Skewed China birth rate to leave 24 million men single

The January 11, 2010 article "Skewed China birth rate to leave 24 million men single" reports the gender bias in selecting children has led to a disproportionate number of men. Thus, millions of them will not find mates.

BEIJING (AFP) – More than 24 million Chinese men of marrying age could find themselves without spouses in 2020, state media reported on Monday, citing a study that blamed sex-specific abortions as a major factor.

The study, by the government-backed Chinese Academy of Social Sciences, named the gender imbalance among newborns as the most serious demographic problem for the country's population of 1.3 billion, the Global Times said.

"Sex-specific abortions remained extremely commonplace, especially in rural areas," where the cultural preference for boys over girls is strongest, the study said, while noting the reasons for the gender imbalance were "complex."

Researcher Wang Guangzhou said the skewed birth ratio could lead to difficulties for men with lower incomes in finding spouses, as well as a widening age gap between partners, according to the Global Times.

Another researcher quoted by the newspaper, Wang Yuesheng, said men in poorer parts of China would be forced to accept marriages late in life or remain single for life, which could "cause a break in family lines."

"The chance of getting married will be rare if a man is more than 40 years old in the countryside. They will be more dependent on social security as they age and have fewer household resources to rely on," Wang said.

The study said the key contributing factors to the phenomenon included the nation's family-planning policy, which restricts the number of children citizens may have, as well as an insufficient social security system.

The situation influenced people to seek male offspring, who are preferred for their greater earning potential as adults and thus their ability to care for their elderly parents.

The Global Times said abductions and trafficking of women were "rampant" in areas with excess numbers of men, citing the National Population and Family Planning Commission.

Illegal marriages and forced prostitution were also problems in those areas, it said.

Authorities put the normal male-female ratio at between 103-107 males for every 100 females. But in 2005, the last year for which data were made available, there were 119 boys for every 100 girls, the newspaper said.

However, the study said that in some areas the male-female ratio was as high as 130 males for every 100 females, a report by the Mirror Evening newspaper said.

The report said the study urged the government to relax the so-called "one-child" policy and study the possibility of encouraging "cross-country marriages."

China first implemented its population control policy in 1979, generally limiting families to one child, with some exceptions for rural farmers, ethnic minorities and other groups.

It has said the policy has averted 400 million births.

Researchers said the gender imbalance problem cropped up in the late 1980s when the use of ultrasound technology became more prevalent.

This allowed women to easily determine the sex of their foetuses, leading to an increased number of sex-selective abortions.

Contrarian Investor Sees Economic Crash in China

In the January 8, 2010 New York Times article "Contrarian Investor Sees Economic Crash in China," David Barboza reports a wealthy hedge fund investor is predicting a downturn for the Chinese economy:

James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true.

Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 -- or worse," he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.

"Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger credit excess than in China." He is planning a speech later this month at the University of Oxford to drive home his point.

As America's pre-eminent short-seller -- he bets big money that companies' strategies will fail -- Mr. Chanos's narrative runs counter to the prevailing wisdom on China. Most economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.

Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Mr. Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal, steel and iron ore.

Mr. Chanos, 51, whose hedge fund, Kynikos Associates, based in New York, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal.

For all his record of prescience -- in addition to predicting Enron's demise, he also spotted the looming problems of Tyco International, the Boston Market restaurant chain and, more recently, home builders and some of the world's biggest banks -- his detractors say that he knows little or nothing about China or its economy and that his bearish calls should be ignored.

"I find it interesting that people who couldn't spell China 10 years ago are now experts on China," said Jim Rogers, who co-founded the Quantum Fund with George Soros and now lives in Singapore. "China is not in a bubble."

Colleagues acknowledge that Mr. Chanos began studying China's economy in earnest only last summer and sent out e-mail messages seeking expert opinion.

But he is tagging along with the bears, who see mounting evidence that China's stimulus package and aggressive bank lending are creating artificial demand, raising the risk of a wave of nonperforming loans.

