China’s Trade In Africa

China’s Investments and Forward Thinking Strategies In Africa

First Published Date: October 24, 2012 ADawnJournal.com

The United States, once Africa’s biggest trading partner, no longer holds that position. Three years ago China captured that position, and became its number one trading partner with its robust business activities. In just ten years, from 2001 to 2011, bilateral trade grew 16 fold from $10.6 billion to $160 billion. China also provided millions of dollars in food aid and as a good gesture gifted the African Union’s headquarters (cost: $200 million) in Addis Ababa.

Bilateral trade expected to reach $300 billion by 2015 and investments expected to rise 70 percent from 2009 to 2015 by $50 billion. Also, China has consistently offered loans to the African countries and currently has a $20 billion loan offer on the table for the next three years. China’s non-judgemental approach to the African countries and easy terms for loans and businesses brought China closer to Africa, while slowly pushing western countries beyond boundaries.

However, criticism exists that China is in Africa to implement its long-term forward-thinking strategies. According to many, these strategies are:

– To exploit Africa’s natural resources

– To pursue neo-colonialism by bolstering brutal and corrupt dictators

– To grab business opportunities away from the local people

– To flood the African market with counterfeiting, and cheap, below-standard quality products

– To shift China’s manufacturing infrastructure in Africa and thus shifting its population gradually into China

In spite of these criticisms, anti-Chinese protests, kidnapping and killing of Chinese workers, China’s heavy engagement and projects are distinctively visible across Africa: from stadiums in southern Africa to hydroelectric projects in the North, from government offices in the east to cultural buildings in the west. Today, China is in most African countries except these few countries that recognise Taiwan: Burkina Faso (Formerly Upper Volta), Gambia, Swaziland, and Sao Tome and Principe (the second smallest African country after Seychelles). And China’s heavy engagement will only grow in the years to come.

China’s Economy and Global Economic Crisis Toll

China Economy and the World

First Published Date : December 29, 2011

The world’s number two economy is very important to the world. The global economic crisis is taking a toll on China’s economy and economic growth of China is likely to slow down according to various forecasts.

China’s economic growth has been fairly stable and good for quite a few years. However, it has slowed for the last three quarters and it is expected to dip below 9 percent in 2012, for the first time since 2001. According to IMF, if the global economic situation does not worsen, it is reasonable to expect that China’s growth will be at 9 percent. According to a study released by senior Chinese government researchers, economic growth should be 7 to 8 percent in 2012. Asia-based investment bank Nomura International predicts economic growth is likely to slip to 7.9 percent. The last time China’s economic growth dropped this low was in 1998 during the Asia-Pacific financial crisis.

Inflation, the housing bubble, export markets, and appreciating Yuan seems be the major factors behind the declining economic growth. China has seen its inflation falling from 6.5 percent in July to 4.2 percent in November. A lower demand on the housing market will impact other related industries as well. The export sector seems to be the one with the biggest decline and the greatest risk. China’s 20 percent exports go to the European Union and if the economic and debt crisis continue to persist, the impact will be enormous on China. Also, an appreciating Yuan will make export markets more likely to perform at their best.

Although the Chinese government has pledged growth in 2012, its economy is shifting from double-digit, high-speed growth to single-digit growth. It is widely expected that China’s central bank will loosen its monetary policy to support the banking industry, boost domestic demand, and increase economic growth.

The biggest challenge the Chinese regime will face in light of the economic slowdown is how the general Chinese population will react. Will there be any strikes, protests, or uprisings or will everything be calm, quiet, and manageable for the regime as it has been for a while?

China’s Economy Heading for a Soft Landing

China’s Economy Will Slow Down

First Published Date : November 3, 2011 ADawnJournal.com

China’s economy, the second largest economy in the world, will grow in the future, but possibly at a much slower pace. The latest data, at least some of them, point out the slower pace compared with the robust pace in the past decades. Chinese economic growth slowed to 9.1 percent in the 3rd quarter, while the previous quarter had 9.5 percent growth.

China’s GDP increased to 10.4 percent in 2010. However, 2011 GDP growth is expected to be 9.4 percent or even below 9 percent. The Chinese manufacturing index showed positive growth last month, but employment growth failed to show any significant improvement. To offset the slower economic growth and external demand for Chinese manufacturing products, the Chinese government is planning to boost support for employment growth in the local small business and service sectors.

