There's lots of reflecting going on at the World Economic Forum in Davos, Switzerland.
And getting to the crux of the matter, the director of the Global Security Research Institute in Keio, Japan, Heizo Takenaka, said “The current situation is something more than a financial and economic crisis,” Mr. Takenaka said. “We face a confidence crisis. Once the confidence of crisis occurs, we need a strong government and central banks.”
Any one from Japan knows of what they speak. A crisis in confidence caused their deflationary recession to last over 13 years.
Chinese Premier, Wen Jiabao, clearly wants to take the optimistic path. “The harsh winter will be gone and spring is around the corner,” he said.
Mr. Wen was also realistic in his assessment, noting the drop in exports and unemployment, but he was clear in his government's 2009 goal of 8% growth. With a stimulus package of 4 trillion yuan, Mr Wen talked about growing domestic demand after "years of being the workshop of the world."
http://www.nytimes.com/2009/01/29/business/29econ.html
Wednesday, January 28, 2009
Monday, January 26, 2009
Happy Niu Year
It's here! Year of the Ox...
Here's one of my favorite new quotes, "A downturn can be a very good time for restructuring the economy" -
Ma Jiantang, China's National Bureau of Statistics commissioner.
In 2008, China's overall economy expanded 9%. (The last three months of the year were lower at 6.8% expansion).
2007's rate was 13%.
My other favorite quote, (same guy), "Just like the freezing weather we had this morning, it will not last forever."
http://english.aljazeera.net/business/2009/01/200912241324835704.html
Here's one of my favorite new quotes, "A downturn can be a very good time for restructuring the economy" -
Ma Jiantang, China's National Bureau of Statistics commissioner.
In 2008, China's overall economy expanded 9%. (The last three months of the year were lower at 6.8% expansion).
2007's rate was 13%.
My other favorite quote, (same guy), "Just like the freezing weather we had this morning, it will not last forever."
http://english.aljazeera.net/business/2009/01/200912241324835704.html
Saturday, January 24, 2009
International Retailers Continue China Expansion
US retailers are feeling confident about China's continued growth. (Maybe the focus of China's economic stimulus plan on encouraging its citizens to spend has helped). Of course, the validity of Chinese government released data is always under dispute, but the numbers show over 20% growth in December, despite surveys that say Chinese consumers are cutting back.
Thursday's Wall Street Journal reported the following expansion by international retailers:
Ikea - plans 2 stores in 2009, currently has 6 stores in the country.
Walmart - currently has 217 retail stores
Carrefour- plans 28 stores in 2009, up from 22 in 2008.
Tesco (UK) - continued expansion
Parkson Group (Hong Kong - opening 4 or 5 stores, currently have 42 department stores.
Notably, Aeon (Japan), is delaying 100 stores to Feb 2013.
The WSJ suggests that as they did in Tokyo in the 1990s, retailers may take advantage of falling real estate to buy desirable retail spaces, saving them leasing costs in the future.
Thursday's Wall Street Journal reported the following expansion by international retailers:
Ikea - plans 2 stores in 2009, currently has 6 stores in the country.
Walmart - currently has 217 retail stores
Carrefour- plans 28 stores in 2009, up from 22 in 2008.
Tesco (UK) - continued expansion
Parkson Group (Hong Kong - opening 4 or 5 stores, currently have 42 department stores.
Notably, Aeon (Japan), is delaying 100 stores to Feb 2013.
The WSJ suggests that as they did in Tokyo in the 1990s, retailers may take advantage of falling real estate to buy desirable retail spaces, saving them leasing costs in the future.
Monday, January 19, 2009
Stimulus package comparison
A lot of stimulus package numbers are being thrown around, so I'm trying to make sense of them. This is what I've come up with (for now)
Japan:
Under Aso's Cabinet: 64 trillion yen, (over US $700 billion) called "an emergency program of livelihood protection" Combined with an earlier package worked out under former Prime Minister Yasuo Fukuda's Cabinet of 11.5 trillion yen - puts total economic recovery measures at 75 trillion yen (over US $827 billion).
Addressing: the deteriorating job market and stabilizing the financial market
Specifics: offering housing to jobless people and stabilizing the financial market.
help dismissed workers such as temporary workers find housing; encourage employers to maintain employment and address problems concerning cancellations of informal job offers to students.
China
China (Nov 08) $600 billion which includes more government investment in infrastructure, tax deductions for exporters, and bigger subsidies to the poor and farmers.
China's package amounts to 14 percent of its likely gross domestic product (GDP)
US
The Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the U.S. financial system: $700 billion passed in Oct 2008. The idea was that $250 billion would be used right away, $100 could be released by Pres Bush and the remaining $350 was to be released by Congressional vote (it was on January 14, 2009). What was actually released and promised, including to the car companies, goes something like this:
December 19, George W. Bush announced that he had approved to provide $13.4 billion now, with another $4 billion available in February 2009General Motors will get $9.4 billion and Chrysler $4 billion.
