Tag Archives: China

Living In A Material World?

Are we living in a material world? To a larger or lesser degree, the answer has to be ‘yes’ but it does seem that to what degree depends on where you live.

In a recent poll of 20 countries conducted by global market-research company Ipsos regarding their attitudes toward wealth and success, findings were that those in China were the most likely to equate success with material possessions, with 71 percent agreeing with the statement “I measure my success by the things I own.”

Perhaps it’s no coincidence that the next three countries were also large emerging markets, implying that people’s views may be shaped not only by culture, but by stage of national development: 58 percent of respondents in India agreed with the same statement, while 57 percent in Turkey and 48 percent in Brazil. In the more affluent US, the figure was 21 per cent.

People in China were also the most likely to say “I feel under a lot of pressure to be successful and make money,” with 68 percent agreeing. A separate global poll last year by U.K office-space company Regus, found that Chinese workers were also the most likely to report increasing stress levels over the past year.

Meanwhile, people in India were the most likely to be hopeful about their country as a whole over the next year, with 53 percent expressing optimism. Forty-six percent of people in China expressed optimism, well above the global average of 32 percent. The most pessimistic were those living in Spain, Italy and France, perhaps not surprisingly considering their recent financial woes.

So, does being well-off financially equate with success? That depends on how you measure your own personal success. What do you think?

WTI Climbs Near Six-Week High

After the slump seen in October that kept crude down all through last month as well, demand is once again up in the world’s largest oil consumers giving a boost to West Texas Intermediate that brought it to its highest price in six weeks as Chinese imports rebounded and U.S. unemployment figures fell.

The commodity’s six-day advance was capped on 6th December and numbers remained relatively unchanged since then. The General Administration of Customs’ data showed that China’s net oil imports increased 19 percent to 5.73 million barrels per day, driving consumption out of its lowest levels in 14 months.

In the U.S., data released by the Labor Department on Friday showed that the unemployment rate fell to 7 percent, the lowest level in five years.

WTI to be delivered in January came in at $97.78 a barrel, an increase of 13 cents. The contract climbed 27 cents to $97.65 on 6th December the highest close since 29th October.

Tin to Make a Splash in Metals Market for 2014

Tin seems to be the way to the future-at least as far as wise investing for 2014-with global demand far exceeding the supply levels of diminishing inventories and China ramping up its role as net importer, according to Morgan Stanley.

China, metal economists note, can no longer sufficiently fulfil its own needs in neither refined- nor mined-tin, as demand for led-free solder in the electronics sectors has risen once again.

Although Indonesia has aggravated global deficit with the export curb it imposed, tin has been the best performing base metal this year on the London Metal Exchange. The disturbance created by the rule changes in the world’s greatest exporter have hiked up the costs of local producers, pushing prices up for makers in the electronics and packaging industries.

The shift in China’s stand from an exporter of the commodity to an importer looking to cover even its basic needs especially stands out in the eyes if investors who predict the improvement in the metal’s performance through next year.

In an October 7th report, Morgan Stanley sees the price of tin for immediate delivery to average $22,845 a ton next year. This year so far, by comparison, tin’s price on the LME has averaged to $22,203 a ton. Three-month tin saw a drop of 2 percent this year, which was smaller that the falls in aluminium, nickel, lead and zinc.

China Hoards Cotton At Risk of Bear Market

China is stowing away an unprecedented amount of cotton in effort to aid farmers as global production exceeds demand for the fourth year in a row, risking tipping prices into a bear market as supply could suddenly surge.

It is expected that by July of next year, China will hold 12.7 million metric tons in inventory, equalling 62 percent of the global total, or enough to make 71 billion t-shirts, according to estimates by the U.S. Department of agriculture. Should the Chinese government decide to end its stockpiling programme the following season, as anticipated, cotton prices will fall 8.5 percent a pound in a year.

