Guangzhou Home prices up 15% from 2012. 69 of 70 major cities are seeing home price increases with most of them up double digits. An interesting market investment theorem is discussed in this clip; “Mahjong Theorm” which states “buy anything the government is trying to
As the U.S military industrial complex focuses on spying on its own people they continue to loose technical advantages via their key competition. Wired Two weeks ago, Jack Dongarra flew to Changsha, China for a meeting with researchers at the National University of Defense Technology,
Cold War rivalries are set to expand as China becomes a dominate player in South America. This project will be successful, and is being heading straight out of Beijing. WSJ Nicaragua Approves Effort to Build Canal Rivaling Panama’s By JOSÉ DE CÓRDOBA Nicaragua’s legislators gave
China’s leading credit rating agency, Dagong Global Credit Rating, has expanded its services to Europe, becoming the first foreign company from China or indeed Asia that is allowed to operate in the region, according to China’s People’s Daily. Dagong and Mandarin Capital Partners founded Dagong
One year after the launch of direct trading between the renminbi and Japanese yen, the daily trading volume between the two currencies has reached 50-100 billion Japanese yen on the Shanghai market and 15 billion yen on the Tokyo market, a combined volume double that
Want China Times The People’s Liberation Army has been suspected by foreign media outlets of preparing for war with the West in a joint military exercise including cyber war games held at the Zhurihe training base of the Beijing Military Region in Inner Mongolia, according
Dan Collins The China Money Report A total of 78 orbital launches were attempted in 2012, with 72 being reported as successful, and a total of 139 payloads launched. The three most prolific spacefaring nations were Russia, with 29 launches and 27 successes; China, with
As we predicted, the U.S. would not reap the benefits of Iraqi oil. The real benefits for the American invasion of Iraq was the military industrial complex and the entire economy set up around rebuilding broken countries. (i.e. Halliburton) Not only did China get the
Nearly half of companies in China report declining profit margins from two years ago, suffering under the combined weights of slowing revenue growth and rising cost-driven inflation Nearly half of companies in China report declining profit margins from two years ago, suffering under the combined
The Singapore Branch of the Industrial and Commercial Bank of China (ICBC) kicked off its RMB clearing service in Singapore on Monday, marking an important step in Singapore’s development as an offshore RMB center. ICBC’s Singapore branch is the first RMB clearing bank designated by
Guangzhou Home prices up 15% from 2012. 69 of 70 major cities are seeing home
price increases with most of them up double digits. An interesting market
investment theorem is discussed in this clip; “Mahjong Theorm” which states
“buy anything the government is trying to regulate you not to buy.” In the
game of Mahjong you try and acquire the tiles your opponent doesn’t want you
to acquire. If the government is trying to stop you from buying something,
demand must be high.
As the U.S military industrial complex focuses on spying on
its own people they continue to loose technical advantages via
their key competition.
Two weeks ago, Jack Dongarra flew to Changsha, China for a meeting with
researchers at the National University of Defense Technology, home to
the country’s top supercomputing program. He expected an update on
their plans for a new mega-machine, but they had a little surprise for
him: The system was already up and running.
It’s called Tianhe-2, and with more than 3 million processor cores, it’s
the world’s most powerful supercomputer. It can perform more than 30
quadrillion calculations per second, easily dwarfing the runner-up, an
Oak Ridge National Laboratories machine known as Titan. The Oak Ridge
system can do 17.59 quadrillion calculations per second, according to
its most recent published benchmarks.
On Monday, the folks who keep track of the world’s biggest supercomputers
will release the latest rankings, called the Top500 List, and the smart
money is betting Tianhe-2 will be on top.
The United States, long the dominant power in supercomputing, won’t have
a comparable system until around 2016, when the U.S. Department of Energy
is expected to build a Tihane-2-range supercomputer called Trinity.
Tihane-2 probably will beat out all U.S. systems for a few years, which
is more than a loss of bragging rights for the U.S. It raises questions
about whether the U.S. is investing enough in research and development
to keep its supercomputing lead.
“The most important thing about this system is that it not only has a
top performance, it also has a substantial investment in technology,”
says Dongarra, a computer science professor with the University of
In fact, the Tianhe-2 is remarkably Chinese. It runs a special version
of Linux called Kylin, developed by the National University of Defense
Technology. It also has its own homegrown networking gear. It’s even
using Chinese processors to power the supercomputer’s management tools.
In fact, the only American components are the Intel microprocessors
used to do the system’s mathematical calculations.
To be sure, those Intel chips are critical components, but Dongarra
believes that on future supercomputers, they eventually will be replaced
by Chinese chips — though he’s not sure when that will happen.
“They’re developing components here that will go into a system that will
ultimately be all Chinese,” he says.
It’s a remarkable success story for a country that didn’t have a single
system on the 500 top-ranked supercomputers in 2001. It’s also a warning
sign that the United States is losing its lead, as Europe, Japan, and
China ramp up their supercomputing efforts. “A decade ago, if it were a race,
we had laps on the field,” says Daniel Reed, vice president of research
and economic development at the University of Iowa. “Now the delta is a few
lengths and closing.” That matters a lot. Supercomputers are the test bed for
many of the computing advances that we now see in everything, from the multicore
processors in Apple’s iPhone to the futuristic networking technologies in
Google’s data centers.
“Cloud data centers and [high performance computing] system are twins separated
at birth,” Reed says. He should know. Four years ago, Microsoft hired him to
help figure out how to build next generation systems for its data centers.
It wasn’t supposed to get this close. Five years ago, the U.S. was on track to
build a supercomputer on par with the Tihane-2. The plan is still to someday
build these “exascale systems” — machines that are 30 times as powerful as
Tihane-2 — but by 2010 the recession intervened and funding never materialized,
says Horst Simon, Deputy Laboratory Director at Lawrence Berkeley National
Laboratory. “At the same time that the Chinese have made this big step forward,
the American investment is stagnating,” he says.
