It is encouraging that the environment in our country has made in the course of many years of tireless efforts of success in finding strong international attention.

We feel pressure, because the environmental problem in our country is still quite serious, and the population with the current state of the environment can not be satisfied.

The national development plans are in the environmental work, even greater demands, the development of the West, the WTO and the globalization of the economy, the penetration through the data technology, etc. provide the environment with new challenges. Only if we remain consistent in the new century, our creative thinking and our pragmatic working style maintained in order to improve environmental protection and strive ceaselessly further progress, we are people’s expectations, the disappointment of this period is not placed in us great confidence. At this point, I’m talking about all the friends that our work entgegenbringen interest, they support and shall give their contribution, from my sincere thanks.

For purpose of making concerted efforts to administrating end-users of China, as from release of this announcement, all of Chinese end-uses such as domestic enterprises, institutional units and administrative units that plan to apply VEU authorization directly or through American exporters and re - exporters must go through registration formalities with the Ministry of Commerce. Please refer to website of Ministry of Commerce for relevant affairs. Chinese end-uses that have already submitted applications of VEU authorization in advance of releases of this announcement must go through registration formalities in 60 days as from release of this announcement. Those who fall to go through registration formalities in line with relevant regulations will have no opportunity to attend the scene of the TEU interview.

Attending the fair were over 1.300 enterprises, 167 of which were from overseas, over 10,000 of business people from more than 80 countries and regions of Europe, USA, Hong Kong, Macao and Taiwan, Japan and South Korea attended the fair.

Deputy Minister of Commerce Mr. Zhong Shan was present at the fair.

Mr Lv Zushan, Governor of Zhejiang Province, Mr. Bayin Chaolu, member of Standing Committee of CPC Zhejiang Provincial Committee and Secretary of Ningbo Municipal Committee, Mr. Gong Zheng, Vice Governor of Zhejiang Province, and Mr. Mao Guanglie, Mayor of Ningbo Municipality also inspected the exhibition.

The government is considering spending an extra 400 billion yuan ($58 billion) to stimulate the economy, according to reports in Chinese news media. A plan awaiting approval from the State Council and the National People’s Congress includes 220 billion yuan of spending and 150 billion yuan of tax cuts, the Beijing-based Economic Observer newspaper reported last week. In addition China has tripled railway spending this year to 300 billion yuan. The current five-year plan, which runs through 2010, calls for investing almost 4.8 trillion yuan on power stations, waterways, roads and other infrastructure projects — more than the combined output of Taiwan, Thailand and Vietnam. Reconstruction after May’s Sichuan earthquake could cost another 1 trillion yuan, the government says.

Monetary policy may also be loosened, and the People’s Bank of China said in August that it would “fine-tune” monetary policy to cushion the economy as overseas demand weakens. This is being widely interpreted as meaning that the central bank will reduce the portion of deposits banks are required to hold as reserves - possibly by as much as 2.5 percentage points, bringing the level down to 15 percent.

• “We’re a better country than one where a man in Indiana has to pack up the equipment he’s worked on for 20 years and watch it shipped off to China, and then chokes up as he explains how he felt like a failure when he went home to tell his family the news.”
• “Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves — protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools and new roads and science and technology.”
• “You know, unlike John McCain, I will stop giving tax breaks to corporations that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America.”
• “And I’ll invest $150 billion over the next decade in affordable, renewable sources of energy — wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and 5 million new jobs that pay well and can’t be outsourced.”

I’ve already got a pony in this race. Despite the negativity on China, this political race has greater implications than trade with China and I’m mostly willing to overlook what Obama is currently saying about China, and hope that it is still just campaign rhetoric.

My guess is that Chinese companies are squeezing costs and margins as far as the lemon will take it, since there is little evidence of any uptick in aggregate global demand for manufactured products, au contraire. My guess is also that they are grabbing market share by entering the supply chain in places they haven’t been before. For example, Hafei Aviation Industry Co., China’s second-largest listed aerospace company, surged to its highest level in almost six months in Shanghai trading this morning after the announcement that it had formed a venture to supply composite-material components to Airbus SAS.

Airbus plans to give 5 percent of the work making parts for A350 airframes to Chinese companies in a bid to win market share in the world’s second-biggest aviation market. The planemaker has also opened an aircraft assembly line in China, its first outside of Europe.

