October 28, 2021

Message Mixed From Factories in China

BEIJING — Asian manufacturers face a challenging business climate in the coming months, surveys released Friday suggested, with China’s huge factory sector managing only a shallow rebound at the start of 2013 as feeble foreign demand dragged on sales.

Two surveys of Chinese factory purchasing managers showed that industrial output in the world’s fastest-growing major economy rose in January but that the pace of the rebound in activity was uneven.

China’s official purchasing managers’ index, or P.M.I., released by the government’s statistics bureau, showed that factory output had grown more slowly than expected in January, with a reading of 50.4 points, easing from 50.6 in December and below a forecast for a nine-month high of 50.9.

The official P.M.I. has been above 50 points, the level that separates growth from contraction, since last August, though its failure to break above 51 indicates that the economic expansion it signals is moderate.

The Chinese factory P.M.I. from the British bank HSBC, which is more focused on smaller, privately held businesses than its official counterpart, rose to a two-year high of 52.3. HSBC’s preliminary figure for the month, released Jan. 24, had put the measure at 51.9.

Trade prospects in China, the world’s biggest exporter, appeared darker than those elsewhere. The manufacturing reports showed that export orders either grew marginally or shrank in January as shoppers in the United States and Europe, the two biggest buyers of Chinese goods, cut back spending.

Domestic demand, on the other hand, was the main force behind China’s gentle economic rebound, driving growth in new orders in January to the highest in several months. The official P.M.I. showed growth in new orders at a nine-month high of 51.6, while the same measure in the HSBC survey climbed to a two-year high of 53.7.

However, price pressures were shown to be building in China, with the both surveys indicating input prices at their highest since mid-2011.

“January’s P.M.I. does raise some red flags about the state of the economy,” Alistair Thornton, an economist at IHS Global Insight in Beijing, said in reference to the Chinese economy. “Things look a little shaky.”

The patchy nature of the recovery on Chinese factory floors was repeated in other P.M.I.’s released across Asia.

Surveys showed that manufacturing output had slowed or declined in India and South Korea. Factories in Indonesia, the star emerging economy of the past year, experienced a decline in business in January for the first time in eight months, while manufacturers in Taiwan reported the fastest growth in 10 months.

Indonesian manufacturers said they had received more orders from abroad, but output at factories there still declined for the first time since last May. The P.M.I. retreated to 49.7 in January from 50.7 in December as domestic demand in the Indonesian economy, Southeast Asia’s largest, dragged.

“Strong export orders appear to have offset a moderation in domestic orders, which may have been partially impacted by the Jakarta floods,” said Su Sian Lim, an economist at HSBC, referring to widespread flooding in the Indonesian capital last month.

In Taiwan, the P.M.I. reached a 10-month high of 51.5 as factories raised output markedly. In South Korea, factories reported their first growth in export orders in eight months, but the P.M.I. edged down to a seasonally adjusted 49.9 in January from 50.1 in December.

The data released Friday showed that India was as vulnerable as China to an export slump, especially as demand from Europe crumbled. Growth in Indian factory output eased to a three-month low of 53.2 in January, retreating from the six-month high in December of 54.7 as new export orders slowed.

“The growth momentum in the manufacturing sector eased in January as a slower expansion in new orders slowed output growth,” Leif Eskesen, an economist at HSBC, said of the Indian purchasing managers’ survey.

Article source: http://www.nytimes.com/2013/02/02/business/global/message-mixed-from-factories-in-china.html?partner=rss&emc=rss

Economic Reports Surprise in Britain and Germany

While official data showed the British economy shrank more than expected in the fourth quarter, raising concern about another recession, a closely followed business confidence index in Germany beat economists’ forecasts for January, a sign that Europe’s largest economy is improving.

“It fits into a pattern we’ve seen for a while that Germany has tended to outperform other countries,” Eckart Tuchtfeld, an economist at Commerzbank, said. “This is not a one-off. The economic situation in Germany has improved” since the last quarter of 2011.

