China overtakes Japan as number 2 economy

From: http://www.bbc.co.uk/news/business-12427321

China has overtaken Japan as the world's second-biggest economy, figures out of Tokyo have shown.

Japan's economy was worth $5.474 trillion (£3.42 trillion) at the end of 2010. China's economy was closer to $5.8 trillion in the same period.

China has enjoyed a manufacturing boom, while Japan has been hit by a drop in exports and consumer demand.

At its current rate of growth, analysts see China overtaking the US as the world's top economy in about a decade.

"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.

Slowdown

According to the latest figures from Tokyo, Japan's economy contracted at an annualised rate of 1.1% in the final three months of 2010. Growth declined 0.3% from the previous quarter.

It was the first time in five quarters that the economy shrunk and was caused by a dip in domestic and export demand, analysts said.

They added that demand has been picking up since the start of the year, and they expect expansion to return.

Japan's anti-piracy tactics

Since I live in the same town as Capt Richard Phillips, it was of great interest to see that pacifist Japan has passed a law allowing the Japanese navy to fire on Somali pirate vessels. Japanese warships are allowed to protect any commercial ship, not just those under Japan's flag.

According to the BBC, "previously, the Japanese force was only allowed to escort Japanese vessels, or those with Japanese cargoes or crews, and use weapons only for self-defense."

Within Japan there are concerns over expanding the role of Japan's military.

http://english.aljazeera.net//news/asia-pacific/2009/06/2009619124944697820.html

http://news.bbc.co.uk/2/hi/asia-pacific/8109242.stm

Foreign investment in China

Foreigners may want to rethink their drop in investment in China.

A "W" shaped recovery is a better investment than the projected U.S. "L" shape recovery.


http://english.aljazeera.net/news/asia-pacific/2009/06/20096154332867464.html

Impact on Shanghai

Acceptance may grow as the economic impact of these events increase.

http://www.nytimes.com/2009/06/15/world/asia/15shanghai.html

No Tweets about Tiananmen Twentieth

I was wondering how a country that so heavily censors Internet traffic would handle Twitter ... they simply block it altogether.

http://news.bbc.co.uk/2/hi/asia-pacific/8078538.stm

Protests in Tiawan

Thousands in Taiwan protest the current administration's pro-China ties. (See my May 5th post about China's business inroads in Taiwan).

I would be concerned about China's increased military spending and number of missiles aimed at the island.


http://english.aljazeera.net/news/asia-pacific/2009/05/20095179175752227.html

English language and the Japanese

English is the most commonly used global language. Japanese students begin studying English in junior high, and many start private lessons at an earlier age. Emphasis was on written English; resulting in a reluctance to speak English unless it could be done well.

Popular television programs supposed teach English, but most are entertainment-based rather than instructional.

But as more businesses recognize the need to compete globally, firms such as Mitsubishi Bank are announcing that all business will be conducted in English.

A number of recently published books are taking advantage of the Japanese increasing interest in English, both written and spoken. Author Seiichi Kanise talks about the importance of being able to "tell a story". Another author, Kyoko Yasui, tells women that they can use English to become a freelancer and take control of their careers.





http://www.yomiuri.co.jp/dy/features/culture/20090428TDY12002.htm

Chinese Earthquake Tourism

The one year anniversary of the Sichuan earthquake is approaching ... so time for an

Earth quake theme park?

Another area is building a quake ruins park ... along with a "tourist reception center, cemetery, a memorial and a museum of folkways and culture."

http://news.xinhuanet.com/english/2009-05/05/content_11315604.htm

Chinese investment in Taiwan

It's surprising to see a Chinese company investing in Taiwan and even more surprising to see Beijing agree to Taiwan's participation in a World Health Organization meeting.

The two countries haven't been friends since 1949 and in the 1970s mainland China bumped Taiwan out of the U.N.

The new investment is China Mobile, a Chinese government-owned wireless carrier. They have invested heavily in Taiwan's third-biggest phone company.

According to the WSJ, the two countries also signed a series of agreements "easing limits on investment between them and establishing the first regular two-way air and shipping traffic in six decades."



http://www.marketwatch.com/news/story/taiwan-stocks-surge-further-china/story.aspx?guid={372BD0A2-525E-4DF8-8EFD-2059578DD722}&dist=msr_1

Is China protectionist or helping foreign business?

