Preview Newsletter
Dory
-
A Look Under China's Hood Reveals an Economic Divergence
Jul 31, 2017 | Bloomberg Markets
By Xiaoqing Pi
Even as China continues to anchor global growth, a look under the hood reveals a divergence in regional economies that the nation’s policy makers should be wary about. -
India May Stymie Tibet's Participation in China's 'New Silk Road'
Jul 29, 2017 | Sputnik News
By Liu Zongyi
A number of provinces and cities are eager to be involved in the "Belt and Road"(B&R) initiative, including Southwest China's Tibet Autonomous Region. -
Pence pressures China on North Korea, talks Russia sanctions, election meddling
Jul 30, 2017 | CNN
By Deena Zaru
Vice President Mike Pence spoke forcefully about reining in North Korea's nuclear program during his trip to Estonia on Sunday, saying that "all options are on the table" in countering the threat. -
Trans-Pac spot spike signals peak season in gear
Jul 28, 2017 | Journal of Commerce
By Bill Mongelluzzo
Eastbound transPacific spot rates surged by double digits this week to the US East and West coasts after three straight weeks of decline, in a sign of the peak season ramping up. -
Spiking traffic helps drive OOCL’s double-digit pricing power gain
Jul 28, 2017 | Journal of Commerce
By Dustin Braden
OOCL handled nearly 30 percent more cargo on the major eastwest trades and increased pricing on total volume by 16 percent compared to last year, another sign of the improving outlook for container lines. -
China Woos ASEAN to Resolve Disputed Sea Without Outsiders
Jul 30, 2017 | Maritime Executive
By Noel Tarrazona
The Chinese government has called on Southeast Asian countries to prevent non-Asian countries from intervening in the resolution of territorial disputes in the South China Sea.
Port Mentions
City/Province Mentions
Competitor Mentions
US - China Relations
Industry News
-
A Look Under China's Hood Reveals an Economic Divergence
Jul 31, 2017 | Bloomberg Markets
By Xiaoqing Pi
Even as China continues to anchor global growth, a look under the hood reveals a divergence in regional economies that the nation’s policy makers should be wary about.
Eight provincial-level regions reported slower growth in the first half of this year from the result in the first quarter, while 12 showed a pick up. Twenty-seven of 31 had reported as of late Friday, with expansion unchanged in seven regions and the nation as a whole.
With gross domestic product figures seen as a performance report for local officials, competition has traditionally been fierce between provinces, with each trying to lure businesses and lobby for infrastructure projects. However, a crackdown on faked statistics and the move to curb local debts may be changing all that. President Xi Jinping said this month that officials are liable for bad debt-management decisions "for life."
"Competition between cities and provinces has played an important role in China’s growth," said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. "How the competition pans out in the future depends on how the central government evaluates local officials. Economic growth is always a key performance indicator, but it will probably be less important in the next five years."
Since Xi took office, there’s been a shift in the evaluation of regional development, with increasing focus on the environment, according to Yang Weimin, vice minister of the Office of the Central Leading Group on Financial and Economic Affairs. The key tasks of some regions are industrialization and urbanization, while some areas’ priorities are farming or conservation, Yang said at a briefing on Thursday.
For the first half, only five regions out of the 27 reported an expansion slower than the nation’s 6.9 percent pace.Unexpected Laggards
Growth in three very different provinces was more than 1 percentage point lower in the first half compared to the first quarter.
Tianjin, a directly-administered municipality near Beijing, seems the most unlikely laggard. The port city had the fastest growth from 2010 to 2013, expanding by as much as 17.4 percent in a year.
The cooling property market there has become a drag. The volume of sales slumped 21 percent and development investment in the sector dropped 0.8 percent from a year earlier. Major cities in China rolled out strict curbs on purchasing properties early this year to control runaway prices.
Environment protection may have also become a constraint as the city gets wealthier. It has overhauled and rehabilitated more than 15,000 lower-end, polluting firms this year to "force them to upgrade."
