China: Pre-U Economics
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The Curious Case of China’s GDP Figures

The Curious Case of China’s GDP Figures | China: Pre-U Economics | Scoop.it

Early this year, China found a missing province, one doing very well for itself.  The total GDP for 2012, according to the National Bureau of Statistics, was 51.9 trillion yuan.  The total GDP figures of China’s 31 provinces for 2012 added up to 57.6 trillion yuan, giving the phantom 32nd province an annual GDP of 5.7 trillion yuan.  For many economists, this was just a shining example of what they have believed for years: that China’s GDP numbers are questionable at best, and often exaggerate China’s growth, largely for political reasons.  

 

In fact, in 2007, Li Keqiang, then-party secretary of Liaoning and now soon-to-be premier, said that GDP statistics were “for reference only” and “man-made,” and that for his purposes, he preferred to look at electricity consumption, rail cargo volume, and loan disbursements.  He did not say this publically–rather, his statements (reflecting what many officials surely believe) came to light in 2010 in a U.S. government cable released by Wikileaks.


Via DOSID
Graham Watson's insight:

Very interesting piece this from China commentary; lots of evaluative angles to take about the nature of official data. Why do commentators look at electricity consumption rather more carefully in China than they do in other leading economies?

 

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DOSID's curator insight, March 6, 2013 10:04 AM

There are a number of reasons for doubts about the accuracy of China’s GDP.  To begin, there are structural political disincentives to reporting accurate GDP figures at the local level.  Local officials are promoted almost entirely on the basis of their locality’s growth rates, giving them a huge incentive to report increasing GDP figures, no matter if they are or not. Environmental concerns have also created an incentive for officials to lie: higher growth rates, when paired with the amount of coal burned, give the province an appearance of greater energy efficiency.

 

At the central level, it is politically imperative that GDP continues to rise, primarily because the central government has erected a system on the promise of economic success, and fears instability should growth decline and unemployment rise.  At this point in time, with a leadership transition in process, it is particularly crucial that growth continue. 

China: Pre-U Economics
All things Chinese - for Paper 3 of the Pre-U Course
Curated by Graham Watson
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What Singles Day says about modern China

What Singles Day says about modern China | China: Pre-U Economics | Scoop.it
A million retailers worldwide took part in the ninth annual Singles Day that generated $25bn in sales.
Graham Watson's insight:
Cindy Sui provides a Sinocentric view of Single's Day in China and reflects upon what it says about the changing nature of the Chinese economy - increasingly consumerist - and how this clashes with more traditional Chinese values.
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Trump says trade deficit not China's fault

Trump says trade deficit not China's fault | China: Pre-U Economics | Scoop.it
Speaking in Beijing, the US president gives China "credit" for taking economic advantage of the US.
Graham Watson's insight:
President Trump at his gracious best in China today - according to the article "he does not blame China for the "unfair" trade relationship between the countries, despite long railing against the economic imbalance."

I wonder who he does blame? Successive American governments for running budget deficits? American consumers for spending too much and wanting to buy Chinese goods. Who can tell?
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China steel ‘zombie’ privatisation sets precedent

One of China's most successful steel tycoons has agreed to invest Rmb4.5bn in Dongbei Special Steel as part of a restructuring.
Graham Watson's insight:
This clip is fascinating documenting how one Chinese province, Liaoning, has started to privatise 'zombie' companies in the hope of returning them to profitability, rather than continuing to prop them up.

The company featured, Dongbei Steel has defaulted on bond interest repayments on ten separate occasions, however, that hasn't stopped Shen Wenrong from investing in the business and hoping to turn it around.

If he can, it might give other entrepreneurs, and other provinces, greater confidence in tackling this sizeable problem.
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Beijing intends to narrow social inequalities | Short View

When China's leader Xi Jinping addressed the congress last week he called for the country to address unbalanced and inadequate development and mentioned environment as a key area. But as the FT's James Kynge explains, there are challenges to China's rebalancing.
Graham Watson's insight:
The FT attempts to read the runes from last week's Congress, with experienced China watchers suggesting that he's going to focus on inclusive and sustainable growth, looking to extend the benefits of previously high levels of growth to rural areas, placing greater emphasis on protecting the environment, shrinking a property bubble, and rationalising state-owned industries are also highlighted.

James Kynge is our guide - and he's a sage one at that.
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US fast-food chains put rural China growth on menu

Kentucky Fried Chicken and McDonald’s outlets are opening at a rate of more than one a day in China, mostly in smaller towns, to revive growth in China’s fast food market, which generates annual sales of $125bn, according to Euromonitor.

