Tag Archives: Economy

Chinese Investment Climbs 30.5% on Stimulus Plan, Surging Loans – Bloomberg

China’s 4 Trillion Yuan Stimulus Takes Hold, Picking Up Slack For Lower Export Figures

China Trade

Slowing Exports, but growing domestic growth, may help China's recovery come sooner rather than later

Results coming out of China this week show that the government’s massive 4 trillion RMB ($586 billion) stimulus package — which is designed to boost domestic consumption, inland infrastructure construction, and earthquake reconstruction projects — coupled with a recent 30.5% boost in urban fixed-asset investment in the first four months of this year are helping the world’s third-largest economy get back on a solid growth track earlier than many other major world economies.

This is good news for China as well as the global economy, which pins much of the hopes of a relatively quick recovery on China’s domestic consumption. As Chinese consumers start to head back to shops, and manufacturers start to work their way up to higher capacity, demand for all kinds of products, both imported and domestically-produced, will help America, the EU, and Japan breathe slightly more easily. Bloomberg’s article today on China’s recovery progress gives encouraging signs that the country’s efforts to stem the financial crisis by investing huge amounts into infrastructure projects that should pay off in the long term should have a far-reaching ripple effect:

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Luxury Brands Look To Shoppers In China For Cushion In Crisis

Gucci and Ferragamo Join Burberry In Opening New China Locations In ’09

Ferragamo in Shanghai: The Luxury brand hopes to add 7-8 locations in China this year

Ferragamo in Shanghai: The Luxury brand hopes to add 7-8 locations in China this year. Photo © Time

The Mercury News reports today on hopes by luxury retailers that well-heeled Chinese shoppers, who have cut back less than their Western and Japanese counterparts, can buoy the luxury goods market enough to get them through the economic downturn. While China itself has been hit hard by the global economic downturn — particularly in its manufacturing and export sectors — a series of domestic stimulus packages and efforts to bolster consumer confidence have begun in earnest to take effect (as we have written before). Although a broader recovery, especially in the more rural or far-flung areas, will take some time, in China’s metropolitan centers like Beijing and Shanghai, the wealthy and upper-middle-class have continued to shop. And for that, luxury brands from around the world are looking at this consumer class as one of their few bright spots in the global economy.

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Chinese Consumers Keep Spending – Good News For Economy

More People Shopping Amid Positive Signs From Economic Stimulus Plan

Businesses and Politicians alike hope China's stimulus measures kick-start the economy and drive consumer spending as consumers in developed economies hunker down. Illustration © The Economist

Businesses and Politicians alike hope China's stimulus measures kick-start the economy and drive consumer spending as consumers in developed economies hunker down. Illustration © The Economist

The Wall Street Journal just posted an informative story about increased spending amongst Chinese consumers, as savings rates drop in younger consumer segments and more first-time car buyers take advantage of small-engine subsidies and overall lower prices on big-ticket items. These habits, of course, turn tradition upside down, as consumers in developed countries save more and hold off on purchasing new automobiles or real estate as the financial crisis continues. Although Chinese consumer confidence is tentative and somewhat fragile, consumers are responding to discounts and other moves by retailers to entice potential customers. Interestingly enough, the macro-level improvements in consumer confidence are boosting sales for companies who have not received any direct benefit from the economic stimulus:

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Are There Still Business Opportunities in China? There Certainly Are

Stimulus Package Leads to Encouraging Signs From Consumers, Manufacturers, and Stocks

Interesting economic news coming out of China this week. It looks like the country’s economic stimulus plan has already started to effect positive developments in industrial output and bank lending. Although this does not mean that China’s economy is out of the woods just yet, naturally, it is a good sign that measures taken to combat the global recession are helping the situation.

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Is Chinese Art the New Hedge?