U.S. and Brazilian growers trimmed production in 2011 as prices dropped from a record $2.197, but farmers in China increased theirs as the state absorbed excess output. The government bought supply equal to 85 percent of domestic production last year and will import 2 million tons less this season. Cheaper cotton prices have already boosted margins for the Levi Strauss & Co., Hanesbrands Inc. (HBI) and other clothing companies.

Cotton slumped 18.6 percent to 75.95 cents a pound yesterday on ICE Futures U.S. in New York since hitting a 16-month closing high of 93.32 cents on 16th August, approaching the 2 percentage limit of a bear market. That trimmed this year’s advance to 1.1 percent as the Standard & Poor’s GSCI gauge of 24 commodities fell 5.6 percent. The MSCI All-Country World Index of equities increased 17 percent and the Bloomberg U.S. Treasury Bond Index lost 2.1 percent.

Asian Indices Slide before Fed Cuts Stimulus

Asian stocks decline after the president of the Federal Reserve Bank of Dallas, Richard Fisher, said the U.S. central bank should curb its record stimulus as soon as possible.

Financial companies in South Korea including Shinhan Financial Group Co., Mirae Asset Securities Co. and Hana Financial Group Inc. fell more than 3 percent. Coca-Cola Amatil Ltd. (CCL), Australia’s largest listed drinks company, declined 4.7 percent after predicting 2013 earnings to drop. MStar Semiconductor Inc., an electronics component maker, advanced 7 percent to close at a record in Taipei.
The MSCI Asia Pacific excluding Japan Index dropped 0.3 percent to 478.22 after rising as much as 0.2 percent. Nearly twice as many stocks fell as rose on the index.

The Fed began changing its rhetoric after its last meeting last month mentioning signs of “underlying strength” in American economy that have people talking about the cost of quantitative easing and the possibility of its curbing sooner than previously anticipated.

Spring is in the Air

Stock markets showed good sings on the first trading day of March on Friday, with the Dow close to hitting a record closing high, as surprisingly good numbers from ISM manufacturing report countered fears over China and Europe and as shareholders welcomed the forthcoming government spending cuts.

Since 1950, the first months of spring, March and April have been solid months for the Dow, with regular gains better than one per cent. Interestingly, particularly April has been the year’s best month, recording an average upsurge of 2.7 per cent per month since 1993 and 1.97 per cent since 1950.

The Chinese Model

China is often argued to provide the third option to capitalism and socialism. According to political science driven by conventional patters, economies generally have two options to grow and to produce wealth. With socialism, the state dictates the cycle of supply and demand, setting standards, wages, and conditions and collects high taxes to pay for social programs which in capitalist economies would be paid for by citizens who express an interest in such programs. In both models, political freedom generally exists independent of economic conditions.

Obviously I am referring to modern-day democracies which are either molding their respective economies according to free-market or welfare models. However, whether Sweden, the US or Spain, political freedoms are non-negotiable, regardless of the fiscal policies of the government.

China took a good hard look at both models and decided to create a fusion which attempts to liberate the economy and lure foreign investment due to low labor costs, but denies the citizens of political freedoms. In other words, in China a man can get rich without having the right to vote. China decided that it does not need a thriving middle class which acts as a check on those in power, but rather it needs people who as a collective will strengthen China’s role in the world without jeopardizing the communist credo and religion according to which property ownership – the cornerstone of capitalism – is not allowed.

Ronald Coase and Nina Wang summarized the Chinese predicament well in their Cato Institute article How China Became Capitalist:

“The combination of rapid economic liberalization and seemingly unchanged politics has led many to characterize China’s market economy as state-led, authoritarian capitalism, which many people have rightly recognized as fragile and unsustainable. When and how China will embrace democracy, and whether the Party will survive democratization, are the main questions asked about China’s political future. In our book, a different perspective is offered. It provides a different diagnosis of the main flaw of the Chinese market economy: China has developed a robust market for goods, but it still lacks a free market for ideas.”

But what is freedom? As Larry David once acerbically asked: who has more freedom: the single man in China or the married man in America?

Each according to his abilities – right?

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