In nearly every public speech since the leadership handover, Li Keqiang, who will take over as premier in March, has spoke about the importance of urbanization as a new growth engine.
Societe Generale’s Wei Yao however writes that the impact of urbanization has been “misunderstood and overstated by the market”.
For one, Yao writes that the impact of urbanization on China‘s productivity growth is decreasing, just like the the direction of demographics on labor force growth.
“For an emerging economy to catch up, moving farmers to manufacturing plants is a key source of productivity gain in the early stage. China’s experience in the past three decades was a typical example.
The 10-year average growth rate of China‘s urban population growth was 4.8% in the 1980s, 4.2% in the 1990s and 3.8% in the 2000s. The impact of this rapid urbanization on total factor productivity (TFP) was particularly pronounced. We estimate that this source accounted for about 30% of the impressive TFP growth.
Posted by cbasdeo09 on January 29, 2013
Indonesia’s Financial Services Authority plans to publish scorecards rating companies on the quality of their corporate governance as it begins supervising capital markets in Southeast Asia’s biggest economy.
The agency plans to rate the nation’s 50 biggest listed companies this year, said Muliaman Hadad, chairman of the newly minted regulator known by its Indonesian acronym of OJK. How companies treat minority shareholders and the roles played by board directors are among the criteria, he said in an interview in Jakarta on Jan. 15. OJK will consolidate supervision of capital markets, banks and non-bank financial institutions.
Hadad, a former central bank deputy governor, wants companies to improve practices to lure investors and broaden the pool of capital to fund growth. Indonesia’s economic recovery since the Asian financial crisis in 1997-1998, when the nation had to seek an International Monetary Fund bailout, has prompted Fitch Ratings and Moody’s Investors Service to raise their sovereign debt scores to investment grade.
Posted by cbasdeo09 on January 24, 2013
According to Huffington Post’s Chris Brummitt, Jakarta, Indonesia — Months behind schedule, the construction crew racing to finish a highway encircling Indonesia‘s traffic-choked capital is being blocked by a determined group of locals and the ramshackle cemetery that is home to their ancestors.
Talks on a new location have yet to reach an agreement accepted by all the relatives of the some 500 people buried there. That has not stopped authorities digging a new cemetery a short distance from the old one – pointlessly according to Yaman, the neighborhood chief.
“There is no way we can agree to that,” said Yaman, pointing to workers hacking through the thick red earth during a midafternoon rain shower. “It will be too noisy. How are we supposed to pray for our ancestors there?”
Indonesia‘s economy is booming. But to sustain and deepen its growth, it badly needs new roads, bridges, power stations and ports. Land disputes such as this one in west Jakarta, and a host of other difficulties from corruption to budget-draining populism, make building such infrastructure a long and costly process. That is preventing the country from attaining the kind of transformational development experienced in a generation by countries such as South Korea and more recently China.
Last week, floods engulfed around 30 percent of Jakarta, including its central business district, dramatically exposing decades of underinvestment in the drainage and flood defenses of the city of 14 million people.
To be sure, beleaguered economies in the West would envy Indonesia‘s current growth rate of more than 6 percent. Coupled with political and social stability, it represents a dramatic change from the Indonesia of 12 years ago, when political crisis, separatist violence and economic meltdown led to fears the massive island nation could break apart.
Posted by cbasdeo09 on January 23, 2013
According to Bloomberg’s News Anuchit Nguyen and Victoria Stilwell, Emerging-market stocks dropped, led by industrial companies, as the International Monetary Fund cut its global growth forecasts and a leading index for China’s economy rose at a slower pace in December.
LG Household & Health Care Ltd. (051900), a South Korean maker of cleaning and personal care products, tumbled the most since 2008 after its profit forecast missed estimates. Hindustan Unilever Ltd. (HUVR) plunged in Mumbai after Credit Suisse Group AG, CLSA Asia- Pacific Markets and Nomura Holdings Inc. cut their recommendations. China Merchants Holdings International Co. (144) sank the most in 11 weeks in Hong Kong. Brazilian paper maker Klabin SA (KLBN4) surged toward a record high.
The MSCI Emerging Markets Index of developing-nation stocks retreated 0.2 percent to 1,076.51 by 1:08 p.m. in New York, while its 100-day volatility dropped to the lowest level since October 2005. The world’s economy will expand 3.5 percent this year, less than the 3.6 percent forecast in October, the IMF said today as it also reduced outlooks for Brazil and India. A gauge for China’s economy gained 0.4 percent in December, compared with a 1.1 percent increase in the previous month.
Posted by cbasdeo09 on January 23, 2013
Alleging that Prime Minister Manmohan Singh has pushed the country’s economy back to the 1991 era of economic crisis, the BJP today hit out at the UPA government for allowing FDI in multi-brand retail.
“The Prime Minister is saying that the 1991 situation is coming back… Who is responsible for this? Prime Minister? You have been in power since last eight years. It’s because of your mismanagement of economy,” BJP leader Venkaiah Naidu told reporters here.
He said the current situation of economy was the result of government’s wrong priorities and overall policy paralysis. “From a robust economy, resilient economy you have turned it into a roasted economy,” he said.
Venkaiah was referring to the serious economic crisis of 1990-1991 when the country’s foreign exchange reserves stood at mere USD 1.2 billion in January 1991. India had to airlift its gold reserves to pledge it with International Monetary Fund (IMF) for a loan.
The former BJP president said senior Congress leader Priya Ranjan Dasmunsi was against allowing FDI in retail.
Quoting Dasmunsi’s letter dated December 16, 2002, Venkaiah said, “Multinational retailers are continuously putting pressure on the government to take anti-national decision of allowing FDI in retail trade.”
Posted by byu2012 on October 5, 2012
U.S. manufacturing grew slightly last month for the first time since May but euro zone factories suffered their worst quarter since early 2009, suggesting the region may struggle to avoid recession.
Factory activity in China also contracted, suggesting the world’s No. 2 economy lost momentum for a seventh consecutive quarter.
The data showed companies across the world have yet to benefit much from the aggressive stimulus spending undertaken recently by the world’s major central banks.
Even the U.S. data was considered only mildly encouraging. While a jump in new orders nudged the Institute for Supply Management’s index of national factory activity up to 51.5 last month, ending three months of contraction, it remained well off levels seen in early 2012.
A separate index on U.S. manufacturing activity from financial information firm Markit came in at 51.1 in September and averaged 51.4 in the third quarter, both three-year lows. A reading above 50 indicates expansion.
Weaker overseas demand for U.S. products, the result of recession in many European countries and slower growth in Asia, was the main drag on U.S. factory activity, the data showed.
Posted by byu2012 on October 4, 2012
Japan’s economy is leveling off as China’s slowing growth casts a deep shadow over production and exports.
The Bank of Japan’s quarterly Tankan survey released Oct. 1 showed a sharp loss of business confidence among automakers and steelmakers.
The diffusion index for large automakers plunged from 32 in the previous June survey to 19, while the diffusion index for large steelmakers sank from minus 17 to minus 28.
The 13-point drop for large automakers was the steepest among all industry sectors. Automakers are key customers for steelmakers.
The diffusion index for all large manufacturers, the headline component of the Tankan survey, dipped 2 points to minus 3, for the first fall in three quarters. The index stayed below zero for the fourth consecutive quarter.
The index is calculated by subtracting the percentage of companies reporting unfavorable business conditions from the percentage of companies reporting favorable conditions. A negative reading means pessimists outnumber optimists.
Posted by byu2012 on October 3, 2012
Japan might be the third largest economy in the world, but the past 20 years have seen its GDP growth rate fall behind that of its economic rivals, the US and UK.
The outlook appears bleak. Recently, Japan halved its second-quarter growth estimate, raising fears of a recession. Morever, Japan’s exporters could face more pressure after the US Federal Reserve announced a third round of quantitative easing, which could drive down the US dollar against the yen.
Pressure to deal with the country’s darkening economic outlook has fallen to the Japanese government (whose deficit financing bill probably won’t make it through the opposition-ruled upper house).
Meanwhile, Japan’s central bank has vowed to maintain its monetary easing policy.
Ippei Fujiwara from the Australian National University examines the long-term economic health of the nation and suggests societal ageing and a lack of technological growth could be to blame for the country’s falling GDP growth rate.
Posted by byu2012 on September 29, 2012
As Indonesia takes over the chairmanship of the Asia-Pacific Economic Cooperation forum from Russia next year, here is a chance for one of the region’s biggest developmental success stories to lead by example.
However, despite its achievements so far, Indonesia should improve its trade and investment environment before it can really chart the way for the 21-member grouping. Only then can it can make sure that the 2013 APEC Summit will be more than a photo op where leaders make sweeping declarations and empty promises.
APEC in the past has done well in formulating ambitious visions. The last time Indonesia was chair in 1994, APEC leaders set forth the so-called “Bogor Goals.” These stipulated that developed nations should achieve free and open investment by 2010, and developing nations by 2020. Eighteen years later, a lot of work has been done, but much more lies ahead. In fact, it would not be realistic at this point to expect the Bogor Goals to be achieved in just eight years’ time. Such goals should, instead, be seen as just one part of an overall vision that keeps driving us forward.
Indonesia’s ascension to the chairmanship comes midway between the 2010 assessment of the Bogor Goals and the next assessment in 2015. This gives Indonesia’s leaders the opportunity to help create a more far-reaching vision that goes beyond the Goals and which should focus on APEC’s long-term growth strategy.
Posted by byu2012 on September 29, 2012
Global business leaders are voicing increasing concern over heightened political tensions between China and Japan, sparked by a maritime dispute in the East China Sea. They fear an escalation may have a spill-over effect on their regional operations and damage trade ties between the world’s second and third-largest economies.
Company executives, diplomats and analysts told CNBC that supply chains across China and Japan and regional trade flows are at risk if the territorial dispute between the north Asian neighbors – believed to be the worst in decades – deepens.
“This could really be something that causes a huge economic dislocation,” Mike Splinter, chief executive officer at Applied Materials told CNBC. “If import barriers go up, it could affect our business.”
John Rice, president and CEO at GE Global Growth and Operations said he was worried about the potential “repercussions” to the flow of free trade that may arise because of escalating “geo-political” risk in the region. “That’s what we worry about…because we’re free traders to our core.” Rice said he was monitoring developments “very closely.”
While the precise scale of any disruption to manufacturing supply chains is hard to assess, many observers are starting to draw a parallel with the disruption in the wake of the 2011 Fukushima disaster in Japan.
Posted by byu2012 on September 28, 2012