China: Local government debts have risen imprudently fast.

   According to a report from the Wall Street Journal,China's local government debt problems are growing.

 Local government debts have risen imprudently fast and reflect deep structural issues that will make it difficult for the economy to grow as quickly as Beijing wants. Banks and other lenders are stuffed with short duration loans to beleaguered local governments that fund questionable infrastructure or projects that have a payback only after decades. Moody's survey found that only around half of local government financing vehicles had the cash needed to meet debt payments this year. Yet defaults are rare, as lenders rollover loans.

Of course, China's ample domestic savings means a serious debt crisis isn't imminent. And reforms outlined at the recent Communist Party congress to boost local governments' tax revenue and budgeting transparency will improve the situation over the long term.

Meanwhile, however, the most likely scenario is for lenders to continue forbearing. More than 20% of the local government debt counted in the audit came due this year. Another 40% is due in the next two years. Rolling debt has costs: It weighs bank balance sheets with unproductive lending and creates moral hazard as debtors are spared the consequences of poor decisions. Ultimately, either the central government steps in with a bailout, or banks and shadow lenders will have to write down the bad debts.

For such an important aspect of the economy, investors should get more than a sporadic audit of local government debts every couple of years.

WSJ: Natural Gas Finishes 2013 As Best-Performing Commodity

    According to a report from the Wall Street Journal,"natural gas for February delivery tumbled 19.7 cents to $4.23 a million British thermal units on the New York Mercantile Exchange. The 4.5% drop was the biggest one-day decline since May".

Still, natural-gas futures rose 26% this year, their biggest one-year rise since 2005 and the largest percentage gain for any commodity in 2013. After a relatively mild winter last year reduced demand for gas-powered heating in homes and offices, this winter started off unusually cold and wintry weather has persisted.

About half of all U.S. households use natural gas as their primary heating fuel, with natural-gas prices having climbed from less than $3.50/mmBtu in early November due to robust heating demand.

Unusually large amounts of natural gas have been withdrawn from storage in recent weeks, a sign of strong demand. Inventories as of Dec. 20 stood at 3.071 trillion cubic feet, 16% below the exceptionally high year-ago level and 9.2% below the five-year average for the week.

Colder-than-normal weather is forecast to continue in the next six to 10 days, especially in the Midwest and East Coast, key markets for natural-gas-powered heating, according to Commodity Weather Group LLC, a private forecaster based in Bethesda, Md.

US markets stellar year 2013, and positive outlook 2014

Equities have had another stellar year in 2013, with the Dow and S&P 500 on pace for the best annual gains since 1995 and 1997, respectively. A near-term pullback to relieve extended sentiment conditions would neither be a surprise nor unwelcomed. The gains came in the face of ongoing macro challenges, illustrating again that stocks often like to climb a "wall of worry." Heading into the New Year, economic growth appears to be gaining some traction and we are seeing some developments that we think will help contribute to a still-positive equity environment in 2014. Moreover, despite regional differences, an improved global growth outlook in 2014 is likely to have a positively reinforcing impact economically and could improve confidence for businesses, consumers and investors.

Source: Schwab's Chief Investment Strategist Liz Ann Sonders

US markets closed at record highs.

 2013 With More Record Highs

As Father Time moves to usher in a new year, the bulls ended the current one in style by posting record highs for the Dow and S&P 500, while looking to extend their streak into 2014. Stronger-than-expected domestic Consumer Confidence and housing price reports provided the day's sustenance, despite a deceleration in regional manufacturing activity. Meanwhile, volume was light ahead of tomorrow's New Year holiday, on which all U.S. markets will be closed, and Treasuries finished mostly lower in a shortened session following the data. In equity news, Hertz Global Holdings announced a "poison pill," while private-equity firm KKR & Co disclosed a 6.8% stake in Marvell Technology Group Ltd. Crude oil prices were lower, while gold and the U.S. dollar were higher.

