2010年10月28日 星期四

Mini-QFII

People have expected the Mini-QFII scheme to come this year, but now the consensus is for spring 2011.

2010年10月19日 星期二

China Anoints Its Next Leader

WSJ

[CLEADERjp1]Associated Press

Chinese President Hu Jintao, left, talks with Xi Jinping after the closing ceremony of the National People's Congress in March 2009.

BEIJING—China's Communist Party appointed Vice President Xi Jinping to a key military post, cementing his status as heir apparent to president and party chief Hu Jintao and removing much of the uncertainty surrounding the country's leadership succession.

The appointment comes at a pivotal time for China as its economic and military might grows. Many inside and outside the party will now be looking for signals as to whether Mr. Xi stands closer to Premier Wen Jiabao and others who appear to be pushing political reform, or to more conservative leaders, thought to include President Hu.

Mr. Xi, the 57-year-old son of a revolutionary hero, was appointed a vice chairman of the party's Central Military Commission at a secretive annual party meeting in a hotel in Beijing that ended Monday. The commission controls China's two-million-strong army and is headed by Mr. Hu, who is due to step down as Communist Party general secretary in 2012 and as president in 2013.

Mr. Xi, who is married to a hugely popular folk singer, is among a generation of Chinese leaders who grew up during China's traumatic Cultural Revolution and whose careers have coincided with the country's meteoric rise since economic reforms were launched in 1979.

A portly figure sometimes criticized for lacking charisma, Mr. Xi has maintained a low public profile, though on a visit to Mexico last year he openly mocked foreign attitudes toward China.

"Some foreigners with full bellies and nothing better to do engage in finger-pointing at us," he said. "First, China does not export revolution; second, it does not export famine and poverty; and third, it does not mess around with you. So what else is there to say?"

Yet the appointment yields few clues as to how Beijing will ultimately move to address rising tensions—domestic and international—over questions such as what political freedoms to allow, what responsibility to take for climate-change issues, or how much to let its currency respond to market forces. In some crucial ways, the next face of China is a blank slate.

Still haunted by memories of the personality cult surrounding Mao Zedong's leadership, and the political convulsions that accompanied the handover of power around his death in 1976, China now actively seeks to avoid emphasis on its leaders' personalities by stressing a collective leadership.

Reuters

Xi Jinping applauds at a conference in Moscow in March.

Xi Jinping's Rise

Vice president of China, vice chairman of the Central Military Commission, member of the Politburo Standing Committee

Born June 1953 in Fuping, Shaanxi province

Son of Xi Zhongxun, former revolutionary leader who was imprisoned by Mao Zedong in 1962. Following Mao's death, the elder Mr. Xi re-entered government and led the creation of the Shenzhen Special Economic Zone in southern China.

Married to celebrity folk singer Peng Liyuan

Joined the Communist Party in January 1974

Graduate of the School of Humanities and Social Sciences of Tsinghua University, majoring in Marxist theory and ideological education. Also holds a law degree.

Named vice president of China in 2008.

WSJ research

It has also been in Mr. Xi's own interest to keep a low profile. Behind the façade of unity among leaders, jockeying for power is intense. For ambitious bureaucrats like Mr. Xi, passage to the top can easily be derailed; that encourages them to mask their personal views, build consensus and avoid taking risks, particularly in their dealings with foreigners.

Senior U.S. officials said they viewed Mr. Xi as a moderate who is well briefed on the U.S.-China relationship. They said that like many of China's senior leaders, he was difficult to read, though they said he appeared very engaged on key economic and strategic issues involving China and the world.

Mr. Xi has long been seen as a potential heir to Mr. Hu, but was passed over for promotion to the commission this time last year, leading to speculation he had fallen out of favor.

His promotion now clearly marks him out as the pre-eminent member of a new generation of leaders. Unlike the present generation, who are mostly engineers and scientists, the new crop have relatively diverse academic backgrounds, including social scientists, lawyers and a historian.

Celebrity Songstress

Hear performances by Mr. Xi's wife, Peng Liyuan, a hugely popular folk singer.

Performing 'In the Field of Hope'

Our hometown lies in the field of hope,
With smoke from the kitchen hearths floating above new workshops,
And brooks flowing through beautiful villages;
Fields of winter wheat next to those of paddy rice;
A vast pond of lotus next to orchards.
Oh, we are living in this field for generations
To make it rich and prosperous.

Our hope lies in the field of hope,
Rice sprouts grow in the sweat of farmers,
Cattle are raised amid the sound of herdsmen's flute.
The west village is spinning fiber while the east is fishing;
The north is planting seeds while the south is threshing grains.
Oh, we are working in this field for generations
To make it pretty and groomed.

Our future lies in the field of hope,
People are living in the beautiful sun,
Life is changing amid people's work,
Old people are raising the glasses while children laughing,
Boys are playing the music while girls singing,
Oh, we are fighting in this field for generations
To make it happy and proud.

* * * * *

Performing 'Mount Everest' at a Chinese New Year Gala in 1997

Mount Everest
You're standing in people's heart and under the blue sky
You're nurturing Gesang flower in the sunshine of love
You're spreading the moonlight across Himalaya
I love you Mount Everest,
The Mount Everest in my heart
You're walking into people's dreams and smiling in the plateau of Tibet and Xijiang
You're radiating the rays of sunshine in the spirits of justice
You're warming the mother land with fresh breezes
How much I want to do a Tibetan dance and present you a white kha-btags
To you, Mount Everest,
The sacred Mount Everest

Cheng Li, an expert on Chinese politics at the Brookings Institution, said there were concerns in the broader Party last year that Mr. Xi wasn't promoted because of a leadership struggle or a push to introduce a more democratic succession.

"The fact that he has got the job shows that the political establishment wants to have the succession go as smoothly as possible," said Mr. Li. He said that the leadership also wanted to give Mr. Xi more time and experience on the top Party bodies. Mr. Hu had been on the Standing Committee for 10 years before he became Party chief. Mr. Xi has been on it only since 2007.

The appointment makes Mr. Xi only the second civilian on the Military Commission after 67-year-old Mr. Hu, who was promoted to the same post when he was vice president in 1999, three years before becoming party chief.

Mr. Xi and other incoming leaders have been scarred by traumatic experiences as children growing up during the Cultural Revolution of 1966-1976, a reign of terror during which many of China's intellectuals were sent to prison or the countryside.

"I ate a lot more bitterness than most people," Mr. Xi said in a 1996 interview cited in China Parenting Magazine. He said he was imprisoned four times and called names such as "son of a b—" and "reactionary student."

But his generation of leaders also has had greater exposure to Western ideas than its predecessors did.

Attention is now focused on who will replace the seven of nine members of the Standing Committee who are due to retire at the next Party Congress in 2012.

The question has been building in importance as the party has been caught up in an intense and unusually public debate about its future ever since Mr. Wen—who is 68 and one of those due to retire in 2012—made a surprise appeal for political reform in August.

Mr. Wen is widely expected to be succeeded by current Vice Premier Li Keqiang, who was once seen as another potential candidate for the top spot.

Some leaders are thought to favor limited internal reforms to make the authoritarian government more responsive to the needs of an increasingly complex society, while others fear that any such moves could unleash social unrest and eventually topple the party.

What is clear from Mr. Xi's biography is that he has always remained loyal to the Party—in contrast to his father, who was accused of disloyalty in 1962 and went on to condemn the 1989 crackdown on pro-democracy protests around Tiananmen Square.

That debate has grown more intense since Liu Xiaobo, a jailed Chinese dissident, won the Nobel Peace Prize early this month, and after a group of party elders wrote an open letter calling for media freedom last week.

The country's new assertiveness on the international stage has also raised questions among anxious Asian neighbors about how the Party intends to exercise its new power. Mutual suspicions still roil China's relations with the U.S.

