China: Reform of the rail freight to market-oriented system

In an article published on Sunday  the Beijing Review writes about "one of the last few monopoly industries in China. According to the China Railway Corp. (CR), reforms of China's rail transport industry will begin with freight. The company says the aim of freight reform is to make the industry more market-oriented and efficient, in a bid to establish a "door-to-door" modern logistics network".

Reform of the sector is the first such reform launched by the CR, which was founded in March. Zhao Jian, a professor with the School of Economics and Management at Beijing Jiaotong University, thinks changes are significant to the company's move toward full market-oriented reform". 

It scraps the previous system where clients had to go through a number of procedures at different counters to clear their goods, and now they only have to process them at a single counter.And the minimum freight requirement of 60 tons has been eliminated, a rule that slowed the transport of goods.

"Zhao says that before the reform measures, freight transport was little concerned with the needs of cargo owners. The changes now shift the industry toward a more market-oriented bent, one that saves on energy and better protects the environment.

Therefore advancing reform of railway freight transport is crucial to accelerate the development of the railway industry, and it is also an urgent need to raise the economic returns of the railway industry," Zhao said.

He thinks the newly established CR has made reforms a top priority. The groundbreaking reforms will allow for larger transport volume, low prices and all-weather services so as to transform the CR into a modern enterprise through market competition".

Source: Beijing Review

I

Saudi Arabia: Multibillion dollar contract for Western Consortiums

"L'Arabie saoudite a accordé a trois consortiums internationaux la réalisation du métro de Riyad, un mégaprojet d'environ 17 milliards d'euros, impliquant des groupes français dont le groupe Alstom. Un consortium conduit par le géant américain Bechtel Corp s'est vu attribuer la réalisation de deux lignes du métro pour environ 7,1 milliards d'euros.

Un deuxième consortium, dirigé par la compagnie espagnole de construction FCC et impliquant des groupes français, sud-coréen et néerlandais notamment, doit réaliser trois lignes du métro pour 5,9 milliards d'euros. Une ligne d'un coût de 3,9 milliards d'euros a été confiée à un troisième consortium conduit par l'italien Ansaldo".

Le projet de métro de six lignes, prévu sur 176 kilomètres, vise à "faciliter la vie"dans la capitale dont le nombre d'habitants devra augmenter de 6 millions à 8,5 millions "dans dix ans", a déclaré le gouverneur de Riyad, le prince Khaled ben Bandar ben Abdel Aziz, lors d'une cérémonie d'attribution des contrats organisée dans la nuit de dimanche à lundi.

Le Monde

Changement dans la méthodologie pour "mieux" évaluer le PIB américain

Deux jours avant d'annoncer les chiffres de la croissance au deuxième trimestre, qui devraient être décevant si l'on en croit les prévisions mitigées du FMI, le Bureau d'analyse économique (BEA) américain,équivalent de l'Insee,va annoncer un changement de taille dans sa méthodologie.

Pour "mieux" évaluer le PIB américain, les statisticiens ont en effet planché sur des nouvelles façons d'inclure l'apport de la production intellectuelle dans l'économie nationale. Cette nouvelle méthode entrera en vigueur le 31 juillet, à la faveur d'une révision, qui intervient tous les cinq ans, de la comptabilité nationale, et doit être rendue publique et détaillée lors d'une conférence de presse, lundi 29 juillet. Il s'agit du plus important changement méthodologique concernant l'économie américaine depuis 1929.

Ce changement de cap comptable, recommandé par les Nations Unies en 2008, commence tout juste à être mis en oeuvre de par le monde. Pour l'instant, seuls l'Australie et le Canada sont passés aux nouvelles normes, l'Europe devrait quant à elle s'y mettre en 2014.

Cette nouvelle méthode est simple, elle consiste juste à "reconnaître les dépenses en recherche et développement, au divertissement, à la création littéraire et artistique comme des investissements à part entière", explique le BEA.

Autre modification, moins impressionnante : le BEA compte modifier la comptabilité des retraites, en prenant en compte les versements effectués par les fonds de pension au fil de l'eau, et non plus en une seule fois, comme c'était le cas avant.

L'une dans l'autre, ces deux modifications opéreront un changement profond sur la taille du PIB américain : en ajoutant des inputs "équivalents au PIB de la Belgique", elles pourraient le faire grimper de 3 %, estime le Financial Times. Les dépenses purement "créatives" compteront pour 0,5 % de l'économie américaine.