Source: Schwab

Gold for Feb. Delivery closed at US$ 1,202.30 an oz 28% lower Y/Y,its first loss since 2000

 Gold futures settled slightly lower on Tuesday, the last trading day of the year in which investors, hoping for an extension of a 12-year streak of annual gains, where hammered. Gold for February delivery settled down $1.50, or 0.1%, at $1,202.30 an ounce on the Comex division of the N.Y.Mercantile Exchange . That was 28% lower than the most active contract's close a year earlier, its first loss since 2000, and its worst loss since at least 1984, according to FactSet records. For the month, gold fell 3.8%, its fourth straight monthly loss. For the fourth quarter, the commodity lost 9%. Low inflation and a expectation the Federal Reserve would end its quantitative easing were two big factors sapping gold's run this year.

Source: Marketwatch

Housing is largest worry of Chinese: survey

A survey conducted by Renmin University of China showed that the top three concerns of theChinese public are housing, medical care and commodity prices, China News Service reportedon Monday.

Researchers surveyed urban and rural residents from 31 provinces, autonomous regions andmunicipalities on health, education, living standard and social environment.

Housing was the top concern, with 13.1 percent of the respondent's vote, while medical carecame second with 12.4 percent and commodity price was ranked third with 12 percent.

Other issues, like children's education, food safety as well as retirement and pension, alsoreceived more than 10 percent of the vote.

Source: ChinaDaily

China: Markets SOE's lead fall in stock market

State-owned enterprises led the fall in market value in China's A-share market in 2013, asequities went through another tough year.

The benchmark Shanghai Composite Index dropped by 0.18 percent, ending at 2,097 onMonday,    marking a 7.9 percent drop year-to-date.

By last Monday, a total of 811 listed companies had seen their market value decrease from the start of the year, according to Wind Information, a financial data provider.

SOEs took up 80 percent of the positions in the top 100 companies that suffered the most severely   from falling share prices.

Among the top 10 companies hit by the biggest market loss of value, six were SOEs, including three   State-owned energy giants, PetroChina Co Ltd, Shenhua Group Corp Ltd and ChinaPetroChemicalCorp  (also known as Sinopec), two national lenders - Industrial and CommercialBank of China and Bank of   China - and China Life, the nation's biggest insurer in terms ofassets.

Market value had shrunk by 820.2 billion yuan ($134 billion) for the above six companies by last   Monday, according to Wind.

On the other hand, thanks to the solid performance of the Growth Enterprise Board, China's      Nasdaq-style market, total market capitalization of the A-share market grew by more than 400billion yuan.

The misallocation of capital in China's economy has lasted for more than 10 years, partly because of   the inefficient operation of some large SOEs, while small companies with innovationability and growth potential are thirsty for funds, said Xin Yu, president of Zequan Investmentbased in Guangzhou.

Source: ChinaDaily

Jiro Honzawa: PM Abe visit to Yaukuni Shrine may lead to the collapse of his administration

 Japanese Prime Minister Shinzo Abe' s visit to the controversial war-linked Yasukuni Shrine may lead to collapse of his administration, a Japanese political commentator told Xinhua in an exclusive interview.

The political commentator also said the worship made Japan trustless in the international community.

Jiro Honzawa, who once was a veteran political reporter and accompanied with then Prime Minister Masayoshi Ohira on a China visit in December 1979, told Xinhua Monday that Abe failed to perform his duty as a prime minister by making Japan lose credibility among the international community.

Despite strong opposition from neighboring countries, Abe on Thursday visited the notorious shrine which honors Japan's war dead including 14 class-A war criminals in World War II. It is the first time in seven years that a sitting Japanese prime minister visited the notorious shrine. Former Prime Minister Junichiro Koizumi paid a visit in August 2006.

The visit has drawn widespread condemnations at home and abroad, especially from Japan's neighboring countries that suffered Japanese brutal wartime aggression, as the Yasukuni Shrine, which Honzawa called as a shrine of war, is considered a spiritual tool and symbol of Japanese aggression in World War II.

Honzawa said Japan's key ally had demonstrated its indignation over Abe's shrine visit, referring to a statement issued by the U. S. embassy in Tokyo after Thursday's visit which said the country was "disappointed" over Abe's act which "will exacerbate tensions with Japan's neighbors".