"In China, he seems to see the excesses, to the third and fourth power, that he's been tilting against all these decades," said Jim Grant, a longtime friend and the editor of Grant's Interest Rate Observer, who is also bearish on China. "He homes in on the excesses of the markets and profits from them. That's been his stock and trade."

Mr. Chanos declined to be interviewed, citing his continuing research on China. But he has already been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.

"The Chinese," he warned in an interview in November with Politico.com, "are in danger of producing huge quantities of goods and products that they will be unable to sell."

In December, he appeared on CNBC to discuss how he had already begun taking short positions, hoping to profit from a China collapse.

In recent months, a growing number of analysts, and some Chinese officials, have also warned that asset bubbles might emerge in China.

The nation's huge stimulus program and record bank lending, estimated to have doubled last year from 2008, pumped billions of dollars into the economy, reigniting growth.

But many analysts now say that money, along with huge foreign inflows of "speculative capital," has been funneled into the stock and real estate markets.

A result, they say, has been soaring prices and a resumption of the building boom that was under way in early 2008 -- one that Mr. Chanos and others have called wasteful and overdone.

"It's going to be a bust," said Gordon G. Chang, whose book, "The Coming Collapse of China" (Random House), warned in 2001 of such a crash.

Friends and colleagues say Mr. Chanos is comfortable betting against the crowd -- even if that crowd includes the likes of Warren E. Buffett and Wilbur L. Ross Jr., two other towering figures of the investment world.

A contrarian by nature, Mr. Chanos researches companies, pores over public filings to sift out clues to fraud and deceptive accounting, and then decides whether a stock is overvalued and ready for a fall. He has a staff of 26 in the firm's offices in New York and London, searching for other China-related information.

"His record is impressive," said Byron R. Wien, vice chairman of Blackstone Advisory Services. "He's no fly-by-night charlatan. And I'm bullish on China."

Mr. Chanos grew up in Milwaukee, one of three sons born to the owners of a chain of dry cleaners. At Yale, he was a pre-med student before switching to economics because of what he described as a passionate interest in the way markets operate.

His guiding philosophy was discovered in a book called "The Contrarian Investor," according to an account of his life in "The Smartest Guys in the Room," a book that chronicled Enron's rise and downfall.

After college, he went to Wall Street, where he worked at a series of brokerage houses before starting his own firm in 1985, out of what he later said was frustration with the way Wall Street brokers promoted stocks.

At Kynikos Associates, he created a firm focused on betting on falling stock prices. His theories are summed up in testimony he gave to the House Committee on Energy and Commerce in 2002, after the Enron debacle. His firm, he said, looks for companies that appear to have overstated earnings, like Enron; were victims of a flawed business plan, like many Internet firms; or have been engaged in "outright fraud."

That short-sellers are held in low regard by some on Wall Street, as well as Main Street, has long troubled him.

Short-sellers were blamed for intensifying market sell-offs in the fall 2008, before the practice was temporarily banned. Regulators are now trying to decide whether to restrict the practice.

Mr. Chanos often responds to critics of short-selling by pointing to the critical role they played in identifying problems at Enron, Boston Market and other "financial disasters" over the years.

"They are often the ones wearing the white hats when it comes to looking for and identifying the bad guys," he has said.

To Slow Growth, China Raises an Interest Rate

In the January 8, 2010 New York Times article "To Slow Growth, China Raises an Interest Rate," Keith Bradsher reports China's central bank is using contractionary monetary policy to slow China's economic growth because its current pace is perceived to be unsustainable:

HONG KONG — China’s central bank raised a key interest rate slightly Thursday for the first time in nearly five months, in what economists interpreted as the beginning of a broader move to tighten monetary policy and forestall inflation.

After breaking stride a year ago during the global economic slowdown, the Chinese economy resumed galloping growth over the summer. Government investments, real estate construction and consumer spending are all rising briskly, thanks to a surge in lending by government-controlled banks.

