runaway inflation in China

 As the United States and Europe struggle to get their economies rolling again, China is having the opposite problem: figuring out how to keep its revved-up growth engine from generating runaway inflation.

The latest sign that things were moving too fast came on Sunday, when China's central bank ordered the biggest banks to set aside more cash reserves.

The move essentially reduces the amount of money available for loans, and is an attempt to cool down the economy. It follows the government announcement on Friday that China's economy was growing at an annual rate of 9.7 percent, by far the strongest performance by any of the world's biggest economies.

Because China is now the world's second largest economy, after the United States, and because the country has been a leading source of global growth during the last two years, money problems here can reverberate from Wal-Mart to Wall Street and the world beyond.

High inflation endangers China's status as the low-cost workshop for the world. And if the government's efforts to fight inflation cause the economy to stumble, that will cloud the outlook for international businesses — whether multinationals like General Electric or copper miners in Chile — that have been counting on China for growth.

Internal threat 
Inside China, inflation also poses a threat to social stability, a particular worry for Beijing, especially since authoritarian governments in North Africa and the Middle East have become the focus of popular uprisings.

"China's inflation is a big concern, and actual numbers are worse than officially reported," said Carmen M. Reinhart, an economist at the Peterson Institute for International Economics in Washington.

She says Beijing is engaged in an economic tug of war, trying to encourage sustainable growth while struggling to control inflation.

Food prices are soaring, and the government said on Friday that the consumer price index in March had risen 5.4 percent, its sharpest increase in nearly three years. Hoping to tame inflation, in the last six months Beijing has tightened restrictions on bank lending and raised interest rates on loans (to discourage borrowing) and deposits (to encourage savings).

The decision on Sunday to raise the capital reserve ratio for banks, to 20.5 percent of their cash, was the fourth such increase this year.

The government has also increased agricultural subsidies to curb food prices, and tried to forbid some Chinese companies from raising consumer prices. These efforts stand in contrast to those in the United States, where inflation is low (the underlying annual inflation rate was 1.2 percent last month) and where the debate centers on how much to stimulate the economy given the size of the deficit. Inflation is also running low in Europe, where some countries are imposing harsh austerity measures to pare their budget gaps.

But analysts say the results of this economic management have been mixed. Growth has begun to moderate from its torrid pace of about 10 percent annual growth but inflation has become worse.

For example, housing prices continue to climb even though Beijing has long promised to curb the property market and to spend billions of dollars over the next few years on affordable housing.

The average apartment in central Shanghai now costs more than $500,000. Even in second-tier cities like Chengdu, in central China, the price of a typical home costs about 25 times the average annual income of residents.

Analysts say too much of the country's growth continues to be tied to inflationary spending on real estate development and government investment in roads, railways and other multibillion-dollar infrastructure projects.

In the first quarter of 2011, fixed asset investment — a broad measure of building activity — jumped 25 percent from the period a year earlier, and real estate investment soared 37 percent, the government said on Friday.

Some of the inflationary factors, like global commodity and food prices, may be beyond Beijing's ability to influence. Gasoline prices have also jumped sharply, in line with global oil prices. As the world's largest car market, China's demand for fuel is soaring, and gasoline prices are close to $4.50 a gallon, up from $3.82 a gallon in late 2009.

Rising food prices, meanwhile, are showing up in various ways — including higher prices at fast-food chains, like Master Kong, which in January raised the price of its popular instant noodles by about 10 percent.

Fearing the bubble 
China's current supercharged boom began in early 2009, during the global financial crisis, when Beijing moved aggressively to increase growth with a $586 billion stimulus package and record lending by state-run banks.

The loose monetary policy, and big investments in local government projects, did revive economic growth. But even at the time there were already concerns about soaring property prices, undisciplined bank lending and the huge debts being amassed by local governments.

The fear among some experts is that the bubble will eventually burst, leading to a wave of nonperforming loans at the big state-owned Chinese banks, which have been the main financiers of the nation's phenomenal growth dating to the economic reforms in the 1980s.