"People within the government and elsewhere are going to want [Mr. Xi] to articulate his vision for the Party and its relationship with the armed forces," said Russell Leigh Moses, a Beijing-based political analyst.

Mr. Xi has been raising his profile internationally in the past few years, meeting President Barack Obama on his visit to Beijing last year, as well as Russian Prime Minister Vladimir Putin, and several other foreign leaders, this year.

The State Department's top economic official, former Goldman Sachs executive Robert Hormats, has met with Mr. Xi twice this year, according to U.S. officials. And Mr. Hormats attended a speech Mr. Xi gave last month at an investment forum in Xiamen, where the Chinese official talked about the need for Beijing to continue its economic-reform program.

"I was impressed with the keynote address," which has "received too little attention in the United States—and yet it has potentially significant implications for Chinese investment and reform policies," Mr. Hormats told a Washington conference this month.

Mr. Hormats added that Mr. Xi "stressed China's 'going-global' strategy and noted that China is now in a new phase of reform and opening-up."

Associated Press

China Vice President Xi Jinping speaks at the Australia China Trade and Economic Forum with then-Australian Prime Minister Kevin Rudd in June.

Mr. Xi's appointment to the Military Commission was announced at the end of a four-day meeting of the Party's Central Committee—consisting of its 371 most senior leaders—to chart China's economic and political course for the next five years.

The meeting approved China's next five-year economic development plan, due to start in 2011. The plan, which straddles the leadership transition, promises to continue the present administration's focus on ensuring more equitable and sustainable growth. It will stress domestic consumption, in part by raising wages, after years of economic growth led by exports and investment.

A communique published by the state-run Xinhua news agency also pledged to make "vigorous yet steady efforts to promote political restructuring," but gave no details about what that would entail or how fast it would progress.

—Jay Solomon contributed to this article.

Write to Jeremy Page at jeremy.page@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

www.djreprints.com


The 12th Five Year Plan

China vows more balanced income distribution, improved healthcare, and a stronger social welfare net as the 17th Central Committee of the Communist Party of China approved the draft of the country's 12th Five Year Plan.

The five-year economic blueprint, which starts 2011, aims to release domestic wellsprings of growth for urban and rural households to see the nation's economy rise by some 50 percent to $7.5 trillion by 2015. The plan comes as the nation's average per-capita income for the richest 10 percent reaches 65 times that of the poorest 10 percent, according to a Credit Suisse-sponsored study by Chinese economist.

To meet these goals, Beijing plans to:

  1. stimulate consumption demand and optimize investment structure to achieve steady and rapid economic growth
  2. improve social security and adjust the income distribution system to enlarge the share of household income in GDP boost farmers' income
  3. improve farmers' income
  4. promote urbanisation
  5. develop strategic industries and accelerate development of services sectors
  6. promote green economy

2010年10月17日 星期日

Beggar Thyself

Unlike the 1930s when the theme of the day was "beggar thy neighbor", this time the emerging paradigm is "Beggar Thyself", coined by the Privateer's Bill Buckler, the term best describes the lunacy that has gripped the world.

Nations which will emerge the "strongest" from the current financial malaise are those succeed in devaluing their currency faster than any other -- a race to see who can come up with a worthless currency faster than anybody else.

2010年10月5日 星期二

The RMB liquidity support pool

Hong Kong stock exchange chief executive Charles Li says the city is lobbying Beijing to improve its FDI regime and to seek approval for providing an interim pool of liquidity support.

Engineering sufficient liquidity to foster RMB trading and settlement in Hong Kong is the city’s “greatest challenge, but also biggest opportunity”, its stock exchange chief executive, Charles Li, said yesterday.

Speaking to a rapt assembly at the Foreign Correspondents Club in the Central business district, Li stressed that the exchange, along with the Hong Kong Monetary Authority, would continue lobbying Beijing to improve its FDI regime as well as to seek approval for providing an interim pool of liquidity support.

Solving this liquidity riddle lies at the heart of convincing a sceptical western audience that Hong Kong can deliver on its aspirations to become a vibrant international trading hub for the RMB, given that China operates a closed capital account.