There are concerns in the credit market as the Chinese government’s recent tighter liquidity control showed significant sharp drop in new lending, pushing the credit costs upward. This caused profit margins to slim for the Chinese firms. Trust loans and the margin deposit went down below regular level in the last quarter.

Based on various data and analysis, the economic outlook for China is mixed at this moment. On one side, we have GDP and export figures showing an imminent economic slowdown. On the other, we have gains in local consumption and fixed-asset investments caused by minimum wage increases and other factors.

The middle class population is estimated to be approximately 250 million in China. However, their consumption level is still low when compared to other nations. However, in recent years domestic consumption has been on the rise and the Chinese government is looking to use this consumption growth to build a sustainable economic growth for years to come.

China Launches New Residential Real Estate Tax start

China’s New Property Tax

First Published Date : January 16, 2011

China is finalizing plans to launch a trial property tax to tame its overheated real estate market. China’s financial hub, Shanghai and Chongqing in Southwest China are among the firsts to taste this new tax. The new tax is expected to be 0.5 to 1.5 percent.

China has long debated having a residential property tax. However, this has never been applied out of fears that it may harm market. Currently, China has real estate tax only on commercial properties. Some tightening measures such as higher down payments, purchase restrictions, hiking lending rates failed to cool down inflated asset prices. This new property tax may be China’s last weapon to curb inflated prices.

Analysts widely believe this new measure should curb speculative demand and should help driving down prices lower in the long run. However, disagreements remain strong as well. Despite some measures taken, housing prices in major cities rose by more than a fifth in 2010. The State Information Center predicts property investment will grow about 20 percent (jumped nearly 40 percent in 2010 from a year ago) in 2011 due to tight property policies.

China recently started to allow its citizens to invest in foreign countries. For example, Wenzhou, which is located in the east, now allows its citizens to make up to 200 million U.S. dollars foreign investments annually. It is expected, but not with certainty, that the newly proposed property tax implementation will be able to curb excessive real estate growth along with many other measures (some mentioned above). Only time will tell.

How The One Child Policy Helped Chinese Economy

China’s One Child Policy

First Published Date : October 6, 2010 ADawnJournal.com

China is the most populous country on Earth, with 1.3 billion people, or 20 per cent of the world’s population. As amazing as it is to think, that population would have been even higher if not for the one-child policy, which was implemented in 1978 by the Chinese government. This policy, while some criticize it, helped China become the world power that many recognize it as now.

The one-child policy restricts the number of children that can be born to married urban couples to just one, while there are exceptions for parents without siblings, official minorities and rural couples.

The policy was created by China as a way of alleviating the social, economic and environmental problems that were beginning to affect China. While the policy has been controversial around the world, roughly 75 percent of Chinese people agree with the policy. The policy helped the fertility rate in China fall from five births per woman in 1970 to just 1.8 births per woman in 2008. It is estimated that about 300 to 400 million births have been prevented through the one-child policy, helping to keep the resources of China from being depleted even more. Overwhelmed social services, slums and overpopulation have all been reduced thanks to the policy.

The one-child policy has helped to fuel the economic change seen in China over the past few decades in large part because there is not as much competition among citizens, allowing for more wealth to be spread around to everyone. Most of the Chinese population is now 60 years of age and over, meaning a big drop in the population will come as those people begin to die.

One benefit from this policy is that individual savings rates have increased in the past 30 years. This is due to the fact that a Chinese household has more resources because they are not being spent on multiple children in terms of time and money. As well, with only one child parents are no longer just relying on children to support them so the parents are saving more for their old age.

As well, the one-child policy has reduced the demand on natural resources, while maintained a steady labour rate, reduced unemployment, and reduced exploitation of workers.

While many look at the economic policies of China as a reason for the change in the country, one cannot dismiss the impact the one-child policy has had in helping to make the country an economic power. The decision in 1978 to limit the population has had far reaching impacts in China and across the planet. With 400 million less people being born in the past 30 years, there has been less drain on resources and an easier time for the world to adapt to environmental changes. Not to mention the fact that the economy of China has become supercharged in part because of the policy, making China one of the leading nations on the planet in the 21st century.