Today being world Earth Day, its only fit we discuss the next big environmental crisis to hit Asia - e-waste or electronic waste. With consumerism on the rise, the rate at which we buy and dispose off mobile phones, Tv’s, laptops, PC’s, refrigerators etc is only making the problem of e-waste worse for Asia.

The star.com reported that despite international agreements that prohibit the import and export of hazardous waste, shipments of broken electronic devices continue to pour into the harbours of Kenya, India and China.The reason is strictly financial. The U.S. Environmental Protection Agency estimates it’s up to 10 times cheaper to export e-waste than to dispose of it domestically.

About 150,000 people are employed by the e-waste industry in Guiyu, China, and 25,000 more work in the scrapyards of New Delhi, India. The gold, silver, copper, aluminum and other metals salvaged become a vital resource for the manufacturing of new items. A typical wage for the arduous, dangerous work is $2 to $4 a day.

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China - India investment questions and comparisons to be raised

Mar. 18 - The Senior Partner of Dezan Shira & Associates, Chris Devonshire-Ellis, who publishes China Briefing, India Briefing and the emerging Asia website 2point6billion.com, will meet next week with Kamal Nath, the Indian Minister of Commerce, and Mr. P. Chidambaram, the Minister of Finance, in New Delhi.

This pre-empts his annual meetings with Chinese government leaders which are scheduled for this May. Last year’s summary of meetings with China’s officials can be accessed here.

Chris will be reporting on issues arising from these talks on 2point6billion.com next week, please subscribe to that site (complimentary) if you require copies of these.

He has also kindly offered to raise important questions on China-India trade or investment directly with Mr. Nath and Mr. Chidambaram on behalf of our subscribers and readers. If you have questions you would like him to pose to the ministers please email him directly at ministerialmeetings@dezshira.com. Replies will be confidential.

Four days after India, the world’s fourth largest military, raised its defence spending by 10% to $26.5 billion for 2008-09 or about 2.5% of its GDP, China, the world’s largest standing force upped its defence budget by 18% to a whopping $58.4 billion, or 1.4% of its GDP. What Beijing did not mention is that India’s military expenses at $26.18 billion (Rs 105,600 crores) is less than half of China’s expenditure in absolute terms, although it might seem higher as a percentage of GDP.

The spurt in defence spending also comes at a time when China claims parts of Arunachal Pradesh (90,000 square kms), in India’s far East to be part of China. China is now also considered a formidable force by the US, who believe that Beijing’s real military spending is two or three times the announced figure.

Justifying the jump in defence budget ‘because other countries were doing it too’, Jiang Enzhu, spokesman for the National People’s Congress, China’s legislature said “military expenses accounted for 14.1 per cent of India’s overall spending while China spent just 7.2 per cent of its total budget on defence. Developed countries spent a lot more with the United States allocating 4.6 per cent of its GDP to defence and Britain spending three per cent of its GDP, he said. The figure for France is 2 per cent and Russia 2.63 per cent of GDP.

Adding, “China’s limited armed forces are totally for the purpose of safeguarding independence, sovereignty and territorial integrity”. “China will not pose a threat to any country.”

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 Will the Chinese economy face gloom after the Olympic torch is blown out in Beijing?

Many economists argue that China’s current economic boom is mostly due to the build up for the Olympics and when the lights die out on the years largest sporting event, money too will dry up.

Recently released global statistics by Morgan Stanley analysts Stephen Jen and Luca Bindelli back this up - The striking common feature is an acceleration in GDP growth in the year in which the Olympics were held, followed by a year of sub-par growth. Of the 11 cases examined since 1956, only the US (Atlanta) in 1996 did not show a slowdown following the Olympics. The slowdown was particularly stark in Australia (1956), Japan (1964), the US (1984) and Korea (1988). Spain actually fell into a recession in 1993. In the two most recent Olympics (Athens and Sydney), both Greece and Australia decelerated by 1.5-2.0% between the year before and that after the Olympics.

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According to statistics issued yesterday by the Japanese External Trade Organisation (Jetro) http://www.jetro.go.jp/, the combined per capita income of ASEAN countries Burma, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Phillipines, Singapore, Thailand and Vietnam for 2007 was USD7,533, against just USD2,459 for China. This represents a rise from USD6,830 for 2006, an extraordinary increase for a diverse total population also larger than China’s at @1.6 billion people against 1.2 billion for the PRC.

This reflects the continuing growth rate and prosperity in the region, with major consequences for FDI throughout Asia. The regions diversity is also displayed, with tiny Brunei and Singapore leading the way in incomes, far beyond their Asian counterparts, over USD32,000 a head. At the opposite end of the scale however, Burma, Cambodia , Laos, Vietnam and India all recorded average per capita income of less than USD1000 per annum, although all showed significant growth rates as well. Of those closest to China’s level of GDP income, Thailand exceeded it and Indonesia was close behind China.

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While Vietnam, Cambodia, Burma & Sri Lanka seem to be taking advantage of the opportunities spilling over from India and China, Bangladesh on India’s north east and China’s south west corners seems to be loosing its main export - finished jute products.