An April 28th Wall Street Journal headline caught my eye, "Foreign Businesses Say China is Growing More Protectionist", then two days later the same paper proclaimed, "China's Stimulus Spurs U.S. Business." So which is it?

The American Chamber of Commerce stated that "protectionism was one of its major concerns this year" and the European Chamber of Commerce worries that Chinese companies want to "create monopolies or oligopolies and have less competition."

Chinese officials counter that Western countries anti-dumping laws and the U.S. attempt to insert a "buy American" clause in the U.S. stimulus bill aren't any different than their own attempts to stimulate their local economy.

China's $585 billion stimulus is largely being spent on Chinese-only projects, such as the high-speed rail project between Beijing and Shanghai. The 4/30 WSJ suggests that the Chinese-only clauses are actually helpful in that the Chinese are not dumping cheap steel on the world markets which would send prices in a spiral.

American firms, in China, directly benefiting from the Chinese stimulus include excavator and tire makers and fast-food chains. China's infrastructure spending went into overdrive when the stimulus was announced and many projects were fast-tracked. The U.S. is unable to match the pace of the Chinese building.

Firms not benefiting are FedEx and DHL who got shut out of China when a new postal law banning "foreign companies from delivering express mail inside China" was passed a few weeks ago.

New transparency for China

Mexico has been critical of China for quarantining 71 Mexicans for the swine flu despite the individuals being asymptomatic. The Mexicans were flown back to Mexico re a chartered plane on Tuesday.

China also quarantined 2 U.S. (it's not clear if they had flu-like symptoms) and 29 Canadians (connected to the University of Montreal) despite their lack of symptoms.

274 guests remain quarantined in a Hong Kong hotel after a Mexican traveler tested for the virus.

It may sound like a bit much but China's response, and openness, is a dramatic improvement over their treatment of the SARS outbreak. When SARS spread to Hong Kong and world, it was discovered that Chinese officials had hidden the outbreak of SARS for four months.

Comparisons are being made to China's quick response to the Sichuan earthquake, especially as the country reflects on that disaster's one year anniversary.


http://www.nytimes.com/2009/05/01/world/asia/01china.html?partner=rss&emc=rss

http://www.cbsnews.com/stories/2009/05/05/health/main4991388.shtml

China's market and counterfeits

China is the world's largest cell phone market. And growing. So that's why counterfeit, or shanzhai, phones are causing a stir. Hi-Phone's can be made or $20 and shipped all across the world. You can expect that Nokia, Motorola and Apple would be complaining to the Chinese government, but the biggest impact may come from China's own cellphone makers.

Not much will change with the counterfeiters until China's own businesses feel the pinch and demand patent laws and the government to protect their intellectual property.

http://www.nytimes.com/2009/04/28/technology/28cell.html

Japan sending home Latin American workers

In an interesting twist, Japan is paying foreign workers to leave the country.

This is the same country that revised the law in 1990 to allow Japanese descendants to receive long-term resident status -something that is very hard for foreigners to get in Japan.

The Japanese aren't fond of foreign workers, so when the export industry boomed in the 1990s, they cooked up a plan to bring Japanese descendants back from Brazil and Peru to fill the jobs.

Unfortunately, the experiment didn't quite work as well as officials had hoped. The Japanese descendants were a little too, um, Latin American for Japanese tastes. Now that factories need to lay off workers it seems like a good time to shift the policy. If the workers accept the pay to leave, they must also agree not to seek work in Japan again.





http://www.nytimes.com/2009/04/23/business/global/23immigrant.html?scp=1&sq=japan%20brazil%20workers&st=cse

Car emissions and solar mobile phones

All eyes (and many hopes) are on the Shanghai Auto Show. Just about the only ones in the world buying cars right now are the Chinese, thanks to government incentives that include a tax cut and cash-refunds.

Since the automakers are excited about the number of buyers they have begun designing cars that the Chinese want ie. better gas mileage. Meanwhile, Chinese emission standards are non existent, so manufacturers aren't bothering with the annoyance. So much for global warming.