To build these so-called exascale systems will take a coordinated effort. Many
of the components are under development. Chipmakers such as Nvidia, Intel and
AMD are working on new microprocessors that will be power-efficient enough to
make these systems work. But the country also needs basic research to develop
the networking and software tools that will power these systems.
That isn’t happening fast enough, says Dongarra. “The country’s paralyzed in
terms of spending money,” he says. “Right now, we can’t get our act together
in terms of the exascale plan.”
Cold War rivalries are set to expand as China becomes a dominate
player in South America. This project will be successful, and is
being heading straight out of Beijing.
Nicaragua Approves Effort to Build Canal Rivaling Panama’s
By JOSÉ DE CÓRDOBA
Nicaragua’s legislators gave their poverty-stricken country one more
chance at a dream that has eluded it for nearly 200 years, granting
a Hong Kong company the right to build a $40 billion interoceanic canal.
Supporters of the 50-year concession, approved Thursday, hope that it
will propel Nicaragua out of its misery by boosting employment and
economic growth. But there is also ample suspicion that the project
will flounder, as so many others have done since the first government
contract for a canal through Nicaragua was awarded in 1825.
“The whole history of Nicaragua revolves around this,” said Paul Oquist,
President Daniel Ortega’s private secretary for national policy. “We see
the project taking the country out of poverty and underdevelopment.”
The project envisions building a canal as long as 286 kilometers
(178 miles), depending on which of four possible routes is used, as well
as two deep-water ports, two free-trade zones, an oil pipeline, a railroad
and an international airport. Critics said the project is a chimera.
“They have sold this as a panacea to the country’s ills,” said Eliseo Nuñez,
an opposition deputy who opposed the concession. “Ortega needs to sell hope.”
Some experts say there is no need for another canal in Central America and
doubt it will ever be built. A Nicaraguan canal would face competition from
the Panama Canal—now undergoing a $5 billion expansion that will soon enable
it to service larger ships—and transcontinental road and rail transport in
The law granting the concession to HK Nicaragua Canal Development Investment
Co., known as HKND Group, whose sole owner is Wang Jing, a 40-year-old
Beijing-based entrepreneur, was introduced last week to Nicaragua’s congress,
which is controlled by Mr. Ortega’s ruling Sandinista party.
Mr. Wang told The Wall Street Journal the project was a response to “the
100-year-old dream of the Nicaraguan people.” He said he was convinced the
world needed a wider and deeper interoceanic canal than Panama’s.
In 1902, Nicaragua missed out when the proponent for the rival Panama project
sent U.S. senators a stamp showing Nicaragua’s Momotombo volcano spouting smoke.
Spooked senators cast their vote for Panama. Nicaraguan government officials
today see the canal project as the country’s ticket out of grinding poverty.
Though work on some of the pre-feasibility studies has barely started and isn’t
scheduled to be finished until next year, Mr. Oquist is already projecting that
Nicaragua will more than double its economic growth to 10.8% next year from a
projected 4.2% this year. He expects growth to shoot up to 15.1% by 2015.
According to the contract, Mr. Wang will pay Nicaragua up to $10 million a year
as a fee for the 50-year concession, which is renewable. On the 11th year of
operation, Nicaragua will own 10% of the company, a figure that would rise to
100% in a century. Mr. Wang will pay for the feasibility studies and is
responsible for arranging funding for the project. Nicaraguan canal proponents
base their case partly on a McKinsey & Co. study that concluded that a movement
to ever-larger ships and growth in world-wide trade would make a Nicaragua canal
economically viable, according to people close to the project. McKinsey wouldn’t
confirm any study, citing its confidentiality policies. Not everyone agrees that
the numbers add up. “I can’t see how this canal could be financially or economically
justified,” said Jean-Paul Rodrigue, a transportation expert at Hofstra University.
“It could be the biggest white elephant in human history.” The HKND’s Mr. Wang is
chairman of Beijing-based Xinwei Telecom Enterprise Group, a closely held company
that makes wireless networking equipment. In a December speech to new employees,
Mr. Wang said Xinwei was on its way to posting a $326 million profit for 2012.
Mr. Wang registered his canal company in Hong Kong in August. A month later, on
Sept. 5, he met President Ortega in Nicaragua. That day, Mr. Wang and the Nicaraguan
government signed a memorandum of understanding—which wasn’t announced at the time—
authorizing Mr. Wang to promote the financing and participate in the construction
of a canal. He and Mr. Ortega also discussed a telecommunications proposal, and
Xinwei was awarded a $300 million telecommunications contract in Nicaragua,
according to the company. In Nicaragua, the general feeling is that the bulk of the
money for the canal will come from China, which is popularly seen in Latin America
as capable of spending enough to complete any project. “The liquidity is in China,”
said Mr. Oquist. Xinwei’s website features photographs highlighting Mr. Wang’s
political connections in China, a country where business and politics are often
intertwined, but HKND Group said it is a private company with no affiliation to the
Chinese government or to Xinwei, and didn’t expect any Chinese government
participation in the Nicaragua project. HKND said it expects to seek financing from
“a broad range of international sources.” The weight of history against a canal being
built in Nicaragua is enormous. In 1825, the government of the Republic of Central
America signed a deal with a New York businessman to dig a canal across Nicaragua.
Since then, at least a dozen plans have gone nowhere.
“It’s been like looking for a nonexistent El Dorado,” said Arturo Cruz, a former
Nicaraguan ambassador to Washington. “It’s done us a lot of psychological harm as
a country.” Mr. Cruz said, however, that he is less skeptical than usual about the
Mr. Wang’s company dismissed doubts about the project, and said that it had hired
consulting company Environmental Resources Management and experienced advisers to
develop feasibility studies.
“We are committed to ensure the proper design, construction and operation of the
Nicaragua grand canal,” Mr. Wang said.
