Changing China

Giant on the move

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from Summit Notebook:

IBM skips around China Internet censorship

Foreign companies in China, which has the world's biggest online community, have faced allegations of bowing to censorship rules in their hunt for market access. To be careful, they usually avoid questions on the subject altogether or deflect them with humour.

"I don't think I am the expert to comment on this," Shirley Yu-Tsui, a vice president of strategy for IBM greater China, said at the Reuters China Investment Summit.

"All I know is my children complain they can not get on Facebook," she said.

The subject is very serious, as companies such as Google and Yahoo have had their executives called to face angry congressional questioning in the United States to explain their business practices in China.

"I don't think they would come to IBM for that," said Yu-Tsui when asked what IBM would do if asked to help monitor traffic on China's Internet.

from Summit Notebook:

Lenovo’s next big thing?

Electronics is a tough business, with most manufacturers
working tirelessly on what they hope will be the next big thing,
even as they survive on razor thin profit margins.

Lenovo, the world's No. 4 PC brand, hopes it's on
the brink of such a blockbuster, although CFO Wong Wai Ming was coy
about disclosing any details.

from LEGACY Reuters Summits:

Lessons from children, old ladies

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China's banking system could take a cue from children and
neighborhood social groups to strengthen lending rules and
ensure that credit flows to where it is needed most.

The country's banks lent a whopping record 7.37 trillion yuan
($1.08 trillion) in the first half of the year, but regulators
worry that a significant portion is not flowing into the real
economy and smaller firms where funds are needed the most.

Look in the mirror

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The U.S. rejection of the $18.5 billion bid by China’s top offshore oil company, CNOOC Ltd, for  Unocal in 2005 was not a move worthy of a world power such as the United States, asserts a Chinese academic with the government’s top economic planning agency.

“If you are weak, then I can understand,” said Chen Dongqi, deputy director of the Academy of
Macro-Economic Research under the National Development and Reform Commission (NDRC).

Interest rate barometer

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Chinese banking regulators should monitor more closely the lending activities of underground banks, where interest rates react more quickly to changing economic conditions than do rigid state-set interest rates.

“Historically, these interest rates change more rapidly to changes in market liquidity,” Gao Shanwen, Essence Securities’ chief economist, said at the Reuters China Investment Summit.

Don’t bank on mortgage spike

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By Michael Wei

Don’t count on a recent spike in home loans to greatly improve earnings at Chinese banks. That’s because they are still a relatively small part of overall lending.

“It is not expected to have a huge impact on banks’ overall earnings,” Gao Shanwen, Essence Securities’ chief economist said at the Reuters China Investment Summit, speaking about the rise in mortgage lending. Mortages make up only about 10 percent of total lending at present.

Where others won’t go

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Chinese mining companies are expanding overseas because they are cost-effective and willing to work in dangerous and risky areas where others are unwilling to go, Yang Junmin, vice general
manager of Beijing Sinodrill, asserted at the Reuters China Investment Summit.

Some critics accuse Beijing of supporting corrupt regimes in Africa, the Middle East and Latin American, where Chinese companies are investing aggressively to secure access to raw materials to fuel the country’s rapid economic growth.

from Summit Notebook:

China’s evolving role from producer to consumer

Hardly a day goes by now without some Chinese firm striking a deal to buy assets overseas, but the country's best prospects for growth may be right in its own backyard. Vivi Lin in Beijing reports on how the world's workshop is fast becoming one of the world's top consumers.

The Other China Stimulus

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By Zhou Xin

As the world watches how Beijing’s $585 billion stimulus package can create opportunities for investors, they might be overlooking another mini-stimulus that is coming in a matter of weeks: the lavish celebration the government will be staging to mark the 60th anniversary of the founding of the People’s Republic of China on Oct. 1.

On top of what is expected to be a huge military parade through central Beijing, massive firework displays are expected to light up the capital and other big cities around the country.

Supply Push?

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This is almost certainly not what Chinese policy makers had in mind when they started encouraging exporters to explore the domestic market to help make up for a drop in Western demand: sex toy makers opening flagship stores in Beijing.

But as an article and a video by my colleagues Ben Blanchard and Kitty Bu explore, that is just one of the side-effects the global slowdown is having on the world’s most populous country.

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