world growth

world growth

Tuesday, November 19, 2013

Analysis of Foreign Investment into China

An overview of Foreign Investment into China
The Ministry of Commerce presents a clear picture with a press conference introducing foreign direct investment (FDI) into China.

First of all, China is on track for a big shift. Very soon, Chinese companies will be investing more money overseas than foreign companies bring to the mainland. In the first 10 months in 2013, China nabbed $97 billion, up 5.8 percent. Meanwhile, outbound investment reached $69.5 billion, growing at a much more rapid 20 percent. “The trend for Chinese companies going abroad has just started,” said Zhang Yuliang, chairman of Greenland, a real estate developer, in a recent interview.
Who’s investing in China? The biggest surge is from the European Union, totaling $6.4 billion January through October, a 22.3 percent increase. U.S. companies, too, increased investment by 12.4 percent to reach $3 billion. And Japanese enterprises invested in $6.5 billion, slightly more than the EU sum, a 6.3 percent rise. The largest amount came from Hong Kong due to its historical link to Mainland; that totaled $63.5 billion (about two third of overall investment), an increase of 10.5 percent.

China’s service industries were the biggest draw for foreign investment, pulling in $50 billion, up about 14 percent in the first 10 months. That’s good news, with Beijing aiming to lift the proportion of its economy made up of the tertiary sector from today’s 45 percent to 47 percent by 2015.

Not surprising, given rapidly rising labor and other costs, investment in manufacturing fell by 5.2 percent, to $38 billion, making up just over two-fifths of the total. Investment in agriculture, animal husbandry, and fishery businesses dropped by 2.6 percent, to $1.4 billion.

Eastern China continues to bring in the most investment, $81.4 billion in the first 10 months, up 6.0 percent, or about 84 percent of the total. That compares to $8.6 billion in the central part of the country, up 9.9 percent, making up 8.8 percent of total investment.

Meanwhile, western China, home to the Muslim region of Xinjiang, didn’t fare well—bad news for Chinese authorities who count on economic development to reduce ethnic tensions. Foreign investment of $7.1 billion was down 1.1 percent and amounted to only 7.3 percent of the total. Nine assailants and two auxiliary police officers were killed in an attack on a police station in Kashgar prefecture, Xinjiang, on Nov. 16, according to Xinhua News Agency.

Thursday, October 17, 2013

China's economy grew 7.8% in the third quarter

China's economic growth jumped to 7.8% in the third quarter, analysts polled by AFP forecast ahead of the release of the figures Friday, the first acceleration in the world's second-largest economy for almost a year.

China is likely to meet this year's economic growth target. China is trying to improve the quality of growth, but just focused on the growth rate alone.

The median forecast in a survey of 11 economists saw growth ahead of both the 7.5% logged in the April-June period and 7.7% in the first three months of the year.

"Both the confidence and demand within the country have improved," said Sun Junwei, a Beijing-based economist with HSBC. "Therefore, we feel the economy is on track to have a mild recovery."

The jump was mainly a result of government stimulus since late June that featured increased rail and urban fixed-asset investment, tax cuts and loose monetary policy, economists said.

The measures were taken after the growth in gross domestic product slowed for two consecutive quarters and following a 7.7% expansion for all of 2012 – the worst performance since 1999 (7.7% is actually not bad at all, still the fastest growth rate in the world).

"The economy may have stabilized and rebounded by a small margin thanks to the so-called mini-stimulus since June," said Li Ruoyu, a Beijing-based economist with the State Information Center, a government think tank.

But many of those polled said growth may now have peaked and is likely to ease in the coming months, as the comparable figures in the second half of 2012 were relatively high.

China, which has set 2013’s growth target at 7.5%, is unlikely to have room for more stimulus measures, with tightening possible in some sectors, they added.

"Looking forward, we believe such growth will be difficult to sustain, as real estate tightening measures may return, and an adverse base effect... may cap upward momentum," Shen Jianguang, Mizuho Securities analyst in Hong Kong, wrote in a research note.

Thursday, September 5, 2013

Chinese Yuan Enters Top 10 Most-Traded Currencies

If China gets rid of capital control, Yuan could become one of top three currencies (along with dollar and euro).