China’s leading credit rating agency, Dagong Global Credit Rating,
has expanded its services to Europe, becoming the first foreign
company from China or indeed Asia that is allowed to operate in
the region, according to China’s People’s Daily.
Dagong and Mandarin Capital Partners founded Dagong Europe in
April last year and set up the Europe division’s headquarters in
Milan. The division has been rating the bonds issued by European
financial and non-financial institutions. However, it has not
rated European sovereign bonds.
The EU has been unhappy with the ratings given by the three major
American credit agencies: Standard & Poor’s, Moody’s and Fitch.
The international capital market and investors are heavily reliant
on their ratings, which carry a strong influence on investor
decisions and bond prices.
Many people hold the credit rating agencies partially responsible
for the international financial crisis in 2008, said Freddy van
den Spiegel, chief economist of European Banking Federation and a
professor at the Free University of Brussels. EU has set up laws
to regulate these agencies and specified that the agencies can
not operate in the region before being approved by European
securities and market authorities.
The region has yearned to break the monopoly of the big three agencies,
said Dagong chairman Guan Jianzhong. The Chinese credit agency’s
expansion in Europe is also in line with its goal of internationalizing
a national brand. The approval from Europe can be seen as a recognition
to China’s growing influence in the world, Guan said.
Analysts agreed that European securities and market management bureau
might have approved Dagong as a way of weakening the grip of the three
US credit agencies, which have downgraded several European countries’
bonds repeatedly. Dagong could provide a different point of view to
investors and help stabilize the European bonds market.
The EU authorities also noted that an increasing number of people
from Asia, especially China, are interested in investing in European
bonds. Dagong is familiar with the Chinese economy and its operations
and accordingly can cater effectively to the requirements of Chinese
One year after the launch of direct trading between the renminbi and
Japanese yen, the daily trading volume between the two currencies has
reached 50-100 billion Japanese yen on the Shanghai market and
15 billion yen on the Tokyo market, a combined volume double that of
a year ago, according to China’s Ministry of Commerce.
The markets for direct trade of the renminbi and yen were set up in
Shanghai and Tokyo in June last year, removing the intermediary role
of the US dollar. Up to now, 300 Japanese enterprises have opened
renminbi trading accounts at the three Japanese banks with the largest
reminbi-denominated business, including 100 at Mizuho Bank, which now
boasts 10 billion yen of trading between renminbi and yen, 70% of the
volume on the Tokyo market.
According to the Chinese Communist Party mouthpiece People’s Daily,
trade between the yen and renminbi is related mainly to corporate trade
and investment settlement, as well as outward remittance of profits and
exchanges of expenses. Meanwhile, the rapid devaluation of the yen has
induced interbank trading with the purpose of benefiting from forex
trading. In addition, higher deposit interest rates and a rising exchange
rate have prompted many in Japan to hold renminbi.
People’s Daily notes however that the number of Japanese enterprises with
renminbi accounts is dwarfed by the number of Japanese enterprises in
China, which tops 20,000, and the volume of renminbi-yen trade on the
Shanghai market during the first three months of this year was only one
fourteenth the volume of trade between the renminbi and the US dollar.
According to Japan’s Ministry of Finance, half of China-Japan trade is
settled in the US dollar at present, followed by the yen with 30%-40%,
with renminbi accounting for a mere 1%.
A senior executive at Mizuho Bank notes that on the interbank trading
market in Tokyo, only 10%-20% of clients are taking part in renminbi
trading, adding however that the percentage will grow along with the
gradual liberalization of renminbi in overseas markets.
Cheng Yulin, a Chinese financial expert, said that in order to raise the
proportion of the use of the renminbi and yen in their trade settlement,
the two nations should expand the channels of fundraising and trade
settlement in their respective currency for investment, financing and
serviced trade in each other; develop more financial products denominated
in their respective currency in each other’s market; and jointly create
bond markets for infrastructure in East Asia and other countries on the
Another executive from Mizuho Bank says currently renminbi-denominated
products available on the Japanese market are quite limited and most of
the renminbi assets held by Japanese financial institutions flow to the
offshore market in Hong Kong to seek various investment opportunities.
In the future, Japanese banks will join hands with other financial
institutions in developing more renminbi-denominated products and if
China can issue renminbi-denominated government bonds in Japan, they
will be welcomed by Japanese investors.
Want China Times
The People’s Liberation Army has been suspected by foreign media outlets
of preparing for war with the West in a joint military exercise including
cyber war games held at the Zhurihe training base of the Beijing Military
Region in Inner Mongolia, according to the Chinese-language Changjiang
Daily in Wuhan.
China’s state newswire Xinhua said the exercise aims to test new types of
combat forces, including units using digital technology, amid efforts to
adjust to “informationalized” warfare. The units, special forces, army
aviation and electronic counter-forces will be mobilized against the enemy
“Blue Force” made up of soldiers of the 65th Group Army during the exercise
according to Shi Zhongwu, the commandant of the Army Command and Staff
College in Shijiazhuang, capital of Hebei province.
The exact date of the exercise remains unknown but it is assumed that it
will take place after President Xi Jinping’s meeting with President Barack
Obama in California, where the issue of cyber hacking by units believed to
belong to the PLA was raised. Chen Hu, a military analyst in Beijing, said
the digitalized units of the PLA still need more experience to catch up with
their counterparts in the United States, hence the need for the exercise.
However, the war game has attracted attention from the United States since
the websites of various military and intelligence organizations in Western
countries are understood to have been attacked by Chinese hackers,
El Pais, a national daily newspaper in Spain, asked if China is preparing
for cyber warfare against the United States and its allies in the future.
Meanwhile, Larry Wortzel, a senior member of the US-China Economic and
Security Review Commission, told the Washington Times that such an exercise
will be monitored closely by the United States.