Separately President-elect Obama proposed as of Jan 14 '09:
$825 billion fiscal recovery plan called the American Recovery and Reinvestment plan.
$550 billion in new spending and $275 billion in tax relief middle class tax cut.
http://www.yomiuri.co.jp/dy/national/20081220TDY02308.htm
Extra! January 2009
Japan:
Under Aso's Cabinet: 64 trillion yen, (over US $700 billion) called "an emergency program of livelihood protection" Combined with an earlier package worked out under former Prime Minister Yasuo Fukuda's Cabinet of 11.5 trillion yen - puts total economic recovery measures at 75 trillion yen (over US $827 billion).
Addressing: the deteriorating job market and stabilizing the financial market
Specifics: offering housing to jobless people and stabilizing the financial market.
help dismissed workers such as temporary workers find housing; encourage employers to maintain employment and address problems concerning cancellations of informal job offers to students.
China
China (Nov 08) $600 billion which includes more government investment in infrastructure, tax deductions for exporters, and bigger subsidies to the poor and farmers.
China's package amounts to 14 percent of its likely gross domestic product (GDP)
US
The Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the U.S. financial system: $700 billion passed in Oct 2008. The idea was that $250 billion would be used right away, $100 could be released by Pres Bush and the remaining $350 was to be released by Congressional vote (it was on January 14, 2009). What was actually released and promised, including to the car companies, goes something like this:
December 19, George W. Bush announced that he had approved to provide $13.4 billion now, with another $4 billion available in February 2009General Motors will get $9.4 billion and Chrysler $4 billion.
Separately President-elect Obama proposed as of Jan 14 '09:
$825 billion fiscal recovery plan called the American Recovery and Reinvestment plan.
$550 billion in new spending and $275 billion in tax relief middle class tax cut.
http://www.yomiuri.co.jp/dy/national/20081220TDY02308.htm
Extra! January 2009
Saturday, January 17, 2009
Japanese consumption tax
It's strange hearing Prime Minister Aso talking about a consumption/sales tax increase in 2011.
I can see the logic in the terms of Japanese deflation fears; maybe saying things will be more expensive in two years, will incite people to buy now.
At the same time, folks need their leaders to inspire confidence and talking taxes seems more like a stick than a carrot.
I can see the logic in the terms of Japanese deflation fears; maybe saying things will be more expensive in two years, will incite people to buy now.
At the same time, folks need their leaders to inspire confidence and talking taxes seems more like a stick than a carrot.
Wednesday, January 14, 2009
Asian Robots
The top three countries for robot density (measured as number of industrial robots per 10,000 manufacturing workers) are all Asian - Japan (an eye popping 295), Singapore (169) and South Korea (164).
But when the regional averages are taken into consideration, Asia/Pacific falls to third place (27) behind Europe (50) and the Americas (31). This suggests that the two largest Asian countries, China and India, are way behind the curve.
When I dug a little deeper, I found 2008 numbers showing India and China significantly increased. China increased 14% from 2006 to 2007, while the industrial robot count increased by 11% in India.
See http://www.worldrobotics.org/downloads/2008_executive_summary.pdf for the full report.
http://spectrum.ieee.org/print/7012
But when the regional averages are taken into consideration, Asia/Pacific falls to third place (27) behind Europe (50) and the Americas (31). This suggests that the two largest Asian countries, China and India, are way behind the curve.
When I dug a little deeper, I found 2008 numbers showing India and China significantly increased. China increased 14% from 2006 to 2007, while the industrial robot count increased by 11% in India.
See http://www.worldrobotics.org/downloads/2008_executive_summary.pdf for the full report.
http://spectrum.ieee.org/print/7012
Sunday, January 11, 2009
China 2008 tourism down
2008 was supposed to be a banner tourism year for the China. Remember the Olympics? They were in August, yet, according to the Wall Street Journal (1/9/09), the year ended with an overall drop of two million visitors.
2008 marked the first decline in visitors to China since the 2003 SARS scare.
China's National Tourism Administration reported that there were 130 million inbound travelers in 2008.
This hasn't slowed down the Walt Disney Company's bid to build Shanghai Disneyland, a $3.59 billion theme park. Disney is actually counting on drawing visitors from mainland China itself. (Disney currently operates parks in Tokyo and Hong Kong).
The deal is far from done. China's central government needs to approve the Shanghai proposal and that can take some time. The government may be tempted by the 50,000 new jobs the park could create as China focuses its economic recovery on growing markets within their borders.
----
Wall Street Journal, 1/9/09 and 1/10/09.
2008 marked the first decline in visitors to China since the 2003 SARS scare.
China's National Tourism Administration reported that there were 130 million inbound travelers in 2008.