Even exports have begun to recover despite continued economic weakness in the European Union and the United States, China’s two biggest overseas markets.

Raising interest rates may help discourage speculative investments by Chinese companies and individuals in real estate projects and other areas of economic activity. China’s dilemma is that higher rates may also prompt overseas investors seeking higher returns to redouble their efforts to push money into China, despite the country’s stringent capital controls.

The People’s Bank of China announced Thursday that the yield from its weekly sale of three-month central bank bills had inched up to 1.3684 percent. The yield had been stuck at 1.328 percent since Aug. 13.

An increase of less than 0.05 of a percentage point might sound small, but economists said it was a harbinger of more interest rate increases to come.

They cited expectations that consumer and producer prices would rise in the months ahead, particularly compared with low price levels a year ago, when demand temporarily slumped in China as well as the rest of the world.

“It is a turning point,” said Ben Simpfendorfer, an economist in the Hong Kong offices of Royal Bank of Scotland. “There is a convergence of events that will lead to higher rates.”

The increase in the interest rate turned mainland China’s stock markets into Asia’s worst performers Thursday. The CSI 300 index of shares on the Shanghai and Shenzhen stock markets slumped 1.98 percent.

Air freight capacity out of mainland China and Hong Kong was almost fully booked in December, according to shippers, making it likely that China would post strong exports when it released a flood of monthly and annual economic data next week. But in interviews this week, senior corporate executives voiced a range of opinions about whether this strength would continue into the new year, or whether the surge in December represented a flurry of restocking by retailers who went into the Christmas season with meager inventories.

Victor Fung, the nonexecutive chairman of Li & Fung, a Hong Kong-based trading and supply chain management company that is one of the world’s largest, said that overseas demand had not been strong enough to sustain the strength in China's shipments seen last month. But he added that his own staff was somewhat more optimistic than he is, as are some investment bank economists.

Thursday's slight increase in interest rates could prove even more significant if it marks the start of an effort by Chinese regulators to limit bank lending. Chinese banks have not only lent heavily at home, but stepped up lending in other countries as well, taking market share from Western banks hobbled by the global financial crisis.

Top officials at the People's Bank of China concluded an annual two-day policy review on Wednesday with a lengthy statement that had particularly strong cautions against bank lending to sectors of the economy with overcapacity or excessive energy use. Chinese bank regulators also warned banks in late November to show more caution in lending and raise more capital to underpin the surge in lending they have already done; the publicly traded Bank of China is widely expected to take the lead in raising money this year.

Thursday's interest rate increase is not the first since the bottom of the economic downturn. After cutting interest rates on the same 3-month central bank bills by 2.4 percentage points in the last quarter of 2008 as the world's financial system trembled, the People's Bank nudged up interest rates by 0.363 from late June to early August last year in a series of increasingly large weekly increases.

But the central bank has been on hold ever since, watching for more evidence of the economy's health. Thursday's increase appeared to confirm that the central bank was starting to become concerned again about rising prices, economists said.

Central banks around the world have a history of taking small steps at first when they begin raising interest rates after a long period of keeping them low in response to an economic downturn. Because China does not have a well-developed bond trading market, the yields on the weekly sales of central bank bills are widely watched as a barometer of the central bank’s intentions.

The central bank sells its bills mainly to banks, which pay in renminbi that the central bank then effectively takes out of circulation, slowing growth in the country’s money supply.

Weekly sales of central bank bills are part of a process that economists describe as “sterilization” of China’s extensive intervention in currency markets.

As U.S. dollars and other foreign currencies pour into China from its trade surplus and foreign investment, the central bank prints vast sums of renminbi and issues them to buy those dollars and other currencies.

To prevent all those extra renminbi from feeding inflation, the central bank then claws back the renminbi from the market through a series of measures that include the sale of central bank bills. China also requires commercial banks to keep large reserves on deposit at the central bank, partly to keep the banks from lending too recklessly but also so that the central bank can use that money to finance further purchases of dollars and other foreign exchange.

