Tag Archive for 'China'

I always thought of it as Engrish

The NY Times, writing about Shanghai’s efforts to improve it’s signs, has a gallery of amusing mis-translations from Chinese to English.  This was one of my favourites:

As an aside, I like the javascript-free technique used by the NYT developers to prevent most people from saving the images.  Here is the relevent section of the page’s HTML source:

<div class="centeredElement" style="background-image:url('http://graphics8.nytimes.com/images/2010/05/03/world/20100503_CHINGLISH-slide-DFXB/20100503_CHINGLISH-slide-DFXB-slide.jpg');width:600px; height:400px;">
<img width="600" height="400" src="http://graphics8.nytimes.com/images/misc/pixel.gif" />

If somebody right-clicks on the dispayed image (technically, the background image) and chooses to view it or save it, they get pixel.gif, which is a 1×1 clear pixel.

Gray markets, PPP and the iPhone in China

Via Felix Salmon, I found this fantastic piece by “Bento” on the take-up of the iPhone in China.

Some background:  When Apple launched the iPhone in China, early sales numbers were disappointing.

Some background to the background:  Under Chinese law, WIFI-enabled phones are illegal, so Apple has to cripple the iPhones they sell in China.

From Bento:

The Chinese have long had access to iPhones. They are for sale at stalls in every cybermall and market in every Chinese city, and come in two varieties: The most expensive ones (at around 6000 RMB in Shanghai for a 16GB 3GS, or 880 USD, depending on your haggling skills) come directly from Hong Kong, where the factory-unlocked model is available from the Apple store for around 4800 RMB. That’s a nice arbitrage play by the stall owner, and everyone is happy. The cheaper model, at around 5000 RMB for a 16GB 3GS, was originally bought locked in the US or Europe, and has been unlocked by the stall owner’s hacker-genius cousin using 3rd-party software. This kind of iPhone is cheaper, because you are on your own when it comes to upgrades and iTunes compatibility.

The distribution model is extensive and robust, and in fact most Chinese buy their mobile phones from stalls like this. There are no iPhone shortages, as prices fluctuate to meet demand. The received wisdom is that around 2 million iPhones are in the Chinese wild; I’ve personally seen a good many of them here in Shanghai, where they are much in evidence among the eliterati. Still, this is a minuscule portion of the 700 million odd phones in use in China, of which a small but growing portion is smartphones.

What can Apple do to grow the number of iPhones on mainland China? Short of lowering prices in Hong Kong (not going to happen) it can do two things: Increase awareness of the iPhone via advertising, and bring the benefits of a Chinese-language App Store to Chinese iPhone owners.

To do either of these, you sort of need to sell the product locally first, though. Apple can’t really go round putting up banners in Chinese tier-3 cities urging consumers to head for the local iPhone aftermarket.
Apple … is not revenue-sharing with China Unicom, the local vendor, but selling the iPhones outright to them. It is up to China Unicom to flog them in China.

And that’s what China Unicom is trying to do. China Unicom stores all have iPhone banners up; I’ve passed several China Unicom road shows stopping by Shanghai extolling the iPhone. The iPhone is being talked about widely. But so is the fact that the China Unicom iPhone is crippled — the Chinese are sophisticated consumers; forget this at your own peril.

The upshot: anecdotal reports tell of aftermarket prices increasing for Hong Kong iPhones these past few weeks, as demand increased. Clearly, the advertising is working, even if China Unicom’s sales of wifiless iPhones are anaemic.

Arbitrage is clearly still happening — buy for 4800 RMB in Hong Kong, sell for 6000 RMB in Shanghai; that’s a 25% markup and well above any reasonable estimate of transportation costs — so Purchasing Power Parity (PPP) doesn’t even hold within the “one” country, but this is a great example of gray market imports.

On China

Menzie Chinn emphasises that for the purposes of estimating country shares in global GDP, it is necessary to think of them in nominal terms.  On that basis, China is large, but only half the size of the Euro zone and well under half the size of America.  Therefore, he implies, an increase in demand from China won’t really contribute as much to global growth as people might be hoping.

Nevertheless, people do seem to be wondering about China as an engine of global growth in demand.  The reason is simple:  Despite a near catastrophic collapse in world trade, China’s economy is still growing while those of  other export-oriented countries like Japan or Germany are falling precipitously.