The commentator went on to say that UN Secretary-General Ban Ki- moon also released a statement over the shrine visit, showing the international community is saying "no" to Abe's challenge against post-war international order and justice.

Visit to Yasukuni Shrine by a prime minister is actually related to the government's attitude toward wartime history and the political basis of Japan-China relations, said the expert, adding Abe does not bother to reflect over past history.

"Abe aims at boosting Japan's military forces and planting nationalist sentiment among the Japanese people by using conflicts between Japan and its neighboring countries," Honzawa said.

In fact, Abe's thought is deeply influenced by his grandfather Nobusuke Kishi, who was then minister of industry for much of the war and arrested after Japan's surrender, but was never charged and went on to serve as prime minister, Honzawa said.

After the worship, Abe made a "pledge for everlasting peace", claiming "Japan must never wage a war again".

However, Honzawa said the prime minister is lying. "If the prime minister really means what he said, what he has to do is to maintain current war-renouncing pacifist constitution" rather than revising it, he said. "Abe's acts belie his words." "If the prime minister does take feelings of Chinese and Korean peoples into consideration, he will not pay the visit," the expert added.

Honzawa predicted that Abe would worship the Yasukushi Shrine in the future but repeated visit will increase public antipathy over such a move.

A latest survey also showed that about 47.1 percent of those surveyed said it "was not good" that Abe visited the shrine, exceeding 43.2 percent who appreciated it, while 54.6 percent of the respondents supported the idea to create a new facility, instead of the Yasukuni, for people to worship the war dead, compared with 32.9 percent who did not.

"The planned sales tax hike will be carried out in April. At that time, Abe's administration would be punched if the plan is impeded and that would put the administration at the risk of collapse at any time," Honzawa said.

A Kyodo News poll in late December showed the approval rate for Abe's cabinet at 54.2 percent, dipping from the 62.0 percent right after he took office on Dec. 26, 2012.

Honzawa said if the ruling Liberal Democratic Party's small ruling partner the New Komeito Party could quit form the ruling bloc, it will probably accelerate the falling of Abe's administration.

The small ruling party also criticized Abe's shrine visit. Natsuo Yamaguchi, leader of the party, called the visit " regrettable" and said his party had consistently urged the prime minister not to visit the shrine.

Source: Xinhua

Xinhua Insight: China's direct government debt risks controllable

China disclosed its total government debt on Monday and said that debt risk was under control.

China's total public debt to GDP ratio is about 53.3 percent, with 31.5 percent of that attributed to local government debt and 21.8 percent down to the central government, said Lu Ting, chief China economist with Bank of America Merrill Lynch, in a research note.

"We believe the markets and the Chinese government should be alarmed by the rapidly rising leverage, but we do not believe China is on the brink of a debt crisis," he wrote.

RISING GOVERNMENT DEBT

The National Audit Office (NAO) said on Monday, after two months of nationwide audits in August and September, that governments in China were liable for a total direct debt of 20.7 trillion yuan (3.4 trillion U.S. dollars) at the end of June, up 8.6 percent, or 1.63 trillion yuan, since the end of 2012.

Total debt guaranteed by governments at various levels amounted to 2.93 trillion yuan at the end of June. Over and above this amount, debt which governments might have some liability for amounted to 6.65 trillion yuan.

In breakdown, direct central government debt stood at 9.81 trillion yuan the end of June, up 4 percent (375 billion yuan) on the end of 2012. Treasury bonds, loans from international financial institutions and foreign governments account for nearly 84 percent and should be paid by the central budget.

The remaining 10.89 trillion yuan was borrowed by local governments, an increase of 13 percent (1.25 trillion yuan) over the end of 2012.

The debt guaranteed by the central government was 260 billion yuan; debt guaranteed by local governments, 2.67 trillion yuan.

While debt for which the central government might shoulder some of the rescue burden stood at 2.3 trillion yuan in June. That for local governments amounted to 4.34 trillion yuan.

Regarding local government debt, direct debt borrowed by the 31 provincial-level regions totaled 1.78 trillion yuan.

