China Readings for September 27th

  • Chinese Social Network Renren Buys Video Sharing Site 56.com For $80 Million | TechCrunch – govt killed 56.com in 2008, shut it down for 7 weeks, never recovered. ok exit for sequoia et al. better than zero
  • China Trade Takes a Toll in U.S. – WSJ.com – in my free trade economics indoctrination classes, especially at SAIS, the issue of worker displacement was always treated with a throwaway line about retraining. US free trade priests/priestesses seem to have ignored the retraining part, or the the question of retraining into what? China knows much better how to fight the ongoing trade war. US needs to wake up, perhaps first by removing some of the economists from its proverbial ass?//

    But new research suggests the damage to the U.S. has been deeper than these economists have supposed. The study, conducted by a team of three economists, doesn't challenge the traditional view that trade is ultimately good for the economy. Workers who lose jobs do eventually find new work or retire, while the benefits from trade, such as lower prices, remain. The problem is the speed at which China has surged as an exporter—overwhelming the normal process of adaptation.

    The study rated every U.S. county for their manufacturers' exposure to competition from China, and found that regions most exposed to China tended not only to lose more manufacturing jobs, but also to see overall employment decline. Areas with higher exposure also had larger increases in workers receiving unemployment insurance, food stamps and disability payments.

    The authors calculate that the cost to the economy from the increased government payments amounts to one- to two-thirds of the gains from trade with China. In other words, a big portion of the ways trade with China has helped the U.S.—such as by providing inexpensive Chinese goods to consumers—has been wiped out. And that estimate doesn't include any economic losses experienced by people who lost their jobs.

  • Ford Motor May Build Electric Cars in China With Partner, CEO Mulally Says – Bloomberg – Ford Motor Co. (F) may make electric cars with its partner in China as the auto industry moves toward producing more fuel-efficient vehicles, Chief Executive Officer Alan Mulally said.

    “As we move to more electrification, you’re going to see more hybrids, plug-in hybrids and all-electric” cars, Mulally, 66, said in a Bloomberg Television interview on Sept. 24 in Chongqing, China.

    Mulally, in China for the groundbreaking of an engine transmission plant at Ford’s venture with Changan Automobile Group, didn’t say when the Dearborn, Michigan-based company may start making the electric cars. Rivals Daimler AG (DAI) and General Motors Co. (GM) have announced plans to add such vehicles in China as the country, the world’s largest polluter, seeks to reduce emissions.

  • Chinese Billionaire Huang Plans Nordic Expansion After Iceland Development – Bloomberg – The Chinese billionaire who is investing $200 million to develop a resort in Iceland said he will use the project as a springboard for resorts in other Nordic countries.

    Huang Nubo, 55, said he plans to establish resorts in countries such as Denmark, Finland and Sweden within five years. He’s in talks to buy 300 square kilometers (116 square miles) of land in Iceland for $8.8 million from five farmers and expects the Iceland government’s decision on the approval of the purchase within two weeks.

  • Ivanhoe Falls After Mongolia Seeks Bigger Stake in Copper Mine – Businessweek – The government of Mongolia is seeking to boost its stake to 50 percent from 34 percent, Dashdorj Zorigt, Mongolia’s minerals minister, told reporters at Oyu Tolgoi on Sept. 25. Such an increase is permitted only after 30 years, according to a summary of the $10 billion project agreement from London-based Rio, which said the new proposal may alarm foreign investors.

    Mongolia’s attempt to renegotiate the Oyu Tolgoi agreement follows pressure from lawmakers ahead of an election next year and highlights risks for overseas investors as countries seek greater control of raw materials. So-called resource nationalism is the biggest business risk for global mining companies, Ernst & Young LLP said last month

  • China – A plum new trend – 王志浩 – 名家博客 – 博客 – 《财经网》 – China is becoming a net importer of fruit
     
      ·This suggests that farm productivity growth is not keeping pace with domestic consumer demand
     
      ·Rising labour costs, slow land reform and barriers to capital deployment in agriculture explain why
     
      A small part of China's agricultural trade is being turned on its head. Take a look at Chart 1, which shows China's trade balance in fruit (on a 12-month rolling sum basis to smooth out the volatility). The country's fruit surplus is now heading towards deficit.
  • CCTV Halts Decades-long Practice of “Remuneration though Invoices” – internal data reveals that the practice of “remuneration through invoices,” which is deeply rooted in CCTV’s old employment system, has caused its “four expenses” to reach 600 million yuan per year. Currently, CCTV has about 8,000 employees, equaling roughly 75,000 yuan per capita. In other words, every month, each employee must come up with over 6,000 yuan worth of invoices to be “reimbursed.”

    The practice of “remuneration through invoices” dates back to early 1990s, when CCTV recruited a large number of new talents to launch the program “Oriental Horizon.” But as a state-run organization, CCTV’s hiring process is subject to strict controls. To circumvent the constraints of its employment system, CCTV decided to recruit contract workers. However, since the contract workers were not “officially recognized” CCTV employees, their salaries could not be listed as labor costs; instead, they were listed under program producing costs. Contract workers were then required to submit corresponding amount of invoices to get their remuneration. This approach worked so well that it soon spread throughout CCTV and has been used ever since.

    But the practice has lead to a series of negative consequences. It caused the existing wage system to collapse, brought about huge income gaps and sowed the seeds for corruption. Under a loose “remuneration through invoices” system, it is impossible to eradicate falsely issued invoices. Moreover, since this portion of income is not counted as salary, CCTV employees pay less personal income tax, resulting in the loss of state tax revenue.

  • Man who kept sex slaves in cellar sacked, loses Party membership — Shanghai Daily | 上海日报 — English Window to China New – A man who allegedly kept six women as sex slaves in a dungeon for two years and killed two of them in a central China city has been sacked from his post and stripped of his Party membership.

    Li Hao was fired from the inspection team under the Bureau of Quality and Technical Supervision of Luoyang, Henan Province, after he was detained for forcing the women into prostitution and to feature in porno videos uploaded on the Internet to make money, Guangzhou Daily reported today.

    Yu Hongwen, Li's supervisor and head of the inspection team, was also suspended.

    Li said he dug two underground rooms in a basement he bought in a residential compound two years ago. He regularly raped the women, who were held for between two months to 21 months, and forced them to perform porn shows and prostitution, police said.

    Residents in the neighborhood, where Li lived, are considering hiring a new property management company to ensure their safety.

  • Feds close huge chip counterfeiting case (exclusive) | VentureBeat – The chips sold by VisionTech were supposed to be “military grade,” but they were in fact counterfeits from Hong Kong and China.
  • China Rebuffs Hopes It Might Help Bail Out Europe – WSJ.com – China to Europe: Don't expect a bailout from us.

    That was the message delivered by a number of Chinese officials during meetings at the International Monetary Fund, where China was widely seen as an answer to the euro zone's problems, either as a purchaser of European debt or as a country that could further goose its economic growth rate.

    Gao Xiqing, vice chairman, president of China Investment Corp., participates in a panel discussion in Washington Saturday.

    "We can't just go save someone," said Gao Xiqing, president of China Investment Corp., China's huge sovereign wealth fund. "We're not saviors. We have to save ourselves," he said at a weekend panel discussion

  • Yahoo/Alibaba: the big scramble – FT.com – Jack Ma, Alibaba’s founder, has Yahoo trapped now.

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