Africa's Economic Advantages and Disadvantages

In recent years, the growth rate of Africa's GDP has remained at about 5%, which is next only to Asia’s and far higher than Europe’s. The World Bank estimates Africa's GDP by 2050 is expected to increase 15-fold. According to the UN's "2015 World Economic Situation and Prospects," Africa's economic growth is expected to reach 4.6% this year and 4.9% next year. French Havas group’s surveys show that all foreign investors in Africa are optimistic for short-term and medium-term economic growth prospects in Africa.

Some economists believe that on the African continent there is a huge demand for investment in infrastructure, it is an important condition for economic take-off in Africa. Former French Foreign Minister Hubert Vedrine and another economist, Lionel Zinsou drafted a report for the French Ministry of Economy, showing that in the next few years, the investment Africa needs in this area will reach $118 billion. African Development Bank President Donald Kaberuka believes that infrastructure construction has become a symbol of Africa's development. In the past 10 years, the African Development Bank invested $28 billion for infrastructure development in Africa.

Secondly, the African continent trade liberalization process is moving forward, in the future the level of trade between African countries is excepted to be greatly enhanced. On June 10 this year, the COMESA, the Southern African Development Community and the the East African Community successfully signed a free trade agreement, the FTA covers 26 countries, 625 million people, some countries’ total GDP reached 1.2 trillion US dollars, accounting for 58% of Africa's gross domestic product. 5 days later, the African unio member States launched the African continent free trade agreement negotiations, aimed at establishing a super FTA covering all of Africa's population, economic output reaching $2 trillion in 2017.

In addition, the demographic dividend will gradually release, which is also an important factor in Africa's promising economic outlook. African Development Bank released figures showing that Africa's population will double by 2050, the total number will reach two billion, then those middle-class who have a certain payment ability will reach more than 1.4 billion.

Of course, to make a better vision into reality, Africa also needs to withstand the extreme tests. After all, about 600 million Africans (equivalent to two-thirds of Africa's total population) still have no access to electricity; 60% among urban residents live in slums; 36 per cent of people have no access to tap water qualified. Although rich in land and water, but Africa has low food production , in 2013 83% of African food are met by imports, Africa is facing a severe food crisis.

As described in an article written by Alfred Minho then published at the French "Tribune" website, today Africa is like a half full bottle of water: In the "Afro-pessimists" eyes, it seems an empty bottle; in the "Africa optimists' eyes, it is a bottle full of real opportunities. From now, policy-makers of the world's major countries have joined the "African optimists' camp, they actively participate in African economic affairs, which will contribute to the early realization of Africa's economic take-off. (www.chinainout.com)

Li Keqiang Meets with Turkish President Erdogan

On the afternoon of July 29, Chinese Premier Li Keqiang met with the Turkish President Erdogan in the afternoon for a state visit to China at the Great Hall of the People.

Li said that China and Turkey are important emerging market countries. On the basis of mutual respect, mutual benefit and win-win, China is willing to strengthen political mutual trust, care for each other, deepen pragmatic cooperation in various fields and promote the healthy and stable development of bilateral relations.

Li pointed out that China attaches great importance to developing pragmatic cooperation with Turkey. Both sides should take advantage of the government cooperation committee mechanism at the vice premier’s level and coordinate the cooperation at the political, economic, cultural and other fields; China is willing to connect "one belt one road" strategy with Turkey’s "middle corridor" plan and strengthen industry cooperation at the field of the railways and other infrastructure, new energy, light industry, telecommunications to promote the balanced growth of bilateral trade; Both expand the cooperation at the emerging field of aviation, aerospace, finance, among others. China hopes Turkey to facilitate and support for the Chinese enterprises to invest in Turkey.

Erdogan expressed a strong desire to develop relations with China and further enhance bilateral trade and investment cooperation. Welcomes China to expand investment and cooperation in infrastructure, energy, information and communications, finance, aviation, engineering, project contracting and other fields. Turkey is ready to become the Chinese enterprise’s production and logistics base and looks forward to work with China to carry out cooperation in third markets. (www.chinainout.com)

State Council Opinions on Promoting Steady Growth of Imports and Exports

To promote a new round of higher level of opening up, is an important support to upgrade the quality and efficiency of the economy. We should further promote foreign trade facilitation, improve the business environment, alleviate burdens on foreign trade enterprises, promote the steady growth of imports and exports, and foster new international competitive advantage. Therefore, with the consent of the State Council, We made the following observations:

First, to resolutely clean up and regulate charges at the imports and exports. Regarding administrative fees, governmental funds, and government price or guiding management service fees at imports and exports, we’ll implement directory listing management, those not included in the list will be regarded as arbitrary charge and will be investigated. 