The 391 prefecture-level cities had borrowed a total of 4.84 trillion yuan and about 2,778 counties owed a total of 3.96 trillion yuan, according to NAO. The remaining 307 billion yuan was borrowed by 3,3091 towns nationwide.

RISK CONTROLLABLE

Risks of government debt are generally controllable, but there are some risks in some places, the NAO statement said.

Over the past year or so, the market has been worried by China's rising debt burden and leverage, and there had been no official update since 2011, when the NAO put local government debt around 10.7 trillion yuan at end of 2010.

Local government debt exploded during the investment and construction binge that was part and parcel of a stimulus in 2008 to buffer against the global financial crisis.

The NAO said central authorities took the problem of government debt very seriously, and governments at various levels had made some progress in paying back some debt and regulating local government financing vehicles.

A huge number of debt-financed projects have not generated any cash flow. Local government debt has become a major threat to financial stability.

Resolving risk associated with local government debt was a main theme of the four-day Central Economic Work Conference which ended on Dec. 13. The conference traditionally sets the tone for following year's economic policy.

Lu Ting, of Bank of America Merrill Lynch, maintains China won't face an imminent debt crisis for five reasons -- a very low debt-to-GDP ratio at 21 percent for China's central government, almost all government debt denominated in the Chinese currency Renminbi, huge national savings and quite large good assets owned by governments at various levels.

In addition, China still has high economic growth and fiscal revenue growth despite the slowdown, he said.

Lu, however, warned of a number of rising issues.

Growth of debt has been significantly higher than economic growth in the past two years.

Public debt is dominated by local government debt with significant duration mismatches.

China's 111 percent corporate debt-to-GDP ratio is higher than many other developed economies, due mainly to the weak equity capital market which cannot raise enough capital to support growth.

To solve the problems, Lu suggested China should deleverage its local governments while leveraging up the central government, and should try to replace local government short-term bank and trust loans with longer bonds.

"To maintain both economic growth and financial stability, China should avoid simplistic deleveraging and debt reduction," he added.

Source: Xinhua

US stock markets open higher,on track for another record.

U.S. stocks opened the final session of 2013 with small gains Tuesday morning, with the Dow Jones industrial Average eying another record close and blue-chip equities on track for their biggest annual percentage gain since the 1990s. The Dow Jones Industrial AverageDJIA +0.26% rose 33 points, or 0.2%, to 16,536, a day after eking out its 51st record finish of 2013. The index is up around 26% since the beginning of 2013, on track for its biggest annual gain since 1996. The S&P500SPX +0.33% rose 3 points to 1,844 and is up more than 29% for the year, which would mark its biggest annual jump since 1997. The Nasdaq Composite COMP +0.48%advanced 9 points to 4,164, setting the stage for a nearly 38% annual rise, which would be the largest since 2009. 

Source:Marketwatch

China to subsidize high-tech clusters

More than 70 emerging industrial clusters are to receive government support as China eyes   technological innovation for its economic growth.

The government is assessing 10 clusters that highlight high-                                                                     technology and innovation,according to Economic Information, a newspaper under Xinhua News   Agency.

Designated clusters include new energy, telecommunications and environmental protection, the            report  said.

Each cluster will receive government subsidiaries of up to 100 million yuan ($16.4 million) and policy   preferences, it added, citing officials from the Ministry of Science and Technology.

A total of 100 clusters are scheduled to be covered by the end of 2015, according to the ministry.

Sinopec profit increases more than 10b yuan

 Profits of oil giant China Sinopec increased more than 10 billion yuan ($1.6 billion) in the first eleven months.

Huang Shuhe, vice chairman of the State-owned Assets Supervision and Administration Commission (SASAC), said the country's central state-owned enterprises (SOEs) posted strong performance from January to November.

Eleven companies including China Guodian Corporation, China Resources (Holdings), First Automobile Works Group, Huaneng Group and Sinopec, reported profit increments of more than five billion yuan during the period, and many loss-making companies had reduced losses.

"It's very difficult to obtain such results in the current complex and changeable domestic and international situation," he said.