Harbin Hafei will start production in September, and it plans to open a new plant by the end of 2010, Airbus said. Hafei, Avichina Industry & Technology Co. and Harbin Development Zone Heli Infrastructure Development Co. will each hold 10 percent of the venture. Harbin Aircraft Industry Group Co. will own a 50 percent stake. Airbus will have a 20 percent stake.

Unemployment Surges Dramatically

Chinese manufacturers also shed jobs last month at the fastest pace since the survey began in 2004, with the employment index falling to a record low of 45, so obviously as workers lose their jobs internal consumption is also affected, and we clearly have worse to come in the immediate future.

Chen Xiwen, a senior rural planning official, estimated that about 20 million migrant workers had lost their jobs because of the nation’s economic slowdown at a press briefing in Beijing today.

More than 20m rural migrant workers in China have lost their jobs and returned home as a result of the global economic crisis according to government figures, raising the spectre of widespread unrest in the authoritarian country. By the start of the Chinese New Year Spring Festival on 25 January, 15.3 per cent of China’s 130m migrant workers had lost their jobs and returned from manufacturing centres in the south and east of the country to their home villages or towns, according to Chen Xiwen, Director of the Office of Central Rural Work Leading Group, who was quoting a survey from the Ministry of Agriculture.

Government figures show that in recent years 6m to 7m new rural migrant workers a year have poured out of the countryside to fill the factories, construction sites and restaurants of the booming cities, which means the government must actually deal with as many as 27m new jobless in the countryside. On top of that, a survey by a government think-tank in December estimated 1.5m recent tertiary graduates in China were unable to find work by the end of November and universities and technical colleges are expected to churn out another 6.5m graduates this year. According to rough official calculations one percentage point of Chinese GDP growth creates around 1m jobs.

Chinese Premier Wen explicitly declined to rule out a devaluation of the yuan in an interview with the Financial Times today, although , he said that for the moment the government was content to keep the currency stable at what he considered to be a balanced and reasonable level.

Asked if China bore any responsibility for causing the financial crisis, as a number of economists believe, he stiffens and says in a low voice: “It is a ridiculous view.” But he makes it clear that Beijing will do whatever is needed to maintain growth at “about 8 per cent” this year. “Running our own affairs well is our biggest contribution to mankind,” he says. If necessary, some of the country’s huge stash of foreign currency reserves could be put towards this endeavour – a new plan to enable the use of reserves for domestic purposes is under discussion, he says.“We must take forceful steps. Under special circumstances, necessary and extraordinary measures are required,” he says. “We should not be restricted by conventions. Success or failure depends on the pace and intensity of those measures.”

Mr Wen refuses to make an explicit commitment not to devalue the Chinese currency during the crisis – as the government did after the Asian financial crisis in 1997, a pledge that helped engineer the eventual recovery and won China a lot of prestige. But he does rule out any big shifts in the value of the Chinese currency.

“I want to make it very clear that maintaining the stability of the renminbi at a balanced and reasonable level is not only in the interests of China but also the interests of the world,” he says. “Many people have not yet come to see this point that if we have drastic fluctuation in the exchange rate of the renminbi, it would be a big disaster.”

The yuan fell 0.1 percent to 6.8471 against the dollar as of 12:23 p.m. in Shanghai today, a drop which is largely a by-product of the fall in the euro against USD.

Hence you can see why, in the case of somewhere like China, the PMIs are very, very useful, for those of us who would like to try and follow what is happening as it actually happens.

As for the PMI itself, China’s composite manufacturing index contracted for the fifth consecutive month in December as recessions in the U.S., Europe and Japan bit deep into demand for exports - indeed China’s exports fell year on year for the first time in seven years in November. The CLSA China Purchasing Managers’ Index registered a seasonally adjusted 41.2, compared with a record low of 40.9 in November. On such indexes any reading below 50 reflects a contraction.

Despite the apparent small improvement in December the current output index actually fell sharply, and was down to a record low of 38.6 from 39.2 in November, so production was falling, and the index was basically nudged up slightly by other factors, such as the measure of new orders which rebounded to 37 from 36.1, driven by a rise in export orders to 33.6 from a horrific 28.2 in November. However, according to the report, Chinese manufacturers reduced the size of their workforces at a series record in December, and the employment index has now contracted for five consecutive months, to hit 45.2 in December.