The Chinese yuan has rocketed into the top 10 of most frequently traded currencies for the first time, the Bank for International Settlements said in its triennial survey of turnover in foreign exchange.

In a rapidly growing global currency business, which the BIS said now generates $5.3 trillion a day in flows, up from $4 trillion in 2010, the yuan climbed to ninth place from 17th three years ago. Offshore trading in the currency drove this expansion, the BIS said in its report of the survey, which was carried out in April.

The Mexican peso also regained a top-10 place, in eighth, for the first time since 1998, demonstrating the breadth of the rise in emerging-market currencies. Both currencies roughly doubled their share of the market to edge the Swedish krona and Hong Kong dollar out of the top 10 and overtake the New Zealand dollar. The Russian ruble, Turkish lira, South African rand and Brazilian real all also accounted for a bigger slice of global flows, albeit on a smaller scale.

This rapid growth reflects the development of international trade and investment in developing-market currencies as a whole, and underscores why banks and financial centers around the world are so keen to grab a slice of offshore yuan trading.
More on Chinese Market

"As reforms continue to take place in emerging markets to further internationalize their economies, cross-border finance will grow and will drive more volumes into the FX market for everybody," said Derek Sammann, senior managing director of foreign-exchange at CME Group Inc. CME -0.38%

Since China made Hong Kong its first offshore trading center for its currency in 2009, competition has been fierce among global and regional financial hubs to become the next city to host a landmark experiment that aims to make the yuan, also known as the renminbi, a serious rival to the dollar's supremacy in global trade. Singapore and London have emerged as the leading candidates, with Tokyo, Sydney, Luxembourg and Kuala Lumpur also vying for a spot.

"The renminbi has been a big growth story over the last year," said Richard Anthony, global head of foreign-exchange electronic trading at HSBC in London. "Trading volumes are increasing not only from corporate clients off the back of global trade but also from the investor community."

Trading in the Chinese currency swelled to $120 billion a day in 2013, up from $34 billion in 2010. Still, trading in yuan remains small in comparison with that of the top currencies. Dollar trading averaged $4.652 trillion a day, the euro averaged $1.786 trillion and the yen $1.231 trillion.


Even though the yuan has expanded its role rapidly, there are significant barriers to its wider use, notably a tightly controlled capital account, which prevents foreigners from easily holding yuan assets, and concerns about transparency and governance that mean many yuan assets appear unattractive to foreign holders.

Trading in the Mexican peso—a favored bet for funds in recent months—surged to $135 billion a day in 2013, according to the BIS, which gathered the data with input from central banks and authorities in 53 jurisdictions and 1,300 dealing banks around the world. The Korean won and Polish zloty accounted for slightly smaller shares of the growing overall market compared with 2010.

In developed-market currencies, flows in the Japanese yen also shot higher in this year's survey, with turnover surging by 63% from 2010. Trading in the dollar against the yen was up by about 70%, the BIS said. The survey was conducted in April in the midst of a heavy drop in the yen driven by newly easy monetary policy from the Bank of Japan, a shift that drew a large number of bets against the currency.

"A lot of hedge funds have been active in this yen move through the options market," said Jeff Feig, global head of major currencies at Citigroup Inc. The overall expansion of this market "re-emphasizes the rationale for continuing to invest in our [foreign-exchange] franchise."

According to the annual Euromoney market-share survey, Citigroup is the world's largest dealer in spot foreign exchange—the core part of the market— and the biggest dealer in emerging-markets currencies.

Wednesday, August 7, 2013

China is the world's biggest material consumer

China has surged ahead of the rest of the world in material consumption, which has created intense pressure on the country's environment, according to a report released by the United Nations Environment Programme (UNEP) on Friday.

The UNEP released the report "Resource Efficiency: Economics and Outlook for China" on Friday during a two-day international forum held in the city of Ordos in north China's Inner Mongolia Autonomous Region.

According to the report, China has become the world's largest consumer of primary materials, including minerals, metal ore, fossil fuels and biomass, with domestic material consumption levels four times that of the United States.

From 1970 to 2008, China's per capita consumption of materials grew from one-third to over one-and-a-half times global average levels.

The report said massive investment in urban infrastructure and manufacturing have caused the domestic per capita consumption of natural resources to increase at almost twice the rate of the rest of the Asia-Pacific region.