The Ifo institute’s business climate index rose more than some economists predicted in January for a third month in a row, with manufacturing and service industries, especially, performing better than expected. Sales at carmakers such as Daimler and Bayerische Motoren Werke jumped last year. SAP, the business management software maker, on Wednesday forecast higher earnings for this year.

In Britain, the economy is struggling to avoid falling back into a recession. Gross domestic product fell 0.2 percent in the fourth quarter of last year from the third quarter, more than the 0.1 percent some economists forecast, the government said Wednesday. Manufacturing shrank 0.9 percent; London has been trying to stimulate the sector in an effort to make Britain’s economy less dependent on services.

Prime Minister David Cameron called the figures “disappointing,” adding that “these are extremely difficult economic times.” He blamed the drop in G.D.P. on an “overhang of debt,” higher fuel prices and “Europe’s economies.”

The leader of the opposition Labour Party, Ed Miliband, said Mr. Cameron should stop blaming the euro zone’s economic crisis for Britain’s difficulties and start to admit that the government’s austerity measures cripple growth. “People are fed up with his excuses,” Mr. Miliband said.

The chancellor of the Exchequer, George Osborne, acknowledged that Britain had “substantial economic problems,” but that “dealing with those problems is made more difficult by the situation in the euro zone.” The government said it would stick to its plan to cut the budget deficit, which would eliminate about 700,000 public sector jobs, asserting that the plan helped to provide Britain with lower borrowing costs than countries such as Italy or Spain.

The International Monetary Fund on Tuesday cut its growth forecast for Britain for this year to 0.6 percent from 1.6 percent and predicted a mild recession in the 17 E.U. countries that share the euro as a single currency. Britain is a member of the European Union but not of the euro zone.

“The heightened uncertainty has damaged confidence, causing businesses and consumers to put their spending decisions on hold, paralyzing the U.K. economy,” Andrew Goodwin, senior economic adviser to Ernst Young’s economic analysis group, said. “There is a danger that this situation will persist, in the absence of a credible and sustainable solution to the euro zone’s woes.”

Britain’s dismal economic data Wednesday means the Bank of England is now more likely to expand its bond purchasing program, or so-called quantitative easing, when its interest rate setting committee meets next month. The benchmark interest rate is at a record low of 0.5 percent and the central bank is close to completing its £275 billion, or $428 billion, bond buying program meant to alleviate pressures in the credit markets.

“There is scope for interest rates to remain low, and, if necessary, for further asset purchases, to prevent inflation falling below the 2 percent target,” Mervyn A. King, the governor of the Bank of England, said in a speech Tuesday evening.

“As we head into a challenging year for the world economy, we have seen more positive sentiment in financial markets, and, at home, a fall in inflation,” Mr. King said. “But none of this implies that 2012 will be an easy year.”

Article source: http://www.nytimes.com/2012/01/26/business/global/economic-reports-surprise-in-britain-and-germany.html?partner=rss&emc=rss

Ambassador Gary Locke Urges China to Open Wider to Investment

In his first speech on economic matters since arriving in Beijing last month, Mr. Locke, a former commerce secretary and an expert on trade relations, told a gathering of American business leaders that the Chinese government’s refusal to open up important sectors of its economy to foreign investment was an increasing concern in the United States, where some members of Congress have been calling for a harder line against China.

“China’s current business climate is causing growing frustration among business and government leaders, including my colleagues back home,” Mr. Locke said in a speech to the American Chamber of Commerce in China. He said a raft of obstacles to foreign corporations — including those focused on mining, health care, energy and financial services — “was planting seeds of doubt in the minds of foreign investors as to whether they are truly welcome in China.”

In his speech, Mr. Locke reiterated many of the themes he advocated as President Obama’s commerce secretary, but he also waded into the politically delicate realm of Internet freedom, calling on the ruling Communist Party to relax online censorship. Such restrictions, he suggested, hamper China’s ability to compete in the global economy by hindering the free flow of information and stifling innovation.

