Slowing China may bring relief to commodity buyers 22 Mar 2012 China’s manufacturing activity looks to have shrunk in March. As the economy cools, so will China’s appetite for globally traded commodities like oil and iron ore. The shift away from heavy industry, and exploitation of cheap domestic shale gas, should continue the trend.
Jaguar far from becoming China’s next top model 22 Mar 2012 The luxury carmaker owned by India’s Tata will join Mercedes and BMW in producing in China. It’s smart to get a local badge, since things are likely to get tougher for foreign auto firms. But the regulatory road is long, and low-end carmaker Chery is a curious choice of partner.
China reform may require a deeper crisis 20 Mar 2012 The outgoing premier and his likely successor have both called for change. But the biggest required reforms will leave powerful losers. Unlike Greece, Spain or Russia, China lacks creditors or voters to hold leaders to account. Greater turmoil may be needed to force a shift.
China’s pig farms will dampen corn bulls’ hopes 19 Mar 2012 Hopes of China becoming a corn importer have fuelled a global rally in corn prices. But traders underestimate Beijing’s will for self-dependence in this commodity. Improvements in pig-farming efficiency and supply-chain bottlenecks will make global corn prices vulnerable.
Purges and paranoia weaken China’s crisis defences 15 Mar 2012 The ousting of Party hotshot Bo Xilai after a rebuke by China’s Premier Wen shows divisions run deep. Modernisation is a sticking point: reformists see it as a cure for unrest, while conservatives see it as a cause. A divided China can still grow, but may not handle shocks well.
HSBC gains little from BoCom cash boost 15 Mar 2012 It’s hard to justify ploughing another $1.7 billion into Bank of Communications when HSBC’s own returns are so low. HSBC can neither raise its 19 percent stake in the Chinese lender, nor sell without causing a diplomatic incident. The benefits for investors are far from obvious.
Youku-Tudou price pop not only about synergies 14 Mar 2012 The Chinese video portals’ combined market value swelled by $1.5 billion after they unveiled a merger. Cost savings of $50 million a year only partly explain it. Other factors may include a squeeze on short sellers, and hopes that an enlarged Youku could itself be a bid target.
China has much to gain from rare earths fight 13 Mar 2012 A new WTO case against China may put Beijing on the defensive. But China’s global dominance puts it in a strong position to resist pressure. Besides, the backdoor trade protectionism plays well at home, as does the effort to make rare earth mining less environmentally damaging.
China’s trade deficit is sign of things to come 12 Mar 2012 Unusually poor demand from Europe and extraordinary purchases of copper and soybeans helped create a rare $4.2 bln trade deficit in the first two months of 2012. But as China imports less to process for export and more to consume, monthly deficits will get more frequent.
Merger of China’s YouTubes shows web maturity 12 Mar 2012 The $3 bln tie-up of China’s two pure-play online video groups looks like a defensive move in the country’s fiercely competitive Internet market. Diversified players like Baidu and Sina are investing in their own video portals. Profits are coming – but only for those with scale.
U.S. energy nationalism soft spot could be gas 8 Mar 2012 Seven years after jingoism prevented CNOOC from buying Unocal, Chinese companies remain on the prowl. So far, they have been content with joint ventures. And high oil prices would make acquisitions difficult now anyway. But foreign buyers may find America less protective of gas.
When to worry about China’s military triangle 8 Mar 2012 Security tensions are building in Asia, and a 11 percent budget boost for the People’s Liberation Army won’t help. China’s rise has been peaceful because its leaders have balanced the people, the Party and the PLA. The triangle still holds, but it is getting wobbly.
Flawed Western governance needs Eastern fix 6 Mar 2012 “One share, one vote, one board” has its problems. But reform rarely goes beyond tinkering. Something radical is needed. A clever dual-class share system, borrowed from 19th century Chinese banking, could keep managers loyal and stop unwanted meddling by capital providers.
Lucrative Sino-Gulf ties will survive Syria clash 5 Mar 2012 China and Gulf Arab countries have different views on whether Assad should be forced out. But they also have $90 bln in trade. It’s in neither’s interest that this is disrupted. If the Syrian conflict escalates, Beijing may need to further soften its position.
Wen passes ball on China’s needed reforms 5 Mar 2012 The outgoing premier cut China’s growth target in his last parliamentary address, but gave little news on big issues like inequality, the yuan and food safety. A focus on stability makes sense, but the longer important reforms are ignored, the more costly they may be to implement.
China’s march to currency dominance just got longer 1 Mar 2012 When the yuan looked bound to rise, investors abroad were desperate to hold it. That boosted the currency’s global profile. Now expectations have changed, and yuan deposits in Hong Kong have fallen 8 percent in two months. There are no short cuts to displacing the dollar.
"Buy China" auto drive not just protectionism 28 Feb 2012 Excluding foreign brands from new government orders looks unfair. But domestic overproduction, and the image of privileged Audi-driving officials, have created a political dilemma. When growth slows, concerns at home can seem more important than keeping trade partners happy.
Alibaba.com minorities should hold out for more 27 Feb 2012 The Chinese e-commerce provider wants to buy out public shareholders at a third of the valuation at which it sold shares in 2007. Yet Alibaba.com’s potential has arguably grown since then. The China opportunity remains barely tapped. Founder Jack Ma is getting too big a bargain.
Troubled princeling poses test for new China 22 Feb 2012 Bo Xilai, one of China’s most colourful politicians, has fallen under a cloud, sparking an unconfirmed report he may have resigned. Outsiders should care, because what happens to Bo may give an insight into how much - or how little - Chinese politics have changed.
China data show slowdown that Asian markets ignore 22 Feb 2012 Investors are using newly minted euros and yen to buy shares in Asian exporters. But Chinese manufacturing has been slowing for four months, with exports especially weak. Markets look vulnerable to bad news from Europe or the U.S. – or to surprises from Asian central banks.