Second, to keep the RMB exchange rate basically stable at a reasonable and balanced level. To improve the RMB exchange rate marketization mechanism, to expand the floating range of the RMB exchange rate. To further improve the level of facilitation of cross-border trade in RMB, expanding the size of the settlement.

Third, to increase the export credit insurance support. To further expand the scale of short-term export credit insurance, to increase small and micro enterprises and emerging market development support. To realize of large complete sets of equipment export financing insurance, to further simplify procedures.

Fourth, to accelerate the development of new business models of foreign trade. To promptly implement "the State Council’s guidance on facilitating cross-border e-commerce healthy and rapid development." To actively promote China (Hangzhou) Cross-border e-commerce comprehensive experimental zone. To formulate policies and measures to support the development of foreign trade enterprises’ integrated services. Before the end of 2015, we’ll present programs further expanding the scope of the pilot and promoting foreign trade-related new business models of foreign trade, which will be implemented in early 2016.

Fifth, to continue to strengthen the imports. To expand the coverage of preferential import credit interest rates. Before the end of July 2015 we’ll adjust and issue "encouraged imported technologies and products catalog", adjust the scope of the import discount interest policy support, and promote the upgrading of domestic industries. To improve related policies of imports of consumer goods, to reduce tariffs of imported consumer goods domestic consumers have large demand for, then to expand the pilot, to moderately increase duty-free stores at the ports of entry, to reasonably expand duty-free product varieties, to increase a certain amount of tax-free shopping, to enrich domestic consumers’ shopping options.

Sixth, to further improve the level of trade facilitation. To further simplify administrative procedures and improve service efficiency. To further implement the management approach of the export tax rebate enterprise, to accelerate the progress of export tax rebates, to ensure full timely rebates. To improve customs clearance efficiency, to strengthen cross-sectoral and inter-regional customs cooperation, and to accelerate to form a national integrated clearance management structure.

Seventh, we’ll improve financial services. We’ll increase the financing support for the cost-effective business. To encourage the syndicated loans, hybrid loans and project financing to support enterprises to develop international markets, international production cooperation and promote Chinese equipment, "going out". To encourage commercial banks, according to risk control and sustainable business principle, to carry out export credit insurance financing.  (www.chinainout.com)

How The Rich Get Richer? Secret of Investment

 


When many of us have a little cash to invest, we might buy a mutual fund or a stock — if we don’t blow it on the latest tech gadget. Not the truly wealthy, however. They often put their money in property, art, businesses and other investments that the rest of us can only dream of owning. How this rarified group uses their cash differentiates them from the rest of us — and keeps them in the black.
Take Joshua Coleman, for example. When his family sold their Chicago-based telecom company for $400m in 2004, they didn’t run out and buy something extravagant. Instead, they began seeking advice on ways to save their newfound riches and help them grow.

Their quest sparked an idea for Coleman, now 27. In 2011, he launched Momentum Advanced Planning — a firm that connects people to tax, legal and wealth experts. If the business one day sells, he could see a big return, just like his family’s first business.If you think that starting a business is an odd way to invest your money, then you probably aren’t among the ultra-wealthy.

People who have at least $30m in assets — dubbed ultra high net-worth — invest in stocks and bonds, but they also grow their money by buying companies and investing in unusual securities, such as airline leasing funds. They also own art and cars that they hope will appreciate in value.

“It’s called alpha risk,” said Coleman. “It’s this kind of stuff wher there can be a lot of upside.”As for the downside, many of these investments are riskier than traditional investments, so there’s a higher chance of losing a large chunk of change. As well, they’re far less liquid than stocks and it could take months or years for the wealthy to get their money out of an investment.

Even if you don’t have millions to invest, though, you can learn a thing or two about how the rich reap returns and apply it your own portfolios. (www.chinainout.com)

China and Australia Reach Agreement on Alive Cattle Imports

Some analysts said the latest deal would help China ease beef shortages.

On July 20, Australian Agriculture Minister Barnaby Joyce said Australia already reached an agreement to export alive cattle to China.

"In the past five years, we had very good cooperation with China on cattle trade, but mainly for daily dairy products. Now, I am pleased to announce that the trade between us is closer, and we will begin to export live cattle to China. "Joyce represents to the local media.