Gansu, the poorest region in China by per-capita income, saw growth slump to 5 percent, less than half the 12.6 percent pace in 2012.
That can be attributed to the aggressive anti-corruption drive in the province, according to Chua Han Teng, head of Asia research at BMI Research in Singapore. "Many officials are currently under investigation, resulting in political uncertainty, and that has resulted in the halting of project developments that have links to the officials who are suspected of corruption," Chua said.
Hainan, China’s answer to Hawaii, also reported a deceleration. Swings in real estate and hotel markets have made the resort island’s economy volatile.
The priority for Gansu and Hainan is protecting their environment, rather than economic growth, Cong Liang, an official at the National Development and Reform Commission, said on Thursday.Diverging Rustbelt
The picture from the rust belt is diverging. Shanxi -- the coal country of China -- rebounded to match the national growth figures, while Liaoning, with its base of heavy industry, struggled.
After recovering in the first quarter from last year’s recession, Liaoning slowed again in the second quarter. Industrial output continued to decline even as corporate profits improved, according to the regional government.
"Liaoning continues to suffer from overcapacity in most of its heavy industries, and this has been weighing on investment activity," BMI’s Chua said.
Shanxi appeared to have successfully turned around. Benefiting from a commodity resurgence, industrial firms recovered, private investment jumped, and property sales surged 46 percent from a year earlier by value.
Hebei, the home of most of China’s steel mills, and Heilongjiang in the northeast, both accelerated. Jilin, a struggling northeastern province, is yet to release first half data.Booms and Busts
Xinjiang, Guizhou and Tibet saw the fastest expansion of fixed-asset investment, all exceeding 20 percent. The central government has prioritized these under-developed regions with large ethnic minority populations in the west for infrastructure funds and stimulus cash.
"For the western provinces without strong fiscal revenue, funding support from the central government is key," said Beijing-based Bloomberg Intelligence economist Wan Qian. "Yet not all poor provinces enjoy the sugar equally."Real Estate
The nation’s real estate market is also fragmented. Provinces such as Hubei saw results from efforts to reduce excess housing inventory, with the total stock able to be sold in just 2.1 months at the current pace. On the other hand, Liaoning reported early this year that it would take 19.2 months for them to do the same.
As for the second half, it may be tough for the regional and national economies to keep up such expansion rates.
"Given that central and local governments’ fiscal expenditures already surged to support growth in the first half, the economy is pressured to maintain the positive momentum," Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong, wrote in a note on Friday. "Hence, we forecast a higher but conservative growth of 6.7 percent."
https://www.bloomberg.com/news/articles/2017-07-30/winners-and-laggards-seen-in-china-s-regional-growth-competition
-
India May Stymie Tibet's Participation in China's 'New Silk Road'
Jul 29, 2017 | Sputnik News
By Liu Zongyi
A number of provinces and cities are eager to be involved in the "Belt and Road"(B&R) initiative, including Southwest China's Tibet Autonomous Region.
The opening-up of Tibet is in line with the general trend, but due to some historical and geopolitical factors, it has had to face some special challenges involving international strategy and security in the process of its development.
First, India's attitude toward the B&R is not conducive to Tibet's involvement in the initiative. Among countries and regions along the route of the B&R, India is the only large economy that has yet to express public support for the initiative. Given this situation, India is unlikely to consider building a railway linking it to the autonomous region.
Second, Sino-Indian border trade is underdeveloped, which is a serious barrier to developing Tibet's trade. More than 90 percent of trade between India and the autonomous region, which border one another, passes through the port of Tianjin in North China, which is 4,400 kilometers away.
Third, Nepal's internal politics may thwart the interconnection of the two countries' infrastructure. In contrast to what Indian media outlets have reported, Nepal does have an interest in China's B&R initiative, but the Himalayan country has misgivings about ramping up efforts to carry out the agreement reached by its former prime minister, KP Sharma Oli, who had a pro-China stance. He agreed to speed up the interconnection and strengthen cooperation with China, but this process may be held up due to India's attitude toward the B&R.
