Thursday, January 29, 2015

Equipping Chinese cities for the new normal

The aim of China’s shift to a ‘new normal’ is to ensure annual economic growth of around 7 per cent, driven by new opportunities in value-added manufacturing, information technologies and modernised agricultural production, said its President.


ANDREW SHENG AND XIAO GENG

JANUARY 29, 2015

For decades, rapid urbanisation in China created clusters of knowledge, manufacturing and distribution in areas that benefited from well-established connections to the global economy. But that growth model has reached its end. With the share of people living in cities rising to 53 per cent in 2013, from 20 per cent in 1981, China is shifting to a “new normal”. President Xi Jinping said the aim is to ensure annual economic growth of around 7 per cent, driven by new opportunities in value-added manufacturing, information technologies and modernised agricultural production.

In moving towards this goal, however, China will face difficult balance-sheet adjustments that cannot easily be managed by conventional fiscal and monetary policies. A new Deutsche Bank study reports that, last year, China’s 300 cities faced a 37 per cent drop in their land-sale revenues — a major setback, given that land sales accounted for 35 per cent of total local-government revenues. Such revenues had risen at an average annual rate of 24 per cent from 2009 to 2013.

Moreover, annual consumer and producer inflation dropped to 1.5 per cent and -3.3 per cent, respectively, last month, owing partly to the sharp decline in world oil prices. China now faces deflation and an inhospitable external economic environment, and its urban centres are struggling with the complex interaction of solvency, liquidity, and structural issues.

But some cities are better equipped than others to weather these challenges. China’s first- and second-tier cities are very wealthy, benefiting from high property values and the continuous inflow of talent, capital, companies and investment projects. Despite a property-market slowdown, Beijing’s recent land auction concluded with record-breaking prices of about 38,000 yuan (S$8,280) per square metre.

Wednesday, January 28, 2015

US in position to dictate oil market

Jan 26, 2015

Oil prices, which have plunged by 50 per cent in four months, may stabilise next year as production slows. But it's America, not Saudi Arabia, that will be the new swing producer.

 

A HISTORIC change of roles is at the heart of the clamour and turmoil over the collapse of oil prices, which have plummeted by 50 per cent since September.

For decades, Saudi Arabia, backed by the Persian Gulf emirates, was described as the "swing producer". With its immense production capacity, it could raise or lower its output to help the global market adjust to shortages or surpluses.

But on Nov 27, at the Organisation of Petroleum Exporting Countries (Opec) meeting in Vienna, Saudi Arabia effectively resigned from that role and Opec handed over all responsibility for oil prices to the market, which Saudi oil minister Ali Al-Naimi predicted would "stabilise itself eventually".

Opec's decision was hardly unanimous. Venezuela and Iran, their economies in deep trouble, lobbied hard for production cutbacks, to no avail. Afterwards, Iran accused Saudi Arabia of waging an "oil war" and being part of a "plot" against it.

By leaving oil prices to the market, Saudi Arabia and the emirates also passed the responsibility as de facto swing producer to a country that hardly expected it - the United States.

Tuesday, January 27, 2015

To embrace or oppose those who are different?

The state can encourage mixing but it cannot force people to integrate

JAN 25, 2015

BY LYDIA LIM
DEPUTY OPINION EDITOR

Two Muslims, a Christian and a Buddhist went to Jerusalem together. There, they met a Jew who drove them around, showed them the sights and told them snippets of the history of Israel and its people.

As they walked the cobbled streets of the old city, the Buddhist asked the others to explain their faith to him. They continued talking as they went to the Al-Aqsa Mosque, the third holiest site in Islam; to the Church of the Holy Sepulchre that is sacred to Christians; and to the Wailing Wall which marks the perimeter of the Jews' ancient temple - all places of prayer and pilgrimage.

I was the Christian in that mix and I am grateful that I saw Jerusalem in the company of people whose religious beliefs are different from mine, and had a chance to converse with and learn from them.

Diversity can enrich, injecting colour, variety and fresh perspectives into many aspects of life - from food to fashion, from sports to scholarship. But it is a double- edged sword and sadly, its dark side has been making headlines of late with the Charlie Hebdo attack in Paris, anti-immigration protests in Europe and terrorist assaults in the Middle East and Africa.

Against that backdrop, a pertinent question to ask is how people can learn to live with and embrace difference.

Or is that even a realistic aim, since differences of race and religion have time and again sparked outbreaks of violence? Should the focus be instead on containing the problems associated with diversity, so as to minimise harm?

What dark secret is in the S'pore basement?

There are things every society is not proud to be associated with, but which still exist

JAN 27, 2015

BY HAN FOOK KWANG EDITOR AT LARGE

I had not heard of the child in the basement, the one who is in our midst.

Until I read The Ones Who Walk Away From Omelas by American writer Ursula Le Guin, and wished more people would read it.

This is the gist of the story: In the city of Omelas, life couldn't be better. The people are happy, they have everything they want and they live life to the fullest.

Except for one dark secret that they share.

There is this child who is kept locked in a basement in utter misery, deprived and tortured. The author does not say why this is so, or what the child has done to deserve this terrible imprisonment.

Only that it is necessary for the city's continued success and contentment. Free him and everything that made the city such a wonderful place will disappear.

"They all know it is there, all the people of Omelas. Some of them have come to see it, others are content merely to know it is there. They all know that it has to be there. Some of them understand why, and some do not, but they all understand that their happiness, the beauty of their city, the tenderness of their friendships, the health of their children, the wisdom of their scholars, the skill of their makers, even the abundance of their harvest and the kindly weathers of their skies, depend wholly on this child's abominable misery."

Wrecked in the name of responsibility

BY PAUL KRUGMAN

JANUARY 26

The United States and Europe have a lot in common. Both are multicultural and democratic; both are immensely wealthy; both possess currencies with global reach. Both, unfortunately, experienced giant housing and credit bubbles between 2000 and 2007, and suffered painful slumps when the bubbles burst.

Since then, however, policy on the two sides of the Atlantic has diverged. In one great economy, officials have shown a stern commitment to fiscal and monetary virtue, making strenuous efforts to balance budgets, while remaining vigilant against inflation. In the other, not so much.

And the difference in attitudes is the main reason the two economies are now on such different paths. Spendthrift, loose-money America is experiencing a solid recovery — a reality reflected in President Barack Obama’s feisty State of the Union address.

Meanwhile, virtuous Europe is sinking ever deeper into deflationary quicksand; everyone hopes that the new monetary measures announced on Thursday will break the downward spiral, but nobody I know really expects them to be enough.

China Economy Stories Jan 23

["China is Falling" stories. May be true... or not.]

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China's bad debt ratio rises to five-year high in 2014

JAN 23, 2015


BEIJING (Reuters) - The bad debt ratio of Chinese banks climbed to 1.6 per cent as of the end of 2014, government data showed on Friday, a level not seen since the global financial crisis and underscoring building financial pressures as China's economy cools.

Singapore Perspectives 2015: Choices

Reports on the Singapore Perspective 2015.

To stay relevant, Singapore has to be extraordinarily successful

SINGAPORE: In a speech at the Institute of Policy Studies’ annual Singapore Perspectives conference on Monday (Jan 26), Mr Bilahari Kausikan, Ambassador-at-Large and former permanent secretary at the Ministry of Foreign Affairs, explained why being a small country in South-east Asia is not as simple as it sounds for Singapore.

Mr Kausikan's full speech is below: