caused a boom in mining investment that is now opening alternatives to China.“I don’t think it’s too little, too late,” said Yaron Vorona, executive director of the Technology and Rare Earth Metals Center at the Institute for the Analysis of Global Security, a nonprofit organization in suburban Washington focusing on energy security.Whatever the eventual implications for world supplies of rare earths, in some ways a recent Western victory on a somewhat related trade case may have strengthened China’s hand.The World Trade Organization ordered China last July to dismantle export duties and quotas on nine other industrial raw materials, including bauxite. An appeals tribunal upheld the ruling and added details in late January.China has been able to study those orders as it has redesigned its export restrictions on rare earths. The new quotas are as stringent as the old ones, making it harder for Western manufacturers to obtain rare earths in the quantities and with the timeliness their factories require. But the revamped quota rules could be easier for China to defend in front of a W.T.O. tribunal, than its earlier policies would have been.China, for example, has begun requiring its rare earth exporters to obtain a certificate of environmental compliance before they are allowed to make any overseas shipments. That could strengthen China’s claim that export quotas on rare earths are environmentally necessary. Without dispute, the mining and processing of rare earths have many toxic and even radioactive byproducts — which is one reason the West and Japan for decades were reluctant to produce them.China denies claims by Western trade officials that Beijing has waved the environmental flag to disguise its true motive: to force Western and Japanese factories to move to China to gain access to an uninterrupted supply of low-cost rare earths.The Chinese government has also lent large sums to four state-owned mining companies that are buying many of their smaller, private domestic rivals in rare earths. That raises the prospect that China could assemble a state-owned rare earth oligopoly — one that could effectively limit exports without government policies that mandate the restrictions. W.T.O. rules mostly cover government regulations, not the behavior of oligopolies.“It will be much more difficult for us to win the rare earth case than it was for us to win the previous case,” said a Western trade official, referring to the W.T.O. rulings on industrial raw materials. The official, who insisted on anonymity because the case was diplomatically and legally delicate, added that the rare earth case could still be won because of voluminous files that point to abusive Chinese trade practices.A diplomatic confrontation between China and Japan over disputed islands in September 2010, for example, turned into a Chinese show of force on rare earths. Chinese regulators abruptly summoned the presidents of China’s rare earth mining companies to a secret meeting in Beijing, said a person with a detailed knowledge of the meeting, who insisted on anonymity to avoid angering Chinese officials.The mining executives were told that the Chinese government was about to halt all shipments of rare earths to Japan, where the electronics industry, camera industry and others depended heavily on the materials. The executives were told that if any of their companies stepped up shipments to another country instead, allowing reshipment of rare earths from that country to Japan, then the company would lose its export license. The assembled executives were also warned against speaking to the news media about the coming embargo, this person said.Chinese trade statistics showed that exports of rare earths to Japan dropped to almost zero during the embargo, which continued for two months. Legal shipments to other markets increased little in that period, although smuggling to Vietnam and then to Japan increased.On Tuesday, besides trying to free the global flow of rare earth metals, the United States and its allies demanded that China dismantle export restrictions on two other strategic minerals mined mainly in China: tungsten and molybdenum, which are used to strengthen steel.Mr. Obama also signed a law meant to make it easier for companies and unions to file antisubsidy cases against imports from China and other countries designated by the United States as having nonmarket economies.This story originally appeared in The New York Times
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Monday, June 4, 2012
Rare Earths Case Against China Too Late, Experts Say
Hong Kong - Even as the United States, the European Union and Japan jointly filed a trade case Tuesday against China over its export restrictions on strategic rare earth metals, many specialists could not help wondering whether it was too little and too late for Western and Japanese manufacturers.President Obama heralded the case as a landmark when he announced it at the White House on Tuesday morning, signaling that the United States and its allies would require China to play by international trade rules.“Our competitors should be on notice: You will not get away with skirting the rules,” he said.But international trade officials, industry leaders and specialists in China and the West noted that Beijing would have a strong hand of cards as it seeks to defend its export policies on rare earths.The metals are needed for making an array of sophisticated products, from smartphones to smart bombs, as well as wind turbines and other green technologies. China is the source of more than 90 percent of the world’s processed rare earth metals.Even if the West and Japan overcome the stiff challenges of winning their case at the World Trade Organization, it could still take several years before Beijing changes its policies — by which time companies in the West and Japan could have moved even more of their factories that use rare earth metals to China.