So where exactly are we? Well we aren’t (quite) in the Second Great Depression yet, but the situation is deteriorating, and rapidly. Manufacturing output is now contracting at quite a sharp pace, while it was rising in the first half of the year at something like a 15% year on year rate. In a useful summary of the Chinese situation back in November, Nouriel Roubini defined a hard landing in China - which he felt was coming - as follows:

There is thus now a growing risk of a hard landing in China. Let us be clear what we mean by hard landing. In a country with the potential growth of China, a hard landing would occur if the growth rate of the economy were to slow down to 5-6% as China needs a growth rate of 9-10% to absorb about 24 million folks joining the labor force every year; it needs a growth rate of 9-10% to move every year about 12-14 million poor rural farmers to the modern industrial/manufacturing urban sector.

This is more or less the consensus view of what we used to think a hard landing would mean in China, but I think the latest data already take us beyond that. I think there is now a real risk of a technical recession in the more or less classic sense of two consecutive quarters of negative growth (let’s say that the risk is 50-50 at this point), and of serious economic and financial dislocation following in the train of this (btw, just how quickly can you burn your way through $1.7 trillion in reserves, it will be an interesting experiment I think).

Brad Setser (further down the same link) has long been more cautious on China, being sceptical about the impact of a dramatic slowdown in exports (and even more importantly in export oriented investment) on an export driven economy, but those of us who have been closely watching other export dependent economies like Germany and Japan over the last decade and a half were surely not quite so sceptical. However even Brad himself is clear that the possibility of an export downturn feeding its way back into the domestic economy - via some sort of negative feedback process - is real enough:

But the real key to forecasting China’s future growth consequently is determining whether domestic consumption and above all investment will continue to grow strongly in the absence of strong export demand. Remember, over the past few years both domestic investment and exports increased rapidly. If they fall together as well, Chinese growth will slow quite significantly. And unfortunately the latest indicators seem to suggest that they are correlated; consequently domestic demand may fall along with exports.

The $1.7 trillion question is, then, just why China is so export dependent? Doubtless there are many factors at work, but one of these is, I am almost sure, China’s very special demographics (30 years of one child per familiy policy), and the special problems that these present in the context of building a sustainable national pensions system at the same time as the population pyramid inverts. Obviously the absence of a credible pension system has to be one of the factors influencing the strong desire to save which we are seeing in China. Economics Nobel Franco Modigliani also thought this, and specifically addressed the Chinese saving puzzle in his last published paper:

China’s per capita income ranks below 100th in the world. Its saving rate, however, has been one of the highest worldwide in recent decades. In this paper, we attempt to explain the seeming paradox within the framework of the Life-Cycle Hypothesis developed by Franco Modigliani. The key LCH variables are income and population growth. Our results based on data we put together from official sources show that income growth has been the dominant factor behind the dramatic increase in China’s saving rate, as predicted by the LCH. Demographic structure and inflation also had significant impact on the fluctuations of the saving rate.
The Chinese Saving Puzzle and the Life-Cycle Hypothesis - Franco Modigliani and Shi Larry Cao

By Way Of Brief Conclusion

Well basically, the conclusion here is that there is no conclusion, at this point at least. But I would draw attention to two potential points of interest for all you “economy watchers”.

Firstly, a couple of months back my fellow blogger Doug Muir drew our attention to a very interesting point being made by US economic historian Scott Reynolds Nelson:

As a historian who works on the 19th century, I have been reading my newspaper with a considerable sense of dread. While many commentators on the recent mortgage and banking crisis have drawn parallels to the Great Depression of 1929, that comparison is not particularly apt. Two years ago, I began research on the Panic of 1873, an event of some interest to my colleagues in American business and labor history but probably unknown to everyone else. But as I turn the crank on the microfilm reader, I have been hearing weird echoes of recent events.

At the time of reading this I thought to myself hmmmm! This isn’t that simple, but he is on to something. Basically I think no two (or does that make it now three) Great Depressions are ever really exactly alike. I certainly think the resemblence between what is going on now and what happened between 1929 and 1933 is more than passing (especially for the sequencing, of which more in another post), but evidently there are elements of the 1873 one too, and Scott Reynolds puts his finger on some of them, especially in the context of surplus to requirement investment and large capacity overhangs. So my best guess is that what we have is a hybrid, and that what is now happening in China is the best example of the underlying dynamics behind that other great depression that hit our grand- (or great grand) parents and that may well be now about to come back to hit us, boomerang style.