Hong Kong’s pro-Beijing Wen Wei Po gave the opinion that the United States
is overly concerned much about the exercise, saying that the PLA units are
not hackers — cyber attacks aimed at US government and corporate IT
infrastructure come mostly from ordinary members of the public, it said.
The China Money Report
A total of 78 orbital launches were attempted in 2012, with 72 being reported
as successful, and a total of 139 payloads launched.
The three most prolific spacefaring nations were Russia, with 29 launches and
27 successes; China, with 19 launches, all of which succeeded; and the United
States, with 13 launches, of which 12 succeeded and one was a partial failure.
Regarding manned space flight, the U.S. had zero and does not have manned space
launch capability any longer. China had a manned mission using
the Shenzhou spacecraft. While the U.S. relies on Russian rockets to get their
astronauts to the international space station, the Chinese have their own
manned rockets and their own space station. In 2012, China’s Shenzhou 9 docked
with the Tiangong-1 orbital laboratory.
What may even be more concerning is that the U.S. space agency, NASA finished
2012 with a Budget of $17.7 billion dollars and had 13 space launches with a
an 87% success rate. The Chinese “Guó Jiā Háng Tiān Jú”, or “National
Astronautics Bureau” had a 100% success rate with 27 launches with a budget
of only $1.3 billion dollars. The Chinese launched more than twice the amount
of rockets with a budget of only 1/17th of NASA’s.
Clearly these are basic rough data points and I am sure their is much detail
behind the numbers ,however, NASA just like most of the American economy has
become a jobs program. It is sinking indefinitely , producing less and less
with more and more resources. Chinese space plans are set by the Space bureau
and do not change when political leadership changes. In the United States,
they have become poisoned by the success of the moon landings and Kennedy’s
involvement in the program. Every time their is a new President, he decides
to completely alter the course of what the space agencies missions are.
Is it any wonder we have accomplished so little in space in the last 50 years.
As we predicted, the U.S. would not reap the benefits of Iraqi
oil. The real benefits for the American invasion of Iraq was the
military industrial complex and the entire economy set up around
rebuilding broken countries. (i.e. Halliburton)
Not only did China get the oil, but the U.S. will continue to
spend money and lives in guarding the supply lines of the oil yet
get nothing in return.
From the N.Y. Times
BAGHDAD — Since the American-led invasion of 2003, Iraq has become
one of the world’s top oil producers, and China is now its biggest
China already buys nearly half the oil that Iraq produces, nearly
1.5 million barrels a day, and is angling for an even bigger share,
bidding for a stake now owned by Exxon Mobil in one of Iraq’s
largest oil fields. “The Chinese are the biggest beneficiary of this
post-Saddam oil boom in Iraq,” said Denise Natali, a Middle East
expert at the National Defense University in Washington. “They
need energy, and they want to get into the market.”
Before the invasion, Iraq’s oil industry was sputtering, largely
walled off from world markets by international sanctions against
the government of Saddam Hussein, so his overthrow always carried
the promise of renewed access to the country’s immense reserves.
Chinese state-owned companies seized the opportunity, pouring
more than $2 billion a year and hundreds of workers into Iraq,
and just as important, showing a willingness to play by the
new Iraqi government’s rules and to accept lower profits to
“We lost out,” said Michael Makovsky, a former Defense Department
official in the Bush administration who worked on Iraq oil policy.
“The Chinese had nothing to do with the war, but from an economic
standpoint they are benefiting from it, and our Fifth Fleet and
air forces are helping to assure their supply.” The depth of
China’s commitment here is evident in details large and small.
In the desert near the Iranian border, China recently built its own
airport to ferry workers to Iraq’s southern oil fields, and there
are plans to begin direct flights from Beijing and Shanghai to
Baghdad soon. In fancy hotels in the port city of Basra, Chinese
executives impress their hosts not just by speaking Arabic, but
Notably, what the Chinese are not doing is complaining. Unlike
the executives of Western oil giants like Exxon Mobil, the Chinese
happily accept the strict terms of Iraq’s oil contracts, which yield
only minimal profits. China is more interested in energy to fuel its
economy than profits to enrich its oil giants.
Chinese companies do not have to answer to shareholders, pay
dividends or even generate profits. They are tools of Beijing’s foreign
policy of securing a supply of energy for its increasingly prosperous
and energy hungry population. “We don’t have any problems with them,”
said Abdul Mahdi al-Meedi, an Iraqi Oil Ministry official who handles
contracts with foreign oil companies. “They are very cooperative.
There’s a big difference, the Chinese companies are state companies,
while Exxon or BP or Shell are different.”
China is now making aggressive moves to expand its role, as Iraq is
increasingly at odds with oil companies that have cut separate deals
with Iraq’s semiautonomous Kurdish region. The Kurds offer more generous
terms than the central government, but Iraq and the United States
consider such deals illegal.
Late last year, the China National Petroleum Corporation bid for a
60 percent stake in the lucrative West Qurna I oil field, a stake that
Exxon Mobil may be forced to divest because of its oil interests in
Iraqi Kurdistan. Exxon Mobil, however, has so far resisted pressure to
sell, and in March the Chinese company said it would be interested in
forming a partnership with the American company for the oil field.
If the United States invasion and occupation of Iraq ended up benefiting
China, American energy experts say the unforeseen turn of events is not
necessarily bad for United States interests. The increased Iraqi production,
much of it pumped by Chinese workers, has also shielded the world economy
from a spike in oil prices resulting from Western sanctions on Iranian
oil exports. And with the boom in American domestic oil production in
new shale fields surpassing all expectations over the last four years,
dependence on Middle Eastern oil has declined, making access to the Iraqi
fields less vital for the United States.
At the same time, China’s interest in Iraq could also help stabilize the
country as it faces a growing sectarian conflict. “Our interest is the oil
gets produced and Iraq makes money, so this is a big plus,” said David Goldwyn,
who was the State Department coordinator for international energy affairs in
the first Obama administration. “Geopolitically it develops close links
between China and Iraq, although China did not get into it for the politics.
