China Economic News

China’s Economy Is Not in Very Good Health: Man
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The People’s Republic of Debt
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China has 4 million millionaires, survey finds
AFP JUNE 16, 2015 3:34PM

China had four million millionaire households in 2014, the second-highest in the world after the United States, as the country’s stockmarket boom boosted private wealth, an independent survey showed today.

One million new millionaires were created in the country last year, the highest increase among all nations, US-based research firm Boston Consulting Group (BCG) said in a report.

The United States had seven million millionaire households last year, the most in the world. Japan took third place with one million, according to the report.

Growth in private wealth in China was driven mainly by investments in local equities, it said.

The benchmark Shanghai Composite Index finished 2014 as the best performer in Asia after soaring more than 50 per cent.

“Strong market performance across the entire (Asia-Pacific excluding Japan) region — thanks to solid domestic demand — significantly increased the value of existing assets ... compared with the increase stemming from newly created wealth,” the report said.

The rise in the value of existing assets accounted for 76 per cent of the region’s growth in private wealth, it added.

China had 1037 households with more than $US100 million in net worth, around one fifth of the United States’ 5201 but the second-largest in the world, the report said.

Forbes said in an April report that mainland China was estimated to have a record 400 billionaires and billionaire families thanks to “a rally in stock prices”.

A yawning income gap has become a rising concern in the world’s most populous country, where the official Gini coefficient stood at 0.469 last year.

The figure is a commonly used measure of income inequality, with 0 representing perfect equality and 1 total inequality. Some academics view 0.40 as a warning signal.

Analysts say that official corruption connected with government control of the economy, the state monopoly of some industries and a lack of social security for migrant workers are among reasons for the country’s income imbalance, according to a report earlier this year by the People’s Daily, the ruling Communist Party mouthpiece.

Short back and sides for fictional Chinese data
PETER CAI THE AUSTRALIAN JUNE 18, 2015 12:00AM

If you think Chinese data on GDP is unreliable, you probably haven’t paid much attention to the country’s unemployment figures. Source: Getty Images
Paul Krugman says all economic data are best viewed as a peculiarly boring genre of science fiction, but Chinese data are even more fictional than most. The Nobel laureate is not the first, and certainly will not be the last, to shine light on the unreliability of Chinese economic data.

Krugman even has allies at the highest levels of the Chinese government.

Premier Li Keqiang, a trained economist with a PhD from Peking University, doesn’t quite believe economic figures provincial officials feed him. In 2007, he told the American ambassador in China that GDP figures in the rust belt province of Liaoning were “man made” and “unreliable”. Thank you, WikiLeaks.

Instead of relying on fictional data from Chinese statisticians, who have a professional reputation similar to that of astrologers, Mr Li preferred to look at the cargo volumes on railways, electricity consumption and bank loans to gauge the true state of the economy. Li’s home grown method of looking at the Chinese economy has been touted as the “Li Keqiang Index”.

The former deputy auditor general of China, Dong Dasheng, even publicly admitted in March that economic data from the last few years were not reliable. He quoted a local official who said that past economic figures were too high, and that if they were to report real numbers now, economic growth would fall off a cliff.

If you think Chinese data on GDP is bad, it means you probably haven’t paid much attention to the country’s unemployment figures. Many China watchers regard it as the weakest link in the country’s basket of economic data. The Chinese media is full of stories of university graduates struggling to find jobs and their stagnant starting salary levels. Yet official statistics about the labour market shows resilience.

What is so bad about the labour market statistics is not the outright fraud, but the deeply flawed method used for measuring unemployment. When it is just fraudulent, you actually know how bad it is. When the method itself is questionable, you can’t separate fiction from fact. That is bad.

In China, the official unemployment figure is known as the urban registered unemployment rate. If you know anything about how they collect these data, you would not believe it at all. In order to be counted as unemployed in China, you need to be registered at designated government offices. The process is rather complicated and demeaning. So people simply don’t bother registering.

More importantly, the data does not accurately capture migrant workers; a huge part of the country’s working population. As a result, despite the significant deceleration in the country’s economy, the unemployment rate remains at about 4 per cent. Nie Riming, from the Shanghai Institute of Finance and Law, says the unemployment data has no use and that it’s simply decorative.

When China was growing very fast, having accurate data on the unemployment situation was not that important, relatively speaking. The government’s preferred method at the time was to look at the number of newly created jobs every year. Migrant workers could also go back to their farms if life got tough in the cities.

However, the situation is changing rapidly. The economy is experiencing its lowest pace of growth in decades and many younger migrant workers prefer to stay in the cities even when they don’t have productive jobs. Like young people in Australia, many of them don’t want to return to the farm after they have experienced urban life.

So at this critical juncture of China’s economic development, the country’s policymakers need to have access to reliable data such as unemployment figures. In fact, Li made it clear that unemployment data is one of the most important indices measuring the health of the economy. It has far-reaching consequences; it means the government will not engage in large-scale stimulus measures if the labour market is resilient despite weak GDP growth.

“The macroeconomic policy of many countries is set according to the surveyed unemployment rate. We have come to a point where this data is equally important for us,” Li said.

“The basic aim of developing the economy is to create jobs.”

He talked about the need to get reliable data on the jobless rate, which means using internationally accepted survey results instead of the useless and discredited urban registered unemployment rate. The good news is that the National Bureau of Statistics clicked its heels and snapped to attention, promising better data from next month onward.

After 30 years of breakneck economic growth, the world will finally get to know China’s real unemployment situation (fingers crossed). The bureau says it will expand the areas it surveys from 65 large cities to include all district level cities. It will also include migrant labourers who have been living in the cities for more than six months.

From July, 15,000 interviewers will survey 120,000 households every month to gauge the true state of the joblessness situation in China. Lets hope they will publish the data in a timely manner.

