Trouble in the Great Mall of China?

May 21, 2012 8:15 am by Rahul Jacob

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Spending by wealthy Chinese tourists has become such a boost for stores in major capitals in Paris, London and Hong Kong in the past couple of years that it is hard to imagine the world of luxury without them.

But, by focusing on the exaggerated effects on Hong Kong’s retail sector, UBS economist Silvia Liu has underlined just how extraordinary the growth in 2010 and 2011 was. It was driven by an increasingly relaxed approach by the Chinese government to overseas travel by its citizens and the mainland Chinese love affair with luxury. Continue reading »

Tags: China retail, consumer, luxury Posted in Asia, China | Permalink

Will Hong Kong lose its place as China’s financial centre? Not likely

May 14, 2012 11:21 am by Rahul Jacob

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In the run up to Hong Kong’s return to China in 1997, a favourite topic of debate was whether Shanghai would supplant Hong Kong as China’s financial centre.

Fifteen years on, the subject hasn’t lost its appeal. Last week, Chatham House revived the debate and added Taipei and the stock market in Shenzhen for good measure to the financial market beauty parade. Continue reading »

Tags: financial centres, RMB internationalisation Posted in Asia, China | Permalink

Luxury spending: crisis, what crisis?

May 8, 2012 7:26 am by Rahul Jacob

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With sales growth of 14 per cent to €197 bn euros in 2011, one would think the luxury boom was destined to slow down. Not a bit of it, according to CLSA’s Aaron Fischer, who has been bullish – and right – on the sector for the past few years. In a report released Tuesday, CLSA unveils a host of seemingly trivial details that add up to big sales and bumper profits for the world’s luxury brands for the foreseeable future.

For example: More than 50 per cent of global luxury spending in cities like London, Paris and Hong Kong is by travellers. Continue reading »

Tags: consumption, luxury Posted in Global | Permalink

China: will Bo’s economic model last?

April 30, 2012 12:16 pm by Rahul Jacob

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A perennial debate in China – until recently – has been whether Chongqing’s Bo Xilai would prevail in competition with Guangdong’s party secretary Wang Yang. With Bo’s fall from grace in the past couple of months, Wang seems a certainty to make it to the standing committee of China’s Politburo, its highest decision-making body.

But how do the two regions’ economic models stack up? Continue reading »

Tags: Bo Xilai, China economy Posted in Asia, China | Permalink

China’s exports: toy diggers to real ones

April 23, 2012 1:03 pm by Rahul Jacob

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The migration of some garment and shoe manufacturers from China to Bangladesh and Vietnam has made the populous nation’s export machine seem like it was sputtering. In fact, China’s export prospects are getting better, not worse. Yes, its labour costs have been rising but so too has its productivity. Continue reading »

Tags: capital goods, exports Posted in Asia, China | Permalink

China-India inflation: reasons to worry

March 12, 2012 8:32 am by Rahul Jacob

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Oil futures declined on the news that China’s export growth rate was slowing based on data released over the weekend. This might seem good news for inflation in India and China but don’t celebrate just yet: the respite is likely to be short-lived.

Frederic Neumann, an HSBC economist, argues that oil prices drifting higher – currently at about $106 per barrel – feeds eventually into higher prices for food through higher transportation and fertiliser costs. Continue reading »

Tags: China inflation, India inflation, inflation, oil & gas Posted in Asia, China, India | Permalink

China: selling baby rights

March 5, 2012 11:04 am by Rahul Jacob

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The head of Guangdong’s family planning commission created a stir last July when he said the province had applied to the central government to relax the one-child policy. Now, a deputy from Guangdong to the National People’s Congress, Li Xinghao, has come up with an innovative variation on this theme of allowing more Chinese to have more children and wants it discussed at the NPC meetings this month. Continue reading »

Tags: regulation Posted in Asia, China | Permalink

Rmb: of limited use?

February 27, 2012 10:14 am by Rahul Jacob

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Scarcely a month goes by without an international brokerage making yet another daring prediction about when the renminbi will be fully convertible. Last week it was the turn of China’s central bank to add frisson to this discussion by setting out proposals for full convertibility.