Now that they are there, they have a great stake in assuring the continuity
of the regime that facilitates their investment.”
For China, Iraq is one of several countries it increasingly relies on to
keep its growing economy running. China recently became the world’s biggest
oil importer, and with its consumption growing, it is investing heavily in
oil and gas fields around the world — $12 billion worth in 2011, according
to the United States Energy Department. Over 50 percent of its oil imports
come from the Middle East, even as imports from Iran have been reduced in
recent years. “It’s pretty simple,” said Kevin Jianjun Tu, an expert on
Chinese energy policies at the Carnegie Endowment for International Peace.
“China needs more energy and needs to diversify its sources.”
The Iraqi government needs the investment, and oil remains at the heart of
its political and economic future. Currently OPEC’s second largest oil producer
after Saudi Arabia, the Iraqi government depends on oil revenues to finance
its military and social programs. Iraq estimates that its oil fields, pipelines
and refineries need $30 billion in annual investments to reach production
targets that will make it one of the world’s premier energy powers for decades
to come. The revenue that investment would produce could either help pave over
tensions between Kurds, Shiites and Sunnis, or worsen those tensions as competing
camps fight over the spoils.
But the kind of investment that is necessary has required contracting the services
of foreign oil companies that are not always enthusiastic about Iraq’s nationalistic,
tightfisted terms or the unstable security situation that can put employees in
danger. Some like Statoil of Norway have left or curtailed their operations.
But the Chinese, frequently as partners with other European companies like BP and
Turkish Petroleum, have filled the vacuum. And they have been happy to focus on oil
without interfering in other local issues. “The Chinese are very simple people,”
said an Iraqi Oil Ministry official who spoke on the condition of anonymity because
he did not have permission to speak to the news media. “They are practical people.
They don’t have anything to do with politics or religion. They just work and eat
International energy experts said the Chinese had a competitive advantage over
Western oil companies working in Iraq. They noted that the Chinese, unlike many
Western oil companies, are willing to accept service contracts at a very low per
barrel oil fee without the promise of rights to future reserves. While private oil
companies need to list oil reserves on their books to satisfy investors demanding
growth, the Chinese do not have to answer to shareholders.
The Chinese companies and their workers also win high marks for their technical
expertise, as long as they are not working in complicated oil fields, like those
in deep waters. “They offer a lot of capital and a willingness to get in quickly
and with a high appetite for risk,” said Badhr Jafar, president of Crescent
Petroleum, an independent oil and gas company based in the United Arab Emirates
and a big gas producer in Iraq. He said the Chinese were vital to Iraq’s efforts
to expand oil production, adding, “They don’t have to go through hoops to get
people on the ground and working.”
Tim Arango reported from Baghdad, and Clifford Krauss reported from Houston.
Nearly half of companies in China report declining profit margins from
two years ago, suffering under the combined weights of slowing revenue
growth and rising cost-driven inflation
Nearly half of companies in China report declining profit margins from
two years ago, suffering under the combined weights of slowing revenue
growth and rising cost-driven inflation, an E&Y survey found.
But most of the companies remain profitable in China, the internal
accounting and consulting firm said in a report.
The survey was conducted among executives and senior managers from
1,700 domestic and international companies in China earlier this year.
48 percent of the respondents said their earnings before interest, tax,
depreciation and amortization (EBITDA) declined from the levels two years
ago, while only 24 percent of companies see their profit margins rise.
Companies in China have been squeezed in the past two years, with
weakness in major economies in Europe and the United States weighing on
China’s export and costs of raw material in China keeping on the rise,
according to the report. But the report also said that only 3 percent of
polled companies reported losses in the past financial year. The average
profit margin for the sample companies was 20.9 percent, it said.
“Companies in general continue to be profitable in China, suggesting that
the economy remains in good health,” the report said. It warns though
companies need to raise their productivity to maintain the current profit
margins in the short to medium term; otherwise their market shares could
be knocked down. “Raising productivity is now critical for China’s economic
future,” as the previous engines of growth are running out of steam in the
country, said Nigel Knight, E&Y’s managing partner of advisory services
The Singapore Branch of the Industrial and Commercial Bank of China (ICBC)
kicked off its RMB clearing service in Singapore on Monday, marking an
important step in Singapore’s development as an offshore RMB center.
ICBC’s Singapore branch is the first RMB clearing bank designated by
China in another country; with Hong Kong and Taiwan previously the only
places outside of Mainland China with designated RMB clearing banks.
On Monday, the Singapore branch cleared 53 transactions worth a total of
RMB1.61 billion, with 23 out of the 49 participating banks using the
Ever since the government’s announcement allowing the clearing of RMB spot
trades in Singapore from May 27, the world’s top banks have been racing
against each other to capitalize on the opportunities brought on by
Singapore’s offshore RMB bond market. HSBC and Charted Standard were the
first batch of banks to issue RMB-denominated bonds in Singapore, raising
a combined RMB1.5 billion.
Standard Chartered said its three-year senior unsecured issuance is priced
with a coupon of 2.625 percent and has generated over RMB3 billion in orders
from 75 investors across Asia. Meanwhile, HSBC priced its two-year fixed
rate notes at 2.25 percent, which is the first RMB bond to be priced
within the Association of Southeast Asian Nations (ASEAN) trade bloc.
“This issuance will help open the market to other issuers looking to fund
themselves internationally in RMB, offer new investment opportunities to
the substantial pool of wealth managed in Singapore, and assist in funding
the rapidly growing RMB-denominated trade business in Asia,” said Matthew
Cannon, head of global markets at HSBC Singapore.