The goal of sterilization is to keep inflation under control in China while keeping the renminbi weak. That helps make China’s exports competitive overseas and preserves jobs in China, while contributing to unemployment in countries producing rival goods.

The U.S. dollars and other currencies go into China’s foreign exchange reserves, which stood at $2.27 trillion at the end of September; monthly figures through the end of December are due for release next week. China has the biggest foreign exchange reserves of any country, by far.

Because the central bank has essentially borrowed at home to finance that accumulation of reserves, there is considerable worry in China about losses on those reserves if the value of the U.S. dollar weakens further.

Comments on Internet bulletin boards in China about possible currency losses on the foreign exchange reserves are quickly deleted by censors, a sign of officials’ sensitivity.

China’s foreign-exchange regulators have redoubled their efforts in the past two months to prevent inflows of so-called hot money — capital that moves on a short notice to any country providing better returns.

With the exception of investments that bring the transfer of scarce technologies or management expertise, China has a dwindling need for foreign capital. A domestic savings rate of close to 40 percent has made ample money available for new projects.

The central bank is already buying more than $300 billion a year of foreign currencies, mainly dollars, to keep the renminbi weak and preserve the competitiveness of Chinese exports in foreign markets. So the central bank has had little appetite to buy more foreign currencies so as to allow foreigners to invest in China’s growth while preventing the renminbi from appreciating.

China's growth accelerates to 8.9 percent in 3Q

In the October 22, 2009 article "China's growth accelerates to 8.9 percent in 3Q," Associated Press business writer Elaine Kurtenbach reports:

SHANGHAI – China's economy expanded 8.9 percent in the third quarter, pumped up by easy credit and massive government spending that have ensured a recovery while the U.S., Japan and Europe continue to flounder.

The world's third-largest economy grew 7.7 percent in the first nine months of 2009, bouncing back from a slowdown that began late last year. Officials say they are confident of reaching an annual growth target of 8 percent.

"We can say we have made obvious and remarkable achievements in our economic growth," National Statistics Bureau spokesman Li Xiaochao told reporters in Beijing.

"We have quickly reversed the economic slowdown. The momentum of the recovery is solid and overall, our economic performance is showing signs of improvement," Li said.

China fought off the global downturn with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending on infrastructure such as rail and roads to boost the domestic economy as exports slumped.

The strategy paid off, with growth jumping to 7.9 percent in the second quarter of the year from 6.1 percent in the first quarter.

Since last spring, China's recovery has outshone still feeble signs of a turnaround in other major economies.

Industrial output rose 8.7 percent in the first three quarters of the year, and 12.4 percent in July-September — signaling accelerating demand, the statistics bureau said.

But while surging purchases of coal, iron ore and other materials have aided global miners like BHP Billiton and Rio Tinto, the impact of China's comeback has mainly been one of improving global sentiment than of actually driving growth, said Stephen Green, economist for Standard Chartered Bank in Shanghai.

"Apart from commodities, there's fairly limited benefits for the rest of the world," he said.

Exports collapsed last year and with them imports, mainly of commodities and components used to assemble products for imports. While September data showed a slight improvement, a recovery will depend on stronger growth in the U.S. and other key markets.

Li, the statistics bureau spokesman, described the export climate as "severe."

"Exports remain the key weakness for the Chinese economy," Moody's Economy.com economist Alaistair Chan said in a report Thursday.

The latest data underscore the crucial role investment, accounting for nearly 88 percent of GDP growth earlier this year, is playing in China's growth. Investment in factories, construction and other fixed assets rose by one third in January-September to a record 15.5 trillion yuan ($2.27 trillion).

Even as the economy flourishes, some analysts warn that the heavy reliance on public works and other investment is masking or even worsening weaknesses that are bound to weigh down growth in the long-term.

"We'll see strong growth from China for the next six months, possibly another year," said Green. "The problem is what happens after another year and a half. What will be the growth driver then?"

