American companies see hopes for future in China

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The American Chamber of Commerce in Shanghai said US companies have achieved great success in the past year in China, and are optimistic about the two nations' closer ties and win-win prospects.

The report was released on Wednesday as President Hu Jintao is paying a state visit to the United States.

The Chamber said despite challenging market conditions and an increasingly competitive business environment, 87 percent of the 346 US companies in China reported revenue growth, surging from 47 percent in 2009 and 77 percent in 2008.

Seventy-nine percent of them said they are in the black, up from 65 percent in 2009 and 70 percent in 2008.

The report, entitled China Business Report 2010-2011, showed 61 percent of the US companies increased their market share in China, up from 40 percent in 2009 and 52 percent in 2008.

Brenda Foster, president of the Chamber, said there are clear challenges to doing business in China, but reiterated a statement last week from US Treasury Secretary Timothy Geithner that "the economic strings of US and China are in many ways complementary".

"And although China faces a complicated set of challenges, it is very much in the interests of not only the American business community, but in the interests of the United States to well manage China's business event," Foster said.

"The result of this year's survey shows that the financial performance of American companies in China improved in 2010, following what had been an uneven growth between 2008 and 2009. Not only have US companies recovered, they are reporting all-time performance highs and remain optimistic about their business prospects," said Foster.

Although showing impressive financial results, US companies report that China remains a challenging business environment for a host of reasons. Finding enough qualified staff is the No 1 business challenge, and competition is picking up not only between US and other foreign companies but between US and Chinese companies - both private and State-owned enterprises.



"This year's survey results indicate that US companies in China have come to expect challenges in the China market and have weighed them against the opportunities and have found a way to succeed despite them," said Foster. "Nonetheless, it is essential that the US continues to aggressively engage China to address key business challenges that hinder market access and impact future investment."

New additions to this year's report are the Chamber's China Business Climate Indices, which measure business performance across the three broad measures of success, confidence and the welcoming environment for US companies in China.

Businesses in China's quickly growing retail sector top the success index, auto companies ranked as the most confident about their future opportunities, and chemicals and electronics companies are among the industries that feel the most welcome.

"US companies in China are performing at a high level and will continue to do so," said Michael Klibaner, national director and research head at Jones Lang LaSalle China, a leading global property service firm. "But what we show in this year's report is that just as there is no one 'China market', the challenges and opportunities for US companies vary by market sector and by industry."

Optimism regarding the China market continued in 2010. About nine out of 10 US companies in China forecast a revenue increase for 2011. China is the No 1 priority for 20 percent of US companies, and the percentage of companies expecting to increase investment in China by more than 15 percent more than doubled in 2010.

"There has always been a great deal of optimism about the China market, mostly based on the hope of future opportunity," said Steven Ganster, managing director of Technomic Asia, a market strategy consulting firm based in Shanghai.

"But now we're seeing a more mature or seasoned optimism, grounded in the reality that succeeding in China is critical to the future of the company no matter the challenges it presents," he said.

This year's survey was conducted online from mid-November to early December. A total of 346 companies participated, yielding a response rate of 25 percent.

The American Chamber of Commerce in Shanghai is the largest and fastest growing American Chamber in the Asia-Pacific region.

Source: China Daily: 
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China overtakes U.S. as biggest economy?

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Though China is yet to release its annual economic data, a U.S. economist has already crowned China as the world's biggest economy in terms of purchasing power parity (PPP).

The "generous" No. 1 title given by Arvind Subramanian, senior fellow at the Peterson Institute for International Economics in Washington, has drawn suspicion from Chinese scholars, who say such remarks are "pure fiction."

Chen Fengying, director of the World Economy Institute of China's Institute of Contemporary International Relations, said the title was an honor unfit for China.

The size of China's economy in 2010 was 14.8 trillion U.S. dollars, compared with 14.6 trillion U.S. dollars for the United States, when accounting for the countries' differing costs of living, Subramanian wrote in a note published on Jan. 13, a week before President Hu Jintao visits Washington.