The full-year profits of all central SOEs will reach 1.3 trillion yuan in 2013.

SASAC director Zhang Yi said on Thursday that the profits of China's central SOEs climbed 7.5 percent year-on-year to 1.2 trillion yuan from January to November.

The central SOEs have taken holdings in 385 listed companies home and abroad, which account for more than 10 percent of their assets and profits abroad, Zhang said.

 Source: Xinhua

China: Luxury market faces smarter consumers

Though China's current anti-extravagance drive is hitting luxury sales hard, themarket is still huge, especially with smart and   increasingly fashion-savvy consumers.

According to a recent Bain & Company report, the growth of luxury sales has slowed. However,Billy Ip, the manager of Seasons Place luxury shopping mall in downtown Beijing, still believesthe prospects   for the luxury market are rosy.

With the increasing affluence of ordinary Chinese people, luxury consumption will graduallybecome a   lifestyle choice instead of ostentation, Ip said.

Luxury consumption by Chinese people around the world is expected to reach $102 billion thisyear,   accounting for 47 percent of global luxury sales, according to a report by FortuneCharacter, a luxury   market consultancy. Chinese buyers are the undisputed kings of the globalluxury market, it said.

Zhou Ting of Fortune Character institute said that with the                                                                 anti-graft and frugality campaigns,the luxury market will rely more on entrepreneurs and               white-collar workers in cities, Zhou said.

"These groups of consumers will be more rational in luxury purchases. They are looking for things that are worthy and are willing to spend money on items with better quality, rather than asheer display of   wealth," she said.

Many Chinese people got their first taste of the international fashion world in 1979, whenFrench designer Pierre Cardin held the first fashion show in China.

Well-Though China's current anti-extravagance drive is hitting luxury sales hard, the market is still huge, especially with smart and   increasingly fashion-savvy consumers.

According to a recent Bain & Company report, the growth of luxury sales has slowed. However,Billy Ip, the manager of Seasons Place luxury shopping mall in downtown Beijing, still believesthe prospects   for the luxury market are rosy.

With the increasing affluence of ordinary Chinese people, luxury consumption will graduallybecome a   lifestyle choice instead of ostentation, Ip said.

Luxury consumption by Chinese people around the world is expected to reach $102 billion this year,   accounting for 47 percent of global luxury sales, according to a report by FortuneCharacter, a luxury  market consultancy. Chinese buyers are the undisputed kings of the global luxury market, it said.

Zhou Ting of Fortune Character institute said that with the anti-graft and frugality campaigns,the luxury market will rely more on entrepreneurs and white-collar workers in cities, Zhou said.

"These groups of consumers will be more rational in luxury purchases. They are looking for things that are worthy and are willing to spend money on items with better quality, rather than a sheer display of  wealth," she said.

Many Chinese people got their first taste of the international fashion world in 1979, when French   designer Pierre Cardin held the first fashion show in China.

Well-known luxury labels in China also include Chanel, with its legendary Chanel No 5 perfume,as well as  Prada, especially after the hit movie "The Devil Wears Prada" was screened in Chinain 2007.

However, Zhou noted that Chinese consumers' fashion taste will become more diversified in the future.

Li Jing, a 33-year-old fashion lover in a city in East China's Jiangxi province, said that after having bought quite a few   expensive items, she is no longer obsessed with the famous "LV" monogram on Louis Vuitton bags.

"Instead of the big names, now I would like to look for luxury goods that cost me less but suit me more," she said.

An increasing number of Chinese customers are also turning to custom-tailored products,according to Zhou.

Ip said the bestselling products in the market will be "light luxury" merchandise that caters toup scale consumers between the ages of 25 and 35, and that this part of the market will not bedirectly affected by the anti-graft campaign.

"Instead of the big names, now I would like to look for luxury goods that cost me less but suit memore," she said.

An increasing number of Chinese customers are also turning to custom-tailored products,according to Zhou.

Ip said the bestselling products in the market will be "light luxury" merchandise that caters toup scale consumers between the ages of 25 and 35, and that this part of the market will not be directly   affected by the anti-graft campaign.