Urbanization and infrastructure have driven the consumption of minerals for use in construction and metal ore, while increased fossil fuel consumption has contributed to China's rising carbon dioxide emissions, the report said.

China's emissions of greenhouse gases per unit of economic output are four times the global average and twice that of the rest of the Asia-Pacific region, the report said.

China has seen dramatic growth in past decades and the effect of its transition on global demand for natural resources is unprecedented, said Achim Steiner, UN under-secretary-general and UNEP executive director.

Steiner said China's growth has come with rising environmental challenges.

The report said China, as well as other emerging economies, needs to make significant investment in more resource-efficient infrastructure.

Although the country is facing serious challenges, it also remains among the most successful in the world in improving resource efficiency, the report noted.

The Chinese government has tried to shift to more balanced growth in recent years, as well as worked to improve resource and energy efficiency.

China was one of the first countries to embrace the circular economy approach as a new paradigm for economic and industrial development. In 2009, the circular economy promotion law was promulgated and put into force in order to improve resource efficiency, protect the environment and achieve sustainable development.

According to another UNEP-backed study released earlier this year, China invested 67 billion U.S. dollars in the renewable energy market in 2012, up 22 percent from last year, which consolidated its position as the world's dominant renewable energy market player.

Thursday, June 20, 2013

China's cash squeeze raises fears of global economic slowdown

China’s financial system is in the throes of a cash crunch, with interbank lending rates spiking Thursday and bank-to-bank borrowing nearly stalled, even as growth in the economy displays signs of slowing further.

China’s interbank and money market rates have soared over the past two weeks, which has made banks and other financial institutions afraid of lending to one another. Those in need of short-term cash, or liquidity, must pay dearly; failure to do so raises the possibility of defaults.

In a worst-case scenario, absent intervention by policy makers, defaults at lenders with the most exposure and shakiest balance sheets could lead those institutions to fail. The damage could spread to other banks, setting off runs on deposits by ordinary Chinese. In the near term, markets will probably continue to be rattled, especially shares in financial institutions.

“China’s interbank market is basically frozen — much like credit markets froze in the United States right after Lehman failed," said Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management. "Rates are being quoted, but no transactions are taking place.”

The interest rate that Chinese banks must pay to borrow money from one another overnight surged to a record high of 13.44 percent Thursday, according to official daily rates set by the National Interbank Funding Center in Shanghai. That was up from 7.66 percent Wednesday and less than 4 percent last month.

China’s policy makers have an arsenal of options at their disposal to inject more money into the financial system, including conducting open market operations — trading in securities to control interest rates or liquidity — or, more drastically, freeing up some of the trillions of renminbi that banks are required to keep on reserve with the central bank, the People’s Bank of China. In the past, when China’s economy has hit a rough patch, the government usually stepped in, forcing state-run banks to pump liquidity into the market, even though there was a risk it could drive up asset prices and lead to overinvestment.

“China’s central bank, by allowing a spike in interbank rates to persist for longer than usual, is sending a message to the market that liquidity needs to tighten and credit growth slow at the margin," Andrew Batson and Joyce Poon, analysts at GaveKal Dragonomics, wrote Thursday in a research note. "Indeed, the central bank has been using its open-market operations to drain liquidity from the interbank market since January, setting the stage for just this kind of showdown with banks.”

If the central bank’s inaction toward the deepening liquidity squeeze is a form of financial brinkmanship, some analysts see it as aimed at reining in smaller banks that had been tapping the interbank market as a source of low-cost funding for their investment in higher-yielding bonds, or to finance off-balance-sheet activities, or shadow banking.

“The P.B.O.C. and some other regulators could be taking the opportunity of the tight funding conditions to ‘punish’ some small banks which had previously taken advantage of the stable interbank rates," Ting Lu, China economist at Bank of America Merrill Lynch, said Thursday in a research note.

Mr. Lu said that although the surge in interbank lending rates could have its desired effect on reckless lenders, “it will undoubtedly disrupt both the financial markets and the real economy if the liquidity squeeze lasts too long.”

Signs of a slowdown
China’s economy has been showing signs of a slowdown in recent months. On Thursday, a preliminary survey of factory purchasing managers in June suggested that output in China had fallen to its lowest level in nine months, as manufacturers cut production at a faster pace in response to slack demand both at home and overseas.