“The filing was too late,” said Karl A. Gschneidner Jr., a rare earths specialist at the Energy Department’s Ames Laboratory in Iowa. China was “cutting off supplies and controlling things in the past couple years,” he said.He noted that this year the reopening of a long-idle American mine at Mountain Pass, Calif., and the opening of another mine in Australia would start putting more rare earths into the global supply chain — potentially enough to meet more than half of the demand outside of China. But many rare earth metal users, including computer hardware manufacturers and producers of energy-efficient lighting, have already shifted operations to China and are unlikely to move soon.But some specialists say that the West has benefited indirectly from China’s quotas, because they drove rare earth prices up by as much as 30 times. That caused a boom in mining investment that is now opening alternatives to China.“I don’t think it’s too little, too late,” said Yaron Vorona, executive director of the Technology and Rare Earth Metals Center at the Institute for the Analysis of Global Security, a nonprofit organization in suburban Washington focusing on energy security.Whatever the eventual implications for world supplies of rare earths, in some ways a recent Western victory on a somewhat related trade case may have strengthened China’s hand.The World Trade Organization ordered China last July to dismantle export duties and quotas on nine other industrial raw materials, including bauxite. An appeals tribunal upheld the ruling and added details in late January.China has been able to study those orders as it has redesigned its export restrictions on rare earths. The new quotas are as stringent as the old ones, making it harder for Western manufacturers to obtain rare earths in the quantities and with the timeliness their factories require. But the revamped quota rules could be easier for China to defend in front of a W.T.O. tribunal, than its earlier policies would have been.China, for example, has begun requiring its rare earth exporters to obtain a certificate of environmental compliance before they are allowed to make any overseas shipments. That could strengthen China’s claim that export quotas on rare earths are environmentally necessary. Without dispute, the mining and processing of rare earths have many toxic and even radioactive byproducts — which is one reason the West and Japan for decades were reluctant to produce them.China denies claims by Western trade officials that Beijing has waved the environmental flag to disguise its true motive: to force Western and Japanese factories to move to China to gain access to an uninterrupted supply of low-cost rare earths.The Chinese government has also lent large sums to four state-owned mining companies that are buying many of their smaller, private domestic rivals in rare earths. That raises the prospect that China could assemble a state-owned rare earth oligopoly — one that could effectively limit exports without government policies that mandate the restrictions. W.T.O. rules mostly cover government regulations, not the behavior of oligopolies.“It will be much more difficult for us to win the rare earth case than it was for us to win the previous case,” said a Western trade official, referring to the W.T.O. rulings on industrial raw materials. The official, who insisted on anonymity because the case was diplomatically and legally delicate, added that the rare earth case could still be won because of voluminous files that point to abusive Chinese trade practices.A diplomatic confrontation between China and Japan over disputed islands in September 2010, for example, turned into a Chinese show of force on rare earths. Chinese regulators abruptly summoned the presidents of China’s rare earth mining companies to a secret meeting in Beijing, said a person with a detailed knowledge of the meeting, who insisted on anonymity to avoid angering Chinese officials.The mining executives were told that the Chinese government was about to halt all shipments of rare earths to Japan, where the electronics industry, camera industry and others depended heavily on the materials. The executives were told that if any of their companies stepped up shipments to another country instead, allowing reshipment of rare earths from that country to Japan, then the company would lose its export license. The assembled executives were also warned against speaking to the news media about the coming embargo, this person said.Chinese trade statistics showed that exports of rare earths to Japan dropped to almost zero during the embargo, which continued for two months. Legal shipments to other markets increased little in that period, although smuggling to Vietnam and then to Japan increased.On Tuesday, besides trying to free the global flow of rare earth metals, the United States and its allies demanded that China dismantle export restrictions on two other strategic minerals mined mainly in China: tungsten and molybdenum, which are used to strengthen steel.Mr. Obama also signed a law meant to make it easier for companies and unions to file antisubsidy cases against imports from China and other countries designated by the United States as having nonmarket economies.This story originally appeared in The New York Times ![]()