Meanwhile, dazzling brands are still a huge magnet for younger Chinese -- a group of potential future buyers.

Source: China Daily

Chinese Investors Flee Stock Markets Ahead of IPO Resumption

Chinese investors are fleeing the country's stock markets amid year-end money shortages and concerns over the IPO resumption early next year.

The country's A-share markets together have seen capital outflow of 110billion yuan for the first 27 days in December, which is 87.16 percent higher than that of November and compared with a net inflow of 727.9billion yuan during the same period of last year, the Chinese Securities Journal reported. 

Investors are pulling their money out of China's stock markets ahead of January's IPO resumption which is expected to unleash Chinese companies' fund-raising appetites which have been held back for a year.

About 50 Chinese companies are expected to have finished all IPO procedures and be listed before the end of January 2014. More than 760 companies are in line for approval, and it will take about a year to audit all the applications.

Regulators' recent decision to expand the over-the-counter stock market and open the floodgate of refinancing for those traded on ChiNext, China's Nasdaq, added to investors' concerns over worsening capital conditions, the paper noted.

The withdrawal came at a time of frequent liquidity squeezes in China's financial system since June which pushed up money market rates and expected annualized returns of wealth management products (WMPs). The annualized return of a 96-day WMP launched by China Industrial Bank last week hiked 7.6 percent.

The paper said expected lower economic growth next year is another reason why investors should be worried.

Economists expect China's economy to grow at a slower pace in 2014 due to the government's effort to push ahead with reforms, upgrade the country's economic structure and reduce excessive capacity and leverages in some industries.

Source: Caijing

Wrong book led to turning new leaf

Many expats come to Wuyuan county in the northeast corner of Jiangxi province as tea tourists,but Joe d'Armenia is the only one who has taken root there, working directly with farmers inXitou village at his organic tea factory.

It all started 17 years ago when he bought the wrong book at New York airport.

"I thought I bought a thriller about murder, mystery, exciting detectives and things like that, but it was   about green tea," says the 69-year-old Englishman.

D'Armenia, who studied economics at the University of London, spent all his working life inmarketing,   first at the multinational consumer goods company Unilever Plc for 10 years beforehelping with the   Olympic Games for the next 20.

It was a serendipitous moment when he mistakenly came across the tea book. He was retired and   thinking about what to do next. You could say he turned a new leaf.

D'Armenia became interested in green tea's purported cancer and heart disease prevention qualities     mentioned in the book. He carried out some research on the green-tea market in the United Kingdom and Germany and discovered that although its clean taste is very   suitable toWestern palates, there was no organic product available.

He then decided to go to China to find quality organic tea. In 1997 at the Canton Fair, he met Yu   Guangzhong, president of Wuyuan Xitou Organic Tea Co Ltd, who took him to Wuyuan county.

At that time, Wuyuan's tea industry was facing a difficult time. Because it had been exportingthrough    other companies and under other names, it didn't have a famous brand and peopleknew little about the area or its market.

"I was the first foreigner to get organic tea directly, so they were excited when I came,"d'Armenia   recalls.

"Wuyuan had a unique product but no direct access to the international market. My company had   access to that market but had no experience or knowledge of the product. We needed each other."

D'Armenia's local company, Wuyuan High Mountain Tea Co Ltd, now works with 690 farmers in the   county, where his factory blends and packs the final product. His tea sells in more than 40 nations and regions, including the United States and South Africa.

"The fastest growing market now is outside Europe," he says. Two years ago the company entered   Australia and has seen an annual growth of about 15 percent. But d'Armenia says he is not aiming for quick growth. Instead, he wants his business to retain the human touch.

Although he lives much of the time in a small cottage on the outskirts of London, d'Armenia says: "The farmers are our farmers, who live next door to us. Our business is built on trust; wetrust farmers   and they trust us. We have very good relationships."

Yu Guangzhong says d'Armenia was also a pioneer in bringing the Fairtrade concept to  Wuyuan to    improve farmers' lives and incomes.