The preliminary purchasing managers’ index, published by HSBC and compiled by Markit, dropped to 48.3 points in the first three weeks of June, its lowest level since September and down from a final figure of 49.2 in May. A reading above 50 indicates growth, and anything below signals contraction.

Stock markets across greater China fell Thursday on news of the liquidity situation and manufacturing survey and were the worst performers in Asia. The Hang Seng Index in Hong Kong dropped 2.9 percent, while the Shanghai composite index fell 2.8 percent.

“Manufacturing sectors are weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures," Qu Hongbin, HSBC’s chief economist for China, said in a statement accompanying the survey results. "Beijing prefers to use reforms rather than stimulus to sustain growth," he added. "While reforms can boost long-term growth prospects, they will have a limited impact in the short term.”

The combination of slower economic expansion and the liquidity crunch in the financial sector offers one of the biggest challenges yet to the newly installed leadership in Beijing.

Prime Minister Li Keqiang, who took office in March, has said he plans overhauls that will promote sustainable growth, as opposed to relying on easy credit from state-controlled banks, which helped the country rebound strongly in the years since the 2008 financial crisis.

“While the economy faces up to many difficulties and challenges, we must promote financial reform in an orderly way to better serve economic restructuring," China’s State Council, or cabinet, said in a statement Wednesday after a meeting presided over by Mr. Li, according to Xinhua, the state-run news agency.

“The central bank wants to accelerate reform,” said Zhu Haibin, an economist at J.P. Morgan. “They want to give the market a lesson: you need to manage your risk and not rely on the central bank.”

Yu Song, an economist at Goldman Sachs, said in a report Thursday that the government’s decision to tighten liquidity to deal with financial risks could slow growth in the near term. But, he added, “the flip side to this new approach is that the reform measures should reduce systemic risks and possibly raise the level of potential growth.”

Louis Kuijs, an economist at Royal Bank of Scotland and former China economist at the World Bank, said in a research note that Beijing’s response to HSBC’s preliminary survey was unlikely to be drastic. "Policy makers would want to see this weakness confirmed by the official P.M.I. and hard activity data before making bold decisions," Mr. Kuijs said. "Nonetheless, this kind of data will test the resolve of the government to maintain its current relatively firm macro policy stance.”

The surge in interbank lending rates is a similar test for the People’s Bank of China, which, unlike many other central banks, is not independent and reports to the State Council.

The rise in interbank rates began to take off two weeks ago, before China went on a three-day national holiday to observe an ancient dragon boat festival. Banks typically face higher demand for cash before public holidays, and the initial uptick in rates was not considered abnormal at the time.

But as the situation has worsened, the central bank refrained from injecting new money into the system. Benchmark seven-day repurchase rates, another measure of borrowing costs, briefly soared as high as 25 percent on Thursday, up from 8.5 percent on Wednesday, before closing at 11.2 percent.

Shadow banking?
Some analysts interpret the central bank’s move to allow the cash crunch as part of a campaign to crack down on shadow banking, which they say can sometimes rely on the interbank market as a source of funding.

According to this theory, the central bank is attempting to rein in the issuance of so-called wealth management products in China. These are short-term debt investment products that are marketed by banks as paying stable returns akin to normal bank deposits, but at higher interest rates. The total amount of such products outstanding in China as of March was about 13 trillion renminbi, or $2.1 trillion, according to estimates by Charlene Chu, a senior director at Fitch Ratings in Beijing.

Banks are able to increase their fee income from the sale of these products, but because they do not appear on banks’ balance sheets, there can be little transparency regarding what loans, bonds or other assets have been packaged together under a given product. Moreover, although the products themselves are typically for a short term of, say, three months, the underlying loans they support are often of longer durations — two years, for example.

“To some extent, this is fundamentally a Ponzi scheme," Xiao Gang, then the chairman of the Bank of China, wrote in an opinion column in China Daily last October, referring to the mismatch between the maturity of wealth management products and the loans they pay for. "The music may stop when investors lose confidence and reduce their buying or withdraw" from the products, he wrote. Mr. Xiao now serves as the chairman of the China Securities Regulatory Commission.