President Obama heralded the case as a landmark when he announced it at the White House on Tuesday morning, signaling that the United States and its allies would require China to play by international trade rules.“Our competitors should be on notice: You will not get away with skirting the rules,” he said.But international trade officials, industry leaders and specialists in China and the West noted that Beijing would have a strong hand of cards as it seeks to defend its export policies on rare earths.The metals are needed for making an array of sophisticated products, from smartphones to smart bombs, as well as wind turbines and other green technologies. China is the source of more than 90 percent of the world’s processed rare earth metals.Even if the West and Japan overcome the stiff challenges of winning their case at the World Trade Organization, it could still take several years before Beijing changes its policies — by which time companies in the West and Japan could have moved even more of their factories that use rare earth metals to China.“The filing was too late,” said Karl A. Gschneidner Jr., a rare earths specialist at the Energy Department’s Ames Laboratory in Iowa. China was “cutting off supplies and controlling things in the past couple years,” he said.He noted that this year the reopening of a long-idle American mine at Mountain Pass, Calif., and the opening of another mine in Australia would start putting more rare earths into the global supply chain — potentially enough to meet more than half of the demand outside of China. But many rare earth metal users, including computer hardware manufacturers and producers of energy-efficient lighting, have already shifted operations to China and are unlikely to move soon.But some specialists say that the West has benefited indirectly from China’s quotas, because they drove rare earth prices up by as much as 30 times. That caused a boom in mining investment that is now opening alternatives to China.“I don’t think it’s too little, too late,” said Yaron Vorona, executive director of the Technology and Rare Earth Metals Center at the Institute for the Analysis of Global Security, a nonprofit organization in suburban Washington focusing on energy security.Whatever the eventual implications for world supplies of rare earths, in some ways a recent Western victory on a somewhat related trade case may have strengthened China’s hand.The World Trade Organization ordered China last July to dismantle export duties and quotas on nine other industrial raw materials, including bauxite. An appeals tribunal upheld the ruling and added details in late January.China has been able to study those orders as it has redesigned its export restrictions on rare earths. The new quotas are as stringent as the old ones, making it harder for Western manufacturers to obtain rare earths in the quantities and with the timeliness their factories require. But the revamped quota rules could be easier for China to defend in front of a W.T.O. tribunal, than its earlier policies would have been.China, for example, has begun requiring its rare earth exporters to obtain a certificate of environmental compliance before they are allowed to make any overseas shipments. That could strengthen China’s claim that export quotas on rare earths are environmentally necessary. Without dispute, the mining and processing of rare earths have many toxic and even radioactive byproducts — which is one reason the West and Japan for decades were reluctant to produce them.China denies claims by Western trade officials that Beijing has waved the environmental flag to disguise its true motive: to force Western and Japanese factories to move to China to gain access to an uninterrupted supply of low-cost rare earths.The Chinese government has also lent large sums to four state-owned mining companies that are buying many of their smaller, private domestic rivals in rare earths. That raises the prospect that China could assemble a state-owned rare earth oligopoly — one that could effectively limit exports without government policies that mandate the restrictions. W.T.O. rules mostly cover government regulations, not the behavior of oligopolies.“It will be much more difficult for us to win the rare earth case than it was for us to win the previous case,” said a Western trade official, referring to the W.T.O. rulings on industrial raw materials. The official, who insisted on anonymity because the case was diplomatically and legally delicate, added that the rare earth case could still be won because of voluminous files that point to abusive Chinese trade practices.A diplomatic confrontation between China and Japan over disputed islands in September 2010, for example, turned into a Chinese show of force on rare earths. Chinese regulators abruptly summoned the presidents of China’s rare earth mining companies to a secret meeting in Beijing, said a person with a detailed knowledge of the meeting, who insisted on anonymity to avoid angering Chinese officials.The mining executives were told that the Chinese government was about to halt all shipments of rare earths to Japan, where the electronics industry, camera industry and others depended heavily on the materials. The executives were told that if any of their companies stepped up shipments to another country instead, allowing reshipment of rare earths from that country to Japan, then the company would lose its export license. The assembled executives were also warned against speaking to the news media about the coming embargo, this person said.Chinese trade statistics showed that exports of rare earths to Japan dropped to almost zero during the embargo, which continued for two months. Legal shipments to other markets increased little in that period, although smuggling to Vietnam and then to Japan increased.On Tuesday, besides trying to free the global flow of rare earth metals, the United States and its allies demanded that China dismantle export restrictions on two other strategic minerals mined mainly in China: tungsten and molybdenum, which are used to strengthen steel.Mr. Obama also signed a law meant to make it easier for companies and unions to file antisubsidy cases against imports from China and other countries designated by the United States as having nonmarket economies.This story originally appeared in The New York Times 
Sunday, June 3, 2012
Apple's 25 Billionth App Downloaded in China
One lucky user in eastern China just found out some good news — they'll be taking home a $10,000 prize for downloading the 25 billionth app from Apple's App Store. Chunli Fu of Qingdao, a city in eastern China, downloaded a free version of Disney's physics-based puzzle game "Where's My Water?" to win the $10,000 (63,000 yuan) iTunes gift card, Apple announced on Monday.
