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October 29, 2008
Video Event: Robert Adanto's "The Rising Tide" -- Chinese Video Artists
We take a detour today with a clip from Robert Adanto's, "The Rising Tide, a New Documentary on Chinese Contemporary Art." Many thanks to Robert for his kind permission, enabling us to post this clip on Asiabizblog.
Please note as well that Mr. Adanto's film will preview at the The Smithsonian Institution's Hirshhorn Museum on November 13 (details below).
In his beautiful debut film, Robert Adanto explores the work of some of China's most talented emerging video artists and photographers and their personal responses to the country's rise as a global economic, political and cultural force. This is a unique opportunity to see this elegant and thoughtful film, introduced by the director.
Featured artists include: Cao Fei, Wang Qingsong, Xu Zhen, Zhang O, Chen Qiulin, Yang Yong and Birdhead
The Rising Tide was recently part of CHINA NOW in the UK, as it was part of Constant Stream: China 08 at the Royal College of Art in London, where it screened with a film by acclaimed Chinese director Jia Zhangke.
Thursday, 11/13 8:00 PM
Smithsonian Institution’s Hirshhorn Museum and Sculpture Garden
Ring Auditorium
Washington, DC
202-633-1000
To learn more about the film, click this link.
Posted by Richard at 4:43 PM
| Comments (0)
October 27, 2008
More Reports of Chinese Factories Shutting Their Doors
As we've noted in the past, sporadic reports of factory closings in China seem to be tied to a downturn in orders from Western nations, as summed up in this USA Today article.
More than half of all China's toy exporters — 3,631 firms — shut their doors the first half of the year, the official Xinhua news agency reported. "Many toy factories have gone bankrupt this year," says Luo Yunzhang, founder of toy exporter Guangzhou Sixiren Toy, which makes playground equipment for Ohio-based Little Tikes, among other products.
"We saw exports start to dip in May, when the government began restricting businessmen's visits ahead of the (August) Olympic Games. … Now the global crisis is causing problems. When people are in difficulties, they spend less on things like toys," Luo says. Luo predicts that Sixiren's export revenue will drop by half this year, to $500,000.
China's textile industry is also enduring a deep slump. Textile exports have been tumbling since March. More than 10,000 small textile manufacturers went out of business the first half of this year alone, the government says. "The global crisis is seriously affecting the local textile industry," says Yu Xin of the China Chemical Fibers and Textile Consultancy in Hangzhou.
Other reports of factory closings may be found here and here [Many thanks to Sean Hocking in Hong Kong for these links.] I haven't even begun to search Chinese language websites for reports of factory closings.
The popular opinion noted at Asiabizblog several months ago -- that the growth slowdown began well before the global financial meltdown -- has been borne out by Chinese government statistics.
Those statistics, invariably unreliable for reasons we have discussed often before, posit a decrease in the rate of GDP growth in the most recent quarter, compared with the same quarter in 2007. Nevertheless, 9% growth, as claimed by China, remains extraordinary. But is it accurate? Is it even close? (Economists posit that 8% growth is required simply to maintain a satisfactory level of employment growth.) Is the Chinese economy still growing by leaps and bounds, or is it qualitatively as bad as the Washington Post reports, also relying upon government statistics?
The official Xinhua News Agency reported this week that 3,631 toy exporters _ 52.7 percent of the industry's enterprises _ went out of business in 2008.
Perhaps we will know when we see more news reports of massive Chinese companies suddenly filing for bankruptcy, like this.
Posted by Richard at 2:44 PM | Comments (1)October 24, 2008
Audio Event: an Interview with China Law Scholar and Practitioner, Stanley Lubman
Asiabizblog kicks off a new season of podcasts with an interview of Stanley Lubman, China law scholar and practitioner. Mr. Lubman has, over 40 years, been witness to and participant in China's veritable earthquake of changes.
Whether as student of Chinese law at Columbia University School of Law in the 1960s, as delegate to the earliest Guangzhou trade fairs in the 1970s, as attorney for energy deals in the 70s and 80s, as scholar/practitioner at Harvard, SOAS or Allen & Overy in the 80s and 90s, Stanley Lubman always seems to be one step ahead of the pack.