Saturday, May 4, 2013

Forcast: China's economy to grow 8% in 2013

The European Commission has forecast that China's economy will grow 8 percent this year and 8.1 percent in 2014, after it successfully avoided a "hard landing" in 2012.

According to its spring forecast released on Friday, EC officials said China remains exposed to a possible worsening of the international environment, but its principal risk factors remain domestic.

The report said the European Union economy is expected to stabilize in the first half of 2013, following recession in 2012.

The commission expects GDP growth in the EU to turn positive in the second half of the year before gaining momentum in 2014.

Projected GDP growth for the EU is minus 0.1 percent in 2013, and 1.4 percent in 2014, and 1.2 percent in the euro area — weak performances which the report attributed to constrained domestic demand due to a number of impediments, which are typical of the aftermath of deep financial crises.

It said the global average growth rate may climb to 3.8 percent from 3.0 percent in 2012.

However, the European economic pickup may not bring job creation. The jobless rate in the area is forecast to be the same in 2013 and 2014, as high as 11.1 percent. While the unemployment rate for the two years in the eurozone stands as high as around 12 percent.

"In view of the protracted recession, we must do whatever it takes to overcome the unemployment crisis in Europe," said Olli Rehn, the commission's vice-president for economic and monetary affairs and the euro.

On China, the report said that consumption is likely to remain the principal driver of growth in 2013. It said rising wages are likely to increase household incomes while real interest rates will remain positive, implying rising earnings on household deposits and an increase in financial wealth.

"Policy is likely to continue to be supportive for household income with a continuation of measures to broaden the social security net, as well as to support spending directly via measures to boost ‘green' consumption," the report added.

Officials said it is unlikely that the rapid growth in exports seen in early months of 2013 can be maintained in China, given the likely slow recovery in world trade, and the short-term prospects for the EU and the US, both major trading partners.

It said China's currency appreciation will not be helpful in increasing exports, a long-term driver of its rapidly growing economy, it added.

According to EC calculations, the real effective exchange rate of the renminbi has appreciated by around 5 percent over the last six months, which will act as a modest drag on export growth.

Pierre Defraigne, executive director of The Madariaga- College of Europe Foundation, a think-tank based in Brussels, said key global players such as China and the EU must maintain a close and direct dialogue over a vast array of important topics of common concern, starting with the grim global economic outlook.

Defraigne said both sides must provide a strong push to the economic and strategic cooperation between the EU and China, which are both confronted with huge reforms at home.

Those include the governance of the eurozone and the growth and jobs priority in Europe, and further progress toward economic growth, administrative effectiveness, and political accountability in China, it said.

"Bilateral cooperation, instead of protectionism in key areas such as energy, urbanization and telecommunications, should be strengthened quickly," said Defraigne.

Monday, April 8, 2013

The Australian dollar is to trade directly with the Chinese Yuan

Trade between Australia and China just got a little easier.

The Australian dollar is set to become only the third currency to trade directly with the Chinese yuan -- a move that will help internationalize China's currency and smooth transactions between the major trading partners.

Australian Prime Minister Julia Gillard announced the deal Monday during a trip to Shanghai.

"Australia's banks, superannuation funds and financial houses will be even better placed to help in the growth of China's service economy," Gillard said. "This is good news for the Chinese economy and good news for the Australian economy."

Australia now exports more goods to China than any other country, and trade between the countries is growing.

In practical terms, direct convertibility means that Australian businesses operating in China will no longer have to use U.S. dollars to purchase goods. Instead, they will be able to use Australian currency without a conversion, which should lower costs.

Related story: Economy central for China's new leadership

The yuan, also called the renminbi, already trades directly with the U.S. dollar and the Japanese yen.

China is pushing to internationalize the yuan, and the currency is being used to conduct a growing number of transactions on international markets as Beijing loosens its grip.

Critics have long accused China of keeping its currency artificially low, making its exports cheaper and more competitive against foreign players.

But the currency has been allowed to appreciate recently, easing periodic tensions over the issue.

Wednesday, March 20, 2013

China FDI overseas soars 147 percent

Chinese overseas investments are mainly focused on resource sector. That is why the top destinations are Australia, Canada, Africa.

BEIJING: Chinese investment overseas in January and February soared 147 percent year-on-year to $18.39 billion, official data showed Tuesday -- more than foreign direct investment into the country itself.