Singapore has been widely expected to serve as a gateway for the use of RMB
in Southeast Asia, with the increasing trade between China and ASEAN and
the continuing appreciation of the RMB contributing greatly to the development
of Singapore’s offshore RMB market. Bilateral trade between China and ASEAN
amounted to US$138.97 billion in the first four months of 2013, up 18.1
percent year-on-year, while on Monday, the central parity of RMB against the
U.S. dollar hit a record high, reaching 6.1316.
“We see this as another milestone for Singapore in the development of its status
as an offshore RMB hub,” said Ray Ferguson, chief executive officer of Standard
Chartered Singapore. “Singapore already leads as a regional treasury center, is
a springboard to Southeast Asia along the key trade corridor with China, and
provides a hub for Asian wealth management and commodities trading. Singapore’s
contribution to the development of the RMB is further enhanced by this issuance.”
Deutsche Bank, Southeast Asia’s largest bank by assets, is reported to launch
RMB-denominated bonds in Singapore shortly. In another move, the Singapore
Exchange launched its depository services for RMB-denominated bonds on Monday,
in an effort to support Singapore’s development as an offshore center for issuers
and investors of RMB-denominated bonds.
As of the end of June 2012, RMB deposits in Singapore totaled RMB60 billion.
Meanwhile, the cross-border RMB volumes handled in Singapore ranked second among
overseas regions, behind only Hong Kong. In March, the Monetary Authority of
Singapore (MAS) and the People’s Bank of China doubled the size of their bilateral
currency swap facility from RMB150 billion to RMB300 billion, allowing MAS to
provide RMB liquidity to banks in Singapore.
China is close to signing a free trade agreement with Switzerland,
the first pact of its kind between the country and continental Europe,
after the two sides inked a memorandum of understanding on May 24.
The agreement may help the world’s second-largest economy further tap
into the European market, Guangzhou’s Southern Weekly reports.
Under the pact, Switzerland will not impose tariffs on 99.7% of Chinese
exports, while China will waive tariffs on 84.2% of its imports from
Switzerland, the paper said. China has been working to establish 16
FTAs with 29 countries and regions. In addition to the deal with
Switzerland, Beijing has also signed and implemented 10 FTAs, while
five are still under negotiation.
With the latest agreement coming into effect, Switzerland will become
the first country in continental Europe and the first among the world’s
top 20 economies to sign such a pact with China. Trade agreements between
Switzerland and other European countries will also facilitate China’s
entry into the European market, according to industry insiders.
Switzerland is not an EU member but Beijing hopes that the new agreement
will ease tense trade relations with the European Union amid anti-dumping
and anti-subsidies disputes involving Chinese products.
China has close ties with Switzerland as its largest trade partner in
Asia, while Switzerland is China’s seventh largest trade partner and
sixth largest source of foreign funds. The trade volume between the two
countries reached US$26.3 billion last year.
“China should learn how to make good use of the FTAs, whether they be
multilateral or bilateral, and learn how to make flexible use of them,”
said Ma Yu, a researcher with China’s Ministry of Finance.
The renminbi has risen by a staggering 19% against the Japanese yen
this year in the wake of Japan’s competitive monetary easing policy,
which has created a huge arbitrage opportunity for investors seeking
to cash in on currency exchange gains, Guangzhou’s 21st Century
Business Herald reports.
The Japanese currency recently breached the 100 yen against the US
dollar mark for the first time since April 2009, with the Chinese yuan
rising 19% against the yen and only 1.75% against the US dollar.
The yen’s financing cost is 0.5% to 1% lower than that of the US
dollar, making the Japanese currency a target for cross-strait
arbitrage, the paper said.
The arbitrage opportunity has also created illicit flows of money being
channeled from the Chinese mainland to Hong Kong — China’s offshore
renminbi center — aimed to bypass the country’s strict financial
regulations and take advantage of the pricing differential of 0.6%-0.7%
between the mainland and Hong Kong markets. A industry source said that
if it were not for the State Administration of Foreign Exchange cracking
down on phony transactions, the volume of illicit trade and number of
investors engaged in arbitrage would be even higher.
Investors are highly sensitive to pricing differentials, with last week’s
news that Japanese government bonds fell, with 10-year rates touching
1% for the first time in a year, unnerving many. The depreciation of the
yen has strongly impacted South Korean exporters, but Chinese exporters
have also felt the squeeze as well. An electronics appliances exporter
in Guangdong said the yen’s depreciation has had a negative impact on
the competitive pricing of his products, adding that he is considering
engaging in spot trading to lower currency exchange risks.
While exporters are feeling the heat, importers have been enjoying lower
importing costs from Japan. Many Chinese clothing manufacturers use
Japanese textiles to make clothes and have begun to enjoy the relatively
lower importing costs, the 21st Century Business Herald said.
Yen is pouring into China after the renminbi appreciated 19%
against the Japanese currency. Speculators are aiming to make
money on currency arbitrage, reports the Guangzhou-based 21st
Century Business Herald. On May 27, the renminbi rose to a
record-high 6.1811 against the US dollar. The record has been
broken 16 times since April. In early May, Australia’s central
bank cut its key interest rate to 2.75%, making the renminbi
the currency with the highest interest rate (its one-year time
deposit rate stands at 3%), and the target of arbitrage, the
“If not for the State Administration of Foreign Exchange’s
measures to crack down on inflows of hot money that are being
drawn into the country through fabricated trade transactions,
there would be even more inflow trying to take advantage of
the foreign-exchange spread difference between the renminbi
and yen,” said an unnamed executive of a bonded trade company,
who is handling inflows of overseas funds. Since mid-May, he
has received several phone calls daily from overseas
institutional investors asking how to remit their huge yen
holdings into China, as these investors had seen huge arbitrage
benefits after the renminbi climbed steeply against the yen.
