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business daily January 22, 2013
GREATER CHINA Regulator to discuss cross-strait trading China’s Securities Regulatory Commission will visit Taiwan later this month for an unprecedented meeting with its Taiwanese counterpart to discuss further opening crossstraits securities markets, according to two sources familiar with the matter. Commission Chairman Guo Shuqing will lead the delegation, one source said, and any outcome from the meeting will be put under the Economic Cooperation Framework Agreement. Taiwan’s financial regulator said last month Taiwan and China would start discussions within three months, aiming to set a framework for Chinese companies to list on the Taipei bourse.
Shrinking pool of workers may limit recovery Decline in the working-age population of ‘great importance’ – Ma
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hina’s growth rebound will be capped by a labourforce squeeze and shrinking resources that leave the government satisfied with rates of expansion as low as half the peak during the past decade. A pace of 7 percent to 8 percent reflects economic forces, Ma Jiantang, head of the National Bureau of Statistics, said on Friday after reporting 7.9 percent expansion in the fourth quarter from a year earlier. He said a decline last year in the working-age population was of “great importance”. Mr Ma’s comments bolster the contention that China’s economy is permanently downshifting a gear as its one-child policy drives down the labour force. Slower growth presents challenges for incoming leaders Xi Jinping and Li Keqiang, and may limit the country’s potential as a market for everything from Australian iron ore to German machinery. “A declining labour force is just one of several economic headwinds looming on the horizon,” said David
Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department, now an Asia analyst in Los Angeles at TCW Group Inc. “As Xi and Li assemble their economic teams, we’ll find out whether necessity will again be the mother of reforms, as it has been in the past.” Fourth-quarter growth, while exceeding the median analyst estimate, brought 2012 expansion to 7.8 percent, the weakest pace since 1999. China stepped up infrastructure spending to reverse a seven-quarter slowdown, with fixed-asset investment excluding rural areas rising an inflationadjusted 19.3 percent in 2012 after 16.1 percent in 2011, according to JPMorgan Chase & Co. “In the past people always believed 8 percent or even 10 percent is necessary for China to maintain high employment and prevent mass unemployment, but demographic change is making the requirement for growth much lower,” said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “Potential economic
growth in China will slow to around 6 percent by 2020.” China recorded average annual expansion of more than 10 percent over the last 20 years, peaking at 14.2 percent in 2007, according to previously released government data. Analysts forecast 8.1 percent this year and 8 percent in 2014, based on median estimates in a Bloomberg News survey last month.
Growth model Mr Ma said at a press briefing that a 7 percent to 8 percent pace “will facilitate change in the growth model and structural adjustment.” Ruralto-urban migration, urbanisation and industrialisation will keep driving expansion, said Mr Ma, who in November was named first in line to join the Communist Party’s 205-member central committee of leaders if a vacancy arises. At the same time, shifting supply and demand patterns in the labour market, increasingly tight natural resources and greater demands from
While we still have to stick to family planning as a national policy, it’s quite necessary to study proper demographic policy according to new changes in the situation Ma Jiantang, National Bureau of Statistics residents to improve their quality of life will help determine the rate of expansion, he added. Last year’s decline of 3.45 million in the labour force still leaves a
Huawei sees firmer revenue growth Company open to IPO after probably surpassing Ericsson in sales the communist nation could install malicious hardware or software in U.S. networks. “Perception is a major issue here,” said Mr Ferragu. “A listing would be a strong help, but I doubt the company is ready for this given the implications on the governance and management model.” It may take about a decade for Huawei to be perceived as “a normal company” worldwide, he said. The House Intelligence Committee also said U.S. companies should steer clear of another Chinese maker of telecommunications equipment, ZTE Corp. Huawei – bouncing back from a disappointing 2011
Profit Surge
public or not, we will always honour our commitment to openness and transparency. We will refer to the standards of listed companies to improve ourselves.” Huawei’s sales have climbed as it adds smartphones, tablets and cloudcomputing services, and benefits from investment in mobile-phone equipment in emerging markets, Ms Meng said. Ericsson, the world’s biggest maker of wireless network equipment by revenue, is predicted to report sales that are little changed from a year earlier because of its exit from a mobile-phone venture with Sony Corp. and a euro zone debt crisis that has damped spending in Europe. Reuters/Bloomberg News
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uawei Technologies Co., China’s largest maker of telecommunications equipment, said it has an “open mind” about offering shares to the public after posting sales that probably surpassed Ericsson AB.’s. A decision to hold an initial public offering would depend on shareholders’ interests, as the company has no immediate need to raise funds, chief financial officer Cathy Meng Wanzhou said yesterday at a briefing in Beijing. The company
expects sales to rise as much as 12 percent this year following an 8 percent increase last year, she said. An IPO may help closely held Huawei expand overseas by boosting transparency and reducing security concerns, said Pierre Ferragu, a Sanford C. Bernstein & Co. analyst. The U.S. House Intelligence Committee in October recommended that companies there avoid equipment made by Huawei, whose founder served in the Chinese military, citing concerns
Huawei’s sales last year rose to 220 billion yuan (US$35.4 billion), helping boost net income 33 percent to 15.4 billion yuan, Ms Meng said. The equipment-maker had US$4.5 billion of working capital at the end of last year, on record cash flow of US$12 billion, she added. It also has credit lines totalling US$33 billion, 77 percent of which comes from banks outside of China. “As to whether or not we will go public, in Huawei we have kept an open mind toward this issue,” she said. “No matter whether we go
US$35.4 billion Value of Huawei’s sales last year