China's economy will soon become the biggest in the world. Each year China passes at least one new milestone. In 2008 it surpassed Germany to become the third biggest economy. In 2009 it surpassed Germany as the biggest exporter and America as the biggest car market. In 2010 it will surpass Japan as the second biggest economy.
With average annual growth in America being some 7.5 percentage points lower during the 2000s, then assuming that this will continue and that the real exchange rate of the yuan will appreciate by on average 3% per year then it will only take 11 years before the Chinese economy becomes bigger, meaning that by 2020 China's economy will be the biggest in the world
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=348918&story_id=17733177
Friday, December 31, 2010
The GDP
The gross domestic product (GDP) or gross domestic income (GDI) is the amount of goods and services produced in a year, in a country. It is the market value of all final goods and services made within the borders of a country in a year. It is often positively correlated with the standard of living, alternative measures to GDP for that purpose.
GDP can be determined in three ways, all of which should in principle give the same result. They are the product (or output) approach, the income approach, and the expenditure approach.
The most direct of the three is the product approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.
Example: the expenditure method:
GDP = private consumption + gross investment + government spending + (exports − imports),
Note: "Gross" means that GDP measures production regardless of the various uses to which that production can be put. Production can be used for immediate consumption, for investment in new fixed assets or inventories, or for replacing depreciated fixed assets. "Domestic" means that GDP measures production that takes place within the country's borders. In the expenditure-method equation given above, the exports-minus-imports term is necessary in order to null out expenditures on things not produced in the country (imports) and add in things produced but not sold in the country (exports).
http://en.wikipedia.org/wiki/Gross_domestic_product
China Coal Shortage
“We want to sign the contracts, but the coal producers don’t,” said the unnamed vice general manager in Anhui Province on Dec. 22, with only three days of inventory left.
On Dec. 10, the National Development and Reform Commission (NDRC) published the “Notice Regarding Streamlining the Connections Among Coal Production, Transportation and Demand for 2011.” The notice required that the key power-coal contract price in 2011 be the same as in 2010, and coal producers “should not raise prices in any form.”
In the meantime, the NDRC also designed the guidance framework for inter-province railway transportation of coal. According to this framework, total railway coal transportation will reach 932 million tons in 2011, including 769 million tons of power coal.
The NDRC further required coal producers and users to finish signing contracts by Dec. 31, and all the signed contracts must be reported to the coal network trade system run by China Coal Trade and Distribution Association (CCTD).
However, as of Dec. 24, less than one week from the NDRC deadline, the total contracts signed were far short of targets. According to CCTD’s statistics, by noon of Dec. 24, the preliminary centralized contracts — referring to successful agreements for production and transportation — totaled 224 million tons. But it only accounted for 29% of the total railway transportation capacity allocated for coal power.
“The coal producers and users are not taking the NDRC’s mandate as seriously as before,”
The thermal-coal shortage has already emerged in several provinces in central and northern China.
In Henan Province, for example, as the coal-power inventory across the province was only at 2.56 million tons, far below the alert level of 3.5 million tons, the State Grid Electric Power of Henan announced on Dec. 16 that the “coal-power shortage is affecting the large-scale backbone public power plants and seriously damaging the supply of electricity throughout the province this winter.”
The coal-power shortage has some structural characteristics. On the national level, the coal-power inventory level is at 17 days, which is relatively safe. In provinces with little coal-power resources and limited transportation capacities, however, the shortage is acute.
Qian Pingfan, researcher at the Industry Economics Research Department of the Development Research Center of the State Council, says that the shortage has not been caused by limited transportation capacity, but by the disagreement on coal prices between coal producers and power plants.
.
“The key coal-power contract prices are determined by the NDRC using the [consumer price index] and [producer price index] as benchmarks,” said a manager at a coal sales and transportation company.
The so-called “key coal-power contract price” refers to the contract price used by large, state-owned coal producers and power plants. As the coal prices in different regions vary under normal circumstances, the planned price is 100 to 200 yuan ($15 to $30) per ton lower than the market price.