Incoming FDI, which excludes financial sectors, stood at $17.48 billion over the period, the commerce ministry said, down 1.35 percent year-on-year.

Beijing is keen to promote overseas investment in part of its efforts to reform China's growth model and acquire significant foreign assets in sectors such as energy, mining and high-tech industries, analysts said.

"It should be a trend in the long run -- it is highly likely that overseas direct investment will exceed foreign direct investment in the next few years," Ren Xianfang, a Beijing-based analyst with research firm IHS Global Insight, told AFP.

"It is a national strategy to transfer China to a big investor from a big exporter."

Chinese direct investment overseas increased almost 30 percent last year from 2011 as firms in the world's second-largest economy increasingly look to expand abroad.

The biggest rise in Chinese investment in a major market over January and February was in Australia, where it surged 282 percent, the ministry said.

It was followed by Hong Kong, up 156 percent, and the US with a 146 percent increase, while in south-east Asia it went up 114 percent and in the EU 81.9 percent.

However, in Japan, with whom Beijing has been involved in a territorial row, investment was down 31 percent. Overseas FDI to Russia also slipped 46 percent.

At the same time China's manufacturing competitiveness faces rising costs, while investor confidence is battered by weakness in the global economy.

Nonetheless incoming FDI in rose 6.3 percent to $8.21 billion in February, the first year-on-year increase in nine months, the commerce ministry said.

EU investment into China increased "quite rapidly" in the first two months of the year, the ministry said in a statement, rising 34.01 percent to $1.214 billion.

But FDI fell from the US and Asia, with Japanese investment down 6.7 percent over the period to $1.269 billion.

China's economy grew at its slowest pace in 13 years in 2012, expanding 7.8 percent from the year before.

But it has been showing renewed vigor, with GDP growth accelerating in the final quarter of 2012 to 7.9 percent, snapping seven straight quarters of weakening expansion.

Wednesday, March 6, 2013

China sets economic goals for 2013

2013 will be the first year of the new Xi-Li administration (10 years).
Chinese economy definitely needs some re-balancing.

Premier Wen Jiabao opened China's annual parliamentary meetings Tuesday by issuing a new set of targets for the world's second largest economy.

The target for gross domestic product growth will remain 7.5%, but the government said it will carry a larger deficit in 2013 to help finance spending plans.

China recorded its weakest growth in 13 years in 2012, but a rebound in the fourth quarter removed any lingering concern that its economy might be heading for a hard landing. GDP grew by 7.8% in 2012, beating the government's target of 7.5%.

Here are the government's stated goals for 2013:

    Gross domestic product growth of 7.5%.
    Consumer Price Index (CPI) target of 3.5%.
    A projected deficit of 1.2 trillion yuan ($190.48 billion), 400 billion more than last year and a total of 2% of GDP.
    Add more than 9 million urban jobs.
    Keep the registered urban unemployment rate at or below 4.6%.
    The government will work to ensure that real per capita income for urban and rural residents increases in step with economic growth.
    China will continue to implement a proactive fiscal policy. The government will give priority to education, medical and health care and social security.
    China will continue to implement a prudent monetary policy. The target for growth of the broad money supply (M2) is about 13%.

Tuesday, February 5, 2013

Huawei will partner with Microsoft to sell Windows smartphones in Africa

Windows phones are not gaining any market share in America and Europe, so Africa may be a better bet.

Microsoft, taking aim at the world’s fastest-growing smartphone market, said on Monday that it would team up with Huawei of China to sell a low-cost Windows smartphone in Africa.

The phone, called the Huawei 4Afrika Windows Phone, will cost $150 and initially be sold in seven countries. Microsoft’s Windows Phone software is fourth among smartphone operating systems, with just 2 percent of the worldwide market in September, according to Canalys, a research firm in Reading, England.

“Microsoft is a small player in smartphones and it needs as many partners as it can get,” said Pete Cunningham, an analyst at Canalys. “And Africa is one of Huawei’s strongest markets outside of China.”

Microsoft’s choice of Huawei, a leading maker of mobile networking equipment for African operators, does not detract from Microsoft’s commitment to Nokia, which is relying on Windows Phone software to lift its new line of smartphones and return the company to profitability.

