17 August, 2005

china economic roundup (vi)

The Big Yuan points to a profile on China’s central bank Governor Zhou Xiaochuan, noting the increased influence of the People’s Bank of China and how the governor is being groomed for higher office.

Zhou has an engineering degree from Beijing Chemical Engineering Institute and a doctorate in economic engineering from Tsinghua University in Beijing, according to the central bank’s Web site. He speaks fluent English and is the first central bank chief with a doctorate degree.
Zhou began advocating step-by-step changes toward a fully convertible yuan as a means to promote economic growth, says Guan, the lawyer. In academic journals in 1995, he wrote that the first move should be to give trading companies and "weak" industries like steel making greater access to foreign exchange, Guan says.
"Many people felt the yuan should be free-floated but disagreed on how it was to be done," Guan says. "Zhou’s voice was a pioneer in the debate back then."

Further illustrating the governor’s rise, Simon points to a Jamestown Foundation brief on China’s bank bailout, which notes that the PBoC - and thereby Zhou - is now running the show.:

With the formation of Huijin, however, the PBOC stands to regain substantial clout in the appointment arena. Huijin itself is directly answerable to the Central Leading Group on Reforming State-Owned Commercial Bank, and the person running the daily affairs of the Leading Group is none other than Zhou Xiaochuan, the governor of the PBOC. Moreover, most of Huijin’s management comes from the PBOC/SAFE bureaucracy and dares not anger Zhou Xiaochuan. As Huijin becomes a majority shareholder of an increasing number of financial institutions, it can weaken if not deprive altogether the appointment power of rival agencies.

Not everyone is pleased about the PBoC’s increasing influence, as the Jamestown brief author notes on his blog, the National Development & Reform Commission isn’t happy. Logan Wright has more.

Survived Sars also points to a People’s Daily item on China’s potentially slowing export growth.:

Second, export growth is likely to see a remarkable slowdown in the
second half year, which will impose heavy pressure on the economic
growth in the short term. It will be seen in two aspects: first,
industrial growth to be pulled down, leading to falling employment
growth and slowed GDP growth; second, slowed growth of the production
of export goods combined with accelerated release of the output
capacity of products in excessive supply constitute greater pressure of
deflation. These will not impose a big impact on China’s economy in the
long run. Favorably, slowed export growth will force domestic
enterprises to improve the quality of their products for export and
their performance.

Software piracy isn’t really hurting Microsoft in China, Tyler Rooker argues, because it is preventing the emergence of domestic competition.:

…from one point of view, is that by continuing piracy, Microsoft is able to sustain its monopoly in China. There are no Chinese operating systems. There are none even in the works. Why? Because they will be pirated as well. Piracy undercuts Microsoft but it also undercuts would-be Chinese entrepreneurs who could (undoubtably) create a Chinese proprietary operating system that could sell for 200 yuan ($25). That is the threshold price that would keep Chinese entrepreneurs profitable and return their investment costs. But why doesn’t Kingsoft, the Microsoft of China, attempt it? Piracy.
Piracy, in the case of China, does take profit from Microsoft. But I would argue that Microsoft also benefits, and even profits (as the proverb predicts) from piracy. Without piracy, 100 operating systems, like Chairman Mao’s flowers, would bloom. They would undercut and eventually end Microsoft’s monopoly over the operating systems.

At the Globalization Institute blog, a reports that European retailers are being punished by the EU’s protectionism.

The Wall Street Journal today reports that some European retailers are being left stranded without clothes they have paid for thanks to EU quotas on textiles:

In June, countries with large textile industries, led by Italy, pressed for and got a quota to restrain the impact of a huge surge in imports that followed the removal of global trade barriers on textiles in January. However, the quota for trousers and sweaters already was filled by August, leaving some European retailers without clothing they had paid for. Since then, nations in northern Europe with large retailers have protested.

The European Commission has no business interfering with the textiles trade. In a year supposed to be about making poverty history, it seems odd that the EU should protecting Italian and French special interests at the expense of the world’s poor - and at the expense of European consumers, too.

Brad DeLong posts a review of a book on economic change in pre-Communist China (1900-1950).

Finally, the World Bank has joined the growing consensus that the Chinese economy will see a slowdown in 2006 (Bloomberg, Xinhua via CDT). The full report can be accessed here.

by @ 1:30 pm. Filed under China, Money, Asia, East Asia, Economy, Northeast Asia, Economic roundup

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