"We'd like to thank our customers and developers for helping us achieve this historic milestone of 25 billion apps downloaded," Eddy Cue, Apple's senior vice president of Internet Software and Services, said in a statement. "When we launched the App Store less than four years ago, we never imagined that mobile apps would become the phenomenon they have, or that developers would create such an incredible selection of apps for iOS users."
Apple announced that it had reached the landmark download milestone over the weekend, but did not reveal the winner at that time.
Like This 3 | 0 CommentsWednesday, February 29, 2012
Next Big Financial Crisis Will Be Made in China: Wolf
The next big global financial crisis will emanate from China. That is not a firm prediction. But few countries have avoided crises after financial liberalization and global integration. Think of the U.S. in the 1930s, Japan and Sweden in the early 1990s, Mexico and South Korea in the later 1990s and the U.S., UK and much of the eurozone now. Financial crises afflict every kind of country. As Carmen Reinhart of the Peterson Institute for International Economics and Kenneth Rogoff of Harvard have remarked, they are “an equal opportunity menace”. Would China be different? Only if Chinese policymakers retain their caution.
Such caution permeated last week’s report that the People’s Bank of China has recommended accelerated opening up of the Chinese financial system. Given what is at stake, in both China and the world, it is essential to consider the implications. Maybe the world will then do a better job of managing this process than it has done in the past.This plan was published by Xinhua, the state news agency, not on the PBoC’s web site. Moreover, it was published under the name of Sheng Songcheng, head of the statistics department, not that of the governor or a deputy governor. This must mean that it is more an exercise in kite-flying than a policy. Nevertheless, this was published with the PBoC’s approval and, quite possibly, with that of people much higher up still.The article lays out three stages for reform. The first, to occur over the next three years, would clear the path for more Chinese investment abroad as “the shrinkage of western banks and companies has vacated space for Chinese investments” and so presented a “strategic opportunity”. The second phase, in between three and five years, would accelerate foreign lending of the renminbi. In the longer term, over five to 10 years, foreigners could invest in Chinese stocks, bonds and property. Free convertibility of the renminbi would be the “last step”, to be taken at an unspecified time. It would also be combined with restrictions on “speculative” capital flows and short-term foreign borrowing. In sum, full integration would be indefinitely delayed.What are the implications of this plan? The answer is that it seems sensible. In reaching that view, one has to take into account the benefits and risks of financial “reform and opening” for China and the world.The arguments for such opening up to the world are closely connected to those for domestic reform. Indeed, the former cannot be undertaken prior to the latter: opening up today’s highly regulated financial system to the world is a recipe for disaster, as Chinese policymakers know. It is for this reason that full convertibility would come in the distant future, as this plan suggests.Happily, arguments for domestic reform are powerful. Dynamic financial markets are an essential element in any economy that wishes both to sustain growth and to begin rivaling rich countries in productivity, as China surely aspires to do. More immediately, as Nicholas Lardy of the Peterson Institute for International Economics notes in a recent study: “Negative real deposit rates impose a high implicit tax on households, which are large net depositors in the banking system, and lead to excessive investment in residential housing. Negative real lending rates subsidize investment in capital-intensive industries, thus undermining the goal of restructuring the economy in favor of light industries and services.”*Yet, as Mr Lardy also knows, this distorted financial regime is part of a wider system for taxing savings, promoting investment and repressing consumption, which has led to huge interventions in foreign currency markets and vast accumulations of foreign currency reserves. The deeper case for reform is that this system no longer contributes to a desirable pattern of development. But it has become so deeply entrenched in the economy that reform is politically fraught and economically disruptive. The question is even whether such reform is politically feasible. It is surely likely to be a slow process.How would the PBoC’s proposed moves towards opening up then fit with such a cautious reform? Presumably, the greater freedom for capital outflows envisaged for the next five years would partly substitute for accumulations of foreign currency reserves. Yet if this went with suggested moves towards higher real interest rates, China’s savings and current account surpluses might explode, worsening the external imbalances.This point underlines just how big a stake the rest of the world has in the nature of China’s reform and opening up of the financial sector.China’s