Shanghai best Happy Hour, Morton”s at Pudong IFC building
A great steak sandwich in Shanghai
Every weekday between 5-7pm, visitors to Morton’s can gobble down as many Petite Filet Mignon Steak Sandwiches as they can manage with orders of the RMB38 happy hour Mortinis. The best steak sandwiches in Shanghai.
deal.
The Mortinis are strong cold and very good. For those chocolate lovers the sweet Chocolate mortini is great. Before I’d finished my last sandwich, he was immediately there to ask if I’d like another plate How about another drink? Well… okay, one more, but I was already feeling the first one. The terrace is great in the summer. The tables are all gone by 5:30 outside.
Oh, the fastest way to get to Pudong is the subway. It took me less than 20 minutes from Jing An Plaza to Pudong.
Add: Shop 15-16, 4/F, Shanghai IFC Mall, 8 Century Avenue (near YinCheng C. Rd)
世纪大道8号国金中心商场4楼15-16号商铺 (近银城中路)
Tel: 6075-8888
http://www.mortons.com/shanghai
Go Go Go Why China Needs to Keep Building
When I first visited Shanghai, the Pudong half of the city was mostly marshland. “Crazy!” was my reaction when told of plans to build skyscrapers there. Who would want to live there? A decade and a half later I live in Pudong, along with 8 million others.
Apple’s [AAPL 337.41 2.41 (+0.72%) ] most profitable retail store in the world per square foot is located there, as are the China headquarters for IBM [IBM 167.50 0.32 (+0.19%) ], Citigroup [C 40.97 0.75 (+1.86%) ]and DuPont [DD 52.56 0.59 (+1.14%) ] lured by tax breaks and cheaper rents. The Chinese government’s growth strategy has been to invest in highways, subways and bridges to previously difficult to reach locations to attract investment and spur development. Doing so has aided in reducing urban crowding and has improved efficiency.
In predicting China’s economic collapse famed short-seller Jim Chanos surprisingly does not understand how capital and infrastructure spending, rising incomes, and a lack of leverage are contributing to stable future growth.
Chanos argues that by taking up nearly half of China’s GDP that construction spending is too high. However, in contrast to Japan where many infrastructure projects lead to nowhere and do not spur sustainable development most infrastructure projects in China have a purpose. If towns remained empty forever or everything was bought highly leveraged, Chanos would be right that huge problems could emerge.
The reality is private enterprises eventually relocate to these development areas because of tax breaks, cheaper rents, and because many key government departments and state-owned enterprises take advantage of the developments to create new business centers.
Why is this development strategy needed? Far too many Chinese live in sub-human conditions because of land constraints and poverty. The country has an inhabitable area the size of America’s eastern seaboard yet five times the population.
It is common for families of 3-5 people to live in 350 square foot homes; the average house in America is 2,330 square feet according to the National Association of Home Builders. Many workers live 8 people to a room. Workers are moving to urban areas in search of better pay. This year, for the first time, more than 50 percent of the country lives in urban areas, up from 30 percent just a decade ago. As the country continues to urbanize and incomes rise, people need more comfortable living conditions.
Chanos also makes the mistake of underestimating rising incomes. Per capita GDP more than tripled to $3,400 at the end of 2010 from $949 in 2000. The trend is continuing as foreign direct investment (FDI) is rising 25 percent a year, causing a fight for both white collar talent and manufacturing jobs.
Factory salaries at companies like Toyota [TM 82.26 0.05 (+0.06%) ], Foxconn are rising 20 percent year on year. The number of US dollar millionaires has risen to nearly 1 million, when just dozens had that wealth two decades ago. In other words, rising incomes and urbanization are creating demand for empty units.
Finally, Chanos wrongly equates high real-estate prices with an impending bubble. What causes problems is not whether the average person can afford homes but whether people buying them are highly leveraged.
In China they are not. Even in the case of highly publicized development failures like Erdos, where a new district of the city developed to house government offices, businesses, and up to one million new residents lies nearly empty despite the fact that many properties have been sold, any long-term damage to the economy is limited because property buyers were not leveraged.
Government restrictions limit leverage on the residential side as well as how many apartments one can buy. In Shanghai, for instance, one cannot even buy a third home anymore. Prices continue to rise in cities like Shanghai because instead of buying five units, wealthy consumers buy one luxury apartment. As a result, transactions and prices in the mid-market have effectively slowed while overall market prices have soared.
The government’s willingness to manage the situation has effectively squeezed speculation out of the market. The result? Real estate agencies are closing. Chanos sees this as a sign of problems ahead when in reality dropping prices and shuttering agencies is good because it signals government measures to keep the market under control and get more affordable housing to the people who need it are working.
It is easy to look at China’s construction boom, and the real-estate market there, and compare it to what has happened in the US, Dubai or Japan but in reality the market is very different. Spending on infrastructure has a purpose, the trend is towards rising incomes and increased spending power, and property buyers are not exposed to anywhere near the level of risk that led to collapses elsewhere.
