The country’s foreign exchange reserves grew in the first quarter by less than they did in the fourth quarter of last year. Reserves stood at $1.95 trillion at the end of March, the People’s Bank of China reports, up $7.7 trillion since the end of December, when they had shown a more than $40 billion increase over the previous year. The first quarter increase was the smallest quarterly gain in eight years.
The numbers are little surprise in that they reflect the shrinking of the trade surplus, which was down 45% in January-March compared to October-December, but they will also reflect the lower returns China is getting on its pile of U.S. Treasuries ($740 billion-worth according to U.S. data) and the weaker euro against the dollar to which the yuan is holding/being held flat.
The deceleration of the growth rate of the reserves is likely to continue in the months ahead, but the pot is still big enough to fund more U.S. debt purchases and foreign acquisitions such as natural resources though loans-for-energy deals. Watch for one of those with Kazakhstan shortly.
China, Iran, Saudi Arabia, Pakistan and the U.S. comprise a deadly quintet. They accounted for nine out of ten of all known executions last year, according to Amnesty International’s latest yearly tally. China tops its list with 470 executions, almost two in five of the 1,252 Amnesty found.
China’s total is down from 1,860 in 2006. It is difficult to quantify how much of a reduction in the use of the death penalty in China the 2007 total really represents. Amnesty says the true figure “is undoubtedly much higher”. But it also notes that there is likely to have been “a significant drop” following the resumption of review of all death sentences by the Supreme People’s Court at the beginning of the 2007.
In the middle of last year, the authorities said there had been a 10% reduction in executions following the restoration of the court’s review but provided no numbers to support the assertion. Last month, Reuters reported comments by SPC judge Huang Ermei that in 2007 the court rejected 15% of death sentences passed by lower courts, due to “unclear facts, insufficient evidence, inappropriate determination of punishment and unlawful procedures.” Again, no data to back up the claim.
China has 60 crimes that carry the death penalty, classifies its use as a state secret and death sentences are carried out in secret. It may be using the death penalty less or it may be that the reviews are just building up a backlog of executions that will show up in Amnesty’s report next year.
New reports of continuing Tibetan unrest despite the crackdown following mid-March’s Lhasa protests.
Police fired on hundreds of protesters in Garze Tibetan Autonomous Prefecture in Sichuan, killing eight people, according to the London-based Free Tibet Campaign and the International Campaign for Tibet. The protesters were demanding the release of two monks who were detained after 3,000 armed police searched their monastery and found photographs of the Dalai Lama, Tibet’s exiled Buddhist leader, the groups said.
Xinhua reported only that one government official was seriously injured in what it called a riot that took place in Garze on Thursday, but said that “police were forced to fire warning shots”.
In part of its propaganda barrage against the Dalai Lama, Xinhua separately noted that what it called “Tibetan separatists and members of so-called international ‘Tibet Support’ groups” have staged violent attacks on 18 Chinese overseas diplomatic missions since March 10, concluding with no apparent hint of irony that “As a Chinese saying goes, those who commit unrighteous acts bring ruin on themselves”.
Effective corporate web sites are fewer and further between than you might expect. Bowen Craggs, a communications consultancy that bills itself as “website effectiveness experts” draws up a ranking of those from 75 of the world’s biggest public companies by market capitalization.
Six Chinese sites make its second annual list, thanks to a raft of bank IPOs last year, against one last year. Highest ranked is Industrial & Commercial Bank of China at no. 48 with a score of 147 out of a maximum possible 280. (The no. 1 overall site, Siemens, scored 221). China Construction Bank is no. 56 with a score of 140, then Bank of China at no. 63 with 126, China Life Insurance at no. 72, with 105, Sinopec at no. 73 with 98 and, at no. 74, with 94, China Mobile, the only Chinese company on last year’s list when it was last with its site described thus: “The look is plain, the layout clumsy and the English flat.”
So things must be on the up.
In a commentary last year, senior consultant David Bowen wrote:
“The web is not a plausible domestic mass communication channel [for Chinese companies]. But it is a route to the middle classes (12.3% of the country online does mean 162 million people) and to external audiences, especially investors.”
He also notes:
“I could, of course, have made the same criticism of most continental European companies a few years ago, which is a clue for the future. They have caught up, overtaken, and moved to the top of our Index. Will the Chinese do the same?”
The other unanswered question: are better corporate web sites leading indicators of emerging global brands?