gross savings are running at an annual rate of well over $3 trillion, which is more than 50 per cent larger than the gross savings of the U.S.. Full integration of these vast flows is sure to have huge global effects. China’s financial institutions, already enormous, are also almost certain to become the biggest in the world over the next decade. One need only think back to Japan’s integration in the 1980s and subsequent financial implosion to recognize the possible dangers. We should be pleased, therefore, that China is taking a cautious approach.The world has a huge interest in a shift of China’s economy towards more balanced growth. It has a parallel interest in the way China manages its domestic reform and opening up of the financial system. A whole range of policies need to be co-ordinated, particularly over financial regulation, monetary policy and exchange rate regimes. If this is done well, today’s high-income countries’ crisis will not be promptly followed by the “China crisis” of the 2020s or 2030s. If it is done badly, even the Chinese might lose control, with devastating results.The PBoC suggests a timetable of reforms that would fit with China’s and the world’s needs. But if this is to happen, thorough discussion of all the implications must now occur. China’s policies do not matter for the Chinese alone. That is what it means to be a superpower — as the U.S. should note.* Sustaining China’s Economic Growth After the Global Financial Crisis, Peterson Institute for International Economics, 2012.![]()
Such caution permeated last week’s report that the People’s Bank of China has recommended accelerated opening up of the Chinese financial system. Given what is at stake, in both China and the world, it is essential to consider the implications. Maybe the world will then do a better job of managing this process than it has done in the past.This plan was published by Xinhua, the state news agency, not on the PBoC’s web site. Moreover, it was published under the name of Sheng Songcheng, head of the statistics department, not that of the governor or a deputy governor. This must mean that it is more an exercise in kite-flying than a policy. Nevertheless, this was published with the PBoC’s approval and, quite possibly, with that of people much higher up still.The article lays out three stages for reform. The first, to occur over the next three years, would clear the path for more Chinese investment abroad as “the shrinkage of western banks and companies has vacated space for Chinese investments” and so presented a “strategic opportunity”. The second phase, in between three and five years, would accelerate foreign lending of the renminbi. In the longer term, over five to 10 years, foreigners could invest in Chinese stocks, bonds and property. Free convertibility of the renminbi would be the “last step”, to be taken at an unspecified time. It would also be combined with restrictions on “speculative” capital flows and short-term foreign borrowing. In sum, full integration would be indefinitely delayed.What are the implications of this plan? The answer is that it seems sensible. In reaching that view, one has to take into account the benefits and risks of financial “reform and opening” for China and the world.The arguments for such opening up to the world are closely connected to those for domestic reform. Indeed, the former cannot be undertaken prior to the latter: opening up today’s highly regulated financial system to the world is a recipe for disaster, as Chinese policymakers know. It is for this reason that full convertibility would come in the distant future, as this plan suggests.Happily, arguments for domestic reform are powerful. Dynamic financial markets are an essential element in any economy that wishes both to sustain growth and to begin rivaling rich countries in productivity, as China surely aspires to do. More immediately, as Nicholas Lardy of the Peterson Institute for International Economics notes in a recent study: “Negative real deposit rates impose a high implicit tax on households, which are large net depositors in the banking system, and lead to excessive investment in residential housing. Negative real lending rates subsidize investment in capital-intensive industries, thus undermining the goal of restructuring the economy in favor of light industries and services.”*Yet, as Mr Lardy also knows, this distorted financial regime is part of a wider system for taxing savings, promoting investment and repressing consumption, which has led to huge interventions in foreign currency markets and vast accumulations of foreign currency reserves. The deeper case for reform is that this system no longer contributes to a desirable pattern of development. But it has become so deeply entrenched in the economy that reform is politically fraught and economically disruptive. The question is even whether such reform is politically feasible. It is surely likely to be a slow process.How would the PBoC’s proposed moves towards opening up then fit with such a cautious reform? Presumably, the greater freedom for capital outflows envisaged for the next five years would partly substitute for accumulations of foreign currency reserves. Yet if this went with suggested moves towards higher real interest rates, China’s