This hasn't slowed down the Walt Disney Company's bid to build Shanghai Disneyland, a $3.59 billion theme park. Disney is actually counting on drawing visitors from mainland China itself. (Disney currently operates parks in Tokyo and Hong Kong).
The deal is far from done. China's central government needs to approve the Shanghai proposal and that can take some time. The government may be tempted by the 50,000 new jobs the park could create as China focuses its economic recovery on growing markets within their borders.
----
Wall Street Journal, 1/9/09 and 1/10/09.
Thursday, January 8, 2009
Less Chinese money available to U.S.
A lot has been written lately about China focusing their stimulus efforts internally. The question looming for the U.S. is what is China going to do about their hefty U.S. public debt investment.
China is currently the largest holder of U.S. public debt, particularly Treasuries. But now that China is focusing on paying for its own stimulus package, who will finance U.S. debt?
China only recently surpassed Japan as the largest Treasury debt holder, so it makes sense that Japan would reclaim the crown.
It's a lot to debt. During the first part of 2008, China spent close to $50 billion per month on American bond markets.
http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html
China is currently the largest holder of U.S. public debt, particularly Treasuries. But now that China is focusing on paying for its own stimulus package, who will finance U.S. debt?
China only recently surpassed Japan as the largest Treasury debt holder, so it makes sense that Japan would reclaim the crown.
It's a lot to debt. During the first part of 2008, China spent close to $50 billion per month on American bond markets.
http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html
Tuesday, January 6, 2009
The upside of a strong yen
The yen is weakening against the dollar. Just a few weeks ago, the dollar was at 88.78 yen. Today it was at 93.27 yen. This is good news for exporters and the Nikkei rose for the sixth straight session in response. But there's an upside to a stronger yen. Japanese trading companies are looking to use that yen to acquire non-Japanese businesses.
Today's Wall Street Journal reported "the stronger yen makes purchases cheaper and potential competitors are sidelined by the credit crisis" .. and ... "After years of restructuring, Japanese firms are sitting on about $1.25 trillion in cash."
Marubeni Corp and Itochu Corp are essentially scooping up cheap assets when no one is looking. I guess I shouldn't say that, plenty of people are looking, but their hands are tied by the unavailability of financing.
Marubeni Corp has been focusing on infrastructure investments as well as energy, machinery, commodities and food businesses. Relationships continue to be vital as Marubeni's acquisitions have transpired through existing business associations.
Itochu Corp has been particularly active and focusing on food distribution, energy and mining.
Of course, the profit picture won't look good when the foreign currency is converted back to the strong yen, but this is for the long term. When the economy improves, the investments will pay off handsomely.
Today's Wall Street Journal reported "the stronger yen makes purchases cheaper and potential competitors are sidelined by the credit crisis" .. and ... "After years of restructuring, Japanese firms are sitting on about $1.25 trillion in cash."
Marubeni Corp and Itochu Corp are essentially scooping up cheap assets when no one is looking. I guess I shouldn't say that, plenty of people are looking, but their hands are tied by the unavailability of financing.
Marubeni Corp has been focusing on infrastructure investments as well as energy, machinery, commodities and food businesses. Relationships continue to be vital as Marubeni's acquisitions have transpired through existing business associations.
Itochu Corp has been particularly active and focusing on food distribution, energy and mining.
Of course, the profit picture won't look good when the foreign currency is converted back to the strong yen, but this is for the long term. When the economy improves, the investments will pay off handsomely.
Sunday, January 4, 2009
Year of the Ox
2009 in the Chinese zodiac is the Year of the Ox. The traditional Chinese calendar is lunisolar, and this year's new year date is January 26. (Japan has followed the Gregorian calendar since the Allied occupation).
Since the ox symbolizes prosperity through hard work, many in Asia are expecting a New Year bump in the markets. It would be nice if the bump was sustainable, but with the credit card bubble and fourth quarter results yet to break, it is unlikely in the the near term.
There are hopes that China will help bring the world out of the global downturn, but China's government has made it clear that they are focusing on domestic stimulus. It's quite a daunting task to turn an export reliant economy into a domestic one.
The risk averse ox truly epitomizes the Chinese people. Most Asians dislike any kind of debt. And the dependable ox has a strong stubborn streak. The question is will the government be flexible enough to adjust if their population's response to increased spending falls short?
Since the ox symbolizes prosperity through hard work, many in Asia are expecting a New Year bump in the markets. It would be nice if the bump was sustainable, but with the credit card bubble and fourth quarter results yet to break, it is unlikely in the the near term.
There are hopes that China will help bring the world out of the global downturn, but China's government has made it clear that they are focusing on domestic stimulus. It's quite a daunting task to turn an export reliant economy into a domestic one.
The risk averse ox truly epitomizes the Chinese people. Most Asians dislike any kind of debt. And the dependable ox has a strong stubborn streak. The question is will the government be flexible enough to adjust if their population's response to increased spending falls short?
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