Barnaby Joyce said the agreement would help the Australian beef farmers open a huge demand potential of the Chinese market, each year it would bring the Australian economy with the value of 1 to 2 billion Australian dollars. He also said that in 8-10 years, China's annual imports of live cattle from Australia was expected to reach one million.

The two countries last year reached a consensus in principle on live cattle export trade, but because of China's concerns about the potential risk of bluetongue virus, the trade process was stalled.

"If China allows a huge number of live cattle trades, it will have a number of effects on the market." The senior analyst at the Dutch cooperative bank Pan Chenjun believes that "China can take advantage of the various parts of live cattle, and can not just focus on the local market, it can consider exporting to other countries, like Japan, in which the steak price is higher than China’s. " (www.chinainout.com)

Imperial Ambitions Have Pushed Europe to Its Limits

A few years ago, I heard an after-dinner speech from a European statesman, a person who has played a leading role not only in the political life of his own country but in the councils of the EU. The speaker that evening lauded, to general agreement, Europe’s values — its culture, its solidarity — and the quality of its institutions. He went on to stress the need for the unio to propagate these values and institutions more widely.

The discomfiture I felt was shared by some of those sitting with me at the table. My problem was that I could have put similar words into the mouths of some of the most unpleasant figures in world history. The EU that the speaker described was an imperialist project. Those who proclaimed the British empire used to sing: “Wider still, and wider, may thy bounds be set. God who made thee mighty, make thee mightier yet.” Britons may still sing “Land of Hope and Glory” but they no longer take the words seriously. Yet the expansion of the EU embraced a similar vision.

For the builders of modern Europe, wider unio has been as important as closer unio. Greece was hastily admitted in the hope of sustaining its fragile democracy after the end of military rule; Spain and Portugal followed soon after. Every post-communist state with passably honest and democratic institutions, and some without, has secured admission. The ambitious project of creating monetary unio between France and Germany was extended, by lowering admission standards, to include most EU members. The principal qualification for membership of a European club has been the desire to join.

Of course, there are big differences between the Europe of the 21st century and the empires of the 19th and 20th: notably, traditional imperialists did not seek the consent of those they colonised and they suppressed most forms of democratic expression. Yet Greeks today might not perceive these differences as being particularly large.

So the question is whether, like so many imperialist projects throughout history, the European project has stretched its territorial boundaries beyond the limits it can plausibly sustain. That question is highlighted by the two existential problems the EU faces today: the geopolitical confrontation with Russia, and the troubled relationship between peripheral economies and the eurozone.

The boundaries of western Europe have been pushed as far east as at any time in history, save for the best forgotten precedent of the Nazi occupation of most of the continent in 1941-42. The Ukraine crisis tests how far implied promises of political, economic and ultimately military support in that extension will be maintained when called on. The Baltic states have reasonable cause to feel nervous about the solidity of the commitment of their new allies.

Few people can now doubt that it was a mistake to let Greece join the euro in the first place. And this is not just a matter of economics — the fudged data, profligate spending and unpayable debts. The central Greek problem is that the country’s political institutions are not sufficiently mature to effect competent administration or economic management, or to engage in a responsible manner with the institutions of western Europe. And Greece is not the only member state of the EU to which that critique could be applied. (www.chinainout.com)

Chinese Official to Announce Seven Measures to Support Steady Growth of Imports and Exports

 

Chinese Vice Minister of Commerce Wang Shouwen told the reporter from the China news agency at a regular briefing of the state department policy, the executive meeting of the state council has examined and approved "a number of opinions on support steady growth of import and export", which includes seven measures and will be announced publicly recently.

On July 13, General Administration of Customs released the first half of 2015 China's import and export totaled 11.53 trillion yuan, down (yoy, as below) of 6.9%. Among this, exports 6.57 trillion yuan, an increase of 0.9%; imports 4.96 trillion yuan, down 15.5%; trade surplus 1.61 trillion yuan, expanding 1.5 times.

On July 15, Chinese Premier Li Keqiang chaired a State Council executive meeting, deployed policies and measures to promote the steady growth of imports and exports, and enhanced the momentum in expanding and opening.

On the 17th day of the briefing, Wang admitted to reporters, China's exports, "encountered pressure from the international market demand, also encountered a number of other difficulties."