U.S. Treasury Secretary Henry Paulson’s flying visit to Beijing to prepare for the next round of strategic economic dialogue due in June was a glummer than usual affair.
Squeezed in between Washington appearances on Monday to announce his plan to restructure America’s financial regulation and a Thursday U.S. Senate hearing on the Bear Stearns bailout, Paulson briefed Chinese leaders on the U.S. economy and the risks that the credit crisis posed to the real economy.
Not that Chinese leaders haven’t been paying attention. “There is no doubt that what’s happening in U.S. markets clearly has to give pause to the Chinese,” over its own financial markets liberalization, the FT quotes Paulson as saying. “They may be too polite to say it directly.”
Concern, too, over investment – where both countries have been complaining about growing protectionism against each other. “This is an area where there has been a loss of confidence on both sides. More work needs to be done,” Paulson said.
The recent accelerated appreciation of the yuan, which has risen against the U.S. dollar at an annualised rate of about 15%-20% so far this year, was a rare bright note.
This story in the FT caught this Bystander’s eye: Philips is set to announce a seven-year research agreement with West China Hospital aimed to help doctors better interpret medical imagery in diagnosing heart disease, strokes and mental illness. It will be the first such project by a multinational in the country, according to the FT.
West China is one of the largest hospitals in the world, with 4,300 beds and 2m outpatients. It is that sheer size that is attractive to the Dutch firm which is the third largest producer of medical imaging equipment. It provides a statistically significant pool of patients. The more data there is to crunch, the better can be made the algorithms that extract meaning from it.
Medical imaging has been a growing market for multinationals as the government has pushed health care modernization and hospital privatization. The SARS outbreak in 2003 also spurred the market. As well as Philips, the obvious suspects, General Electric, Siemens, Toshiba and Hitachi, are all active.
The next five-year plan puts more focus on rural medical treatment. That should open a new market for diagnostic imaging equipment manufacturers but one that may be more attractive to the smaller scale domestic companies like Analogic and Weida.
Australia’s Takeovers Panel has given Chinese companies another sharp lesson in the ways of cross-border M&A. This time: no concert parties.
It has ruled that Shougang Concord can’t go ahead with buying a 19.7% stake in Australian iron ore company Mount Gibson because Apac Resources, in which Shougang Hong Kong holds an 18% stake, already owns 20..2%. That would take Shougang above the 19.9% stake that triggers the requirement for a full bid under Australia’s takeover rules.
Shougang Concord and Shougang Hong Kong are both subsidiaries of state-owned steelmaker Shougang Corp. Shougang Concord was proposing to buy its stake in Mount Gibson from Gazmetall, an ore producer controlled by Ukranian-born billionaire Alisher Usmanov.
Chinese steel companies have been trying to buy a number of Australian mining companies in order to secure raw materials. Sinosteel is making a hostile A$1.2 billion bid for Midwest Corp, and Baoshan Steel is involved with BHP Billiton’s attempt to buy Rio Tinto for $140 billion. The Takeovers Panel has made it clear that if the Chinese are to come, they have to come in through the front door.
Filed under Economy, Markets
When U.S. Treasury Secretary Henry Paulson arrives in Beijing on Wednesday, the Chinese currency might coincidental break through the symbolic seven to the dollar level. As Richard McGregor writes in the FT “the currency has become a litmus test of Chinese responsiveness to U.S. complaints on trade.”
Yet what really is driving the recent strengthening of the yuan — it has risen more than 15% so far this year, more than in the previous two and a half years — is domestic inflation not Washington’s grumbling. Beijing is finding it increasingly difficult to sterilize the economy against the inflationary impact of the foreign exchange reserves piling up because of the trade surplus.
With inflation running at a 12 year high, that has become a more important policy imperative than supporting exporters and inefficient state owned enterprises that are in no fit state to compete against imports. Plus it gets it a few bonus brownie points in Washington — if not Brussels or Tokyo.
Despite unprecedented attempts to ensure a protest-free hand over of the Olympic flame to the organizers of the Beijing Olympics, Greek police scuffled with pro-Tibet demonstrators gathered outside the Athens stadium where the ceremonial transfer was due to take place.
On Tuesday the flame formally sets off from Beijing for the Kazakhstan capital, Almaty, the first stop on an 85,000 mile relay through 19 countries that is followed by a three-month tour of China, including a controversial and highly symbolic leg that will see the flame carried up Mount Everest.
This Olympic flame will be carried further than any before it. Every step of the way, inside and outside China, will be taken in the shadow of Tibet.