Such also seems to be the case with his journal article, "Looking for Law in China," available here. While much of the world, including academia, seems to approach China with an "irrational exuberance," a subject upon which I have discoursed a often (see below for links), Stanley Lubman's take on China's development is nuanced, endowed with a subtlety of understanding that comes only with experience. Many thanks to Stanley for his willingness to share his expertise with the Asiabizblog audience.
An in-depth interview with Stanley Lubman, China law scholar and practitioner, on the uncertainties lawyers and businessmen face when dealing with China.
* * *
The Irrational Exuberance Series (from 2005):
Quick links to Rich Kuslan's "Irrational Exuberance, or, Should You Enter the China Market?" series:
* Should You Be Doing Business In China? (Text only)
* What Do You Wish to Accomplish? (Text / Audio)
* Where's the Beef? (Text / Audio)
* A Handsome Bit of Documentation (Text / Audio)
* Says Who? (Text / Audio)
October 23, 2008
CITIC Pacific's Great Big Bet (Bath) -- Who Else Is Next? China Railway!
Details have emerged in the CITIC Pacific forex scandal:
Citic Pacific Ltd.'s attempt to manage currency risk means the Chinese steelmaker and property developer has four times more money riding on the Australian dollar than it earned last year.
The unit of China's largest state-owned investment company has contracts committing it to buy as much as A$9.44 billion ($6.3 billion) of the currency, according to an Oct. 20 statement. That's more than quadruple Citic Pacific's market value yesterday and compares with 2007 net income of HK$10.8 billion ($1.4 billion).
More here.
As worldwide currency traders continued to deleverage risky positions -- with greater volatility and uncertainty than ever done before -- we will certainly see many more Chinese currency investments unwind with significant losses to major overseas investment subsidiaries.
What you know, but the Hong Kong subsidiary of China Railway Group has just announced currency trading losses of $278 million.
Posted by Richard at 2:13 PM | Comments (0)October 21, 2008
China's Economic Growth 9% in Third Quarter And Dropping
Statistics compiled by the Chinese state are unverifiable and unreliable, but Western company representatives seem to agree that the bloom is still there, but wilting somewhat. Indeed, the Chinese economy has slowed drastically, even before the American melt-down. Expect more to come as American and EU retail spending plummets over the course of the next year.
You read intimations that trade was slowing here (and elsewhere on this blog) long before you could read it there.
Posted by Richard at 6:54 PM | Comments (0)October 20, 2008
CITIC Pacific Loses $1.89 Billion in Bad Betting on Currency
CITIC Pacific, whose parent company recently offered to raise its equity stake in Morgan Stanley to 49% from 10%, has announced the loss of US$1.89 billion (and possibly $2 billion) in currency trading. Trading of the shares was suspended for one day (October 20) on the Hong Kong exchange.
``The incident shows the company has problems in its internal control as it's too big a potential forex loss,'' Kenny Tang, a director of Tung Tai Securities Co., said in Hong Kong. ``The company won't get bankrupted because of its state-owned background but the stock may fall at least 10 percent tomorrow.''
Here again we see the general belief that state-owned Chinese financial institutions are invincible. I well remember bankers telling me that no Chinese bank would ever fail in China because ”政府绝对不会让银行倒闭。“ (The government will absolutely never let a bank go under.)
Unless, of course, the loss is great enough. How great? Who knows? We've already seen sleight of hand applied to a bankrupt Chinese financial sector, theoretically taking bad loans off the books and allowing major insolvent institutions to list on world exchanges, as if they were pure as the driven snow. The American house of cards has fallen and the bailout's success is not readily apparent. And the Chinese?
Posted by Richard at 6:48 PM | Comments (0)October 15, 2008
Impact of the Credit Freeze on International Shipments -- Where's the L/C?
Bloomberg reports that the credit freeze is expected to reduce the number of international shipments banks commonly guarantee:
``Letters of credit and the credit lines for trade currently are frozen,'' Khalid Hashim, managing director of Precious Shipping, Thailand's second-largest shipping company, said in Singapore yesterday. ``Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay.''
