China overtakes Japan on R&D

[Laura]

http://www.ft.com/cms/s/da4ed9f2-82fa-11db-a38a-0000779e2340..html

By Geoff Dyer in Shanghai
December 3 2006

China has overtaken Japan to become the second biggest spender on
research and development behind the US, a report from the Organisation
for Economic Co-operation and Development revealed.

The country is expected to invest $136bn in research and development
this year after growing by more than 20 per cent in the past year, ahead
of the the $130bn from Japan but still well behind the $330bn the US
will invest, the OECD said.

The report is the latest indication of the dramatic rise in research
spending in China, which is beginning to cause concerns among western
governments.

Dirk Pilat, head of the OECD's science and technology division, said the
surge in Chinese research was "stunning". He added: "Chinese investment
has been growing rapidly for some time, but it is still a surprise that
it has overtaken Japan so quickly."

Mr Pilat said that the bulk of the spending in China was on development
work, to alter products for the fast-growing Chinese market, rather than
basic scientific research.

The number of patents coming from China that were registered with the
patent office in the US, Europe and Japan is still low and a string of
recent scandals over academic fraud have also raised questions about how
well the money is spent.

But Mr Pilat added that some multinationals were beginning to move
genuine research to China because of the high numbers of skilled
scientists they could recruit in Shanghai or Beijing. "There are some
signs that they are starting to do fundamental or breakthrough work in
China," he said.

As well as increasing spending on university science departments, the
government has also been eager to attract multinational companies to
open research centres in the country.

Copyright The Financial Times Limited 2006

 

[Laura]

China warns 15 million will not find jobs next year

http://news.yahoo.com/s/afp/20061208/ts_afp/chinaeconomyjobsunemployment_061208040543

Dave Chiang
sino.economics

BEIJING (AFP) - China will be unable next year to create jobs for 15
million people -- nearly equivalent to the entire population of the
Netherlands.

An estimated 25 million urban residents will be seeking jobs and they
will be competing for just 10 million vacancies, the China Daily said,
citing a government think tank researcher.

"We anticipate employment pressure will remain high in 2007," said Yang
Yiyong, deputy chief of the Economic Research Institute under the
National Development and Reform Commission.

To make things worse, 120 million surplus laborers have migrated to the
cities, mostly from the countryside, looking for odd jobs, he said in
the "2007 Analysis and Forecast on China's Economy".

A record number of 4.95 million new university graduates -- 820,000 more
than in 2006 -- will face a "grave" situation in the job market next
year, according to the Ministry of Education.

The urban registered unemployment rate in China was 4.2 percent in 2005
while no figure is immediately available for this year, the report said.

Foreign economists have frequently criticized China for publishing
unreliable unemployment statistics.

They especially target the fact that rural unemployment tends not to be
counted as part of the figures.

In order to alleviate the employment strains, the country will have to
vigorously expand the service industries and subsidize re-employment
efforts, Yang said.

The central budget has earmarked 25.1 billion yuan (3.2 billion dollars)
to fund re-employment this year, according to the newspaper.

Yang's institute has proposed that central and local governments should
allocate at least 40 billion yuan next year, it added.

The Chinese economy grew 10.7 percent in the first three quarters over
the same period last year.

However, productivity gains mean employment opportunities do not rise at
a similar rate.

 

[Laura]

Let's Be Honest About Using History Mashahiro Matsumura
China using Japan's war record as a unifier

http://www.iht.com/articles/2006/11/17/opinion/edmatsu.php

The [China-Japan] "history question" has existed for decades, and has
been characterized by extended periods of calm followed by outbursts of
anti- Japanese sentiment provoked by some incident that reminds the
Chinese of Japan's image during the war years... The Chinese do not have
a deeply entrenched sense of national identity. Instead China is divided
by competing regional, ethnic and class identities. The Japan history
question is an issue on which all Chinese can reach consensus and on
which a temporary and precarious sense of unity can be fabricated.

 

[Laura]

http://www.forbes.com/business/feeds/afx/2006/12/07/afx3235275.html

China Central Bank warns of US Dollar crash

Dave Chiang

BEIJING (XFN-ASIA) - China's central bank said it is concerned over a
possible slide in the US dollar if there is a widespread move to sell
off dollar assets.

The People's Bank (nasdaq: PBCT - news - people ) of China said in its
2006 Financial Stability Report that Asian oil exporting countries also
may need to adjust their foreign exchange holdings to reduce risk.