 A report by Bangladesh’s Daily star says that Bangladesh is loosing millions in jute exports because it exports the raw material to India and China who process it (mostly into bags (gunny sacks)) and later re-export as value added goods.

“Export price of raw jute is around Tk 13,000 a tonne, but its price becomes Tk 35,000 if it is a finished goods (sacks),” Salim Reza, vice chairman of Bangladesh Jute Exporters’ Association, told The Daily Star.

According to official data, during the July-December period this fiscal (2007-08), Bangladesh exported raw jute worth US$82 million, a 13.18 percent increase from the US$72 million exports during the corresponding period in the last fiscal year.

While Bangladesh’s jute goods export has declined by about US$2 million to US$166 million in the first half (till December) of the current fiscal year compared to the same period of the last fiscal year.

India, China and Pakistan have become major buyers of Bangladeshi raw jute in the recent time, exporters said.

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Both China and India are leading the way forward for global vehicle trends as Tata’s Nano has stunned the US car manufacturing market in it’s simplicity and low cost. The increasing rising of gas prices is having three effects, both of which China and India have long foreseen – the need for smaller cars, a fundamentally different financial production model than the current one used for auto manufacture,  and the trend ultimately to electric powered clean emission vehicles.    

The Reva 

While the US market is not planned for market entry by Tata, many industry experts believe that the way forward will be vehicles of the Nano type. The disposable culture of the US fits that of the cheap USD2,500 Nano – with no need to spend much on repairs or maintenance – you just buy a new one when the need arises. The Nano is already mostly made from recyclable materials – with it’s manufacturer, Tata also owning many recycling plants in India, thus creating an entirely new economic model for vehicle production. This financial model is completely different of anything American, European and Japanese manufacturers have previously considered.

Forecasts for ‘small’ car purchases are set to rocket by 65% in the next four years, and by 50% in Western Europe. Even the conservative US, lovers of big auto statements, are anticipating a growth of 25% in the category.

Auto analyst John Wolkonowicz stated “The Nano is the price of a small laptop computer, and is the 21st century equivalent of the Model T Ford. It is going to mobilize the third world and that will have implications for everyone”.

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A tailor displays fabrics in Beijing’s Cental Business District.

Alarm bells are definitely ringing in boardrooms across China.

Eating into exporters’ profit margins, producer prices jumped 6.1 percent last month to a three-year high.Meanwhile, labour wages last year rose 20 percent and the yuan has appreciated more than nine percent against the US dollar in the past 14 months.

This has meant that more exporters face bankruptcy unless they lift prices to salvage their disappearing margins, which is just what most plan to do.

According to a survey by brokerage and research firm CLSA, 80 percent of Chinese exporters intend to raise prices this year in response to higher raw material costs.
“The appreciation of the renminbi (yuan) against the US dollar is a secondary factor driving these price hikes,” Shanghai-based CLSA economist Andy Rothman said in the survey.

read more here: http://afp.google.com/article/ALeqM5hEgIChMQQp2ctk9tdgiuG7uYkBww

Does this mean that China is finally moving up the value added chain?, will it create more opportunity in the area for Vietnam, Cambodia, Sri Lanka and Burma in the low cost manufacturing space? Or will this erode China’s edge as a low cost manufacturer the world depended on for cheap goods, giving rise to India’s dominance as a quality supplier?

 The Chinese just have too much money! At a time when when world gold grices are at an all time high, China has for the first time usurped the US, as the world’s second largest market for gold jewellry. China is however yet surpassed by India - who still hold the global #1 position, according to the World Gold Council (WGC).

At a time when gold prices are already high (gold prices jumped more than 30 percent last year, the biggest increase since 1979),  WGC statistics showed that sales of gold jewellry in China reached a record high of 302.2 tons in 2007, up 34% from 2006. Conversely, WCG said that in 2007 demand for gold in the U.S. saw a 14 percent year on year drop, while sales in Britain and Italy slumped too.

Interestingly, in January China’s gold futures made a strong debut on the Shanghai Futures Exchange as international gold prices repeatedly hit new highs.

Chinese demand for the metal helped boost its price in London to a record high of $936.50 an ounce in early February.

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 HAPPY NEW YEAR !!!

People gather to watch a lion dance performance during Chinese new year in Kolkata’s Chinatown. Kolkata in east India boasts the country’s largest Chinese population. Indians and Chinese together brought in the year of the Earth rat.

The year of the golden Pig which finished yesterday was truely a golden period for China’s superpowered growth. In 2007, the economy grew by 11.3%, the fastest rate in 13 years, stock prices on the main Shanghai bourses hit a record high of 6,000 having risen six fold in two years, foreign exchange reserves surged over $1.4 trillion thanks to booming exports and PetroChina became the planets most valuable company - one of five Chinese firms in the world top 10.

In contrast, the year of the Earth rat starts with more expectations as the west looks to China to anchor it against recession. Inflation is at a 10 year high, share prices have fallen 25% from their peak last year, export growth is under pressure from a rising currency and the coldest winter for half a century has paralysed large parts of Central and Southern China. ~ lets just hope the worst is already behind us and the Olympics later this year bring China and all our readers a lot of warmth, wealth and happiness.