“If China’s businesses, entrepreneurs, academics, scientists, researchers and students and even ordinary citizens aren’t able to fully participate in the international marketplace of ideas, then China as a country and as an economy will fail to realize its full potential,” Mr. Locke said.

Despite China’s robust economic growth, many American businesses say they are increasingly stymied by government regulations that favor Chinese corporations, especially the state-owned enterprises that dominate banking, energy, telecommunications and other sectors. Another irritant involves longstanding rules that force many overseas companies into ventures with Chinese partners.

As part of its efforts to spur domestic job growth, Mr. Locke said the Obama administration was pressing for initiatives to reduce limitations on the export of American technology to China, while helping foreign investors navigate the sometimes daunting tangle of American government regulation. Such measures, he said, would invariably benefit Chinese corporations, which have enjoyed a 400 percent increase in direct investment in the United States since 2008.

In his closing remarks, Mr. Locke said China would do well to return the favor. “The United States is doing everything it can to make our investment and commercial climate as open and appealing as possible,” he said. “Unlocking the full potential of the U.S.-China relationship requires China to take similar steps.”

Article source: http://www.nytimes.com/2011/09/21/world/asia/ambassador-gary-locke-urges-china-to-open-wider-to-investment.html?partner=rss&emc=rss

Off the Charts: Europe Frets Over Trade Deficits With China

The commission said China was “significantly subsidizing its coated fine-paper industry by giving cheap loans, allocating land below market value and granting various tax incentives,” and announced duties of up to 12 percent on imports of high-quality paper used for magazines and brochures.

While the move affected only one industry, it was indicative of rising worry in Europe. “There is a general feeling that economic openness and business climate in China are not improving, so we will use all instruments at our disposal to improve the situation there,” Europe’s trade commissioner, Karel De Gucht, told a European Parliament committee last month.

Over all, the bilateral trade deficits between countries in the European Union and China have been growing since economies began to recover in 2009, but there are wide differences between countries. Trade levels had plunged during the financial crisis, and are now recovering.

Germany, by far the largest exporter in Europe, now runs a trade surplus with China, something it did not do before the financial crisis. But Italy’s terms of trade have weakened significantly.

The accompanying charts show that exports from most European countries to China are rising faster than imports from China. But if Europe is to start reducing its bilateral deficits with China, it will have to make even more adjustments. At the extreme, Greek exports are now running at well over twice their 2007 level, while Greek imports from China are declining and are only slightly ahead of the 2007 level. But because Greek exports are so small, Greece still exports only 10 cents worth of goods to China for each dollar’s worth it imports.

Bilateral trade deficits are not the full story, of course. A country can run a large deficit with one country and a similar surplus with another. But with China now by far the world’s largest exporter, a big deficit with it can be hard to overcome. Britain’s trade deficit with China was nearly 5 percent of its gross domestic product in 2010.

The charts show the four largest economies in the European Union — Germany, France, Britain and Italy — and the three that have been forced to seek bailouts — Greece, Ireland and Portugal. The final chart shows the combined trade with China of the other 20 countries in the union.

The austerity that was forced upon Ireland and Greece has stifled imports, particularly in Ireland, and something similar seems likely to happen in Portugal. But Italy, which is also deeply in debt but has a growing economy, has been able to rapidly increase its Chinese imports. As a result, its trade deficit with China has nearly doubled over the last year.

The trade figures are released by China and are in dollars, which is the currency used to denominate most international trade. China has released data through April for its major trading partners but has given figures only through February for some smaller ones.

The United States has also been vocal in worrying about its trade deficit with China, which is now larger than it was before the crisis. But while Europe has focused on specific industries, looking for subsidies and other unfair trade practices, the Americans have emphasized the need for China to allow its undervalued currency to appreciate.

Floyd Norris comments on finance and the economy on his blog at nytimes.com/norris.

Article source: http://feeds.nytimes.com/click.phdo?i=17a84ebbe611d9546cfed4a73e362677

You’re the Boss: Why Austin, Tex., Is a Good Place for Small Businesses


Recently, Austin was ranked No. 1 in “small-business vitality” for the second year in a row in a survey by the American City Business Journals.