'If the US current account deficit growth continues to be higher than
GDP growth, the investment value of US assets will be questioned by
global investors, and the willingness of investors to continue holding
and buying US financial products may weaken,' the central bank said.

China has been cautious in its statements about the dollar. It now has
over 1 trln usd in foreign exchange reserves and some 70 pct of that is
believed to be held in dollar-denominated assets.

Officials have talked of diversifying the nation's foreign exchange
holdings but they do not want to trigger a sharp sell-off that will
reduce the value of the assets China now holds.

Instead economists have suggested that China has been adding less
rapidly to new dollar holdings as a percentage of new foreign exchange
reserves.

But the central bank report made clear that the bank is concerned with
the prospect of a significant decline in the dollar's value.

'If the external capital stops flowing into the US, the US dollar may
face a significant slide,' the central bank said.

'Along with that there would be a decline in (domestic) consumption and
investment as well as interest rate increases and financial market
turbulence.'

The central bank also said the stability of the global economy may also
be threatened by rising international economic imbalances and trade
protectionism.

'Each country should take responsibility for resolving international
economic imbalances,' the central bank said, adding that Asian countries
need to step up domestic consumption.

Turning to the domestic economy, the central bank said it will maintain
a prudent monetary policy, and use a combination monetary policy tools,
including open market operations and interest rates, to strengthen the
management of liquidity.

It also said the 'overly fast' growth in fixed asset investments is a
key problem facing the country's economic leaders. Fixed asset growth
climbed 26.8 pct year on year in the January-October period.

Much of this investment goes into real estate and that could lead to
inflation and new financial risks in the economy, the central bank said.

The bank also said that some of this pressure stems from large inflows
of international capital.

China has announced measures to slow investment in certain sectors,
including real estate. It has also tried to choke off some of the
external funding that it is flowing into the property market.

The central bank also said it is aiming to maintain the stability of
China's financial market, it will enlarge the open market operation,
diversity the investment channel on its foreign exchange reserves, and
close monitoring cross-border capital inflows.

 

[Laura]

http://www.ft.com/cms/s/41470ec0-845b-11db-87e0-0000779e2340.html

Richest 2% Hold Half the World's Assets; China more equal

By Chris Giles, Economics Editor in London
December 5 2006

Personal wealth is distributed so unevenly across the world that the
richest two per cent of adults own more than 50 percent of the world's
assets, while the poorest half hold only one percent of wealth.

A survey released on Tuesday shows that middle-income countries with
high growth rates still have a long way to go before they have a hope of
catching up with the levels of prosperity of the richest.

Adults with more than $2,200 of assets were in the top half of the
global wealth league table, while those with more than $61,000 were in
the top 10 per cent, according to the data from the World Institute fpr
Development Economics Research of the United Nations University (UNU-Wider).

To belong to the top 1 per cent of the world's wealthiest adults you
would need more than $500,000, something that 37m adults have achieved.

So much of the world's wealth is concentrated in few hands that if all
the world's wealth was distributed evenly, each person would have
$20,500 of assets to use.

Almost 90 per cent of the world's wealth is held in North America,
Europe and high-income Asian and Pacific countries, such as Japan and
Australia.

While North America has 6 per cent of the world's adult population, it
accounts for 34 per cent of household wealth.

The concentration of wealth in different countries varies considerably,
with the top 10 per cent in the US holding 70 per cent of the country's
wealth, compared with 61 per cent in France, 56 per cent in the UK, 44
per cent in Germany and 39 per cent in Japan.

According to Anthony Shorrocks, the director of UNU-Wider, the number of
wealthy individuals in a country depends on the size of the population,
the average wealth and its inequality.

"China fails to feature strongly among the super-rich because average
wealth is modest and wealth is evenly spread by international
standards", he said.

As countries grow richer, their population changes how it holds wealth,
according to the report.

In developing countries, property, particularly land and farm assets are
important, while cash savings tend to dominate in middle-income counties.

Only in certain advanced countries such as the US and the UK with
developed financial sectors is there a strong appetite for holding
equities and other more sophisticated financial assets.

Debt is also low in poor countries because financial institutions do not
exist to allow people to borrow.

In contrast, the authors say "many people in high-income countries have
negative net worth and, somewhat paradoxically, are among the poorest
people in the world in terms of household wealth."

Wealth is difficult to measure even in the most advanced countries, so
the research was based on painstaking compilation of aggregate and
survey data for the 38 countries of the world where it exists and
statistical models for the rest of the world.