China Iron and Steel Association disclosed that its latest survey shows evident price manipulation on the iron market. Therefore, it suggests the implementation of a national reserve strategy. According to the Association, China's iron ore imports account for 75 percent of the world's total iron ore trade through sea shipping. However, the global market of iron ore is monopolized by the top three foreign miners, including Australia's BHP Billiton and Rio Tinto and Brazil's Vale. They have pu ...
Alibaba’s retail Website is beefing up its group buying offerings just as Groupon appears to gear up for a launch in China. On Asia Today, Asia Heard on the Street Editor Mohammed Hadi and WSJ’s Andrew LaVallee discuss that development, plus the resignations of Alibaba.com’s CEO and COO following an internal fraud investigation:
A list of what the Wall Street Journal’s reporters in China are reading and watching online, periodically updated throughout the day. (NOTE: WSJ has not verified items in the ‘News’ section and does not vouch for their accuracy.) Last updated: 12:35 pm Beijing time. News Items: The wife of jailed Nobel Peace Prize laureate Liu Xiaobo is afraid she might “go crazy” under house arrest, human rights groups say. (AFP) Foxconn International Holdings Ltd, a subsidiary of Apple supplier Hon Hai Precision Industry Co Ltd, announces a plan to raise salaries further after a spate of worker suicides last year. (Economic Observer) Libya’s Moammar Gadhafi defends the Tiananmen Square crackdown in a speech Tuesday (AtlanticWire). Volvo Cars, now owned by China’s Zhejiang Geely Holding Group, plans to build its first Chinese assembly plant in the Chengdu, according to a person with direct knowledge of the plan. (Bloomberg) Digging Deeper: A split in the Party? In a detailed analysis, Alice Miller at the Hoover Institution goes looking for evidence of a rift between reformers and hardliners in China’s powerful Politburo–and doesn’t find much ( PDF ). Internet Watch: First China overtakes Japan as the world’s second-largest economy, now, the FTtechhub reports, China is poised to pass the U.S. — in online games, that is . Confused about China and the Internet? Forbes writer Gady Epstein provides a smartly written primer on how politics, social media and business intersect in the world’s most tech-savvy autocracy. The New Yorker’s Evan Osnos offers an informative Q&A with New American Foundation fellow Rebecca MacKinnon focusing on U.S. efforts to promote “Internet freedom,” and what they mean for China. Consumption Watch: Cuban cigars are in danger and, according to the Guardian, it may be up to China’s elite to save them . Just Because: “The Kinda Long March,” in which a group of Chinese men take to the Appalachian Trial–and walk away unimpressed . –compiled by Josh Chin. Follow him on Twitter @joshchin
Author: Tsuneo Akaha, MIIS The Russia–Japan territorial dispute over the southern Kurils/Northern Territories is heating up again. Although the Cold War has long ended, Russian President Dmitry Medvedev’s visit to Kunashiri Island on 1 November 2010 prompted Japanese Prime Minister Naoto Kan to call it ‘an unforgivable outrage.’ Japan claims that the islands of Habomai, Shikotan, Kunashiri (Kunashir in Russian), and Etorofu (Iturup) are not part of the territories it surrendered in the 1951 San Francisco Peace Treaty. The peace accord, Japan claims, did not specify to whom the renounced territories would belong, and the Soviet Union (now Russia) could not and cannot base their sovereignty claims to the islands on a treaty the USSR refused to sign. Moscow and Tokyo agreed in their joint declaration of 1956, which restored their diplomatic relations, that the Soviet Union would return the disputed islands to Japan upon conclusion of a bilateral peace treaty. Both countries ratified the joint declaration. In 1991, the Japanese were encouraged when General Secretary Mikhail Gorbachev acknowledged that there was a territorial dispute between the two countries. They even became hopeful when the first Russian president, Boris Yeltsin, agreed in 1993 that the 1956 joint declaration was still valid. Since then, Japan has continued to insist that all of the disputed islands are inherent territory of Japan and Russia’s control of the islands is illegal. Moscow’s position is essentially that Japan has no claim to the territories because it surrendered the entire Kuril chain in the San Francisco peace treaty. The victorious Soviet Union, therefore, acquired the islands as well as the southern half of Sakhalin Island (the northern half was already Soviet territory before the Second World War) as justly deserved spoils of war — as agreed in the Yalta Conference among the allied leaders. In recent years, the Russian leadership has intensified their appeal to patriotism and used the islands issue to this end. On 7 July 2010, the Russian Duma passed legislation establishing 2 September as the day to commemorate the end of the Great Patriotic War; that date in 1945 being the day when Japan signed the instrument of surrender. On 28 September, President Medvedev and Chinese President Hu Jintao issued a joint statement commemorating the 65 th anniversary of the war and pledged further strengthening of the Sino–Russian strategic alliance. This was followed by the Russian president’s visit to Kunashiri Island, as noted above, and similar visits to the disputed territories by Defense Minister Anatoly Serdyukov, other key ministers and high-ranking officials. Ironically, the Russian leaders’ visits to the disputed islands demonstrate Moscow’s commitment to develop the long-neglected economy of the Russian Far East, including the southern Kurils; an effort in which Russia regards Japan as an important partner. Japan also sees mutual benefits in closer economic ties with Russia, particularly in the energy field. Although the eventual outcome of the territorial dispute is anybody’s guess, there is no question that the level of trust between Moscow and Tokyo must improve substantially if a mutually acceptable solution is to be reached. Several essential elements of trust-building efforts can be outlined. First, it is essential to improve and expand the relationship between the two governments so as to withstand the ups and downs of diplomatic tensions. The two countries need a more comprehensive engagement, particularly in the economic and social spheres, at both national and subnational levels, especially involving communities in the Russian Far East and northern and western regions of Japan. Second, Moscow and Tokyo should advance cooperation over transnational and global challenges; for