On Wednesday, China's top leaders signaled their own concerns over imbalances in the economy, with the State Council saying policy will shift to dealing with waste and other problems of high growth.

"In the first three quarters, the pace of economic growth quickened," the State Council said in a statement after a meeting with Premier Wen Jiabao. "At the same time, we also are clearly aware that there are still difficulties and problems in the economic and social development of our country."

The focus in the next few months will be on curbing industrial overcapacity, promote new industries, maintain liquidity and lower unemployment, it said.

While they have ordered curbs on bank lending to some industries, China's planners are not facing any pressure from inflation: despite surging share and property prices, the consumer price index fell 1.1 percent in January-September from a year earlier, the statistics bureau said.

The worry is that wasteful and redundant spending on new factories and unneeded construction will worsen gluts of some products, while inviting financial problems as projects fail to pay off.

Li, the statistics spokesman, acknowledged the concerns, but noted that domestic consumption such as consumer spending accounts for a growing share of growth.

Emblematic of the rise in consumer spending: China's auto market has surged ahead to become the world's biggest, with sales up 34 percent to 9.66 million vehicles in the first nine months of the year. The streets of Shanghai, the financial capital, are full of shoppers, its restaurants busy as ever. Retail sales growth was 15.1 percent in the first three quarters, the bureau said.

"The Chinese are the biggest customers for many countries around the world," said David Cohen, director of Asian economic forecasting for consultancy Action Economics.

"They matter like never before," he said.

Amazing Pictures, Pollution in China

According to the October 21, 2009 article on China Hush, "Amazing Pictures, Pollution in China:

October 14, 2009, the 30th annual awards ceremony of the W. Eugene Smith Memorial Fund took place at the Asia Society in New York City. Lu Guang (卢广) from People’s Republic of China won the $30,000 W. Eugene Smith Grant in Humanistic Photography for his documentary project “Pollution in China.”

Lu Guang (卢广), freelancer photographer, started as an amateur photographer in 1980. He was a factory worker, later started his own photo studio and advertising agency. August of 1993 he returned to post-graduate studies at the Central Arts and Design Academy in Beijing (now is the Academy of Arts and Design, Tsinghua University). During graduate school, he studied, traveled all over the country and carved out a career, became the “dark horse” of the photographer circle in Beijing. Skilled at social documentary photography, his insightful, creative and artistic work often focused on “social phenomena and people living at the bottom of society”, attracted the attentions of the national photography circle and the media. Many of his award winning works focused on social issues like, “gold rush in the west”, “drug girl”, “small coal pit”, “HIV village”, “the Grand Canal”, “development of the Qinghai-Tibet Railway” and so on.

The collection of photos includes:
1. “At the junction of Ningxia province and Inner Mongolia province, I saw a tall chimney puffing out golden smoke covering the blue sky, large tracts of the grassland have become industrial waste dumps; unbearable foul smell made people want to cough; Surging industrial sewage flowed into the Yellow River…” - Lu Guang


6. Guiyu, Guangdong province, (广东省贵屿镇) rivers and reservoirs have been contaminated, the villager is washing in a seriously polluted pond. November 25, 2005


10. In Inner Mongolia there were 2 “black dragons” from the Lasengmiao Power Plant (内蒙古拉僧庙发电厂) covering the nearby villages. July 26, 2005


16. Hebei Province Shexian Tianjin Iron and steel plant (河北省涉县天津钢铁厂) is a heavily polluting company. Company scale is still growing, seriously affecting the lives of local residents. March 18, 2008

Economic Growth in China

China GDP Growth Rate

China GDP Growth Rate chart, historical data, forecast and news. The People's Republic of China is one of the fastest growing economies in the world. Since free market reforms in 1978 China's GDP has grown an average 9.9 percent a year. The country is the second largest economy in the world with a GDP of $10.8 trillion (2007) when measured on a purchasing power parity basis. In 2007, the nation accounted for 11% of the gross world product, according to the International Monetary Fund.