Companies completely dependent upon product purchased overseas by means of letters of credit could be badly affected if L/Cs will not issue. Very few will purchase product from China T/T and who will ship D/P? Primarily self financed manufactured goods (not many of those, one expects) and domestic manufacturers may be somewhat better off.
One would expect effects to be seen at American and EU factories dependent upon foreign parts and retail stores within a matter of weeks. What possible effects? fewer imported products? increased difficulty of obtaining product? Higher prices, if demand remained steady? Production ramped up in the US and scaled down in China?
Posted by Richard at 2:30 PM | Comments (0)October 14, 2008
Alabama Company Cuts Production in China, Brings Work Back Home
In the past six months, production in China has, for some foreign manufacturers, become too expensive. At present, I don't hear this as any more than a minor rumbling, but it could be, possibly, a precursor to a trend.
A drop in the dollar, rising transportation and labor costs, and the added difficulties inherent in overseas production have convinced some to pull production out of China and bring it back home. Remember our post on companies shifting production capacity back home to Germany from China?
Read this story on an Alabama sleeping bag manufacturer which has reduced production at its joint venture in Shanghai and now produces more of its products in the US than anywhere else.
To be fair, production has been shifted to the US only on this one product, but note the skeptical attitude towards the value of production in China:
While sleeping bags are three-fourths of its business, Exxel also makes tents and ski vests that are still cheaper to produce in China. Even so, ``every product we make is up for study now,'' {founder and CEO Kazazian} said.
In other words, something has changed.
Posted by Richard at 1:44 PM | Comments (0)October 10, 2008
Another Attorney Scam -- India, China, Japan, This One's Got It All
As we in the U.S. find ourselves inching ever closer to the nationalization of private banks -- despite Treasury denials -- let's take a break in the turmoil for some humor and at least an instance of successful self-preservation. Here is another example of the attorney scam with an Asian, about which I've written many times. Click this link to save it to your desktop and view it large enough to read it clearly.
The URL is linked to a server in Mumbai. Saitama is nowhere near Shanghai. The text is completely unpersuasive. DON'T visit the URL -- might be a malicious website. Many thanks to my colleague who sent it in.
Posted by Richard at 3:51 PM | Comments (0)October 9, 2008
More Chinese-Style Financial Steps Planned for American Banking System?
The Fed has discussed a plan to take ownership stakes in American banks, even healthy ones
"It is the policy of the federal government to use all resources at its disposal to make our financial system stronger,'' Paulson said. ``We will use all of the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size.''
Direct infusions of capital into specific banks, taking equity stakes in return. If this doesn't hint of the Chinese system, I don't know what does
"No such moves are imminent, but the fact that the department is engaging in such discussions is an indication of how the crisis is constantly morphing. Such a move was not under consideration just a few days ago but has become more of a possibility in recent days as the stock market has plunged and the credit crunch shows no signs of easing."
Where are these ideas coming from? Apparently from a Republican administration. I must confess to be frightened at the mere contemplation of such ideas at the highest level of American governmental authority. If such invasive activitiy is to be practiced now, what next?
[UPDATE: This article asks: "The End of American Capitalism?"]
Posted by Richard at 2:45 PM | Comments (0)October 8, 2008
ABA Hiring for the Rule of Law Initiative, China Program
The American Bar Association Rule of Law Initiative China Program is currently hiring for the following positions (click each link for a job spec):
- Staff Translator/Interpreter
These positions are available immediately.
Many thanks to Hyeon-Ju Rho (卢炫周), Country Director, China Program, for this information.
October 7, 2008
Fed to Set Up Special Purpose Vehicle to Purchase Bad Debt
Just over the wire: the Fed will set up an SPV (special-purpose vehicle) to purchase bad commercial paper directly from banks and non-banks. Echoes of the Chinese experience...