Purchasing power parity calculates gross domestic product (GDP) using exchange rates and takes into account price differences of the same goods between nations.

However, statistics from the International Monetary Fund (IMF) and the World Bank (WB) tell another story to that of Subramanian's.

The IMF, for instance, estimates gross domestic product, in PPP terms, in the United States was about 14.6 trillion U.S. dollars in 2010, while China's was 10.1 trillion U.S. dollars. The World Bank estimates a similar gap.

That's why David Leonhardt, an economics journalist with the New York Times, said on Jan. 14 in his article "On the size of China's Economy, a dissenter" that "I was careful to say that, by most measures, the United States still has by far the largest economy in the world."

Ranjit Lall, the Financial Times' 2010 Peter Martin Fellow and also a senior statistician, said on Jan. 14 in his article "Has China already overtaken the U.S.?" that "one might wonder, if this were the case, why Chinese policymakers have made no effort whatsoever to correct the IMF's statisticians.

Subramanian's conclusion is far from scientific and his claim "highly overestimates the Chinese Yuan purchasing power," said Chen Fengying.

No wonder, David Leonhardt said Arvind Subramanian "remains very much in the minority."

"Even if China's economy surpasses the U.S. by economic scale one day, in terms of total economic scale, there is a long way to go before China becomes as strong as the U.S.," Chen said.

Concerning GDP per capita, IMF figures show that the average American is six times better off than the average Chinese person, however Subramanian thinks the difference is only four times, according to Ranjit Lall's article.

Subramanian's conclusion aims to make China bear responsibilities far beyond its ability, Chen said.

Chen also downplayed a poll by the Washington-based Pew Research Center for the People and the Press, which revealed last week some 47 percent surveyed Americans said China is the leading economic power with 31 percent naming the U.S., saying that the majority of Americans do not know China in depth, and their judgments are still influenced by both countries' performances during the global economic downturn. 

Source:Xinhua
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Penang Pulau Jerejak's RM30million Loss

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No time limit for Pulau Jerejak report, says PAC

By Asrul Hadi Abdullah Sani

January 19, 2011

Azmi said a formal request has been sent to the A-G. — file pic

KUALA LUMPUR, Jan 19 — The Public Accounts Committee (PAC) said that it will not set a deadline for the Auditor-General’s (A-G) report on the Pulau Jerejak island resort development, which Penang claims has cost the state RM30 million. Its chairman, Datuk Seri Azmi Khalid, confirmed that PAC has agreed to formalise the request today to the A-G.

“The committee has agreed today to get the Auditor-General to give us some info into what is going on in Pulau Jerejak. So the Auditor-General will have to do the auditing before giving it (the report) to PAC.
“We have not given a timeline. We don’t give them timeline,” he told reporters after chairing PAC meeting in parliament here.

The 362ha island off the eastern coast of Penang once served as a penal and leper colony but was turned into a resort by a joint-venture company approved by former Barisan Nasional (BN) Chief Minister Tan Sri Dr Koh Tsu Koon.

The remodelled island is now run by Tropical Island Resort (TIR), which owes the state RM10.6 million in unpaid land premium. UDA holds a 51 per cent stake in TIR with the balance owned by state-owned Penang Development Corporation (PDC).

Penang Chief Minister Lim Guan Eng, who is also PDC chairman, said besides the outstanding premium payments, the project had also caused the state agency to suffer a RM19 million loss which it cannot recoup.
Lim also said almost all usable land on the former leper colony had been handed over to UDA during Koh’s 15-year tenure as chief minister.

He was quoted in the local media today as saying the state government was willing to buy UDA’s stake in TIR if the federal agency paid for the land and land premium.

Earlier, Azmi had chaired an inquiry on Penang Port for malpractice and irregularities as underlined in the recent Auditor-General’s 2009 report.

Azmi said that the PAC was satisfied with the explanation given by the port’s chief executive officer, Datuk Ahmad Ibni Hajar, but refused to divulge any details under Dewan Rakyat’s Standing Order 85.
The Standing Order stipulates that any statement recorded before the legislative committee must be embargoed until its final report is tabled before Parliament.

