More credit lines for small businesses

Recently, the Chinese government lowered the loan target for this year fearing excessive lending in 2009 which could lead to asset bubble risks. Dispite the clampdown, China's banking regulator said Tuesday it would open up more credit avenues for small enterprises this year.

Small- and medium- sized enterprises always had a harder time receiving credit lines in China as commercial lenders were reticent to give loans to them due to the high risk compared to larger companies and instead preferred to lend to large State-run companies. The earlier announced credit tightening has frightened the government because small enterprises could be the first to feel stricter credit availability. Therefore, more credit lines should be available to smaller businesses to prevent a total credit shutdown.

"In order to stimulate credit lending to smaller businesses, the banking supervision department is drafting new supervision rules governing banks' small enterprise business which are likely to come out later this year," said Xiao Yanqi, director general of banking supervision department II.

Also, an increasing number of domestic mid-sized lenders, are planning to lend more to smaller businesses to fend off competition with large State-run lenders, said Xiao.

Personally I think that the earlier announced credit tightening is an essential evil to prevent a future bubble that could lead to an enormous economic disaster. But I also find it a good decision to put more credit lines available for smaller businesses. Those small businesses are a very important part of a growing industry on which a lot of people are relying.

Tom Bogaert

Source : http://www.chinadaily.com.cn/bizchina/2010-02/24/content_9495627.htm

Toyota president says recall-hit firm 'grew too fast'

The boss of Toyota admitted that the safety problems of the last months are possibly due to the rapid expansion of the firm. Last Wednesday the president Akio Toyoda did explain that due to the fast growth of the company they have lost their priorities. Causing severe damage to the reputation of Toyota by several issues. By which 8.5 million cars had to be recalled for a check up. Most of the problems are “accelerator pedals getting stuck under the floor mats, and problems with the breaking systems on its hybrid models.

Mister Toyoda personally apologised and took all responsibility for the issues and troubles caused by quality problems by his cars. He also personally apologised to the families who were victims of an accident caused by failure of the braking system or acceleration problems. He is also handling the problem inside of the Toyota firm, because some of these issues could be prevented, and would there have not been a lack of communication in the firm. He ended “I, more than anyone, wish for Toyota’s cars to be safe and our customers to feel safe when they use our vehicles. While all Toyota vehicles bear my name.”

I agree that all carmakers should have a good check-up before a car leaves the firm. But it is always possible that there are some problems. On this moment they have to react as quickly as possible, and do not wait until there are some deadly accidents caused by the problems. It is time they take responsibility for their acts. And do not put their reputation above human life’s.

regards,
Jeanbart De Fruyt
http://news.bbc.co.uk/2/hi/business/8529950.stm
Jeanbart De Fruyt

China sees growth engine in a web of fast trains

In February 2010 China revealed the Chinese bullet train, this train is the world’s fastest train. The Chinese bullet train sure has earned it’s name, with an average speed of 215 miles an hour it’s as fast as a bullet. The bullet train connects Guangzhou, the southern coastal manufacturing center, to Wuhan, deep in the interior. This 664 mile run takes about 3 hours compared to 12 hours from the normal train.

The transport is possible thanks to a new high-speed line. China set to open 42 high-speed lines till 2012. This will be good for 5,000 miles of track for passenger trains at 215 miles an hour, 3,000 miles of track for passenger and fast freight trains traveling 155 miles an hour.

The United States choose not to be left behind and plan to build their first high-speed rail by 2014. This line will connect Tampa and Orlando.

China has known a phenomenal economic growth, and this railway system will only boost aforementioned growth. This new technology will boost, or even artificially create a new big export industry.

The high speed train also has some disadvantages, for instance the bullet train costs 72 dollar for a one way trip. This price is far from reasonable for labourers. Yet many workers do not complain about the price. They find it an understandable price based on the distance, although many workers take the slow train to save some money.

Secondly airlines are losing customers because the three-hour train to Wuhan is faster than the two hour flight included check-in times.

In my opinion the Chinese bullet train is a good invention, other countries will follow their idea and that will open chances for China. China is slowly becoming world’s biggest economy.

Niels Steyaert
Source: http://www.nytimes.com/2010/02/13/business/global/13rail.html?pagewanted=2

China's factories 'lack workers'

China is facing a shortage of workers in the Pearl River Delta, the manufacturing heart in southern China.

Some estimate that factories need two million more migrant workers from other parts of China. The shortage of workers have already been highlighted in Chinese media. That they emphasize the shortage is a good thing, because China is a big country and through the media they can reach a lot of persons who are interested in finding a job.

The expectations of higher wages and better working conditions are blamed for the labour shortage. The migrant workers used to travel from all over China for jobs like these, but now they found work where they pay similar salaries and closer to their home. They work on the infrastructure projects funded by the government. It is a good thing that China is investing in the infrastructure so that the economy can expand and spread itself over the whole county.

Beijing's own research suggests that each new generation of workers is better educated, and has higher expectations in terms of salary, labour conditions and rights. They want to choose more in what factory they want to work.

Experts think that because of the shortage of workers the companies are forced to invest in new technology. The investments can help to speed up the transformation of the economy and lift it to a higher level.

The shortage of workers does not have to be a bad thing for the economy, the companies are now forced to invest in new technology. They will also be obliged to give the workers better wages and labour conditions.

Thibaut Delsoir

http://news.bbc.co.uk/2/hi/business/8527621.stm

China: expect more tightening

China, the world's fastest-growing economy stands for a new problem due to the bad health of global economy.

China's central bank unexpectedly ordered banks to increase the amount of reserves they hold by 0.5%, in order to temper the lending boom. The amount of loans keeps on rising. January saw more new loans granted than in the previous three months combined.

The authorities are worried about overheating.

It is no surprise that the government of china had to step in and this because of the rising inflationary pressures.

Edward Hadas, Assistant Editor at Breakingviews, says that the authorities have an unenviable task to fulfill. They need to keep growth above about 8% and job creation steady so as to avoid social unrest.

But it’s possible that this problem could be solved by the significant jump in Chinese consumption. China is exporting more and more to the Western consumers.

The gradual slowdown on the cards for this year is one key reason why commodities are vulnerable to solve this problem.

However not everybody thinks that the demand in Chinese commodities will stabilize the situation. “Capital Economics” and “The Economist”, say that the Chinese demand will slow down.

Whether or not China can ultimately avoid a nasty crash stays a mystery for now.

I personally think that China will solve this problem, like they solved many others. The growth in Chinese commodities should easily avoid the crash. More consumption means more jobs and this should stabilize the demand for loans.

Bram Verstraete

Source: http://www.moneyweek.com/news-and-charts/economics/china-expect-more-tightening-47409.aspx