Wang added, the aforementioned "opinions" made some specific provisions to further speed up the reform, simplify administrative procedures, focus on improving the business environment, effectively reduce the burden of enterprises and promote stability in foreign trade.

Wang introduced, the "Opinions" mainly included seven measures, in terms of improving trade environment, strengthening policy support, accelerating reform, highlighting innovation drivers, etc.

"We are now discussing and communicating with the relevant departments, in accordance with the division of responsibilities, we’ll accelerate and refine the implementation of relevant policies and measures to ensure that all policies will be implemented as soon as possible." Wang said, he believes these measures will boost foreign trade business confidence, stimulate market players vitality, and promote the smooth growth of imports and exports. (www.chinainout.com)

Ten Highlights of China’s Economy in First Half

Highlight one: the economic growth rate remained at a reasonable range

Economic growth in the first two quarters maintained at 7%, still stable, and economy continues to operate in a reasonable range. At present we are still in a stage of structural adjustment pains, digestion and growth of the early shift of policy stimulus, to maintain a 7% growth in the hard-won.

Highlight two: the employment generally remained stable

In the first half, new urban jobs reached 7.18, 71.8 percent of the annual target was completed. From the monitoring result of 31 capital cities, the unemployment rate was still about 5.1%, there was no big volatility, the employment is generally stable.

Highlight three: income growth outperformed GDP growth

After income growth in the first quarter outperformed GDP growth, in the first half residents per capita disposable income grew by 7.6%, 0.6 percent higher than the GDP growth rate in the first half. Moreover, the income gap between urban and rural residents are gradually shrinking.

Highlight four: industrial structure continues to optimize

From the industrial point of view, the tertiary industry continues to accelerate, and it’s proportion of GDP was 49.5 percent, up 2.1 percentage points over the same period last year, the transformation from the industry-led trend towards services-led trend continues.

Highlights five: contribution consumption made to economic growth continues to improve

contribution consumption made to economic growth continues to increase, in the first half the consumption rate reached 60%, an increase of 5.7 percentage points over the same period last year, indicating that demand structural changes now are in line with the direction of regulation.

Highlights six: the economic growth quality should improve

From the point of view of investment classes, GDP energy consumption per unit fell by 5.9% in the first half, and fell by 5.6% in the first quarter.

Highlights seven: reform dividends continue to be released

It mainly displayed the enhancement of the vitality of the private economy, the growth rate of the industrial added value of non-public economy in the first half was 8.1%. In the terms of Private investment, in the first half it increased by 11.4%, accounting for 65.1 percent in the total investment. This shows that under the impetus of a series of decentralization measures, the vitality of the private economy has been enhanced.

Highlights eight: startups and innovation are popular

New industries, new formats, new products are in fast-growing. In terms of new industrial, the added value of the high-tech industry still maintained double-digit growth, nearly 5 percentage point higher than the average growth rate of above-scale industry. In terms of new, online retail sales continue to maintain a high growth rate. New products also continue to emerge, like robots, new energy vehicles, locomotives. 

Highlights nine: the international payments are balanced on the basic

In the first half there was international trade surplus, and the basic balance of imports and exports.


Highlights ten: Agriculture continues to maintain a stable development trend

Food production increased by 3.3%, grain harvest is essential to maintain the stable economic development. (www.chinainout.com)

FT Editorial on Greece Crisis

The global attention paid to Greece is entirely understandable; the prospect of Grexit is an existential problem for the world’s second largest economic bloc. Yet the Greek economy is smaller than Chile’s, which has suffered vividly from more powerful global economic forces: China’s slowdown and Asia’s growing trade surpluses. Indeed, South America is almost a canary in a coal mine when it comes to these themes.

Their biggest effect so far has been on commodities. Oil prices, for example, entered a new bear market this week, with Brent crude, the international benchmark, dropping below $57 a barrel. That will hurt oil exporting countries everywher, from Venezuela to Russia — which hosts China, India, Brazil and South Africa at the seventh Brics summit this week. Yet the oil price dro is only part of a broader collapse of commodity prices that has followed the end of the China-led boom.

This collapse has knocked the wind out of developed commodity countries, such as Australia, and vast swaths of the emerging world, especially South America. This can be seen in the region’s tumbling growth rates, shrinking imports, widening trade deficits and plummeting government ratings. In Brazil, Dilma Rousseff leads the most unpopular government since the dictatorship era ended in 1986; in Chile, the world’s largest copper producer, President Michelle Bachelet’s ratings have dropped to 27 per cent; in Colombia, wher President Juan Manuel Santos is struggling to make a peace deal with Marxist guerrillas, his approval ratings are 28 per cent. It is a similar story across the region. Everywher, leaders’ rising unpopularity makes it harder for them to steer their countries through leaner times.