“This is a historical transformation that is going to be very difficult, very complex, particularly in the context of overall global changes, with trade controversies and many other things,” said Li.

“A lot of people are very sceptical about it. I don’t have a magic solution or a crystal ball. It is a decade-long process and it is going to take a lot of creative innovation, and a lot of trials and pilot programmes. But we believe it is possible.”

He noted that China’s trade account was fully open, allowing the free flow of renminbi in and out of the country, supported by large-scale swap arrangements in place between the central banks of trading partners.

“The problem is there is no water in the pipe because there is no RMB out there to pay for it,” he added. “Even though the swaps could provide the RMB for people who want to pay in RMB, trade partners have no incentive to do so because they don’t really have … a place to park the RMB. So at the beginning we have to do it [generate liquidity] artificially.”

http://i.haymarket.net.au/Utils/ImageResizer.ashx?n=http%3a%2f%2fi.haymarket.net.au%2fNews%2f20101005111547_HKscreen.jpg&w=300&c=0At present Hong Kong has a rapidly growing liquidity pool of about Rmb100 billion, broadly in lower-yielding fixed income and banking products – which Li referred to as “the formation phase” (see graphic).

“It is a great starting point,” he said. “We are starting to see insurance products and foreign fund management products. Many trading partners will begin to consider putting RMB into [the pool]. Their CFOs and treasury departments over time may want to begin to re-denominate some of their balance sheets into RMB if they are China’s long-term major trading partner.

“But we are saying that is not enough. We believe we need to begin to move into a higher yield curve. We need to do that to make sure that there are larger products and a greater number of products. As products begin to emerge, they are going to trade more actively.”

Li underlined that the city is now striving to move into “the growth phase” (see graphic), spawning the emergence of corporate bonds, interest rate products, stocks and index futures in RMB.

While he conceded that the upside for investors was still limited at present as Hong Kong continues to lobby Beijing to secure a more relaxed regime of controlling FDI back into China, the downside centres around the RMB's limited availability damaging demand for securities.

“The issuer would have every reason to say ‘I don’t want to consider this product unless I know that I am not going to suffer a valuation discount’ simply because there is not enough RMB out there,” said Li.

He pointed out that Hong Kong has lobbied for the opportunity to provide an interim pool of liquidity support to ease issuer difficulties for the launch and trading of designated products on a pilot basis.

“How it works is a little bit technical, but essentially you have a pool and the people who have RMB can continue trading [RMB products], while people who don’t have RMB but love the product for arbitrage or other reasons can go into the pool and participate in the deal, thereby minimising if not eliminating all the price discrepancies due to the availability of RMB.”

These Hong Kong dollar investors would be able to tap into the RMB liquidity pool, provided that when they trade out of the position, they exit with Hong Kong dollars, therein returning the pool to its original size.

“The integrity of the RMB level inside the pool gets preserved,” explained Li. “We do believe that this capital pool is something that is highly feasible and highly workable.

“The reason policymakers in China will potentially consider this favourably is because even though it requires some limited opening of the capital account, this capital pool is for limited purposes only and for a short period of time. When enough RMB has started to accumulate naturally, then eventually the need will be phased out.”

Li described the potential market in offshore RMB flow as very substantial, adding: “Hopefully a portion of that RMB will become permanently stationed [in Hong Kong], creating an indigent and native growth market that will also begin to have yield. Ultimately the Holy Grail is that one day Chinese investors will begin to come here en masse.”

He listed Hong Kong’s priorities as setting up RMB infrastructure, expanding its mainland market data business, developing renminbi products, facilitating mainland connectivity, and pursuing OTC clearing.

"When the RMB [market] gains sufficient critical mass offshore, there will be a huge amount of interest rate swaps, hedging and risk management opportunities. We want to make sure that we are there," Li concluded. "This is a very exciting potential transformation. It is going to be easier said than done, but I do think we have a very bright future ahead of us.”