With economic integration between Tibet and the rest of China a major way for the region to play a more active role in the B&R initiative, China should create a favorable international environment for itself to speed up the interconnection with South Asian countries and make Tibet a bridgehead for that process.
First, Tibet could continue to improve its infrastructure, including roads, telecom facilities and land border ports.
Second, while setting the stage for strategic interaction with India, China should focus on cooperation with the state governments of India and major companies there. These parties are always significantly less interested in geopolitics than national governments. There is a strong desire among state governments in India to promote local economic development, while heads of local government departments care about their individual political careers relating to economic growth.
Many investment promotion delegations led by chief ministers of Indian states have visited China to attract investment, and these events offer a shortcut for the B&R initiative to establish a presence in India. China needs to strengthen cooperation with state governments in northeast India such as Uttarakhand and Himachal Pradesh.
Third, China should become a dependable friend of Nepal. Although political uncertainty persists, Nepal is the best option for Tibet's opening-up and interconnection with the outside. Since the early 1990s, "striking a balance" has been a principle of the foreign policy pursued by Nepal, on the basis of a rise in nationalism and anti-India sentiment.
Events such as an undeclared economic blockade by India, which led to shortages of fuel, medicine and other supplies in Nepal, have led most Nepali people to abandon their illusions about India. Although India maintains a considerable presence in Nepal, this does not necessarily mean that the smaller nation is unwilling to change the status quo, although its internal political disputes diminish its solidarity. China has no intention of competing with India in Nepal; rather, what China hopes to achieve is that Nepal and other neighboring countries can get a free ride on China's economic rise.
China hopes that Nepal can serve as a bridge to India, which means that China needs to speed up interconnection with Nepal first. China should strengthen cooperation with Nepal in terms of the economy and infrastructure, and enhance political and cultural exchanges.
Fourth, we must optimize local industries in Tibet to make it an important node for the B&R initiative. We should take the opportunity to promote specialized industry development, focus on improving the environment and pursue natural and cultural heritage protection.
In addition, as Tibet is close to South Asia, we may also make full use of the unique advantages of Tibet in geography and humanities to boost the local financial industry.
Finally, in participation in the B&R initiative, Tibet must pay attention to connections to people in surrounding countries and regions.
https://sputniknews.com/business/201707291055982847-china-tibet-india-economic-interference/
-
Pence pressures China on North Korea, talks Russia sanctions, election meddling
Jul 30, 2017 | CNN
By Deena Zaru
Washington (CNN)- Vice President Mike Pence spoke forcefully about reining in North Korea's nuclear program during his trip to Estonia on Sunday, saying that "all options are on the table" in countering the threat.
"The continued provocations by the rogue regime in North Korea are unacceptable, and the United States of America is going to continue to marshal the support of nations across the region and across the world to further isolate North Korea economically and diplomatically," Pence told reporters.US tests defense system after North Korea missile launch Pence also lamented China's actions in the effort to pressure Pyongyang.
"We believe China should do more," Pence said. "The President has been clear about that in his conversations with President Xi (Jinping) that while China has taken unprecedented steps to begin to isolate North Korea economically and to bring diplomatic pressure, we believe China has a unique relationship with the regime in North Korea and has a unique ability to influence decisions by that regime.
"US Ambassador to the United Nations Nikki Haley also tweeted Sunday morning about the administration's desire for China and other nations to put pressure on Pyongyang, writing, "Done talking about NKorea. China is aware they must act. Japan & South Korea must increase pressure.
Not only a US problem. It will require an international solution. In a statement on Twitter on Sunday afternoon, Haley dismissed reports that Washington is seeking an emergency UN Security Council meeting, saying, "North Korea is already subject to numerous Security Council resolutions that they violate with impunity," and "China must decide if it is finally willing to take this vital step" of challenging Pyongyang.
"The time for talk is over," Haley said. "The danger the North Korean regime poses to international peace is now clear to all."The remarks come two days after North Korea tested a ballistic missile that it claims can reach all of the United States. China, a longtime North Korean ally, issued a statement Saturday condemning the missile launch and asked Pyongyang to "stop taking actions that would escalate tensions" on the Korean Peninsula."