One family one child moves to the dogs, one family one dog
The city of Shanghai – which already follows China’s one-child policy – has announced a new rule for households.
From May a one-dog policy will be introduced, and more than 600,000 unlicensed dogs will be declared illegal.
The new regulation has been the subject of long and heated debate among the city’s lawmakers.
Last year more than 140,000 people told police they had been bitten by an unlicensed dog.
There are four times as many dogs without the proper paperwork in Shanghai as there are animals with a permit.
Pooch permits
The new rule means owners whose dogs are not registered with the authorities will have to give them away.
Those who already have two licensed dogs will be able to keep them, but only new applications from households without hounds will be accepted.
Of course, this being China, people will no doubt find a way to get around the rules.
When restrictions on the numbers of homes families could own here were introduced to try to slow the rise in house prices, there were reports of couples getting divorced but still living together just so they could buy more properties.
The police say they are expecting they will have to adopt many of the dogs once they are declared outlaws.
They are also banning the keeping of what they call “attack dogs”.
British bulldogs are among those that will not be welcome here under the new rules.
Gangster Hilton Hotel boss gets life in prison in SW China
CHONGQING, May 4 — The boss of a Hilton Hotel in southwest China’s Chongqing Municipality was sentenced to life in prison by a local court on Wednesday for mafia-style crimes. When he was arrested they also shut down the 5 star Hilton hotel. Who ever heard of a 5 star hotel being shut down.
Peng Zhimin ordered his men to force competitors out of business by violence and organized prostitution in his casino in the Chongqing Hilton Hotel, according to the verdict of the Chongqing No. 1 Intermediate People’s Court.
The verdict said Peng also bribed officials.
Lu Yonghe, head of the Farmland and Water Resource Bureau of Chongqing’s Nan’an District, was sentenced to 14 years behind bars for accepting bribes from Peng. Lu’s deputy He Defu got 14 years and a half. Another three government employees named Huang Hongwei, Chen Weidong and Xian Yi were also sentenced to jail terms from 3 to 11 years. Now the city quiet down and the fun is toned down.
Twenty six members of Peng’s ring were sentenced to jail terms of one and a half years to life, the verdict said.
China tightens internet censorship controls forms new department
China has set up a new government body to control information on the internet.
The State Internet Information Office will take over responsibility from a number of lower-ranking directorates.
The new set-up will enable the government to keep a tighter grip on the content available to Chinese internet-users inside the country. Which means the internet will be even slower in China.
Beijing operates vast internet censorship, dubbed the “great firewall of China”. Websites deemed sensitive by the government are routinely blocked.
The Chinese government has put a lot of resources into controlling and censoring the internet content available to its citizens.
Until now, the responsibility fell to the country’s Information Office and quite a few other agencies across various government ministries.
There was often in-fighting as each tried to wield power over what was allowed on the internet, from online games to politically sensitive content.
The newly-created State Internet Information Office brings technical and political control over the internet under one body, with Information Minister Wang Chen in charge.
This in effect gives his ministry more power than the other agencies involved.
This indicates that online news and information, new media business and internet access will most likely come under tighter control, as the government clamps down on dissent following the Jasmine Revolution in the Middle East and north Africa.
At the same time, the government hopes to use the internet to promote itself both at home and abroad.
China’s Cashmere is the hot soft gold of China.
Shanghai cashmere store
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- Shanghai cashmere yarn outlet
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- Shanghai cashmere store
China sees growing demand for ‘soft gold’ cashmere
ORDOS, China — Factory worker Wu Suqing hunches over a machine knitting a green cashmere sweater bound for a department store in China where demand for the luxury wool is growing even as Western sales shrink. The largest producer in China of cashmere
Surrounded by towering piles of brightly coloured pullovers, Wu and dozens of workers at a factory in northern China churn out more than 100,000 sweaters a year that retail in Beijing and Shanghai for hundreds of dollars each.
“At the beginning I was tired but now I’m used to it,” Wu told AFP above the the clamour of knitting machines in a dingy building in Ordos in northern China’s Inner Mongolia, where she works 11 hours a day.
China is the world’s largest producer of cashmere, churning out 75-80 percent of the global supply — worth an estimated five to six billion yuan ($770 million to $920 million) per year.
This “soft gold” or “diamond fibre,” as highly prized cashmere is known in the industry, has traditionally been exported to affluent overseas markets. The Chinese are just starting to understand the need for one good sweater instead of wearing 3-5 sweaters at a time.
But China’s growing taste for luxury products is changing that.
High-altitude northern and western China are ideal for producing the cloud-like wool. Their cold, dry winters cause the long-haired goats scattered across the region to give forth rich coats to keep the animals warm.
The soft fiber is spun into yarn and then knitted into sweaters, scarves and shawls sold by luxury brands such as Hermes and Eric Bompard in Paris, New York, and Sydney. The only difference is that the finishing is not good in China. They ship out the raw cashmere and it’s finished in Italy and other spun in other countries.
More than half of the country’s cashmere clothing and accessories are still exported, but are finding a growing market in increasingly affluent Chinese cities. The quality is not the same as the export but it’s cashmere.