savings and current account surpluses might explode, worsening the external imbalances.This point underlines just how big a stake the rest of the world has in the nature of China’s reform and opening up of the financial sector.China’s gross savings are running at an annual rate of well over $3 trillion, which is more than 50 per cent larger than the gross savings of the U.S.. Full integration of these vast flows is sure to have huge global effects. China’s financial institutions, already enormous, are also almost certain to become the biggest in the world over the next decade. One need only think back to Japan’s integration in the 1980s and subsequent financial implosion to recognize the possible dangers. We should be pleased, therefore, that China is taking a cautious approach.The world has a huge interest in a shift of China’s economy towards more balanced growth. It has a parallel interest in the way China manages its domestic reform and opening up of the financial system. A whole range of policies need to be co-ordinated, particularly over financial regulation, monetary policy and exchange rate regimes. If this is done well, today’s high-income countries’ crisis will not be promptly followed by the “China crisis” of the 2020s or 2030s. If it is done badly, even the Chinese might lose control, with devastating results.The PBoC suggests a timetable of reforms that would fit with China’s and the world’s needs. But if this is to happen, thorough discussion of all the implications must now occur. China’s policies do not matter for the Chinese alone. That is what it means to be a superpower — as the U.S. should note.* Sustaining China’s Economic Growth After the Global Financial Crisis, Peterson Institute for International Economics, 2012.Friday, February 24, 2012
China Central Bank Outlines Plan to Open Markets
China should accelerate the loosening of capital controls, its central bank said, in a report outlining the path to a freely tradable currency and more open capital markets.While China’s economy has grown dramatically over the past three decades, its financial markets have remained mostly closed off from the rest of the world. Opening the capital account would give foreigners far more access to Chinese stocks and bonds and help transform the renminbi into a global currency and potential rival to the dollar.The proposal signals that officials in favor of bolder economic reforms may be trying to seize the initiative just months before a once in a decade leadership transition is announced.“This seems to be a very clear timetable to push capital account liberalization,” said Liu Ligang, an economist with ANZ. “The resistance [against] faster liberalization is not as strong as before.”Such reform carries major risks, potentially undermining the government controls on cross-border capital flows that have shielded China from the global financial crisis and could meet opposition from more conservative officials.The International Monetary Fund ![[cnbc explains]](/CNBCexplainsicon1.gif){kind=small}
and the World Bank have both advised Beijing to relax its tight investment controls. By trapping money in China, the closed capital account has fuelled soaring property prices and generated inflationary pressures.The World Bank, in partnership with a prominent Beijing think-tank, is due to release its own report next week calling for more ambitious economic reform in China. Wen Jiabao, China’s premier, has repeatedly said liberalization of the capital account is a government priority.But currency reforms have only advanced at a crawl. Many officials and government advisers remain worried that the Chinese financial system remains fragile and would be undermined by a hasty shake-up.Sheng Songcheng, the author of the central bank report, was critical of this cautious approach. “By overemphasizing preconditions [to reform], a gradual approach is easily twisted into a negative, immobile approach, leading to delays,” he said. “Being prudent in opening the capital account does not mean waiting for ever.”The report laid out three stages for reform. The first, over the next three years, would clear the path for more Chinese investment as “the shrinkage of western banks and companies has vacated space for Chinese investments” and presented a “strategic opportunity”. The second phase, in three to five years, would accelerate overseas lending of the renminbi, especially in support of trade deals.Longer term, over five to 10 years, foreigners would be given more freedom to invest in Chinese stocks, bonds and property. At present, foreign institutions are restricted to relatively small quotas that are subject to a slow approval process.Free convertibility of the renminbi would be “the last step” to be taken at some unspecified time, the central bank added, with restrictions on “speculative” capital flows and short-term foreign borrowing.Thursday, February 23, 2012
China Internet Firm Qihoo Says Citron Allegations False
U.S.-listed Chinese online services provider, Qihoo 360, announced a 190 percent jump in revenues for 2011 in an unaudited financial statement released Thursday, but U.S.-based research firm Citron Research alleges in a report posted on its website that there are “gross inconsistencies” in Qihoo’s financials.