Which brings me to my second point, the Smoot-Hawley Tariff Act, which, as wikipedia explain, was signed into law on June 17, 1930, and raised U.S. tariffs on over 20,000 imported goods to record levels. After the act was passed, many other countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half. Many economists now regard the Smoot-Hawley Act as having been the principal feedback catalyst for the severe reduction in U.S.-European trade, and which took it from the 1929 high down to the depressed levels of 1932 and which thus accompanied the start of the Great Depression. And here, in the spectre of a repeat performance comes just the danger we face in the wake of the dramatic contraction which is now underway in China.

It is my personal guess that the first major issue to face Barack Obama as President of the United States may well be what to do about China, and especially what to do about a China which lets - as I now suspect they may well do - the yuan float, in order to see it float DOWN as the economy unwinds. If this does indeed happen then Obama will really have to struggle to hold back the protectionist pressure I think.

Exports rose 21.5 percent from a year earlier to $136.4 billion after gaining 21.1 percent in August, according to data from the Chinese customs bureau. China has cut interest rates twice in the last month in an attempt to stimulate the economy as the worst financial crisis since the Great Depression undermines global growth. The surplus adds to the already existing $1.8 trillion of foreign-currency reserves.

The expanding trade surplus – up from the previous record of $28.7bn in August – will bolster China’s slowing gross domestic product growth rate but could also refocus international attention on Beijing’s effort to support exporters in recent months by slowing the renminbi’s appreciation against the US dollar.

Chinese imports grew 21.3 per cent year-on-year in September, their weakest performance for more than a year.

It is clear that the focus of government policy has shifted away from combating inflation, which hit a 12-year high of 8.7 per cent in February, and toward supporting growth. China remains relatively insulated from the current international financial turmoil. Major state banks have been extensively recapitalised in recent years and have only limited international exposure, while the government has been enjoying rapid growth in tax revenues and over $1.8bn in foreign exchange reserves.

However, local investors are already suffering from dramatic falls in stock prices and the slump in urban property markets, increasing vulnerability to any fall in export demand.

• U.S. Commitment to the Millennium Development Goals
• Promoting Food Security Worldwide: A U.S. Commitment
• United Nations Management Reform
• The Universal Declaration of Human Rights
• The United States’ Response to the Darfur Crisis
• The United States’ Commitment to Human Rights
• Financing for Development

My interpretation isn’t some huge leap, but basically the Executive is saying that despite plans to use 100s of billions of dollars to setup “Uncle Sam’s Domestic Wealth Fund” we’re not giving up on our monetary commitment to our foreign policy goals around the world. Several of those above are targeting China. The Humans Rights stuff, and the Darfur stuff are telling China that we still care about that stuff. Financing for development and millenium development goals is saying that we’re still in the soft power game. Management reform is saying many of our bankers may be crooks, but that doesn’t mean we’re gonna let others get away with it. Food security is related to the Doha round of trade talks which were all but scuttled due to fallout between India, China, EU and the US over agricultural subsidies. Some other foreign policy initiatives will probably have to be scaled back, especially extremely costly ones.

In a recent twist in Thailand’s politics, ousted prime minister Thaksin Shinawatra’s brother-in-law has been elected as the country’s fourth prime minister in two years. The election comes after the country declared emergency two weeks ago following mass demonstrations outside the prime minister’s office compound and the seat of government. Overcoming internal party politics, Mr Somchai won the parliamentary vote 298 to 163.

The New York Times said the new prime minister, Somchai Wongsawat, 61, is a long standing judge and senior bureaucrat who is married to Taksin Shinawatra’s younger sister. The opposition party, People’s Alliance for Democracy, contend that blood might be thicker than water - allowing for the the governing People Power Party, or P.P.P., to carry out Mr. Thaksin’s orders and plot to quash the cases against him so he can return.

Mr. Thaksin, a telecommunications billionaire who was ousted as prime minister in a coup two years ago, remains one of Thailand’s most influential figures. He is now a fugitive in London, where he has asked for political asylum to avoid corruption cases against him. Most political analysts say Taksin’s impact and influence within the P.P.P. and Thailand maybe waning.

Mr. Somchai said his connection to Mr. Thaksin would not compromise his conduct in office. “Our government does not come here to protect the interests of any particular individual, but comes to protect the interests of every Thai,” he said.

Mr. Somchai was named caretaker prime minister last week after Samak Sundaravej was removed for a conflict of interest in accepting pay for appearing on a televised cooking show. Mr. Samak served in the top post for just over six months.