The UN Security Council has clear regulations on North Korea's launch activities that use ballistic missile technologies. China is opposed to North Korea's launch activities in violation of UN Security Council resolutions and against the will of the international community," Chinese Foreign Ministry spokesman Geng Shuang said.In a pair of tweets Saturday, Trump also slammed China for not taking stronger action.
"I am very disappointed in China," Trump tweeted. "... they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!"
In a show of force on Sunday, the US military said it conducted a successful missile defense testin the Pacific Ocean amid the growing tensions. US forces tested the Terminal High Altitude Area Defense (THAAD) system in Alaska by launching a ballistic missile, which was then detected, tracked and intercepted over the Pacific Ocean, according to the military.
Russia
Pence's visit to Estonia is the first leg of an Eastern European trip that will also take him to Georgia and Montenegro to show US support for them and NATO in the face of what the administration has called Russia's destabilizing activities in Ukraine and elsewhere and its efforts to undermine the alliance.
The trip comes amid rising tensions between the US and Russia over a new sanctions bill that easily cleared Congress last week and that the White House says Trump is expected to sign.Passage of the bill prompted Russia to retaliate by cutting US diplomatic missions by 755 people, which Moscow announced Friday -- in response to penalties that would be codified by the legislation, including the ejection of Russian diplomatic staff and closure of two Russian compounds in the US, for its alleged meddling in last year's election and aggression in Ukraine.
"We waited a long time for things to perhaps change for the better," Russian state media quoted Russian President Vladimir Putin as saying Sunday. "We had such hope that the situation would change, but judging by the situation that will not be soon."
On taking retaliatory measures, Putin said, "I thought it was time for us to show that we will not leave this without an answer. As for other possible measures, or whether it is a lot or not, this is quite sensible from the point of view of the work of the diplomatic department. ..."Russian Deputy Foreign Minister Sergei Ryabkov threatened further retaliation against the US on Sunday morning, saying that if that US goes through with the sanctions, "we will respond in kind," but he would not specify how Russia plans to respond.
Pence said Sunday that he hopes that slapping new sanctions on Russia would lead Russia to change its behavior with regard to Ukraine and end its support for Iran and North Korea."The President and I remain very hopeful that we'll see different behavior by the Russian government, with regard to Ukraine, with regard to supporting rogue regimes in Iran and North Korea," Pence said.
"We continue to believe that if Russia will change its behavior, our relationship can change for the good and improve for the interests in both of our countries and the interest of peace and stability in this region and around the world."
Pressed on how to square the purpose of his trip with Trump's position on Russia's alleged efforts to influence last year's election, Pence defended the President. He insisted Trump is in agreement with US intelligence services on Russian meddling despite newly appointed White House communications director Anthony Scaramucci telling CNN last week that Trump is still unsure.
The President has confirmed repeatedly that we believe Russia did meddle in US elections," Pence said. "I think he has also said it could have been other actors as well. But he's confirmed his belief and our intelligence that Russia was involved in meddling in US elections and it's part of what inspired the bipartisan action in the Congress to codify the sanctions that our administration has been implementing against Russia and will continue to advance that."
http://edition.cnn.com/2017/07/30/politics/pence-russia-north-korea-trump/index.html
-
Trans-Pac spot spike signals peak season in gear
Jul 28, 2017 | Journal of Commerce
By Bill Mongelluzzo
Eastbound transPacific spot rates surged by double digits this week to the US East and West coasts after three straight weeks of decline, in a sign of the peak season ramping up. The rate to the East Coast shot up 37 percent compared with a year ago, to $2,685 per FEU, while rates to the West Coast jumped 28 percent, to $1,687 per FEU, according to the Shanghai Containerized Freight Index published on JOC.com under the Market Data Hub.