On the plus side, Sharp has designed a sun-powered, waterproof mobile phone that goes on sale in Japan on Monday that is being touted as helping to reduce carbon dioxide emissions.

I don't think the cell phone usage will quite make up for the new cars in China.


http://english.aljazeera.net//news/asia-pacific/2009/04/20094209482632287.html

http://hosted.ap.org/dynamic/stories/A/AS_JAPAN_KDDI_SOLAR_PHONE_ASOL-?SITE=YOMIURI&SECTION=HOSTED_ASIA&TEMPLATE=ap_national.html

China's growth

The numbers are out and China's GDP grew 6.1% last quarter. Down from the 13% 2007 numbers, China is not in bad shape. Here are some important attributes:

* China's financial system is healthy and the banks are lending
* China has a fiscal surplus and is financing it's stimulus through that

China's biggest challenge is to increase domestic demand so the country is not as export reliant. This is a tall order. Yes, there were record car sales in March, but the Chinese do not have health plans or social services and continue to sock money away for a rainy day.




http://english.aljazeera.net//business/2009/04/20094163218569726.html

Which China is it?

Is China the country of economic strength telling rich nations how to manage their economy or is it a developing country with (tens of) millions of poor?

It's both. China holds $1 trillion in U.S. debt and an additional $1 trillion in other foreign reserves. It is also considered a lower-middle income country, with $936-3,705 in annual per capita income, according to 2007 World Bank figures.

What's interesting is China likes to plays the "we're rich" card when they want to talk about global international policies and the "we're poor" card when asked to ante up to help others or to fight climate change.







http://www.reuters.com/article/newsOne/idUSTRE53501820090406?pageNumber=3&virtualBrandChannel=10452

Japan's stimulus math

Everyone sites Japan's previous crisis for lessons on this one. It follows that Japan knows a thing or two about how tackle these things.

They've clearly decided that stimulus is the way to go. They've added another US$150 billion (15.4 trillion yen). This is in addition to the previous 12 trillion yen number.

The measures represent about 3% of GDP.

There's a continued trend to help small businesses, including contract workers. There are also measures to expand "green" technologies and support elder/health care. Other targeted areas are boosting fuel-efficient vehicles and consumer electronics.

Unemployment in Japan hit a three-year high of 4.4 per cent in February.

http://english.aljazeera.net//business/2009/04/20094685024327368.html

http://news.bbc.co.uk/2/hi/business/7985239.stm

http://hosted.ap.org/dynamic/stories/A/AS_JAPAN_STIMULUS_ASOL-?SITE=YOMIURI&SECTION=HOSTED_ASIA&TEMPLATE=ap_national.html

China dialog

The U.S. and China have agreed to "establish a Strategic and Economic Dialogue group" the stated intent is "to tackle the global financial crisis and strengthen the worlds's financial systems".

They may end up talking more about North Korea and Iran.

http://news.bbc.co.uk/2/hi/asia-pacific/7977145.stm

Careful what wish for

It's just been a few mere months since the eyes of the world were beckoning China to help bail out the world economy. Now China is flexing its political muscle and calling for a new currency to replace the dollar as the global standard.

There's been lots of finger pointing over the current global crisis. Some say the Chinese are to blame by investing heavily in US Treasuries and flooding the market with easy cash - thus lulling the Fed into holding interest rates too low for too long. The Chinese say the Fed was indeed at fault, and those policies were not only misguided, but put the entire global economy at risk.

The Chinese feel that a different reserve currency, overseen by the International Monetary Fund, would help emerging and developing nations better manage their own economies.






http://english.aljazeera.net/business/2009/03/20093253587630765.html

China's growth numbers

Last week China officially stopped clinging to their 8% targeted yearly growth number. This week, the World Bank downgraded their assessment from 7.5% to 6.5%. The lower number is more in line with independent economists/Chinese watchers.

Even at 6.5%, growth is growth and China is faring much better than the two economies larger than it (US and Japan). The 2009 projections for he world economy is only a 0.9% expansion.




http://english.aljazeera.net//news/asia-pacific/2009/03/20093184551167145.html