Clearly part of the reason for the continued Chinese growth, like in Australia, is the successful use of a fiscal stimulus to boost local demand (the Australian rebound was also helped by the fact that, by not manufacturing much, their decline in investment was offset by a fall in imports and (price) changes in natural resource exports occur with a significant lag).

Brad Setser has explored the Chinese stimulus a little.  He writes:

I initially underestimated the magnitude of China’s stimulus by focusing on the (fairly modest) change in the government’s fiscal balance. It is now clear that the majority of China’s stimulus has been off-budget: the huge increase in lending by state owned banks mattered far more than the change in the budget of the central government. The expected loss on these loans can be considered a form of fiscal stimulus.

Which is a fascinating way to conduct government business.

Hot money and China

Brad Setser (there are lots of pretty graphs on his site):

There is only one way to square a record trade surplus with the sharp fall in reserve growth:

Hot money is now flowing out of China. Here is one way of thinking of it:

The trade surplus should have produced a $115 billion increase in China’s foreign assets. FDI inflows and interest income should combine to produce another $30-40 billion. The fall in the reserve requirement should have added another $50-55 billion (if not more) to China’s reserves. Sum it up and China’s reserves would have increased by about $200 billion in the absence of hot money flows. Instead they went up by about $50 billion. That implies that money is now flowing out of China as fast as it flowed in during the first part of 2008.

And in December, the outflows were absolutely brutal. December reserves were up by $20 billion or so after accounting for valuation changes – but the fall in the reserve requirement alone should have pushed reserves up by at least $25 billion. Throw in a close to $40 billion trade surplus and another $10 billion or so from FDI and interest income, and the small increases in reserves implies $70 billion plus in monthly hot only outflows … That’s huge. Annualized, it is well in excess of 10% of China’s GDP. Probably above 15%.

The mystery being, of course, who is doing the “hot money” transfers.  Chinese companies?  Investors from Taiwan or Hong Kong?  Investors from further abroad? Brad seems to suspect the second:

Over time, if hot money outflows subside, China’s reserve growth should converge to its current account surplus (plus net FDI inflows). That implies ongoing Treasury purchases – though not at the current pace – barring a shift back into “risk” assets. And if hot money outflows continue, watch for Hong Kong and Taiwan to buy more Treasuries. The money flowing out of China doesn’t just disappear … it has to go somewhere.

Ken Livingstone to work for Hugo Chavez

This piece in The Independent is short enough to quote in full:

Former London mayor Ken Livingstone has agreed to help Venezuelan President Hugo Chavez improve urban planning.

While he was in office Mr Livingstone made a deal with Mr Chavez to exchange cheap Venezuelan fuel for British buses for London’s advice to mayoral candidates in Caracas.

But the current mayor Boris Johnson cancelled the deal when he came to office.

Mr Livingstone said he will personally advise officials and candidates to ensure that the country gets the “advice that we promised”.

A spokesman for the Mayor of London, said: “Boris Johnson made it clear during his election campaign that he did not want to be on the payroll of Hugo Chavez and did not believe a poor South American country should be subsidising one of the wealthiest cities in the world.

“He has kept that promise to the people of London. Ken Livingstone is free, as a private individual, to offer his advice and services to whomever he wants.”

Of course, the last time Mr Livingstone made the news was only a couple of weeks ago, that time on the generosity of the Chinese government:

When Livingstone and his Trotskyist cronies were given a multi-million pound payoff from city hall I wondered how much they would be giving away to good causes. As it happens it’s Livingstone and his aide John Ross who have been reviving charity – from the Chinese government.

As Andrew Gilligan reports in today’s Evening Standard these champions of the working person stayed at a £1,100 a night hotel in Beijing and were given VIP seats for the opening ceremony. No wonder he told the Today programme that the Chinese regime was not a police state and was going in the right direction on human rights. Tell that to HIV Aids campiagner Hu Jia.

Apparently, the Chinese invited Livingstone because they saw him as someone “who might have some influence in the future”. Senior Labour figures closely involved with the ill-fated Livingstone campaign are now tearing out their hair out at the former mayor’s increasingly unpredictable behaviour since he lost the election. The sooner the Labour Party finds a decent candidate for 2012 the better.