Graham Watson's insight:
Another nice China story today: KFC and McDonald's are hopeful that greater focus on smaller towns will revive their business in China which had stagnated. The hope is that incomes in these towns will have risen so as to make them the sorts of places where a new fast food restaurant will be likely to thrive.
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A blockage in global waste disposal

A blockage in global waste disposal | China: Pre-U Economics | Scoop.it
A ban on the import of waste in China is about create a major blockage backing up through the global waste disposal system
Graham Watson's insight:
Another remarkable China story. As part of China's attempt to tackle pollution, the authorities have tightened up regulations associated with importing waste for disposal. As a result, a number of forms of waste that were previously disposed of in China, and not always appropriately are starting to collect in other places, notably Hong Kong.

Who knew?
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Xi Jinping, China's president, is the world's most powerful man | The Economist

Is Xi Jinping the worlds most powerful man? The world's balance of power is shifting. For the past five years president Xi Jinping, China's leader, has ruled with an iron fist and has been pursing a new model of great power relations.

Graham Watson's insight:
The Economist speculates: is Xi Jinping the world's most powerful man?

Don't tell President Trump.
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Human cost of China's economic reforms

Human cost of China's economic reforms | China: Pre-U Economics | Scoop.it
Health risks and job losses are among the harms many in China face in the push for economic change.
Graham Watson's insight:
This article highlights the ongoing problems with high rates of growth in China - notably the impact of the environment on people's health. It looks at the negative externalities of various sectors of industry and how they impinge upon people's lives.
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Urumqi, China: Faster, Greener and More Comfortable Transport Service with BRT

Residents of Urumqi benefit from cost-effective, green public transport services through the World Bank-supported Bus Rapid Transit Project.
Graham Watson's insight:
And here's a case study of how they've done this in Urumqi, North West China. The city has a population of 3.5 million people and associated traffic and air pollution. However, a $140 million loan helped the city develop a Bus Rapid Transit Project to help solve the problem. 
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Chinese firm behind Essex nuclear plant refuses to reveal security information

Chinese firm behind Essex nuclear plant refuses to reveal security information | China: Pre-U Economics | Scoop.it
State-owned company refused disclosure of security arrangements for Chinese plant the Bradwell nuclear station could be modelled on
Graham Watson's insight:
One of the problems of doing business with China: a lack of transparency. Are we prepared to permit a Chinese firm to build a nuclear power plant without revealing its security arrangements? I doubt it.
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Trump blocks sale to Chinese company

Trump blocks sale to Chinese company | China: Pre-U Economics | Scoop.it
The administration said it barred the $1.3bn deal because of national security concerns.
Graham Watson's insight:
A change of US policy: Donald Trump has intervened to block a merger between a Chinese company and an American superconductor manufacturer. The article notes: "the Trump administration said it was concerned about the "potential transfer" of intellectual property from Lattice, which makes advanced computer chips. It also cited the use of Lattice products by the US government."

But is this good economics? I doubt it.
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China looks at plans to ban petrol and diesel cars - BBC News

China looks at plans to ban petrol and diesel cars - BBC News | China: Pre-U Economics | Scoop.it
China has started "relevant research" but has not yet decided when the ban would come into force.
Graham Watson's insight:
With major car manufacturers having committed to producing electric cars, the Chinese government has also committed to getting rid of petrol and diesel cars, with a target of 20% of cars being either electric or hybrid by 2025.

However, there's no definitive target for them. Yet.
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China’s clout has few limits. Shouldn’t we be worried about its new Silk Road? | Tom Miller

China’s clout has few limits. Shouldn’t we be worried about its new Silk Road? | Tom Miller | China: Pre-U Economics | Scoop.it
Xi Jinping’s global investment programme threatens the west with more than economic dominance, says Tom Miller, author of China’s Asian Dream: Empire Building Along the New Silk Road
Graham Watson's insight:
An odd article for the Guardian to carry? Should we worry about the growth of China, and the spread of its influence?

Critics of China suggest that its rise is neo-colonialism at its worst; others suggest that it simply represents a rebalancing of the global economy.
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China's Single Day - bigger than Black Friday and expected to smash $20bn 

China's Single Day - bigger than Black Friday and expected to smash $20bn  | China: Pre-U Economics | Scoop.it
China is in gearing up for Single's Day, the world's biggest shopping event, as $20bn (£15bn) is forecast to be splurged in just 24 hours as companies across the world try to cash in on the spending spree.
Graham Watson's insight:
Thought that Black Friday was the biggest day for retailing in the world? Well, think again, China's Single's Day - a patently commercial creation - knocks it into a cocked hat. This Telegraph article details the extent to which lovelorn Chinese consumers console themselves via retail therapy. That alone should indicate why many of them don't have a boyfriend/girlfriend.
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China moves to clean up online shopping

China moves to clean up online shopping | China: Pre-U Economics | Scoop.it
New laws mean shopping websites which publish false product adverts will face tough fines.
Graham Watson's insight:
Is online retail just another example of Xi's anti-corruption campaign? Certainly, legislation has been passed aiming to clean-up the sector, but is this more than rhetoric?
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The problem facing Trump's China probe

The problem facing Trump's China probe | China: Pre-U Economics | Scoop.it
President Trump targets intellectual property theft from China, but only a few firms are helping.
Graham Watson's insight:
Excellent image of Xi Jinping ignoring the irrelevant man sat next to him.