Qian points out that the reason the NDRC has asked coal producers not to raise prices is that if the coal price is too high, power plants will “not be able to absorb the rising costs but to raise their output price — if the electricity price rises, the inflationary pressures will be even more severe.”
However, it is obvious that coal producers are not willing to sign contracts on NDRC terms. Instead, they are trying everything possible to work around the price limits.
In December 2009, the NDRC cancelled the 2010 conferences for the coal industry. It also proposed that, starting from 2010, coal producers and power plants would carry out the price negotiations entirely on their own. Such a development was seen as major progress in power coal-price reforms and streamlining.
http://www.marketwatch.com/story/china-price-fracas-leads-to-coal-shortage-2010-12-30
On Dec. 10, the National Development and Reform Commission (NDRC) published the “Notice Regarding Streamlining the Connections Among Coal Production, Transportation and Demand for 2011.” The notice required that the key power-coal contract price in 2011 be the same as in 2010, and coal producers “should not raise prices in any form.”
In the meantime, the NDRC also designed the guidance framework for inter-province railway transportation of coal. According to this framework, total railway coal transportation will reach 932 million tons in 2011, including 769 million tons of power coal.
The NDRC further required coal producers and users to finish signing contracts by Dec. 31, and all the signed contracts must be reported to the coal network trade system run by China Coal Trade and Distribution Association (CCTD).
However, as of Dec. 24, less than one week from the NDRC deadline, the total contracts signed were far short of targets. According to CCTD’s statistics, by noon of Dec. 24, the preliminary centralized contracts — referring to successful agreements for production and transportation — totaled 224 million tons. But it only accounted for 29% of the total railway transportation capacity allocated for coal power.
“The coal producers and users are not taking the NDRC’s mandate as seriously as before,”
The thermal-coal shortage has already emerged in several provinces in central and northern China.
In Henan Province, for example, as the coal-power inventory across the province was only at 2.56 million tons, far below the alert level of 3.5 million tons, the State Grid Electric Power of Henan announced on Dec. 16 that the “coal-power shortage is affecting the large-scale backbone public power plants and seriously damaging the supply of electricity throughout the province this winter.”
The coal-power shortage has some structural characteristics. On the national level, the coal-power inventory level is at 17 days, which is relatively safe. In provinces with little coal-power resources and limited transportation capacities, however, the shortage is acute.
Qian Pingfan, researcher at the Industry Economics Research Department of the Development Research Center of the State Council, says that the shortage has not been caused by limited transportation capacity, but by the disagreement on coal prices between coal producers and power plants.
.
“The key coal-power contract prices are determined by the NDRC using the [consumer price index] and [producer price index] as benchmarks,” said a manager at a coal sales and transportation company.
The so-called “key coal-power contract price” refers to the contract price used by large, state-owned coal producers and power plants. As the coal prices in different regions vary under normal circumstances, the planned price is 100 to 200 yuan ($15 to $30) per ton lower than the market price.
Qian points out that the reason the NDRC has asked coal producers not to raise prices is that if the coal price is too high, power plants will “not be able to absorb the rising costs but to raise their output price — if the electricity price rises, the inflationary pressures will be even more severe.”
However, it is obvious that coal producers are not willing to sign contracts on NDRC terms. Instead, they are trying everything possible to work around the price limits.
In December 2009, the NDRC cancelled the 2010 conferences for the coal industry. It also proposed that, starting from 2010, coal producers and power plants would carry out the price negotiations entirely on their own. Such a development was seen as major progress in power coal-price reforms and streamlining.
http://www.marketwatch.com/story/china-price-fracas-leads-to-coal-shortage-2010-12-30
Wednesday, December 29, 2010
China’s estimated economy by the year 2040.
By 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. China's per capital income will hit $85,000, more than double the forecast for the European Union, and also much higher than that of India and Japan. In other words, the average Chinese mega city dweller will be living twice as well as the average Frenchman when China goes from a poor country in 2000 to a super rich country in 2040. Although it will not have overtaken the United States in per capital wealth, according to my forecasts, China's share of global GDP -- 40 percent -- will dwarf that of the United States (14 percent) and the European Union (5 percent) 30 years from now. This is what economic hegemony will look like.