Qihoo’s [QIHU Loading... () 
] Chief Financial Officer, Alex Xu, told CNBC that internal investigations conducted in recent weeks have found no wrongdoings and that the company will file its audited financials by the regulatory deadline of April 30.“In terms of the allegations made by Citron, even though all of them are false and misleading, we take them very seriously. We conducted an internal review organized by (an) audit committee...we concluded that all the allegations are either misleading or totally false,” Xu told CNBC.Citron, which has raised questions about the credibility of the Internet company’s financials in the past as well, reiterated on Thursday its concerns that Qihoo’s earnings’ report was “grossly misrepresented.” Andrew Left, Manager at Citron Research, told CNBC the company had inflated revenue generated from advertising, particularly from the text links on its website.A text link is text that is hyperlinked to a page on another website, in this case to the page of an advertiser.Qihoo's claims that its annual revenue from text links in excess of $110 million is "impossible," as text links make up one percent or $80 million of all online advertising revenue in China, says Citron.“I do not believe the growth in their current advertising revenue,” Left said adding that their business model of selling text links was “archaic”.Citron also says in its report that the Internet company’s average revenue per user (ARPU) from its gaming products is “widely out of scale” with publicly listed competitors. Qihoo claims ARPU of RMB380 ($60) per month, while similar online games from publicly traded competitors earn less than RMB100 per month, according to the research firm. Citron, which says in its report that Qihoo has a slim chance of passing an audit or avoiding an investigation by the U.S. Securities and Exchange Commission, is taking a short position on the company.However, other analysts including Wendy Huang, Senior Media & Internet Analyst at RBS, are upbeat on the prospects for the web firm.“Few companies can deliver such stellar growth these days. Qihoo this quarter beat the street expectations, beat our estimate by 12 percent from the top line to bottom line, and also operating margins are improving every quarter,” she said.Huang says Qihoo is an attractive investment because of its huge user base of more than 400 million a month, which is growing and can be monetized by the firm.“While, Qihoo is not a popular company amongst their industry peers but it is becoming a necessity for most of the Internet users (in China),” she said.![]()
Qihoo’s [QIHU Loading... () ] Chief Financial Officer, Alex Xu, told CNBC that internal investigations conducted in recent weeks have found no wrongdoings and that the company will file its audited financials by the regulatory deadline of April 30.“In terms of the allegations made by Citron, even though all of them are false and misleading, we take them very seriously. We conducted an internal review organized by (an) audit committee...we concluded that all the allegations are either misleading or totally false,” Xu told CNBC.Citron, which has raised questions about the credibility of the Internet company’s financials in the past as well, reiterated on Thursday its concerns that Qihoo’s earnings’ report was “grossly misrepresented.” Andrew Left, Manager at Citron Research, told CNBC the company had inflated revenue generated from advertising, particularly from the text links on its website.A text link is text that is hyperlinked to a page on another website, in this case to the page of an advertiser.Qihoo's claims that its annual revenue from text links in excess of $110 million is "impossible," as text links make up one percent or $80 million of all online advertising revenue in China, says Citron.“I do not believe the growth in their current advertising revenue,” Left said adding that their business model of selling text links was “archaic”.Citron also says in its report that the Internet company’s average revenue per user (ARPU) from its gaming products is “widely out of scale” with publicly listed competitors. Qihoo claims ARPU of RMB380 ($60) per month, while similar online games from publicly traded competitors earn less than RMB100 per month, according to the research firm. Citron, which says in its report that Qihoo has a slim chance of passing an audit or avoiding an investigation by the U.S. Securities and Exchange Commission, is taking a short position on the company.However, other analysts including Wendy Huang, Senior Media & Internet Analyst at RBS, are upbeat on the prospects for the web firm.“Few companies can deliver such stellar growth these days. Qihoo this quarter beat the street expectations, beat our estimate by 12 percent from the top line to bottom line, and also operating margins are improving every quarter,” she said.Huang says Qihoo is an attractive investment because of its huge user base of more than 400 million a month, which is growing and can be monetized by the firm.“While, Qihoo is not a popular company amongst their industry peers but it is becoming a necessity for most of the Internet users (in China),” she said.HP, Dell Watch Rising China Labor Costs for Apple
Hewlett-Packard and Dell are keeping a close eye on a big jump in wages for workers that assemble Apple's iPhone in China, and could be forced to nudge up prices for their own products if labor costs keep rising.