That aside, the article looks at the importance of intellectual property rights in US-China trade relations, highlighting the fact that President Trump has already announced that the issue is a major concern.

However, the question is one of 'net' gains: is it worth jeopardizing relations with the largest consumer market in the world for the sake of what, at present appear to be a relatively small number of issues regarding intellectual property?
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China lifts ban on stinky cheese

China lifts ban on stinky cheese | China: Pre-U Economics | Scoop.it
Import ban on Roquefort, Brie, Danish Blue, Gorgonzola and Stilton to be lifted immediately.
Graham Watson's insight:
The BBC clearly has a 'nose' for a story: China has decided to lift an embargo on so-called stinky cheese because the bacteria hadn't been approved by the Chinese authorities.

Blessed are the cheesemakers, in this instance, although it strikes me as slightly odd that the Chinese should object to unusual foodstuffs given certain Chinese specialities.
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China anti-corruption purge hits Central Committee

Beijing's historic anti-corruption campaign has claimed 18 of 205 members of China's elite Central Committee since 2012 and helped President Xi Jinping to consolidate his control over the party.

Graham Watson's insight:
This FT clip looks at how no-one is apparently above the anti-corruption campaign of Xi Jinping, with nearly 10% of the Central Committee of the party investigated since 2012, and a number of other leading officials having been sentenced.

The hope is that by tackling corruption, growth is promoted at the expense of rent-seeking.
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China economy grows 6.8% in third quarter

China economy grows 6.8% in third quarter | China: Pre-U Economics | Scoop.it
The world's second largest economy has taken steps to rein in debt and cool the housing market.
Graham Watson's insight:
There was a time when 6.8% growth in China would set alarm bells ringing. However, 6.8% is above the 6.5% growth target, and quite an achievement for an economy looking to control both debt levels and the possibility of a property bubble.
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What has China's president achieved?

What has China's president achieved? | China: Pre-U Economics | Scoop.it
Chinese president Xi Jinping will be confirmed for a second five-year term this month.
Graham Watson's insight:
A brief synopsis of what President Xi Jinping has achieved, touching on the major issues that threaten the Chinese growth miracle, and what he's done about them: it looks at the environment, debt and question marks about the pace of reform.

For those people studying China for Paper 3, this is a must.
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Bonfire of the freebies: China officials forgo free fruit and haircuts in Xi austerity drive

Bonfire of the freebies: China officials forgo free fruit and haircuts in Xi austerity drive | China: Pre-U Economics | Scoop.it
No more sea cucumber and prawns for officials at party congress, where home-style cooking replaces luxury banquets
Graham Watson's insight:
China is in the midst of an anti-corruption drive, with more than 1.3 million party members having been punished. But the end of sea cucumber and prawns? Things must be bad.
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China: More Mobility with Fewer Cars through a GEF Grant

A World Bank-supported project will help seven cities in China improve city life by developing and implementing transit-oriented development (TOD) strategies.
Graham Watson's insight:
The World Bank is keen to foster 'green' solutions to problems with urban mobility and this clip focus on how they are looking to help the Chinese overcome this problem. The aim is to focus on transit-oriented development (TOD) strategies, or perhaps more simply integrated transport solutions to deal with China's rapid urbanisation.
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Chinese firm buys UK chip designer

Chinese firm buys UK chip designer | China: Pre-U Economics | Scoop.it
UK tech firm Imagination, which has designed chips for iPhones, is being bought for £550m.
Graham Watson's insight:
A Chinese firm has just bought a UK chip imagination, which used to make chips for Apple, was looking for a buyer and the Chinese firm has stepped in. Interestingly, the Americans have barred the same company, Canyon Bridge, from buying an American semiconductor firm.
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China relaxes currency controls | Markets

The renminbi suffered its worst day in three months after China’s central bank scrapped two rules intended to bolster the currency, in a sign that official nervousness about currency depreciation and capital flight has eased.
Graham Watson's insight:
An interesting day on Chinese currency markets as the scrapping of currency controls designed to reduce the risk of capital flight and interpreted as a sign of greater confidence saw a fall in the value of the renminbi, suggesting that capital flight remain a risk.

Your task? To work out why capital flight and a weaker RMB is such a bad thing.
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Has flood of Chinese money really dried up?

Has flood of Chinese money really dried up? | China: Pre-U Economics | Scoop.it
There had been rumours for some time about the Chinese government wanting to slow the flood of money out of the country;
Graham Watson's insight:
There's a suggestion that the Chinese government are keen to stop capital flight. This article considers the extent to which this is true, and suggests that for now there is a dip in the level of Chinese overseas investment.
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