Some economists have begun to argue that high inflation may be around for some time. Here again, the tug of war is evident.

To encourage the growth of a consumer market that will help meet the Chinese people's demand to share the nation's wealth, Beijing and many municipal governments have required employers to raise wages.

The government has raised minimum wages in the hope of reducing the big income gap between the rich and the poor, and the urban and rural. But higher wages drive up the costs of production, leading to higher prices. Some experts say rising wages may be an unavoidable inflationary force for years to come.

"China is moving into a new era, a new norm," said Dong Tao, an economist at Credit Suisse in Hong Kong. "In the previous decade, inflation was about 1.8 percent a year; in the next decade, it may be closer to 5 percent."

The implications of such a shift are huge, not just for domestic consumers but perhaps even more so for exports. As wages and production costs rise, coastal factories are demanding higher prices for the goods they ship overseas. That means Americans, Europeans and other buyers will have to pay more for those goods or seek lower-cost suppliers elsewhere. In some cases, retailers are bidding for goods at prices the exporters consider too low.

"I hear that many Chinese exporters are rejecting orders from Wal-Mart and other Western retailers," Mr. Tao said. "I've been covering the Chinese economy for a long time, and I've never heard that before."

'May take a long time' 
Many analysts say the government is going to have to do even more to slow the economy, through measures like placing additional restrictions on lending and continuing to raise interest rates, the textbook methods of fighting inflation by tightening the nation's money supply.

But the mixed results so far do not inspire widespread confidence. In fact, some experts say that despite the Communist Party's efforts to manage the economy by committee, the absence of a top autonomous central banker — Beijing has no equivalent of the United States Federal Reserve chairman, Ben S. Bernanke — means no one actually has a hand on the growth throttle.

"The roots of inflation were laid down after the financial crisis, with the stimulus policy," said Zhang Weiying, a professor of economics at Peking University.

After a big stimulus, stamping out inflation is not easy, Professor Zhang said. "It may take a long time."

Citizens like Wang Jianren, 56, a retiree in Shanghai, a bustling city of 20 million, say that over the years China has benefited from its rapid economic growth. But like so many here, he complains that inflation is beginning to erode those gains.

"Prices have gone up a lot," Mr. Wang said at an indoor vegetable market on Friday. "Unstable prices make people nervous and make society unstable. In this sense, our generation even has some nostalgia for Mao's era."

 

Gas prices continue to rise

On Sunday, the Empire State became the sixth state to top $4 for the average price of a gallon of gas, joining Alaska, California, Connecticut, Hawaii and Illinois, according to AAA's Daily Fuel Gauge. The average price of gas also rose to more than $4 per gallon in Washington, D.C., on Saturday.
The next states to join the list could be Michigan, which has gas for $3.95 per gallon on average, and Indiana, where the average price is $3.94. Nevada, Washington and Wisconsin are close behind.
Hawaii has the highest price in the U.S. at $4.48 per gallon. Wyoming has the lowest, at $3.54.
The national average for gas has increased for 26 straight days, and is now at $3.83 per gallon. That's up 29 cents from a month ago. Retail surveys suggest motorists are reacting to higher prices now by buying less fuel. Still, the government expects pump prices to keep climbing this summer as vacationers take to the highways.
For American drivers, the $4 mark harkens back to the summer of 2008, when oil rose to $147 per barrel and gas prices topped out at $4.11 per gallon before the economy went into a tailspin.
The rapid increase at the pump follows a parallel rise in oil. Since Labor Day, oil has risen 48 percent and U.S. gas prices have gone up 42 percent. The increases gained momentum in mid-February when a popular rebellion in Libya turned violent and shut down the country's exports. Crude has jumped 30 percent since then, with gas prices gaining 22 percent.