His company joined Fairtrade International, an organization that works to secure a better deal for    farmers and workers. Every year, the farmers' cooperative gains millions of yuan in  subsidies from the organization. Other companies are now following in his footsteps.

China SOEs Lead in Market Capitalization Loss this Year

Among 100 listing companies posting the biggest losses in market capitalization this year, 38 are state-owned enterprises (SOEs), according to data from financial data provider Wind Info.

The SOEs, all run by the central government, lost a combined 1.3 trillion yuan this year at the end of December 23, with PetroChina (SSE:601857), China Shenhua Energy (SSE: 601088), Industrial and Commercial Bank of China (SSE: 601398) and China Life Insurance (SSE:601628) paring over 100 billion yuan, Wind data showed.

PetroChina lost 220.2 billion yuan in value, or 600 million yuan every day, to stand at 1.24 trillion yuan close to the year-end while its rival Sinopec also nudged into the top ten spot for the biggest losers.

Market capitalization of both the Shanghai Stock Exchange and Shenzhen Stock Exchange rose from 22.94 trillion yuan at the start of the year to 23.39 trillion, according to Wind. Specifically, 1,652 companies saw their value rise and 811 witnessed fall in value.

Leading liquor makers, including Jiangsu Yanghe Brewery JSC, JIugui Liquor, Shanxi Fen Wine, were among the hardest-hit companies, with their market capitalization more than halved from earlier this year.

Comparing with SOEs' weak equity market performance, an official with China's state-asset regulator said yesterday that the central government-run SOEs were expected to deliver a "strong" profit aggregate of roughly 1.3 trillion yuan this year.

"Against the backdrop of uncertainties both home and abroad, it is really not easy for such achievements," said Huang Shuhe, deputy director at the State-owned Assets Supervision and Administration Commission, Xinhua reported.

Perú espera 3,6 millones de turistas y 4.000 millones de dólares en 2014

 Las autoridades de Perú consideran que el país recibirá durante 2014 unos 3,6 millones de turistas, que generarán 4.000 millones de dólares en divisas, afirmó hoy el viceministro de turismo, José Miguel Gamarra.

"El crecimiento en la llegada de turistas en 2014 será de un 13 a 14 por ciento comparado a lo registrado en este año, que es de unos 3,2 millones de visitantes", declaró Gamarra a la agencia oficial Andina.

El viceministro aseguró que entre los factores que impulsan el crecimiento del turismo está "la imagen positiva" que proyecta Perú como destino de inversiones y de negocios por su expansión continua.

Gamarra dijo que su país se está posicionando a nivel internacional como un centro estratégico para la celebración de congresos y convenciones.

"Ya se están realizando en Lima eventos que conglomeran 6.000 participantes, quienes vienen con sus acompañantes que realizan tours después de los eventos, viajan al interior del país y generan beneficios adicionales al sector", señaló.

Según datos de la Cámara Nacional de Turismo (Canatur), difundidos por Andina, este año se celebraron en el país 53 encuentros internacionales que reunieron a cerca de 10.000 participantes. EFE

Xiaomi reports monthly revenues of $4.9 million from its MIUI Android ecosystem

Today Xiaomi, up-and-coming Chinese smartphone revealed two important figures that serve as the strongest benchmarks to assess its domestic success.

First, in a post on Xiaomi’s excellent official blog (hat-tip Marbridge Daily), the company revealed that its Android-based MIUI software has over 30 million users. This includes Xiaomi phone buyers as well as those who have installed the software on their Android phones as a ROM. The company points out that this means that one in every 48 people in China have MIUI installed on their devices, if you assume that China has a population of 1.4 billion people – a subject that’s best suited for other blogs.

Second, and more importantly, the company states that it receives over RMB 30 million (about $4.9 million) in monthly revenue from apps, games, and theme customizations installed on MIUI.

Why is this number so significant? Because these apps and services are a core component of Xiaomi's profits . The company sells its devices at near-production cost as a means to put its software ecosystem in consumers’ hands, while also selling a wide range of accessories.