Fernando de Sousa, the general manager for Microsoft Africa, said that in the next few months, Microsoft and Nokia planned to introduce two new Windows phones for the African market.

Africa is the world’s fastest-growing region for smartphones, with an average sales growth of 43 percent a year since 2000, according to the GSM Association.

In sub-Saharan Africa alone, 10 percent of the 445 million cellphone users have smartphones, but that is expected to increase rapidly as operators expand high-speed networks.

By 2017, most consumers in South Africa will be using smartphones, up from 20 percent last year, according to the GSM Association. In Nigeria, the continent’s most populous country, the outlook for sustained growth is even greater, with smartphone penetration projected to reach just 30 percent by 2017.

The World Bank says that roughly a quarter of the one billion people on the continent are middle-class wage earners, the target group that Microsoft will try to reach with the Huawei phone, Mr. de Sousa said.

“Africans are generally quite conscious of brand, quality and image,” he said. “We are being very clear that we are not going to be building something cheap for this market. What we want to do is deliver real quality innovation at an affordable price. Compared to some smartphones that cost $600 here, this is very affordable.”

Microsoft plans to introduce the Huawei 4Afrika phone on Tuesday at events in Lagos, Cairo, Nairobi, Johannesburg and Abidjan, Ivory Coast. It will also be sold in Morocco and Angola.

The phone, which will run the Windows Phone 8 OS, will be sold with applications designed for African consumers. Some apps give easy access to African soccer results. Others, like in Nigeria, focus on the country’s entertainment and film industries. An application developed in Egypt allows a woman who feels she is being harassed to alert the authorities to her location with one touch of her phone.

By targeting Africa, Microsoft is trying to build on momentum it recently gained through its partnership with Nokia. The company sold 4.4 million Lumia Windows smartphones in the fourth quarter of last year, up from 2.9 million the previous quarter.

Tuesday, January 29, 2013

Indonesia to import 2500 ships from China

China's ship building industry is already second largest in the world after South Korea.
I am sure this order will further boost China to become the number one ship builder in the world.

Indonesia will import 2,500 ships from China to improve the logistics and distribution among ports scattered throughout the archipelago.

The Indonesia Chamber of Commerce and Industry or Kadin will import the ships, Xinhua reported.

Kadin has signed an agreement with China worth $5 billion, said Natsir Mansyur, vice chairman of Kadin's trade, distribution and logistics division.

The ships will be delivered within five years starting 2013.

"Indonesia's logistics costs are quite high due to limited infrastructure and armada, we need to boost the logistics operations," Natsir said.

Located in South East Asia, Indonesia is the world's largest archipelago with 17,000 islands.

A report by the World Bank in 2012 showed Indonesia's position in logistics performance index was at 2.94 in the scale of 5, lagging behind its regional peers such as the Philippines and Vietnam.

Sunday, January 6, 2013

Sudan seeks China trade in yuan

Sudan has asked its biggest trading partner China to use the yuan currency and Sudanese pounds rather than US dollars in their commercial exchanges, the central bank governor said on Wednesday. "If the Chinese agree to that, we might quit completely from dollars," Mohamed Khair al-Zubair told reporters.

"The Chinese economy is now the second biggest in the world and soon will become the biggest," he explained. Beijing has been hoping for wider use of the yuan in its international trade but the dollar remains the dominant currency in global transactions.

Energy-hungry China is the largest foreign investor in Sudan's oil sector, with two-way trade between the countries valued at $10 billion last year, according to a website of the Chinese embassy. A special Chinese envoy has been trying to resolve a dispute over oil exports between Sudan and South Sudan, which took 75 percent of the country's oil output when it gained independence in July. The vast majority of Khartoum's export earnings came from petroleum, leaving the government scrambling for ways to bolster its finances while fighting rising inflation - which the government sees reaching 17 percent next year - and the sharp devaluation of the Sudanese pound.

Beijing is also a major military supplier to Khartoum, which has suffered from US economic sanctions since 1997. In June, Chinese President Hu Jintao welcomed his Sudanese counterpart Omar al-Bashir to Beijing, where they signed economic agreements and sparked the anger of Washington, rights groups and the United Nations. Bashir is wanted by the International Criminal Court for crimes against humanity, genocide and war crimes allegedly committed in Sudan's Darfur region.