Prime Minister Naoto Kan should be replaced

Japan is also struggling to bring the Fukushima Daiichi nuclear plant under control after it was damaged by the March 11 natural disasters and began leaking radiation, a process that could take the rest of the year.
Plant operator Tokyo Electric Power Co. (TEPCO) said Sunday it hoped to achieve a cold shutdown to make the reactors stable within six to nine months.
Full recovery could take even longer, the government has said, while rebuilding the shattered northeastern coast has yet to begin.
The cost of material damages alone from the quake and tsunami has been estimated at $300 billion, making it the world's most costly natural disaster. More than 13,000 people have been confirmed dead, and tens of thousands made homeless.
Nearly 70 percent of people surveyed by the Nikkei business daily said Prime Minister Naoto Kan should be replaced, and a similar number said the government's response to the nuclear crisis was not acceptable.

　動詞の後に２つの要素が置かれ，その２つの要素の間にイコール，もしくは主語＋述語，の関係が成立する場合，それらを「Ｖ＋Ｏ＋Ｃ」という記号で表します。
　この「Ｖ＋Ｏ＋Ｃ」で最も良く用いられるのが make です。
　The film made her a star overnight.（her = a star)
　（その映画で，彼女は一躍スターになった）
　The rain and sun make the grass grow. (the grass = 主語，grow = 述語）（雨と太陽によって，草が育つ）

英語力をアップさせる重要な要素の一つは「Ｖ＋Ｏ＋Ｃ」を取れる動詞を実例と共にたくさん覚えることです。英語のよくできる人はみなこのタイプの動詞をたくさん知っている。あなたはいくつ挙げられますか？
A relief fund was recently established for the victims of the quake that destroyed the town and rendered numerous people homeless.
▽ Free Translation
町を破壊し，多数の人々をホームレスにさせたその地震の犠牲者のために，最近，救済基金が設立されました。

▼ WORDS
□ relief＜名＞救済，救援：relieve＜動3＞＜不安・苦痛＞を取り除く［和らげる］
□ fund＜名＞基金，資金
□ recently＜副＞最近（＝ lately）（◆現在完了形か過去形の文で用いる）
□ establish＜動3＞＜制度・組織など＞を設立［設置］する（＝ set up）
□ for＜前＞…のために，…向けに
□ victim＜名＞犠牲者，被害者（◆傷ついた者と死者と両方を含む語）
□ quake＜名＞地震（＝ earthquake）
□ that＜関代＞すなわちそれは（◆「説明文」の主語の働きをする）
□ destroy＜動3＞…を破壊する
□ render＜動4＞（（格式的））OをCにさせる（＝ make）（◆Cは主に形容詞）
□ numerous＜形＞（（格式的））多くの（＝ many）
□ homeless＜形＞住む家のない，ホームレスの

China markets expected to take reserve rise in stride

Chinese markets are likely to take Sunday's required reserve increase for banks in stride, as huge quantities of cash continue to flow into the financial system through maturing central bank bills and from overseas.
The People's Bank of China (PBOC) on Sunday raised the required reserve ratio for banks for the seventh time since last October, to a record 20.5 percent.
While the move will soak up about 360 billion yuan ($55.1 billion) that could otherwise have been lent out, nearly 450 billion yuan in central bank bills and repos will mature in the next two weeks alone, which is one reason many traders had expected the increase.
Because the move was widely expected, interest rate swaps (IRS) and government bond yields will probably rise only slightly on Monday and for the rest of the week, after edging up late last week in anticipation of further tightening.
The benchmark weighted-average seven-day repo rate , which jumped about 40 basis points late last week to 2.36 percent to take into account the likelihood of a bank reserve rise, could rise slightly on signs of the PBOC's determination to keep liquidity in check.
In the stock market, the Shanghai Composite Index , which breached the psychologically important 3,000-point mark last week, could hesitate in its recent rally, but should continue to rise in the medium-term given strong corporate earnings and ample liquidity in the system.
With the central bank making clear it is willing to use all tools at its disposal to contain inflation, the yuan will likely continue its steady crawl upwards against the dollar, which has seen it rise close to 1 percent so far this year.
Central bank governor Zhou Xiaochuan said on Saturday that the yuan would be one of the tools the PBOC uses in the inflation fight, underscoring comments by Premier Wen Jiabao earlier this month. ($1 = 6.533 yuan)

Keppel begins work on Tianjin project

Mainboard-listed Keppel Corporation broke ground for its mixed-use development Seasons City project located in the Sino-Singapore Tianjin Eco-City yesterday.