Major contract manufacturer Foxconn Technology Group — which counts Apple [AAPL Loading... () ] , HP [HPQ Loading... () ] , Dell [DELL Loading... () ] , Nokia [NOK Loading... () ] and Motorola Mobility [MSI Loading... () ] among its major clients — last week raised wages for its workers in China by 16-25 percent, the third hike since 2010.The wage increases reflect a rising trend across the Chinese electronics manufacturing industry and could pressure already wafer-thin margins at the likes of HP and Dell.HP Chief Executive Meg Whitman said rising wages in China could eventually have a ripple effect across the world electronics industry."If Foxconn's labor cost go up, their product cost to us will go up," she told Reuters in an interview on Wednesday."But that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb."Dell, which on Tuesday reported a 18 percent slide in quarterly profit, said it was also keeping an eye on wages in China."It's not clear to us how that will play out in terms of our costs," Dell Chief Financial Officer Brian Gladden told Reuters. "It remains to be seen how that flows through the overall supply chain. We will continue to watch that."But Gladden said labor costs are a "very, very small piece" of the total cost of its products.To companies like HP and Dell that specialize in creating ultra-efficient supply chains and cutting costs to preserve razor-thin profit margins, any rising expense can be trouble."HP and Dell's PCs could cost a bit more. Those companies have been trying to pass on extra costs. It may or may not work. Their products aren't as differentiated as Apple's," said Shaw Wu, an analyst at Sterne Agee in San Francisco.Apple's main manufacturer of iPads and iPhones, Foxconn is already in the spotlight because of its poor labor conditions, with reports of employees committing suicide.Foxconn's February wage hike was announced days after Apple said a U.S. non-profit labor group had begun an "unprecedented" inspection of working conditions at its main contract manufacturers, including Foxconn.Foxconn's wage increase comes as Chinese electronics manufacturers face higher costs to attract workers.The government of Shenzhen, a freewheeling boomtown bordering Hong Kong, announced in January it was increasing its minimum wage by 13.6 percent despite warnings from factory owners the move could deal another blow to exporters already reeling from a sharp drop in Western orders.Taiwan-based Foxconn said the pay of a junior level worker in Shenzhen, southern China, had risen to 1,800 yuan ($290) per month and could be further raised above 2,200 yuan if the worker passed a technical examination. It said that pay three years ago was 900 yuan a month.Copyright 2012 Thomson Reuters. Click for restrictions.![]()
Major contract manufacturer Foxconn Technology Group — which counts Apple [AAPL Loading... () ] , HP [HPQ Loading... () ] , Dell [DELL Loading... () ] , Nokia [NOK Loading... () ] and Motorola Mobility [MSI Loading... () ] among its major clients — last week raised wages for its workers in China by 16-25 percent, the third hike since 2010.The wage increases reflect a rising trend across the Chinese electronics manufacturing industry and could pressure already wafer-thin margins at the likes of HP and Dell.HP Chief Executive Meg Whitman said rising wages in China could eventually have a ripple effect across the world electronics industry."If Foxconn's labor cost go up, their product cost to us will go up," she told Reuters in an interview on Wednesday."But that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb."Dell, which on Tuesday reported a 18 percent slide in quarterly profit, said it was also keeping an eye on wages in China."It's not clear to us how that will play out in terms of our costs," Dell Chief Financial Officer Brian Gladden told Reuters. "It remains to be seen how that flows through the overall supply chain. We will continue to watch that."But Gladden said labor costs are a "very, very small piece" of the total cost of its products.To companies like HP and Dell that specialize in creating ultra-efficient supply chains and cutting costs to preserve razor-thin profit margins, any rising expense can be trouble."HP and Dell's PCs could cost a bit more. Those companies have been trying to pass on extra costs. It may or may not work. Their products aren't as differentiated as Apple's," said Shaw Wu, an analyst at Sterne Agee in San Francisco.Apple's main manufacturer of iPads and iPhones, Foxconn is already in the spotlight because of its poor labor conditions, with reports of employees committing suicide.Foxconn's February wage hike was announced days after Apple said a U.S. non-profit labor group had begun an "unprecedented" inspection of working conditions at its main contract manufacturers, including Foxconn.Foxconn's wage increase comes as Chinese electronics manufacturers face higher costs to attract workers.The government of Shenzhen, a freewheeling boomtown bordering Hong Kong, announced in January it was increasing its minimum wage by 13.6 percent despite warnings from factory owners the move could deal another blow to exporters already reeling from a sharp drop in Western orders.Taiwan-based Foxconn said the pay of a junior level worker in Shenzhen, southern China, had risen to 1,800 yuan ($290) per month and could be further raised above 2,200 yuan if the worker passed a technical examination. It said that pay three years ago was 900 yuan a month.Copyright 2012 Thomson Reuters. Click for restrictions.Wednesday, February 22, 2012
Jeffrey Katzenberg Wants to Create the 'Disney of China'
Data is a real-time snapshot *Data is delayed at least 15 minutesGlobal Business and Financial News, Stock Quotes, and Market Data and Analysis
© 2012 CNBC LLC. All Rights Reserved.
Jeffrey Katzenberg Wants to Create the 'Disney of China'
Data is a real-time snapshot *Data is delayed at least 15 minutesGlobal Business and Financial News, Stock Quotes, and Market Data and Analysis
© 2012 CNBC LLC. All Rights Reserved.
Monday, February 20, 2012
Yen Falls, Aussie Cheers as China Cuts Bank Reserves
Data is a real-time snapshot *Data is delayed at least 15 minutesGlobal Business and Financial News, Stock Quotes, and Market Data and Analysis
© 2012 CNBC LLC. All Rights Reserved.
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