An extraordinary step, which appears to be authorized by the Federal Reserve Act, Section 13:
3. Discounts for Individuals, Partnerships, and CorporationsIn unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank, during such periods as the said board may determine, at rates established in accordance with the provisions of section 14, subdivision (d), of this Act, to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange when such notes, drafts, and bills of exchange are indorsed or otherwise secured to the satisfaction of the Federal Reserve bank: Provided, That before discounting any such note, draft, or bill of exchange for an individual, partnership, or corporation the Federal reserve bank shall obtain evidence that such individual, partnership, or corporation is unable to secure adequate credit accommodations from other banking institutions. All such discounts for individuals, partnerships, or corporations shall be subject to such limitations, restrictions, and regulations as the Board of Governors of the Federal Reserve System may prescribe.
[12 USC 343. As added by act of July 21, 1932 (47 Stat. 715); and amended by acts of Aug. 23, 1935 (49 Stat. 714) and Dec. 19, 1991 (105 Stat. 2386.]
This clause has been invoked very rarely in the past.
Posted by Richard at 2:01 PM | Comments (0)IRS Allows Multinationals to Borrow Larger Sums of Cash from Overseas Subsidiaries
As a further response to the credit crisis (crash?), the American Internal Revenue Service issued a temporary guidance last Friday allowing multinationals to borrow cash from overseas subsidiaries for as long as 60 days, three times a year, without incurring corporate tax.
"Recognizing current liquidity constraints, we issued this temporary guidance," said Andrew C. DeSouza, a Treasury Department spokesman. He declined to comment on whether any specific companies or their representatives had pushed for the move. "I think we're recognizing there were companies out there that were having liquidity constraints," he said.
Those of you located outside the United States may find headquarters tapping you on the shoulder for your cash somewhat more often.
Posted by Richard at 1:42 PM | Comments (0)October 3, 2008
North Korea on Google Earth
These brilliant Google Earth maps of North Korea [download here] are unsurpassed by anything I've seen made available to the public. You can't bring one in with you on a laptop, but you can surely prepare for your trip to the DPRK with it. Once again, thanks go to the North Korea Economy Watch Blog.
Posted by Richard at 6:28 PM | Comments (0)October 2, 2008
US Requirement of Cervical Cancer Vaccination for Immigrants Stirs Up Backlash
Part of my law practice includes immigration, primarily for Chinese.
The incidence of cervical cancer among Chinese women, according to a recent study, is relatively low in comparison to world statistics, but is, nevertheless, the fifth most prevalent cancer among women in China.
Section 212(a)(1)(A)(ii) of the Immigration and Naturalization Act requires certain vaccinations -- including polio, rubella, etc. -- of all immigrant visa and adjustment of status applicants. Beginning August 1 of this year, all women aged 11 to 26 who wish to apply for immigrant visas or an adjustment of status must be vaccinated against cervical cancer -- an expensive proposition -- but the decision to make HPV vaccination mandatory has created a good deal of confusion, even among the medical authorities upon which USCIS apparently relied. (Gardasil may cost as much as US$120 for a series of three shots.) Even though the Center for Disease Control (CDC) "routinely recommend[s] the vaccine:"
[...] even some of the CDC physicians and experts who promoted Gardasil [the brand name of the vaccine] in the U.S. say they never intended to make the vaccine mandatory for young female immigrants.
"If we had known about it, we would have said it's not a good idea," said Jon Abramson, who was chairman of the CDC's Advisory Committee for Immunization Practices when the body recommended the vaccine for U.S. citizens last year.
Why?
WSJ answers the question with a snippet from another interviewee:
"We don't want someone coming into the U.S. who hasn't been vaccinated against measles or chickenpox," said Dr. Abramson, who is currently chairman of the department of pediatrics at Wake Forest University School of Medicine in Winston-Salem, N.C. "HPV can only be communicated by sexual contact....This is not something that endangers kids in a school setting or puts your population at risk."
(I find of questionable worth the practice of offering the words of a second interviewee to fill in what the writer should logically have asked of the first interviewee.)
Given the rather surprising storm of controversy -- read the entire WSJ article for the predictable immigrant advocate groups --, it remains to be seen whether and for how long this latest vaccination requirement will remain on the books.
Posted by Richard at 1:56 PM | Comments (0)