Most accounts of China's economic ascent offer little but vague or threatening generalities, and they usually grossly underestimate the extent of the rise -- and how fast it's coming. (For instance, a recent study by the Carnegie Endowment for International Peace predicts that by 2050, China's economy will be just 20 percent larger than that of the United States.) Such accounts fail to fully credit the forces at work behind China's recent successor understand how those trends will shape the future. Even China's own economic data in some ways actually underestimate economic outputs.
Monday, December 27, 2010
U.S. Stock Market Report Article
U.S. Stock Market Daily Report (December 23, 2010, Thursday)
As major indexes reached their highest levels in two years, stocks are on pace to have the best monthly performance in over a decade this December. In yesterday's session, the Dow closed at its highest level since August 28, 2008, the S&P 500 closed at a level that hasn't been reached since September 3, 2008 and the Nasdaq hit its highest level in almost exactly three years. Overall for the month of December the Dow is up 5%, the Nasdaq rose the most by 6.9%; this is the best monthly performance since 1999. The S&P rose 6.5% in December, making it the best month since way back in 1991. December is shaping up to be a great month for many; UPS is also expecting to have a great month. The shipping giant forecasted 24 million shipments worldwide in 24 hours, that's up 9% from last year. UPS said yesterday was expected to be their busiest day of the year. UPS credited a huge increase in online sales to their success this holiday season. Online sales are up 12% from last year as far as of last Friday totaling $27.46 billion. Analysts are expecting holiday sales to be up between 2 and 4% from last year. Stocks were mixed throughout the session following the latest batch of economic reports, which also were mixed. The Dow was rising to a gain of almost 10 points, just before falling later in the session; other major indexes were also falling. Commodity prices were also mixed today; gold prices were falling over $6.00 an ounce while oil prices were increasing. The dollar was falling versus the euro, the pound and the yen. With just under a half hour of trading remaining until next week, the Dow was still down 10 points.
I think that the American economy is on its way back up again, recovering from the major recession which started in 2008. As stated in the article above, the S&P 500 and Nasdaq have reached their highest levels in a long time. This is a good indicator for the U.S. Stock Market and the American economy in general, that people are spending (but not too much), businesses are doing well, and the economy is thriving. And if this keeps up, the economy will keep growing and eventually reach its peak.
As major indexes reached their highest levels in two years, stocks are on pace to have the best monthly performance in over a decade this December. In yesterday's session, the Dow closed at its highest level since August 28, 2008, the S&P 500 closed at a level that hasn't been reached since September 3, 2008 and the Nasdaq hit its highest level in almost exactly three years. Overall for the month of December the Dow is up 5%, the Nasdaq rose the most by 6.9%; this is the best monthly performance since 1999. The S&P rose 6.5% in December, making it the best month since way back in 1991. December is shaping up to be a great month for many; UPS is also expecting to have a great month. The shipping giant forecasted 24 million shipments worldwide in 24 hours, that's up 9% from last year. UPS said yesterday was expected to be their busiest day of the year. UPS credited a huge increase in online sales to their success this holiday season. Online sales are up 12% from last year as far as of last Friday totaling $27.46 billion. Analysts are expecting holiday sales to be up between 2 and 4% from last year. Stocks were mixed throughout the session following the latest batch of economic reports, which also were mixed. The Dow was rising to a gain of almost 10 points, just before falling later in the session; other major indexes were also falling. Commodity prices were also mixed today; gold prices were falling over $6.00 an ounce while oil prices were increasing. The dollar was falling versus the euro, the pound and the yen. With just under a half hour of trading remaining until next week, the Dow was still down 10 points.
I think that the American economy is on its way back up again, recovering from the major recession which started in 2008. As stated in the article above, the S&P 500 and Nasdaq have reached their highest levels in a long time. This is a good indicator for the U.S. Stock Market and the American economy in general, that people are spending (but not too much), businesses are doing well, and the economy is thriving. And if this keeps up, the economy will keep growing and eventually reach its peak.
http://www.stockmarketsreview.com/reports/us_stock_market_daily_report_20101223_74475/
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