Texas’s capital city scored high points for its quality of life, business environment and healthy residents. Last July, Kiplinger named Austin one of the “10 Best Cities for the Next Decade.” Yes, it’s true that most of the rest of Texas thinks of Austin as that place full of crazy liberals, but we’ll take that (we don’t understand why they insist on starching their jeans).

As a 25-year Austin resident who has also lived in Washington, Denver, Dallas and Corpus Christi, Tex., (the coastal city where I grew up), I have some theories on how Austin — a place where mandals and cowboy boots find common ground — has managed to do so well on the small-business front. I also canvassed a few of my fellow residents.

Austin, according to Dr. George Gau, former dean of the University of Texas’s McCombs School of Business, is a hotbed in large part because of urban economics. He apologized for the “nerdy” explanation, but said it boiled down to primary employers like Samsung and the university, which support service businesses like restaurants, dry cleaners, law offices, real estate agencies, etc. Depending on the salaries paid to workers in the primary sector, each primary worker generates two or three service workers. “EBay recently announced they plan to hire 1,000 workers in Austin over the next 10 years,” he said. “That will translate into 2,000 to 3,000 service jobs being added here. All of the factors that cause large firms to relocate to Austin — business climate, skilled work force, beauty, weather, etc. — lead to the creation of more small businesses.”

Sonia Gaillard who owns Nventia Ventures, a company that works with entrepreneurs to get their products into the market, said Austin was an incubator. “We have a vibrant funding community, which a lot of cities lack, even if they have the innovation,” she said. “And we have a plethora of successful entrepreneurs who are open to mentoring others along their entrepreneurial journey.” For example, Austin is home to RISE, a week-long, free “un-conference” for entrepreneurs that was started in 2007 by Roy and Bertrand Sosa, brothers and entrepreneurs. RISE is now an ongoing annual program that provides resources and experience to entrepreneurs worldwide.

If Austin were one big corporation, the organization chart would be flat. In the ’60s and ’70s, people came to school here and, because of the nature, outdoor lifestyle and music scene, decided to stay — preferring $1 long-neck nights listening to Jerry Jeff Walker at the Armadillo World Headquarters to earning a fat paycheck and merging into traffic and responsibility back in Dallas or Houston.

When I arrived in 1986, I knew two people — dorm mates from college years. One of them introduced me to someone in advertising and he graciously consented to give me a courtesy interview. I remember sitting on the couch in Karl Rove’s office and watching him swing a phantom golf club while he talked to me about Austin and where to look for gainful employment. Yes, Austin is known as a liberal city, but it has pockets of red.

Two years ago, ad executive, Nancy Giordano, moved to Austin from Los Angeles, and within 12 months she had organized and started TEDx Austin with Jen Spencer. The idea-sharing conference had a waiting list its first year, leaving me wondering how an outsider could come into another city and pull together such an amazing gathering of thinkers and leaders. Ms. Giordano had grown up in Atlanta, and her career took her to New York City for seven years, Chicago for three and Los Angeles for 13, where she worked for Chiat Day, the ad agency, before starting her own consulting firm, Play Big, Inc.

I asked her what about the Austin culture made this doable. “There is this circle and a current that runs between the community’s business pillars that helps people do their thing,” she said. “There’s a real desire here to help people manifest whatever success they want to create. I think that’s because people are really happy. There is no sense of, ‘you win, I lose.’ Here it’s, ‘you win, I win.’”

Of course, it’s important for the long-term success of any entity — city or small business — to not buy into its own public relations. Sure, enjoy the accolades, but continue to focus on the road ahead and planning for the future — or else you risk getting covered with the dust of those moving past you.

MP Mueller is the founder of Door Number 3, a boutique advertising agency in Austin, Tex. Follow Door Number 3 on Facebook.

Article source: http://feeds.nytimes.com/click.phdo?i=7b9d808fd110d039059bd8645ac39292