Penang Port is a wholly government-owned subsidiary under the Finance Ministry.

China Sovereignty & US Cold War Mentality

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Hu Says U.S. Must Respect China Sovereignty, Rejecting Push for Yuan Gains

Hu Jintao, China's president. Photographer: Toshiyuki Aizawa/Bloomberg

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Jan. 14 (Bloomberg) -- U.S. Senator Richard G. Lugar of Indiana, the top Republican on the Foreign Relations Committee, talks with Bloomberg's Al Hunt about U.S.-China relations and his concern that China isn’t doing enough to control the spread of nuclear material. Bloomberg's Hans Nichols and Mike Forsythe preview Chinese President Hu Jintao's Jan. 18-19 visit to the U.S. Mike Tackett discusses President Barack Obama's speech at the memorial for the victims of the Jan. 8 shooting spree in Tucson, Arizona. Commentators Margaret Carlson and Kate O'Beirne speak about reaction to the shooting spree including an Internet video by Sarah Palin, former Republican governor of Alaska. (Source: Bloomberg) 

Chinese President Hu Jintao said greater cooperation with the U.S. on economic and security issues must include recognition of each nation’s sovereign rights as he rejected American arguments for yuan appreciation.

Hu, who will arrive in Washington tomorrow for a state visit, said the two nations should abandon the “zero-sum Cold War mentality.” He cited trade, energy and terrorism as areas for strengthening cooperation, according to a transcript of answers to written questions from the Wall Street Journal and the Washington Post.

“We should respect each other’s sovereignty, territorial integrity and development interests,” Hu said. Inflation can’t be the “main factor” in determining yuan gains, he said, after U.S. Treasury Secretary Timothy F. Geithner said Jan. 12 that higher prices in China will lead to “necessary” exchange rate adjustments.

Allegations of unfair Chinese treatment of foreign companies, the awarding of the Nobel Peace Prize to jailed dissident Liu Xiaobo and China’s refusal to condemn North Korea’s shelling of a South Korean island have been sources of tension since President Barack Obama visited China in 2009.

“The biggest achievement for this trip will be a strengthening of mutual trust and setting a tone for future strategic development,” said Liu Qin, a researcher at the China Institute on International Studies in Beijing. “This visit serves as a connection point for the next generation of Chinese leaders and will lay a solid foundation for the next 10 years.”

Congressional Meetings
Hu’s visit from Jan. 18-21 will include meetings with members of the U.S. Congress and a visit to Chicago. Chinese Commerce Minister Chen Deming and Lou Jiwei, chairman of the nation’s sovereign-wealth fund, will accompany Hu.

In response to the newspapers’ questions, Hu said China had adopted a “package plan” to curb inflation, including interest-rate adjustments. On Jan. 14, the central bank ordered lenders to set aside more deposits as reserves for the fourth time in three months, draining cash from the economy to cool price pressures. Hu said that the increase in the cost of living is “on the whole moderate and controllable.”

Prices are climbing faster in China than in the U.S., making Chinese goods less competitive, Geithner said last week. Speaking in Washington on Jan. 12, he said that while the yuan was still substantially undervalued, the “fundamental forces that are pushing Chinese productivity growth and are pushing inflation higher will bring about the necessary adjustment in exchange rates.”

The yuan fell for the first day in five today, trading at 6.5950 per dollar as of 10:48 a.m. in Shanghai.
Dollar’s Role

The dollar’s primacy as a reserve currency and in trade is “the product of the past,” Hu told the newspapers. He pointed to China’s effort to expand the role of the yuan in cross-border trading and investment, while acknowledging a “fairly long” road to making it a fully fledged international currency.

U.S. lawmakers argue that an undervalued yuan hurts American manufacturers and widens the trade deficit with China by holding down the price of exported Chinese goods.

While “there are some differences and sensitive issues” between the two countries, Hu said, “we both stand to gain from a sound China-U.S. relationship, and lose from confrontation.”