According to the executive, the main way to generate inflows of
hot money is to create non-existent “trade background” as
justification for exchanging the yen into the renminbi. In a bid
to avoid the Chinese regulator’s measures to curb such practices,
speculators have transferred funds to Hong Kong, converting them
first into offshore renminbi holdings before converting them into
An added benefit to running the money through Hong Kong is that
speculators can earn money off the foreign exchange difference
between offshore renminbi and domestic renminbi. Currently, the
former is 0.6% to 0.7% higher than the latter in foreign exchange
As the yen’s financing cost is 0.5% to 1% lower than that of the
US dollar, the compound investment returns by borrowing the yen
for arbitrage will be even higher, the executive said. But these
arbitrage funds are very sensitive to the financing costs because
the leverage can be up to 10 times the original amount, making
even the smallest fluctuation in the renminbi/yen exchange rate
or commodities such as copper and nickel boom or bust.
Since the beginning of May, the executive said he has handled
inflows of yen hot money amounting to more than US$3 million.
The room for the renminbi’s appreciation against the yen may become
even greater following the move by Japan’s central bank to expand
the scale of quantitative monetary easing. The renminbi has risen
1.57% against the US dollar so far this year, a range far smaller
than the 19% rise of the renminbi against the yen.
“That’s why so many institutional investors are giving up the US
dollar and turning to the yen to conduct arbitrage on the renminbi’s
appreciation,” the executive said.
The recent talk about the so-called duel in the gold market between
Chinese “mother investors” and Wall Street investors, which resulted
in the dramatic rise and fall of gold prices, actually reflects
different investment views and growing risks in the financial market.
Gold prices dropped for seven consecutive sessions last week to a
nearly two-year low of US$1,370 per ounce, following the continuing
plunge since mid-April from the US$1,600 level. The gold buyers in
China and the sellers, mainly Wall Street investors, represent
long-term and short-term investment views, respectively.
In China and India, gold is considered the traditional safe haven
for long-term investment and buyers are more likely to pass it to
their children rather than sell it. However, Wall Street investors,
several of whom have been bearish about the precious metal and sold
large amounts of it during the first three months of this year, are
possibly trying to push down gold prices and buy it back to make a
Gold buying by investors in the East perhaps reflects their distrust
of paper currencies, since the quantitative monetary easing measures
introduced by central banks in the Western world since 2008 have
distorted long-term economic trends. With the global financial market
and the value of the US dollar and the euro becoming more unpredictable,
gold, in comparison, is a commodity that can maintain a certain value
in the long term. In addition, there have been growing media reports
about the current stock market rally being called baseless, including
a Financial Times article pointing out that “the behavior of credit
and equity markets has moved into the opposite direction from fundamentals.”
Such a development indicated growing risks in the market, especially
when stocks continue to soar, and these potential risks could provide
strong support to the bullish views on gold.
China has approximately 40 underground air force bases capable of
holding at least 1,500 jets, reports the Global Times, a tabloid
under the auspices of the Communist Party mouthpiece People’s Daily.
The paper, citing US military website Strategy Page, says the
underground bases are used largely for storage and maintenance
of aircraft, as well as fuel, ammunition and other facilities
such as airstrip repair equipment.
The report says these bases make it difficult to destroy aircraft
on the ground and personnel can repair damage without danger from
enemy fire. However, the United States has developed bunker buster
bombs and is “always looking for new details on the construction
of underground Chinese facilities,” the article said.
Global Times says the underground bases give China an edge over the
US army, which does not have concrete hangars for all aircraft.
China also has nearly 2,000 ballistic missiles housed in underground
shelters with a range of 300-700km aimed at airfields of neighboring
countries, giving Chinese air power a significant advantage in any
protracted war, the article said.
China is demanding North Korea release a Chinese fisherman
captured in Chinese Waters. These cases are happening more and
more often. Can North Korea even control its own borders anymore?
Is the threat of a NATO attack on the hermit kingdom nothing
more than a last ditch effort to keep control of the country?
Chinese fisherman captured
Yu Xuejun, who wasn’t aboard the boat, first publicized the seizure on
his microblog late Saturday saying that North Koreans seized his boat
on May 5 in Chinese waters and that they demanded a 600,000 yuan
($100,000) ransom. Yu, posting on a verified Tencent Weibo account,
said he was asking for help from Internet users and China’s Foreign
Ministry. His post was reposted and commented on more than 12,000 times.
In another plea for help on Monday, Yu wrote on his blog that he
received another call from “the North Korean side” on Sunday night,
still demanding money.
North Korean Missile test
North Korea fired another short-range missile into the sea off its
eastern coast on Monday, extending its series of launches to five
missiles over the last three days, South Korea’s defense ministry said
“The North Korean armed forces’ exercises to suppress nuclear war
threats from the U.S. and the South Korean puppets are an uncontestable
legal right of a sovereign country. Despite that, the U.S. and the
puppets are running wild on using the rocket launch exercises on the
18th and 19th against the Republic (of North Korea),” the Korean Central
News Agency said in a dispatch attributed to a body that handles inter-
Want China Times
As international gold prices plunge again, a number of people have
been caught trying to smuggle gold from Hong Kong into mainland China.
One woman was caught on May 10 with three kilos of gold bars hidden
in her bra at the Shatoujiao customs on the border at Shenzhen.
Many mainlanders rushed to Hong Kong to buy gold after international
prices tumbled to US$1,321 per ounce on April 12. Gold prices have
declined again since May 10 following a brief rise and closed at
US$1,374.90 per ounce on May 17, according to the state-run China
The woman who was stopped at Shatoujiao, surnamed Yu, had placed
three .999 kg bars of gold bullion in her bra. Staff members found
her body movements and facial expression suspicious and asked her
to go through a metal detector, followed by a physical check which
uncovered the bars. A maximum of 50g of gold may be carried through
Hong Kong customs.