example, nuclear proliferation, terrorism, climate change, public health (like HIV/AIDS and infectious diseases), alternative energy development, space exploration and new materials development. Third, both sides should encourage creative and innovative ideas that go beyond long-held perspectives which have proven ineffective. For one, Russia might consider returning the Habomais and Shikotan to Japan upon conclusion of a peace treaty, where the two sides commit to negotiating the status of the remaining islands. While the negotiations continued, Japan should offer assistance and encourage private investment in the development of the entire Northern Territories. Both Russians and Japanese might live side-by-side, with disputes between them to be settled in an arbitration board or a court of their choice. Finally, for any compromise to withstand inevitable criticisms at home, the political leaders in Moscow and Tokyo must build their credibility not on their ability to fan nationalism among their citizens but on their ability to ensure sustainable economic development and social stability. Professor Tsuneo Akaha is Professor of International Policy Studies and Director of the Center for East Asian Studies at the Monetary Institute of International Studies, California. China and its territorial disputes: One approach does not fit all China and its territorial disputes: One approach does not fit all Japan must acknowledge ‘territorial issue’ over islands
2010 was a tough year for China’s financial regulators. While on the face of it banks sharply reduced their lending, in line with Beijing’s decision to call an end to economic stimulus spending, the reality was banks lent just as much as the year before but hid a lot of it off-balance-sheet. Though the China Banking Regulatory Commission has been trying to bring wayward lending back onto the books, the genie is out of the bottle. And in a country where new loan data is one of the key determinants of monetary policy, that’s a real problem. Now moves are being made to do something about it. In an essay posted on its Web site Thursday, the People’s Bank of China proposed a radical overhaul of how monetary policy wonks look at the economy. “New yuan loan data no longer actually reflects the extent of financing in the real economy,” said the essay ( in Chinese ), authored by Sheng Songcheng, director of the PBOC’s Survey and Statistics Department. Sheng proposes a new formula that includes more than just loan data. “That will help avoid overly focusing on the size of loans and needing to play whack-a-mole, where one problem pops up while you’re dealing with another, such as banks using off-balance sheet lending to avoid credit limits,” Sheng wrote. While banks formally lent 7.95 trillion yuan, or roughly $1.2 trillion, in loans last year, according to the essay, the use of entrustment loans (where-by banks match-make lenders and borrowers and take a fee for their pains) and bank acceptance bills (a type of bank guarantee) meant off-balance-sheet lending inflated banks’ credit creation by a further 3.47 trillion yuan. An Fitch Ratings report issued in December estimated “credit leakage” from the banking sector at more than 3 trillion yuan . The new formula to calculate what the PBOC has termed “social financing” adds yuan loans to foreign currency loans, entrustment loans, trust loans, bank acceptance bills, corporate bonds, funds raised by share sales of non-financial companies, insurance payouts, insurance companies’ investment properties and “others,” and leaves open the option of including private equity and hedge funds in the future as those sectors mature. According to the essay, focusing on new loan data once made sense in an economy where the banks were by and large the only source of financing, but the development of China’s capital markets over the last nine years now means at the end of last year loans accounted for less than 60% of all financing. Despite the fairly holistic attempt to paint a snapshot of actual fundraising in the economy, there’s still one notable emission from the formula: China’s informal lending sector. China’s banks have long neglected lending to entrepreneurs and small firms. Beijing has been trying to redress the problem in recent years by launching a raft of small-scale financial institutions to plug the gap and by encouraging the major commercial banks to set up SME funding units. Still, there is a major unregulated cottage industry for loans, the relative size of which varies from year to year: According to some estimates informal lending was about a third of the size of total new banks loans in 2007, a year when monetary conditions were significantly tighter than the last couple of years. With the banks sloshing money around over the last couple of years, the informal lending networks, loans between family and friends, and underground banks have been relatively less important. And Beijing may now feel that its efforts to encourage formal institutions to extend credit to smaller firms is also reducing the overall importance of informal lending. But if monetary policy does start to tighten meaningfully this year, it Beijing might find its new indicator comes up short. –Dinny McMahon
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There are few observers on the scene in Tokyo today with the institutional wisdom and introspection of Toyoo Gyohten when it comes to commenting on major economic changes affecting Japan. In an office steps away from the Bank of Japan, the senior advisor to the Bank of Tokyo-Mitsubishi UFJ, Ltd. and former vice-minister of finance for international affairs is surrounded by mementos of a career spent at the pinnacle of policy making. “China’s ascendancy to No. 2 is very serious,” said the owlish but spry Mr. Gyohten, speaking in an interview Monday after Japanese GDP figures showed it slipping behind the Chinese economy. “This is clearly a very stark demonstration of a global power shift.” The urbane 80-year old now spends his days mulling world events as head of a bank-funded think tank called the Institute for International Monetary Affairs. The former Japanese finance ministry official said the rise of China is less of a commentary on Japan’s shrinking economic clout than it is on the challenge posed by Chinese ambitions. “They believe–rightly or wrongly–that they are qualified to become the [top] global leader like they used to be several hundred years ago,” he said. “So in that sense, this is less of a problem for Japan than it is, in my view, a problem for the U.S. and the [rest of] the world. ” Continue reading on our sister blog Japan Real Time