Mieux, écrit le quotidien britannique, ces nouveaux calculs feront baisser la part des dépenses fédérales dans le PIB de 0,5 %, et la part de la dette publique de 2 %, des arguments utiles face aux Républicains, qui dénoncent un budget fédéral "hors de contrôle".

Le Monde

Guandong Province has fiscal revenue growth of 16% y/y

Guangdong Province, south China's economic powerhouse, posted fiscal revenue growth of 16 percent year on year on the back of booming business taxes and land transfer fees in the real estate sector, according to a government report.

The figure is double the 7.5-percent fiscal revenue growth reported by the entire country in the first half of the year.

The province's total fiscal revenue stood at 348 billion yuan (56.4 billion U.S. dollars) in the first six months, according to  government officials.

China eyes Japan's buying of assets in Southeast Asia with a lack of confidence.

"Japanese companies have buying assets at a record pace in Southeast Asia this year, a sign that Chinese experts said should be watched with caution to see if a political agenda is behind the buying spree".

Japan's growing interest could either boost regional economic development or further damage Sino-Japanese relations, depending on Tokyo's economic intensions, experts said.

According to an AFP report, Japanese firms have spent a staggering $8.2 billion on mergers and acquisitions in Southeast Asia so far in 2013, already a record with five months to go and well above the $614 million at the same time in 2012, data provider Dealogic said.

The figure easily outstrips the previous full-year best of $7.6 billion in 2006, it added.

Toru Nishihama, an economist at Dai-Ichi Life Research Institute, said Japan has a reason to invest so heavily so fast.

"Japanese companies have been searching for places to invest in addition to China," Nishihama was quoted by AFP as saying. "This trend is likely to continue for the next five to 10 years.

"The Japanese government is very proactive about it," Nishihama said. "It has become enticing for Japanese businesses to invest in Southeast Asia, with government-affiliated financial institutions."

Meanwhile, the increase in Japanese investment in China has been slowing in the past two and a half years, from 76.3 percent in 2011, 16.3 percent in 2012, to 14.4 percent in the first half of 2013, according to the Ministry of Commerce and the Japanese Chamber of Commerce and Industry in China.

Zhang Jifeng, a researcher at the Chinese Academy of Social Sciences, said political tension between China and Japan fueled by territorial rows have been damaging the two countries' economic ties.

"However, if Japanese Prime Minister Shinzo Abe wanted to gain more political support from Southeast Asian countries that have territorial disputes with China at the moment through economic measures, the new competition between China and Southeast Asian countries, incited by Japan, will not be good for the region's development," Zhang said.

Both China's and Japan's exports increased in the first half of this year, and the global economy generally turned better in the same period, but Sino-Japanese economic ties did not improve, Zhang said.

"We can see that China-Japan political relations have a strong impact on the two countries' economic cooperation. Since China is Japan's largest trading partner and Japan's investment is also important for China's economic development, both governments should pay more attention to avoid the negative consequences from political tensions," Zhang added.

Source: China Daily

China's local government liabilities to be audited

The National Audit Office declared on Sunday that it will start a nationwide assessment of local government liabilities, which will address concerns about rising debt from overambitious development projects.

The announcement was made following Chinese media reports that the State Council has made the audit campaign one of its "urgent" tasks, and that all government auditors are being given crash training so they can start the audit as early as next week.

Their work is expected to update China's local government debt figures, which stood at 10.7 trillion yuan ($1.75 trillion) by the end of 2010.

By comparison, China's GDP was close to 52 trillion yuan in 2012.

But an estimate by the International Monetary Fund last month put China's total government liability, including government-led infrastructure development projects, in excess of 45 percent of the country's GDP.

If the results turn out to be good, he said, new policies could loosen local government financing, as the economy still yearns for capital to restore growth.

"But given local government debt conditions in recent years, the results are unlikely to be promising," he said.

Japan supports Philppines with concessional loan. Both share policy of containment to China.

Japan's Prime Minister Shinzo Abe has promised support for Philippine maritime forces as both countries confront China in separate territorial disputes.