Customs officials have stepped up inspections amid a spate of
similar smuggling attempts. A Hong Kong man was discovered trying
to pass through customs at the Luohu border crossing with 4kg of
gold bullion hidden in his shoes on May 8. In other cases, gold was
found sewn into the hem of skirts.
China has now convicted 4,170 people for economic crimes
revolving around illegal fund raising with several of them
getting the death penalty. By contrast, the U.S. economic criminals
have been giving QE money to invest in the stock market.
A Chinese court sentenced 39-year old Lin Haiyana, a businesswoman
to death after prosecutors accused her of running a Ponzi scheme
that defrauded investors of about $70 million.
The women was a Wenzhou business women with her own informal banking
network in a city well-known for shadow financing.
The WSJ reported that as of the end of April, 1,449 people had been
“seriously punished”–a designation that includes the death penalty
and more than five years imprisonment—for illegal fundraising since
2011, said Miao Youshui, a senior judge on the People’s Supreme Court,
China’s highest judicial body, at a recent news conference.
In total, 4,170 people were convicted over the same period for similar
economic crimes, he said.
“I’m not optimistic” about controlling the spread of illegal fundraising,
said Du Jinfu, the head of discipline inspection at China’s banking
regulator, and a member of a task force set up to tackle economic crimes.
“One factor is the high frequency of cases. Also, the scope is broadening,
with cases appearing in most cities…It affects the employed and retired,
the rich and the poor.”
China is allegedly developing a secret “space bomber” to compete
with America’s Boeing X-37 reusable unmanned spacecraft, reports
Duowei News, an outlet run by overseas Chinese.
Sources say people who reported UFO sightings on March 13 in the
Chinese cities of Chongqing, Kunming, Chengdu, Wuhan, Changsha,
Zhaoqing and Haikou actually saw a top secret rocket being tested
by the government. This coincides with an announcement on the
website of China’s National Space Science Center the same evening
which declared that scientists had successfully conducted a
high-altitude scientific exploration test.
Various reports claim that China upped its space program following
the successful launch of the US X-37B reusable unmanned spacecraft
in December last year. Sources say China has been developing a
mysterious space shuttle codenamed “Shenlong,” meaning “Divine
Dragon” in Chinese, a stealth space bomber that will significantly
boost the country’s space warfare capabilities.
Chinese military websites began “leaking” alleged photos of the
Shenlong project in 2007, with a spacecraft appearing to be suspended
from a Xian H-6 strategic bomber. In January 2011, a television
station in northwest China’s Shaanxi province reported the successful
test of an aerosphere vehicle. However, precise details of the
Shenlong have remained secret, with most online reports about the
project deleted by censors.Last June, media in central China’s Hubei
province said that the Shenlong is similar in purpose to the X-37B
in that it is an unmanned spacecraft, and claimed that the country’s
scientists have achieved four major technological breakthroughs on
the project in the last two years. Speculation from alleged photos
puts the Shenlong’s size at around 1m high and 5m-6m in length, which
would make it roughly a third the size of the X-37B. Others sources
have estimated the Shenlong at around 1.1m high, 12m long and 4m wide.
According to speculative reports, the Shenlong is designed to be
launched at 10,000m in the air from a Xian H-6 jet. The first phase
engine will boost the 13-tonne Shenlong up to an altitude of 490 km
within eight minutes, while the second phase will take it to height
of 600 km. In the third phase, a 50 kilogram satellite will be
launched into orbit before eventually descending back to Earth.
A Taiwanese fisherman named Hung Shih-cheng was shot dead by the Philippine
coast guard on May 9, sparking strong anti-Philippine sentiment across
Taiwan. Cyberwar has begin, militaries are being deployed. A summary of
(1) Taiwan and Philippines in cyber war over fatal shooting
Taiwan and Philippines are in cyberwar. On Sunday morning, the websites
of Taiwan’s Presidential Office, Department of Defense, Coast Guard
Administration and Ministry of Economic Affairs were shut down after
experiencing a cyber attack authorities say originated from the
Sources have confirmed that as of 8:40pm on Saturday more than 10
governmental websites from the Philippines crashed after experiencing
multiple denial-of-service attacks by hackers. The affected sites include
the home pages of the Philippine President’s Office, Ministry of Foreign
Affairs, Coast Guard, National Police Force, Ministry of the Interior,
and the Philippine News Service.
(2) Taiwan’s five major cities suspend exchanges with Philippines
All five major municipalities of Taiwan have suspended exchange activities
with the Philippines amid heightened tension between the two countries
over the death of a Taiwanese fisherman at the hands of Philippine personnel.
The municipalities involved are: Taipei, New Taipei, Taichung, Tainan and
Kaohsiung. They account for some 60% of Taiwan’s population of 23 million.
(3) Taiwan’s navy to extend patrol area southward to Bashi Channel
Taiwan’s navy will extend its patrol area by 100 nautical miles southward
to the south of the Bashi Channel and go beyond the current ROC Air Defense
Identification Zone, deputy minister of defense Andrew Yang said at a
legislative session Monday. Navy chief of staff vice admiral Hsu Pei-shan
said that the Navy is adjusting its patrol area and hopes that amendments
to related regulations can be completed by the end of this month.
In the future, the Navy will be allowed to freely carry out activities in
the area if it does not enter waters within 24 nautical miles of the Batan
islands in the Philippines, Hsu said. After the patrol area is expanded
southward, it will encompass all the waters of Batanes from the original
Eluanbi sea, according to a defense ministry official.
Yang said after the adjustment, the navy’s patrol missions will be moved
southward to the south of the Bashi Channel in response to the Coast Guard
Administration’s plan to strengthen patrols in waters near the Philippines
following public outrage over the shooting of a Taiwanese fisherman by
Filipino coast guards.
In addition, the Navy and the Coast Guard will hold a joint exercise in
waters south of Taiwan on May 16 when Kidd-class destroyers and Chengkung-
class frigates will be mobilized to escort coast guard vessels in the exercise.