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Media Report
March 03 , 2017
  • Forbes comments: "Recent figures suggest China's labor costs are rising fast, which could be good news, and could be bad. Certainly the amount of Chinese people able to rise out of poverty is one of the signature achievements of the early 21st century, but the prospect of wage inflation could signal bad news for an economy whose key comparative advantage has until now been low labor costs. The speed of the increase, however, invites consideration of whether China has reached the 'Lewis Turning Point'?... It comes about as the migration of agricultural labor to the industrializing cities–released by agricultural mechanization–starts to slow up, and results in a rapid rise in wage costs as the available labor pool becomes suddenly shallower...Rising wages may spur a long awaited boom in domestic consumer spending and speed China along the manufacturing value curve as higher labor costs drive investment in more capital intensive production technology. In turn this might raise the prospect of resource efficiency gains, rather than the simple resource deployment gains that have hitherto driven China's growth, creating a virtuous cycle of growing demand and better calibrated investment and helping China vault over the middle-income trap."

  • The New York Times reports: "Mao once branded capitalists enemies of the Chinese people. In the era of President Xi Jinping, those capitalists are billionaire lawmakers — and they're getting even wealthier. The combined fortune of the wealthiest members of China's Parliament and its advisory body amounts to $500 billion, just below the annual economic output of Sweden. Among that group of 209 entrepreneurs and business tycoons, the 100 richest saw their net worth rise 64 percent in the four years since Mr. Xi took power, according to the Hurun Report, an organization based in Shanghai that tracked the wealth of the delegates, ahead of their annual joint sessions that start on Friday in Beijing...The increasing wealth of lawmakers 'tells us that political power and money have remained tightly intertwined in China: this is a structural issue that Xi cannot solve,' but only hide, said Jean-Pierre Cabestan, a professor of Chinese politics at Hong Kong Baptist University...'That's part of the stability of the Communist Party," he added. "So there may not be that earthquake so fast.' "
  • Bloomberg reports: "China has the economic power to move markets, and it isn't afraid to use it. South Korean stock trading offered a case in point Friday, with a selloff in hotels, cosmetic makers and other tourism-related companies that made the country's benchmark the worst performer among Asian equity markets. The slide followed a Yonhap news agency report on China ordering travel agents to halt sales of holiday packages to South Korea...The broader takeaway: while South Korea has given no indication it would change its plans, there can be risks of economic damage -- at least for a time -- that offer investors both dangers and opportunities. 'There is actually no industry in Korea that is free from THAAD risks,' said Jung Sang Jin, who helps manage the equivalent of $33 billion at Korea Investment Management Co. in Seoul, using the abbreviation for the U.S. missile-defense system. 'Many companies have plants in China, and China could halt operation at those plants.' "
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