Its wholly-owned subsidiary, Keppel Integrated Engineering Limited (KIE), also signed a joint venture to pursue the building, owning and operation of a water reclamation plant in the area, with a total investment value of 300 million yuan (S$57 million).

Senior Minister Goh Chok Tong attended the ground-breaking ceremony in Tianjin, and also witnessed the signing of the joint venture by KIE with Tianjin Eco-City Investment and Development Co Ltd (TECID).

"Seasons City is also the first commercial development to roll out under Keppel Land China and we are looking into opportunities in other cities as well to build up our commercial portfolio," said Mr Ang Wee Gee, executive vice-chairman of Keppel Land China.

The project consists of three office towers, retail premises and serviced apartments, which will be developed in phases. Seasons City has a total gross floor area of about 254,398 sqm.

Keppel Land China, the wholly-owned subsidiary of the group's property arm Keppel Land Limited, is the project manager for the Keppel development in the eco-city.

As for the water reclamation partnership with TECID, KIE will hold 40 per cent of the joint venture while 60 per cent will be held by TECID. The plant will include a wastewater effluent polishing unit and a water recycling facility, and is expected to serve the whole eco-city.

Keppel said the joint venture agreement is not expected to have material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.

日本語の「…した」が常に英語の「過去形」で表現できるというわけではありません。
ニュースで「ドル（の価値）が下がりました」と言う場合，これを過去形で言うと感じが出ない。
過去形には現在とのつながりがない，つまり現在我々が置かれている状況と無関係，といった響きがあるからです。
「ドルが下がった」という（過去の）出来事は，「現在の経済状況に少なからぬ影響を及ぼしている」はずです。（だから，ニュースとして取り上げられたわけです）
このように，「（過去においてそれが）起こり，その結果，今その影響が出ている」という意味をもつ「…した」は，現在完了形を使うとよいのです。現在完了形とは「過去とのつながりの中で現在のことを述べる時制」なのです。
The dollar has fallen in value against the major currencies. At the current exchange rate, a dollar is equivalent to 115 yen.

▽ Free Translation
ドルが主要通貨に対して値を下げました。現在の為替レートでは１ドル１１５円となっています。

▼ WORDS
□ the＜冠＞（（全体を一つにまとめる総称として））（◆例文の The dollarは１ドル，２ドルといった個々を指すのではなく「ドル（という通貨）」全体を指している）
□ dollar＜名＞ドル（◆ dollarは可算名詞（例：20 dollars）．yenは不可算名詞）
□ fall＜動1＞下落する（＝ decrease）
□ in＜前＞…において（◆意味の範囲を限定する）
□ value＜名＞価値
□ against＜前＞…に対して（◆「背景にして」「対照的に」というニュアンス）
□ major＜形＞主要な
□ currency＜名＞通貨
□ at＜前＞…の地点［時点］では（◆利率（rate）の前などに置く）
□ current＜形＞現行の，目下の（◆「流れ」→「現在流れている」）
□ exchange＜名＞交換；＜動3＞…を交換する
□ rate＜名＞率，割合，レート
□ equivalent＜形＞等しい，同じ；＜名＞等しいもの（例：Kabutocho is Japan's equivalent of Wall Street.「兜町はウオールストリートの日本版だ」）

▼ Phrases & Patterns
□ exchange rate＜名＞為替レート
□ be equivalent to ...＜動＞…に等しい（＝ be equal to ...）