Still, what hurts one part of the world can help another. In Europe, for example, lower commodity prices have helped offset the depressing effects of Greece. Cheaper oil, metal and agricultural goods have kept inflation down and provided a fillip for consumers. They have also helped counteract the Asian slowdown, which has sapped the export vigour of Europe’s capital goods.

Sweden, with an industrial sector highly geared to Asia, has suffered deteriorating trade balances since Chinese growth peaked five years ago. Germany still shows some export growth. But the performance looks weak given the euro has dropped 10 per cent in the past year. Anecdotally, German shipments of capital goods to China are falling, even as Beijing continues to develop China’s capital goods sector, especially robotics. US exports also dropped in May, led by weaker capital goods and exports to China.

The reason for such weakening trade, be that of South American commodities or developed economy capital goods — is the cutback in Asian investment. Its dramatic effect can be seen in May’s 17 per cent slump in Chinese imports, and the continuing rise of Asia’s trade surplus. Summed over 12 months, this surplus reached some $450bn in April, according to Andrew Hunt Economics, a consultancy, twice as big as Greece’s economy. Unfortunately, because it is due to less imports rather than more exports, it is also the “wrong” kind of surplus.

Forecasting models suggest a budding recovery may be taking hold in the US, Japan and even China, despite the crumpling Shanghai stock market. Nevertheless, the shrinkage of Asian imports remains a powerful deflator on the world economy. Because of the commodity price collapse, South America has so far suffered the most, even as the cheaper commodities prices have helped others. Europe’s economies may well be threatened by more than events just in Athens. (www.chinainout.com)

China's Economy Has Sufficient Power to Maintain Growth

"In the next five to ten years, the Chinese economy will have sufficient power to maintain rapid growth." Nicholas Lardy, a Senior Fellow from Peterson Institute for International Economics, recently told the "Economic Daily" reporter when participating in the British Royal Institute of International conference.

First Lardy made clear that he hold a highly optimistic attitude on China's economic growth. Lardy said that in China’s former reform process, market plays a more important role in the allocating resources. One of the most noteworthy phenomenon is the rapid development of the private sector. From the beginning of reform and open, the private sector developed from scratch, and rapidly increase in terms of volume and quality. Currently, the private sector has become the main source of China's economic growth, employment and investment increase. He believes this is an indispensable factor in China's economic success. Although the current Chinese economy entered a period of structural adjustment, but the development trend of the private sector has not changed, instead, its development has been enhanced to some degree. This will provide the impetus and support for China's future economic growth.

On the future development of China's private economy, Lardy believed that the current government's economic reform in China provided a huge space and incentives. First, the Chinese government further lowered the threshold of private enterprise establishment. Lardy believed that the Chinese government has not only simplified the administrative procedures to create a company in China, but canceled the limitation of a company's minimum registered capital. The Chinese government made a lot of policy adjustments and reforms to reduce administrative examination and approval, and encourage private sector development, which provided a favorable policy environment for the further rapid development of the private economy. Affected by this, in the past two years, a large number of newly registered private enterprises began to emerge in China.

Meanwhile, as China has made efforts to "Develop Mixed Ownership Economy", private sector development space will also be further expanded. Lardy believed that the current Chinese state-owned enterprises occupy important position in the energy, financial and telecommunications sectors, but this is changing and the change is favorable to the private sector. At present, more and more industrial sectors began to open to the private sector. Lardy also told the reporter in an interview that Chinese Private Enterprises had huge space for development. The rapid development of the private sector in the future will further enhance allocative efficiency of the economic factors, the return on capital and the efficiency of state-owned enterprises. This means that the total output of China's economy and overall labor productivity will be significantly enhanced in the future.

Lardy stressed that in the reform process over the past 30 years, the Chinese government continued to enhance the role of market in resource allocation, China's still in the reform process currently. under the circumstances that the private sector’s ROI and production efficiency has been improved significantly, the reform provides power and space for the development of the private sector. Therefore, China has the ability to maintain labor productivity and efficiency of all economic sectors, China won’t fall into the so-called "middle income trap", but will enter the ranks of high-income countries, after a new round of rapid growth in the future. (www.chinainout.com)