Auction Surpasses Expectations, Stabilizes, Poised to Grow

Yue Minjun, Hats Series, Armed Forces

SOLD THIS WEEKEND: Yue Minjun, Hats Series, Armed Forces

As previously discussed, recent developments have shown that contemporary Chinese art continues to show enduring strength despite an overall weakness in the global art market. As I wrote on Saturday, this weekend’s auction of Southeast Asian art in Hong Kong was a bit of a disappointment, but all eyes were on Sunday’s auction of fine wines and Asian art — which included a mix of modernist and contemporary Chinese works by artists like Lin Fengmian, Zhu Yuanzhi, Huang Yongping, and Sui Jianguo. Unlike the Southeast Asian auction, Sunday’s results most certainly did not disappoint. Showing their resiliance amid a global financial slump, Chinese works destroyed expectations and records alike, bringing in over $20 million. And, as many observers have noted, competition for Chinese pieces was stiff, particularly from buyers from mainland China.

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Sunday Brief – 4/5/09

A few weekend developments to wrap up a busy week

1. Richard Spencer, the departing Beijing bureau chief for Britain’s Daily Telegraph was interviewed by Danwei about China’s prospects for global investment. When asked, “What do you think will be the impact of all these Chinese investment and takeovers in the future?”:

That’s the million dollar question. China’s trying to avoid the fate of Japan which spent a lot of foreign exchange buying showpiece companies abroad in the 80s, many of which then crashed. So it’s buying many more smaller, strategic stakes in companies and sectors like energy and resources round the world. On the face of it that’s a much more sensible approach and gives it the chance to build up long-term relationships and use them as a launch-pad for greater control later. But of course there’s a danger with the downturn that they will have the same problem in a different way – small stakes of declining value in which their stakes aren’t big enough to give them influence. It’s a tough one for them. But one thing is for sure – the forex reserves are the national pension plan.

2. Chinese gaming company Changyou, a subsidiary of Chinese internet portal Sohu, had a great day following its IPO on the NASDAQ:

Of the total of 7,500,000 American Depositary Shares of Changyou that were being offered in the initial public offering, 3,750,000 ADSs were being offered by Changyou and 3,750,000 ADSs, plus up to an additional 1,125,000 ADSs to cover over-allotments, are being offered by an indirect wholly-owned subsidiary of Sohu.

3. John Pomfret writes on China’s growing role in international affairs, as reflected in the country’s increased pledge of funds to the IMF:

British Prime Minister Gordon Brown announced that China will provide $40 billion extra to the IMF. That’s a big chunk of change. Especially for China. In total the IMF is raising $750 billion.

As Caijing magazine (China’s best business publication) noted the new money is well above China’s voting share in the IMF and “another sign of the mainland’s desire to take a larger role in the global economy.” China’s contribution represents 5.3 percent of the new funds, as against its voting rights of 3.8 percent within the organization.

For years China has boxed below its weight internationally. Deng Xiaoping, the man who brought economic reforms to China, urged the Communist Party to keep a low profile in international affairs. But now, slowly, spasmodically, that seems to be changing.

4. Southeast Asian artists struggled at Sotheby’s Southeast Asian art auction in Hong Kong yesterday. All eyes are on the results of the imminent contemporary Chinese artwork auction. More on this tomorrow.

A work by I Nyoman Masriadi was the top lot yesterday in Sotheby’s Hong Kong auction — at a price that was a fifth of the record for the artist set last year. Art dealers said demand was being held back by economic weakness.

Masriadi’s 2008 acrylic-on-canvas painting “Negosiasi” (“Negotiation”) fetched HK$1.7 million, against a presale top estimate of HK$800,000, which excluded buyer’s commission. Last October, a Masriadi image of boxers sold for HK$7.8 million ($1 million), the most for Southeast Asian contemporary art.

“It’s a difficult market for Southeast Asian art,” Zhao Xu, a Beijing-based art collector, said in an interview at the sale. “Many Indonesians couldn’t buy even if they wanted to.”

Chinese Economy Beginning to “Warm Up” – Times Online

Aggressive Measures Starting To Show Results

changyouThe Times UK has an interesting article about the Chinese economy starting to show signs that the government’s recent stimulus measures are taking hold. While the economy still isn’t out of the woods just yet, recently it appears that it may have bottomed out early in the first quarter of this year.

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