US merchandise imports from Asia normally begin their ascent this time of year, climbing steadily through August, September, and October. As capacity tightens and some shipments are rolled to subsequent voyages, carriers are able to push freight rates higher. Retailers are usually willing to pay higher rates in order to get their containers onto vessels and through US ports so their shelves will be well stocked for the holiday shopping season. Spot rates spiked briefly before a previously announced general rate increase on July 1.
However, since peakseason volumes had not really begun to move, the increase deteriorated in subsequent weeks. Several carriers recently filed for rate hikes of about $625 per FEU to take effect in early August. Therefore, the ability of carriers to maintain the rate hikes, or push rates even higher, in the coming weeks will be an indication of how strong this year’s peak season will be. The longerterm prospects for shipping lines could also be positive.
At a webinar this week, Drewry Shipping consultants said a global shift in the market cycle is under way. After six consecutive years of losses, the industry could be entering a cycle of prosperity due to significant carrier consolidation, diminishing orders for new vessels and improving freight rates on a number of trade lanes.
Drewry projects that carriers this year will show a profit of $5 billion in their global operations. In both of the large eastwest trade lanes, the upward trajectory of rates will be determined more by capacity than by demand. US and European imports from Asia were fairly strong in the first half of 2017, increasing 4.2 percent compared to the first six months of 2016, according to PIERS, a JOC.com sister company.
The global container shipping fleet is projected to increase 3.4 percent this year and 4.7 percent next year, according to Alphaliner. Prospects for continued growth in imports from Asia look good. The US Department of Commerce reported that inventories in June rose 0.6 percent, which could indicate that retailers are stocking up on merchandise in anticipation of a robust holiday shopping season. IHS Markit Senior Economist Mario Moreno projects that US containerized imports in 2017 will increase 6.6 percent compared with 2016.
http://www.joc.com/maritime-news/trade-lanes/trans-pacific/trans-pac-spot-spike-signals-peak-season-gear_20170728.html
-
Spiking traffic helps drive OOCL’s double-digit pricing power gain
Jul 28, 2017 | Journal of Commerce
By Dustin Braden
OOCL handled nearly 30 percent more cargo on the major eastwest trades and increased pricing on total volume by 16 percent compared to last year, another sign of the improving outlook for container lines. OOCL’s volume rose 6.6 percent to 1.6 million TEU as revenue per unit jumped 16.2 percent in the same period.
Those dramatic gains drove up secondquarter revenue 23.8 percent year over year to $1.4 billion and firsthalf revenue 15.2 percent to $2.6 billion. Volume for the first half increased 6.8 percent to 3.1 million TEU as firsthalf revenue per TEU rose 7.8 percent.
The volume and revenue growth will come as good news to OOCL’s prospective new owner, China Cosco Shipping Holdings, which earlier in July announced plans to purchase the midsized carrier for $6.3 billion and retain its brand. The deal is subject to approvals from Cosco shareholders and government regulators. While OOCL’s volume gains outpaced new capacity for the firsthalf as a whole, rising 5.3 percent, added capacity in the second quarter was 3 percent higher, at 9.6 percent, than volume growth, as the company took delivery of the Hong Kong. At 21,000 TEU, it is currently the largest ship in operation. The strong volume and revenue growth at OOCL is the latest data point hinting at a stronger global container shipping market defined by higher volumes and rates, and by extension, container line profits.
AsiaEurope and transPacific spot rates are expected to strengthen in the coming weeks, and generate $5 billion in profits for ocean carriers this year, according to maritime analyst Drewry. Signs of that improvement are already apparent, with the Shanghai Shipping Exchange’s rate for moving a 40foot container from Shanghai to the US West Coast up 62.1 percent from last week to $1,987, while the rate to the US East Coast rose 20.2 percent to $2,685.
The ShanghaiEurope rate also rose, but not as dramatically, with the rate for moving a 20foot container to North Europe up 4.8 percent to $963 and the rate to the Mediterranean up 3.6 percent to $883. Carriers were also generally able to secure higher contracts on both trades this year, with many at or just under breakeven levels, depending upon a given carrier’s operating costs. OOCL’s secondquarter AsiaEurope volume rocketed 26.3 percent to 295,216 TEU, followed closely by transPacific volume, which expanded 26.3 percent to 233,658 TEU.