The now-trademark flash sales which have helped Xiaomi attract international attention serve as great marketing. They are also central to its production strategy, in which it only produces what it intends to sell. But unless Xiaomi consumers buy Xiaomi’s software, the number of Xiaomi devices in peoples’ hands (never mind the speed at which the phones reach them) is largely irrelevant.

Currently, Xiaomi’s ecosystem in China consists of a theme store, an app storea,book store, a games center cloud storage services , a messaging app, and a browser. In the blog post, Xiaomi representative Hong Feng states that next year the company will “improve the integration between its smart devices and real-life services.”

The first test will simply see whether or not the company can successfully sell its phones to consumers. This ought to be easy – as long as it can effectively communicate to consumers that it sells top-end hardware at bargain-bin prices, it should have no trouble moving units (assuming other firms don’t successfully squeeze it out  by employing the same strategy).

The second, more difficult test will see whether or not the company can earn revenues abroad from its software offerings. This will require an extensive network of dedicated developers from around the world that are willing to create products tailor-made for MIUI. These apps and services must also exceed those that Google already offers in the Google Play store, which only offers free apps and is partially blocked in China (like many other Google services). Fostering this community could prove to be challenging (though there are certainly plenty of dedicated MIUI developers in China – Xiaomi says “tens of thousands” in the blog post).

Xiaomi is on track to sell 20 million smartphones for the year 2013, aiming for total revenues of over $5 billion. In 2012 the company sold over 7 million phones, and earned over $2 billion in annual revenue.

TECHINASIA

Unrealpolitik in Russia and China

In Ukraine, Russia must choose what kind of relationship it wants to have with Europe. If Ukraine returns to the Kremlin’s orbit, whether through direct reintegration or some kind of “Finlandization,” Russia will end up reenacting an old European problem: like France from 1643 to 1815 and Wilhelmine Germany, it will be both “too much” for its neighbors and “not enough” for its ambitions.
Leaving aside why Russia should want to pay so much money to sustain a Ukrainian regime that is even more corrupt and dysfunctional than its own, Ukraine, with a territory greater than France and a population of 45 million, is the de facto linchpin of Europe’s geopolitical equilibrium. Unlike Poland three times in the eighteenth century, there can be no question of partition, with western Ukraine joining Europe and the country’s east returning to Russia. As a result, Ukraine’s civilizational choice – between a democratic European Union and an autocratic Russia – will necessarily have major strategic consequences for the entire European continent.

The Chinese seem now to be displaying an impatience that is contrary to their country’s long-term interests. China’s heightened global status is obvious and recognized by all. But where is the serenity of a great power so confident in the superiority of its civilization, and so secure in its future, that it bides its time?

   By flaunting its hegemonic regional ambitions, China has managed to unify against it countries as diverse as Vietnam, Indonesia, and the Philippines. These countries now want more than ever America’s continuing presence as an Asian power. Indeed, transcending their historical enmity with Japan, they tend to show more understanding for the rhetoric of Japanese Prime Minister Shinzo Abe’s government – and its new and more muscular defense policy – than for China’s recent demonstration of force.

The age of grand ideologies is behind us; an era marked by strict calculation of interest beckons. In the interim, war may have changed more than diplomacy – and probably for the worse. Our weapons’ destructive power has peaked at a time when the “enemy” is becoming more diffuse. How do you make war on instability? How do you fight an adversary that disappears into civil society?

   Even if technological progress has changed the diplomat’s job, the rules of the diplomatic game remain fundamentally the same. Success presupposes an understanding of the interests and perceptions of one’s counterparts, as well as an innate sense of moderation and self-limitation, something that both Russia and China seem to be lacking.

  By contrast, one may wonder whether US President Barack Obama should not also learn from Bismarck – but from Bismarck the Iron Chancellor, who united Germany behind Prussia. Is he demonstrating enough toughness and clarity of vision in his policy toward Iran – or, even more to the point, toward Syria? Cold-blooded realpolitik, as Bismarck showed, is the best way to keep the peace.

Source: Project Syndicate. By Dominique Moisi,  Senior Adviser at The French Institute for International Affairs (IFRI) and a professor at L'Institut d’études politiques de Paris (Sciences Po).