Monthly Archives: April 2010

China Steps Up Tariffs On U.S. Poultry Imports

In China-U.S. trade relations’ own game of chicken, China is to impose new tariffs on U.S. chicken imports in retaliation for what it says are unfair U.S. subsidies to American poultry farmers by way of cheap feed. A new tariff of up to 31.4% comes on top of up to 105.4% tariffs imposed earlier this year in response to alleged dumping.

The move comes just when bilateral relations seemed to be coming out of a choppy period with the yuan’s peg to the dollar the main point of contention. However, China started an anti-dumping and anti-subsidy investigations into U.S. poultry imports last September.

Last year, U.S. poultry producers sold $722 million worth of chicken and chicken part, mostly wings and feet, to Chinese consumers, and accounted for 90% of China’s chicken imports in the first half of the year,  Xinhua says. That trade will be effectively ended by the new tariffs. This is also the first time China has imposed tariffs on agri-imports on the grounds of subsidies, though it has done so with industrial products, notably U.S. steel.

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China’s Small Win At The World Bank

China is a winner from the World Bank’s $86 billion capital increase agreed at the World Bank/IMF annual meeting, but a winner of a battle to raise the voting power of the developing nations in the multilateral financial institutions, not of the war itself.

Beijing will take some satisfaction from having its voting share raised to 4.42% from 2.77%. Among its fellow BRIC’s, India’s share was increased to 2.91% from 2.77% and Brazil’s to 2.24% from 2.06%. China’s larger increase means it surpasses Europe’s largest economy, Germany, in the pecking order at the World Bank and leaves it behind only the United States and Japan.

The U.S. still has a 15.85% voting share. With the World Bank requiring an 85% vote to pass any fundamental change, that gives Washington veto power. And it is not going to give that up willingly. The cycle of five year reviews of voting rights also agreed at the World Bank/IMF meeting gives it a measured timetable to slow the issue being forced. The rich countries also dominate the boards of the World Bank and the IMF. Beijing still has to chip away at that, too.

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Shanghai Expo To Show China To The World

The Beijing Olympics, we still think, was a demonstration of China’s emerging standing and influence on the world stage intended primarily for a domestic audience. We have no doubt that the Shanghai Expo, which opens on May 1, is to demonstrate China’s soft power to the rest of the world. In that, it echoes what Japan did with the 1964 Tokyo Olympics and then its Expo in Osaka six years later, which we now look back on as Japan Inc’s coming out. Beijing has telescoped the time line to two years, but the fact that it is spending twice as much to host the Shanghai spectacular than it did the Olympics is all you really need to know.

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Wang Moved On As Xinjiang Party Boss

While no official explanation of the replacement of Wang Lequan as had of the Party in Xinjiang has been publicly given, the change follows an internal meeting earlier this week that reviewed the unrest in the western province where rioting last July left nearly 200 people dead. Zhang Chunxian, previously party boss in Hunan, takes over as party secretary, the most powerful post in the province, while Wang, who has close links to President Hu Jintao and has been in the Politburo since 2002 with responsibility for ethnic minority affairs, moves to a party job in Beijing. There he will be deputy secretary of the political and legislative affairs committee of the Party’s Central Committee, Xinhua reports. That will be interpreted as a demotion, though now 65 Wang has held the job since 1995.

Xinjiang’s predominantly Muslim ethnic Uighurs won’t be sorry to see him go. For more than a decade he has cracked down on Uighur separatists and enforced a systematic Hananization of the province through measures such as making all teaching in primary schools in Chinese, limiting observation of Muslim festivals and encouraging westward Han migration from the rest of China as he opened up the region’s oil resources. Beijing’s plans for Xinjiang, which the 57-year-old Zhang will have to implement, call for more long-term economic development in the same vein.

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Mapping China’s Global Foreign Direct Investment

We often think that web infographics end up as more style than substance, but here is an exception. The Heritage Foundation has published on Forbes.com something it calls its China Global Wealth Tracker. It is little more than a map of the world showing where Chinese companies have made investments from March 2005 to the end of last year. There is a dot for each investment, color-coded by industry; green for finance, blue for energy, for example. As the map loops through each month since March 2005, the density of the dots builds up. Two points stuck us: how globally dispersed the dots now are, and, for all the talk of investment in the mineral resources of Africa and Australia, how many dots are clustered in Europe and the United States.

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Gome’s Huang Guangyu Stands Trial

Huang Guangyu, founder of the Gome electronics retail chain, has gone on trial on charges of insider trading and bribery, Xinhua reports. Huang has been in detention for more than a year and was indicted in February. The trail opened last Thursday in the Beijing No. 2 Intermediate People’s Court, the state newsagency says. Huang stands accused of illegal foreign exchange trading via Hong Kong in 2007 and insider trading of Shenzhen-listed technology stocks. He is also accused of offering bribes of 4.6 million yuan ($667,600) to a number of officials. The 41-year-old tycoon was once China’s richest man but last year topped Xinhua’s list of most disgraced executives.

Update: The trail has concluded. In truth it was probably done by the time its opening was announced. No verdict has been announced. Anything less than a conviction and 10 years imprisonment would be a surprise.

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China Needs To Restructure Economy To Cut Greenhouse Gas Emissions

China and the five other leading East Asian economies have grown 10 fold over the past three decades and tripled their energy consumption in doing so. They are expected to double it again in the next two decades as industrialization and urbanization continues apace.

That growth has come at an environmental price, but, the World Bank now says, these economies could stabilize their greenhouse gas emissions over the next 15 years without compromising growth.  It will require “major investments in energy efficiency and a concerted switch to renewable sources of power”, according to the newly published Winds of Change: East Asia’s Sustainable Energy Future.

China accounts for 80% of East Asia’s energy consumption and 85% of its CO2 emissions.  In its case, it  will need to reduce it energy intensity by 4.3% a year over the next 2 decades, the World Bank says. Over the past decade it has achieved 3.4% a year. Beijing’s target is a reduction of  4.2% per year.

This is a daunting goal, as the World Bank notes, “given that China is at a developmental stage in which energy-intensive industries, driven by demand from domestic and export production, dominate the economy”. While China is developing nuclear power generation and low carbon technologies such as hydropower, wind, and biomass to wean it from its coal dependence, it will be structural economic change toward a less energy-intensive economy that will be the single largest contributing factor in cutting China’s greenhouse gas emissions.

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