As China goes through a period of painful adjustment, it is about time to end the unhealthy obsession with GDP growth and focus on more important issues such as unemployment. Beijing and the world need accurate data to know what is going on in the country so they can make appropriate economic policy and investment decisions.

Giving us a believable jobless rate will be a good starting point.

「救救我」變「我愛你」
訪民攔習車隊呼冤　遭封喉滅聲拖走
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2015.06.14文茜的世界周報／周永康判無期徒刑　世紀大審悄然落幕
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China manufacturing shrinks for fourth straight month: HSBC
JUNE 23, 2015 1:33PM

China’s manufacturing activity contracted for the fourth straight month in June as demand remained sluggish in the world’s second-largest economy, a survey by British banking giant HSBC shows.

The bank’s preliminary Purchasing Managers’ Index came in at 49.6 in June, the highest in three months, but still below the break-even point of 50, HSBC said in a statement.

The index, which is compiled by information services provider Markit and tracks activity in factories and workshops, is seen as a key barometer of China’s economic health.

However, while it marked a fourth straight contraction, the figure was an improvement on May’s final reading of 49.2 and also beat a forecast of 49.4 in a survey of economists by Bloomberg News.

Total new business and purchasing activity increased slightly this month, but companies continued to slash staff, with the latest reduction the sharpest in more than six years, Annabel Fiddes, an economist at Markit, said in the statement.

The acceleration in job cuts indicated that companies have “relatively muted growth expectations as demand conditions both at home and abroad remain relatively subdued”, she said.

“The data add to evidence that the sector has lost growth momentum in Q2 as a whole, and suggests that the authorities may step up their efforts to stimulate growth and job creation in the second half of the year,” she added.

AFP

China’s Auditor Says State Firms Falsified Revenue and Profit
http://www.bloomberg.com/news/articles/2...and-profit

Is this anything or part of the culture?

(29-06-2015, 11:22 AM)Behappyalways Wrote: China’s Auditor Says State Firms Falsified Revenue and Profit
http://www.bloomberg.com/news/articles/2...and-profit

JD.com boss Richard Liu says consumers will drive China’s growth
THE AUSTRALIAN JUNE 30, 2015 12:00AM

Matt Chambers

Resources Reporter
Melbourne

Chinese billionaire keeps faith
Richard Liu, chairman and founder of JD.com. Picture: Aaron Francis Source: News Corp Australia

One of China’s richest men has expressed confidence in his country’s economy, as the Shanghai stock exchange continued to fall despite a surprise move by the People’s Bank of China on the weekend to cut rates.

Billionaire Richard Liu said China was transitioning from infrastructure-led growth to a consumer and services-led economy.

“I am very optimistic about China’s economy,” he said.

“Not only are the Chinese people working very hard, but also China is attaching great importance on innovating.”

Mr Liu was in Melbourne yesterday to launch an “Australia Mall” channel by his giant online trading platform, JD.com, as part of a move to sell more Australian products to Chinese consumers.

He plans to invest equity in local food and cosmetic companies, and said Australia would be the major overseas investment destination targeted in coming years by JD.com, the world’s third-biggest internet company by revenue after Amazon and Apple.

“In regards to investment, Australia will be our main target,” he told The Australian yesterday.

“The traditional US, European, Japanese and Korean markets are well developed and their products are already well known in China, but we see a lot of hidden gems in Australian products and it has a huge potential in the future.”

The company is looking to take stakes in companies that it will promote through its platform.

“We are looking at investing in Australian companies in the near future to ensure the quality of our products,” said the 42-year-old Mr Liu, the chairman, chief executive and founder of JD.com.

As part of its launch yesterday, JD.com announced partnerships with Treasury Wine Estates and Australia Post.

Already a distributor of products from The a2 Milk Company, JD.com is targeting food and cosmetic products from Australia on the basis that his 100 million customers want unique, regulated, high-quality products.

“We believe it’s important to market the country first and then its product and we want to promote Australia as a very clean, very natural and very beautiful country,” he said.

“We also want to make Chinese people aware of how straight and stringent Australian regulations are in regards to food safety and security.”

He said the platform would focus primarily on food and cosmetics in Australia but also healthcare, sports, shoes, baby goods and others.

The online trader listed on the Nasdaq in May last year and has a $US46 billion ($60bn) market value.

“We know there are a lot of good Australian companies and we know they have more than often focused on the European and American markets in the past,” Mr Liu said.

“We would like to urge them to come forward and attach greater importance to the Chinese market — this will be a huge opportunity for Australian consumer products companies.”

JD.com says its advantages over other platforms are that it has its own Chinese logistics business to deliver its goods and that it is a strong protector of intellectual property.

“You will not find one fake bottle of a2 Milk, and no a3, a4, or a5 either,” said Mr Liu, who is worth $US9bn and is China’s 11th-richest person.

Treasury Wine chief financial officer Tony Reeves said the company planned to sell eight brands direct to the Chinese consumer market through the JD deal.

“For a lot of consumers in China, if they’ve tasted hard liquor, wine is a very nice change and a much more approachable drink,” Mr Reeves said.

“Overall, the megatrend is favouring a shift to wine.”

Mr Reeve, who said there were no discussions for JD.com to take a stake in Treasury, said the memorandum of understanding between JD.com and Australia Post would allow small businesses in Australia direct access to China.

Phil Wohlsen, a2 Milk’s head of Asia, said JD.com customers tended to be at the more high-end, sophisticated part of the market.

“The increasing wealth and sophistication of consumers, the desire for high-quality food and nutrition, concerns over food safety and the relaxation of the one-child policy, means the local market demand for premium ­imported products, especially from Australia and New Zealand, is growing,” Mr Wohlsen said.