In an allusion to the Federal Reserve’s policy of buying $600 billion of Treasuries to stimulate the economy, Hu told the newspapers that U.S. monetary policy has a “major” impact on global liquidity and on capital flows.

Foreign Investment
Hu pledged to continue to improve laws and regulations concerning foreign investment, and to offer a stable and transparent legal and policy environment. U.S. companies’ “innovation, production and business operations in China enjoy the same treatment as Chinese enterprises,” he said.

China will continue to develop a “socialist democracy,” the Chinese president said. He called for an “increased dialogue and contact” with the U.S. and said the countries should “respect each other’s choice of development path.”

Hu answered only some of the questions submitted by the newspapers, not addressing one about Nobel Peace Prize winner Liu and another on China’s growing naval power, among others, according to the Journal.

China has “made relentless efforts to help ease the tension” between South Korea and North Korea and “pays a great deal of attention to the Korean nuclear issue,” he said. China stands “for achieving denuclearization of the peninsula in a peaceful way through dialogue and consultation to maintain peace and stability of the peninsula and Northeast Asia,” the president added.

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net 

China questions dollar dominance

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While proposing new bilateral co-operation, Hu Jintao resists US arguments to strengthen the Chinese currency.

The US is accusing China of undervaluing its currency to get an unfair trade advantage [EPA]

The Chinese president has resisted US arguments about why China should let its currency strengthen, saying the dollar-based international currency system is a "product of the past".

However, Hu Jintao admitted that it would take a long time to make China's yuan (RMB) a world currency.

"China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development," he told two US newspaper in a written interview ahead of his visit to th US next week.

"But making the RMB an international currency will be a fairly long process."

Critics say China intentionally undervalues the its yuan to make its exports cheaper and gain a trade advantage, contributing to the huge US trade deficit.

Hu suggested that arguments that allowing the yan to appreciate would curb inflation are too simplistic, and said China is fighting inflation with a range of policies including interest-rate increases.

'Moderate inflation'

While inflation in China hit a 28-month high in November, Hu told the Wall Street Journal and the Washington Post that prices were "on the whole moderate and controllable."

"We have the confidence, conditions and ability to stabilise the overall price level," he said.

US legislators are among the biggest critics of China's exchange rate policy. Three Democratic senators - Charles Schumer, Debbie Stabenow, and Bob Casey - said on Sunday that they would propose legislation to try and fix the problem.

The legislation would impose stiff new penalties on countries that the treasury department designated as currency manipulators. The treasury has not labelled any country a currency manipulator since July 1994 when it cited China.

On other issues, Hu struck an upbeat tone about ties with the US.

 "We should abandon the zero-sum Cold War mentality," he said and "respect each other's choice of development path."

The president suggested co-operation with the US in areas like new energy sources, clean energy, infrastructure development, aviation and space.

"Both sides should keep to the right direction in the development of our relations, increase exchanges, enhance mutual trust, seek common ground while reserving differences, properly manage differences and sensitive issues and jointly promote the long-term, sound and steady development of China-US
relations."

Optimism on Koreas

He also expressed optimism about the outlook for resolving tensions on the Korean peninsula, an area of concern to both Washington and Beijing, saying he sees signs of decreasing tensions between the North and the South.

 "Thanks to joint efforts by China and other parties, there have been signs of relaxation," Hu said. He was convinced "an appropriate solution to the Korean nuclear issue" could be found, a reference to North Korea's nuclear arms programme.

The Chinese leader, who is expected to step down as president and general secretary of China's Communist Party in 2012, arrives on Wednesday in Washington for his first and last state visit.

Eswar Prasad, a Brookings Institution economist and former International Monetary Fund, said Hu's generally conciliatory tone augured well ahead of his Washington meetings with Barack Obama, the US president, and other officials.

"Hu makes it clear that China intends to move forward on opening its markets, freeing up its exchange rate and restructuring its political system, but at its own pace and with little heed to external pressures for more rapid or broader reforms," he said.

Source:

Agencie

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