TransAtlantic volume in the quarter rose 11.9 percent to 97,030 TEU but intraAsia/Australasia volumes fell 8.5 percent to 810,277 TEU. For the first half, Asia Europe traffic grew 23.1 percent to 865,081 TEU, transPacific volume rose 22.2 percent to 546,505 TEU, and transAtlantic volume was up 8 percent to 209,438 TEU. IntraAsia/Australasia volumes declined 5.2 percent to 1.5 million TEU. Based on US container volume in 2016, a merged line would give Mediterranean Shipping Co. fiercer competition for market share by handling 9.9 percent of all of US exports and imports. MSC controlled 11.9 percent of volume last year, while thirdplace Maersk Line handled 9.4 percent of volume, according to an analysis of PIERS, a sister product of JOC.com. Cosco and OOCL were the sixth and seventhlargest movers of US containerized cargo, respectively, in 2016, with 5.26 percent and 4.65 percent shares.
-
China Woos ASEAN to Resolve Disputed Sea Without Outsiders
Jul 30, 2017 | Maritime Executive
By Noel Tarrazona
The Chinese government has called on Southeast Asian countries to prevent non-Asian countries from intervening in the resolution of territorial disputes in the South China Sea.
Chinese Foreign Minister Wang Yi was in Manila last week to discuss the framework for a code of conduct in the South China Sea between and among ASEAN nations. China has claimed ownership of a large part of the South China Sea despite the Hague’s Arbitration Court having denied its sovereign claim.
Wang announced through an Chinese-English interpreter that “external players do not want to see stability in the region. Thus, we need to stand together and say 'no' to them.”
Telling his country that he is not ready for war with China, Philippine President Rodrigo Duterte announced during his State of the Nation Address (SONA) last week that the Philippines and China will start joint oil and gas exploration in the South China Sea. Many of his advisers believe this is the best option for easing diplomatic tensions between the two Asian neighbors.
Wang welcomed the development for the joint exploration of the South China Sea and said the partnership will involve much consultation so that “we could come up with a common goal or agreement.”
However, Wang also warned that while China is open to the idea of joint exploration, they are against “unilateral development” conducted by other claimant countries in the South China Sea.
“If one party goes unilateral development and the other party takes the same action, that might lead to tensions and the end result nobody will be able to develop the resources,” Wang was quoted saying by Asian journalists.
Wang said that whenever there are disputed claims over sovereignty, maritime rights and interests, joint development is the best option.
The Philippines started energy exploration at Recto Bank three years ago, but this was later suspended when they raised the dispute in the Permanent Court of Arbitration in the Hague contesting China’s claim in the South China Sea. China continues to ignore the Hague Court ruling, insisting the territorial dispute should be resolved bilaterally.
When Duterte won office as President of the Philippines in 2016, he announced before the international community that he was aligning himself with China (and also Russia) and kept a lie-low stance against China’s military presence in the South China Sea.
When journalists asked Duterte about his weakening stance on claiming sovereignty of the disputed waters, Duterte replied that the Philippines was not ready for war with China and that he will never allow carnage of his soldiers should war with China happen. He also said that China’s missiles can reach the Philippines in less than half an hour, and that made the Philippines ill-prepared for war.
China, Brunei, Malaysia, Philippines, Vietnam and Taiwan all have claims the disputed sea which forms part of a busy shipping lane that transports $5 trillion worth of goods a year.
Many shipping industry stakeholders have been monitoring developments. Many Western analysts view China’s aggression as a potential threat to the shipping industry in the region, but, for the Philippines, collaborating with China in joint exploration is a key move to promote peaceful relations in the region and on that should be beneficial to the global shipping industry.
https://www.maritime-executive.com/article/china-woos-asean-to-resolve-disputed-sea-without-outsiders
Port Mentions
City/Province Mentions
Competitor Mentions
US - China Relations
Industry News
Add recipients
Suggested