Following a meeting with Philippine President Benigno Aquino on Saturday, Abe announced Japan would provide a concessional loan to build 10 coast guard patrol boats for the Philippines.Aquino says the two reviewed security challenges both countries are facing and promised to co-operate to push for what he calls responsible action from international players in a reference to China.

Source: NewsOnJapan

China's state-owned enterprises increase profits in H1

China's 113 state-owned enterprises (SOEs) administered by the State-owned Assets Supervision and Administration Commission (SASAC), or central SOEs, posted a net profit increase of 18.2 percent year on year in the first half of 2013.

The net profits of central SOEs totaled 631.5 billion yuan (102.3 billion U.S. dollars) during the period.

Jiang Jiemin, head of the SASAC, revealed the figures at a seminar attended by senior executives of central SOEs and heads of local SASAC agencies on July 25 to 26, according to an online statement issued by the SASAC on Monday.

He said the total revenues of central SOEs during the first six months of 2013 rose 9 percent year on year to hit 11.4 trillion yuan.

During the period, the SOEs had 1 trillion yuan payable in taxes and fees, up 3.4 percent from last year, according to the SASAC statement.

Source: Xinhua

China's Real State Improved in H1

China's building materials sector regained steam in the first half, with real estate investment picking up speed, according to the latest data from the country's top economic planner.

Cement output rose 9.7 percent year on year to 1.1 billion tonnes in the first half, compared with 5.5 percent recorded in the same period of 2012, according to data issued by the National Development and Reform Commission (NDRC).

The output of flat glass grew 10.8 percent year on year to 389.9 million weight boxes in the first six months, compared to a 3.1-percent decline in the first half of 2012, according to NDRC data.

A major consumer of cement and flat glass, the property sector rebounded with mounting investment in the April-June period, according to a report published by the Ministry of Land and Resources on Sunday.

Prices for cement and flat glass headed in different directions in June. The factory price of cement slid 1.1 percent from May to an average of 339 yuan (54.9 U.S. dollars) per tonne at major building material manufacturers. The wholesale price of flat glass rebounded 2.2 percent from May to 63.8 yuan per weight box.

 The combined profits of the building materials industry rose 19.9 percent year on year to 132.15 billion yuan in the first five months, compared with a 9.7-percent decline recorded in the same period of 2012.

Source: Xinhua

IMF report for the U.S. economy Part I

The latest IMF report for the U.S. economy says that the recovery has been weak,with GDP
growth of 2% in 2012,legacy of the financial crisis,the budget deficit reduction,a weak external
environment in China the EU and other developed economies.
"While policymakers in Congress averted the fiscal cliff at the beginning of 2013, the expiration of the payroll tax cut and implementation of across-the-board spending cuts  are weighing significantly on growth this year, with growth in the first quarter of 2013 at 1.8 percent and indicators suggesting slower growth in the second quarter"
Despite these powerful headwinds, there are a few bright spots in the economy "equity valuations have soared in 2013 and house prices have increased by more than 10 percent over the last 12 months, strengthening household balance sheets and supporting private demand. At the same time, residential construction has accelerated and labor market conditions have improved"
 To a large extent this owes to a extremely accommodative monetary policy. Since mid-may after the
FMOC meeting where Fed Chairman said that in the near future, the central bank would start to scale
back its bonds buying,financial conditions have somewhat tightened,but monetary policy still remains extremely accommodative.
 Because of the rapid consolidation of the fiscal budget growth will kept subdued to a 1.7% rate 
in 2013. The IMF expects economic growth to accelerate to 2.7 percent next year as the fiscal drag subsides and the side-effects of financial crisis wane further. The unemployment rate is expected to remain  stable in 2013,  and to gradually fall in 2014. Inflation is expected to pick up somewhat but to remain below the Fed long-run objective of 2%.

The IMF report says "risks to the outlook appear modestly tilted to the downside. Economic activity could be lower than in our baseline scenario in the presence of a stronger-than-projected impact of fiscal consolidation, a faster-than-expected increase in interest rates, a weaker external environment, or higher structural unemployment"
 It agrees wih the Fed Board in mantaining a very accommodative monetary policy,for a considerable
time after the economy strengthens, and that the pace and composition of its asset purchases will depend on the evolution of economic conditions. 
 It also says that bank conditions have improved substantially over the year up to date but there signs of emerging vulnerabilities in the financial sector from persistently low interest rates