So far, so optimistic. It’s something of a relief to hear a more doubtful voice on the matter. Continue reading »

Tags: currencies, RMB internationalisation Posted in Asia, China | Permalink

China: investing too little?

February 21, 2012 11:26 am by Rahul Jacob

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It takes a brave economist to argue that China is not investing too much: the country’s fixed capital formation to GDP ratio is now 46 per cent of GDP, up from 28 per cent in 1980.

Yet that is exactly what Qu Hongbin, HSBC’s Chief Economist for China, suggests, pointing to the fact that China is just “halfway through the process of urbanisation and industrialisation.” The recent roll-out of its high-speed railway and freight networks may have garnered its share of headlines but Qu points out that “China’s railway network is still shorter than that of the US in 1880.” Continue reading »

Tags: construction, infrastructure, investment Posted in Asia, China | Permalink

China’s GDP: no easy leading indicator

February 13, 2012 9:16 am by Rahul Jacob

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Economists the world over have been parsing over China’s economic data for years to see if the government has been “adding water” – to use the Chinese phrase – to boost growth numbers. The consensus is that although the numbers of provincial governments don’t always add up, China’s economic data have been getting better. Continue reading »

Tags: China economy, China property, economic growth, investment Posted in Asia, China | Permalink

FDI in China: inland and at your service

February 6, 2012 10:31 am by Rahul Jacob

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With wages in China rising at about 12 per cent annually after adjusting for inflation over the past few years, it’s easy to think that lower-cost countries such as Bangladesh, Vietnam and Indonesia will benefit.

But the conventional wisdom that China will attract less foreign direct investment (FDI) as manufacturing moves away is wrong, according to a new report from the Economist Intelligence Unit. Continue reading »

Tags: Bo Xilai, FDI, manufacturing Posted in China | Permalink

Fungs: more European style to China

January 27, 2012 11:25 am by Rahul Jacob

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News that Fung Brands is in negotiations with Sonia Rykiel, the French fashion house, to buy 80 per cent of the company, suggests that the private company owned by the Hong Kong billionaire Fung brothers, William and Victor, is taking a page out of the playbook of the luxury menswear company, Trinity Group, also controlled by the Fungs. Continue reading »

Tags: fashion, luxury, retail Posted in Asia, China | Permalink

Renminbi: not so fast

December 12, 2011 11:38 am by Rahul Jacob

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The weakness of the Chinese renminbi recently has doused speculation that it was imminently going to eclipse the US dollar, that it would become fully convertible in five years…etc etc. The predictions were coming fast and furious. Now, with economic growth slowing, the forecasting mill is whirling again – this time speculating that the weakness in the renminbi is due to capital flight. Continue reading »

Tags: renminbi Posted in China | Permalink

Social housing: a cushion for China?

December 2, 2011 12:16 pm by Rahul Jacob

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With China’s property market in the doldrums, a major engine for the economy is stalling. In cities like Shanghai, buyers of apartments have staged noisy protests after learning that the developer had cut prices for new buyers. Exporters have been hard hit in October and November by a drop in orders from Europe. What could take the place of these major drivers of GDP growth?

Here’s a surprise: Housing. Continue reading »

Tags: affordable housing, China economy, property, real estate Posted in Asia, China | Permalink

Chinese luxury: immune or human?

November 22, 2011 8:54 am by Rahul Jacob

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Can mainland China’s love affair with luxury goods withstand a downturn in the global economy? Yes, say retailers – naturally.

For Graff, the diamond retailer, and Chow Tai Fook, the Hong Kong gold and jewellery store, both planning IPOs in Hong Kong, the belief is rock-solid. Graff’s chief executive Laurence Graff projected to the South China Morning Post on Monday that if 10 per cent of China’s population bought diamonds, the world would run out of diamonds. True, but unlikely. Continue reading »

Tags: China slowdown, luxury Posted in China | Permalink

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