“It is easy for a Chinese person to buy a cashmere sweater now. People are much richer than before,” Zhang Quanxiang, vice director of the China Livestock Marketing Association’s cashmere department, told AFP.
The number of Chinese-made cashmere sweaters exported in 2010 fell to 12 million, down 33 percent 2007, as the financial crisis hit US and European buyers, said Zhang, former vice president of China’s largest cashmere producer, Ordos Group.
But he adds that the growing Chinese market has helped offset that.
Raw cashmere prices have nearly doubled in recent years due to the Chinese demand, fewer goats following recent bitterly cold winters, and a ban on grazing the sharp-hooved animals on open land in Inner Mongolia to prevent soil erosion, and you wonder why we have sand storm, they eat all that is holding down the grass.
The rising prices have been life-changing for herders such as Meng Lounu, 77, whose family lives in a village on the edge of the vast Gobi Desert where they raise hundreds of goats in large earthen-floor pens.
The family earns one million yuan per year selling cashmere to factories in Ordos. Recently, they have been able to buy a new pick-up truck and build several block-shaped cement houses for family members.
“Our standard of living gets better and better,” Meng said, herding dozens of long-horned goats around a yard strewn with dung and straw.
“Before, our life was bad, but now it’s great. We can eat as much as we want — we make more and more money,” she told AFP, her brown face creased with wrinkles.
China is the world’s fastest-growing market for luxury goods and is forecast to be the biggest by 2015, according to consultancy PriceWaterhouseCoopers.
A woman shopper at a wholesale outlet in Ordos, where a 100-percent cashmere sweater sells for up to 2,000 yuan, said she liked the soft fibre because it was comfortable.
“Our products are not considered that expensive — it is more expensive to buy them in the stores in Beijing,” a saleswoman told AFP.
The picture is less rosy for China’s cashmere factories, whose profit margins have been eroded by the soaring wool prices and increasing competition from other Chinese manufacturers enticed by the growing market.
“The business is becoming more and more difficult,” said Yang Wang, the owner of a factory in Ordos which makes about 100,000 sweaters a year mainly for the Chinese market.
“Cashmere factories are popping up everywhere in China. And there are more than 10 factories of the same size in Ordos.”
While Wu Suqing may not be able to afford one of the beautiful sweaters she makes, she understands why people are prepared to pay the equivalent — or more — of her entire monthly salary for the luxuriant wool.
“It feels nice and is comfortable to wear,” she said, sitting on a steel chair piled with folded cloth as a cushion.
Beijing’s Empty Bullet Trains Is China investing way too much in its infrastructure?
World's fastest trains, made in China
China’s economy is overheating now, but, over time, its current over investment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible—most likely after 2013—China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chinese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium.
The bullet trains are the fastest in the world and they are building the fastest and the most track than any country in the world. The CHR trains to most of the places in China are more than half empty. The price of the average train ticket as gone up more than 60%, but you do get to places in half the time. The Shanghai Beijing train to start soon is set for 4 1/2 hours. They promise the tickets to be cheaper than the planes. We will see.
Despite the rhetoric of the new Five-Year Plan—which, like the previous one, aims to increase the share of consumption in GDP—the path of least resistance is the status quo. The new plan’s details reveal continued reliance on investment, including public housing, to support growth, rather than faster currency appreciation, substantial fiscal transfers to households, taxation and/or privatization of state-owned enterprises (SOEs), liberalization of the household registration (hukou) system, or an easing of financial repression.
China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed investment (infrastructure, real estate, and industrial capacity for import-competing and export sectors). When net exports collapsed in 2008-09 from 11 percent of GDP to 5 percent, China’s leader reacted by further increasing the fixed-investment share of GDP from 42 percent to 47 percent.
Thus, China did not suffer a severe recession—as occurred in Japan, Germany, and elsewhere in emerging Asia in 2009—only because fixed investment exploded. And the fixed-investment share of GDP has increased further in 2010-2011, to almost 50 percent.
The problem, of course, is that no country can be productive enough to reinvest 50 percent of GDP in new capital stock without eventually facing immense overcapacity and a staggering nonperforming loan problem. China is rife with over investment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.
Commercial and high-end residential investment has been excessive, automobile capacity has outstripped even the recent surge in sales, and overcapacity in steel, cement, and other manufacturing sectors is increasing further. In the short run, the investment boom will fuel inflation, owing to the highly resource-intensive character of growth. But overcapacity will lead inevitably to serious deflationary pressures, starting with the manufacturing and real-estate sectors.
Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment—including East Asia in the 1990s—have ended with a financial crisis and/or a long period of slow growth. To avoid this fate, China needs to save less, reduce fixed investment, cut net exports as a share of GDP, and boost the share of consumption.
The trouble is that the reasons the Chinese save so much and consume so little are structural. It will take two decades of reforms to change the incentive to over invest.
Traditional explanations for the high savings rate (lack of a social safety net, limited public services, aging of the population, underdevelopment of consumer finance, etc.) are only part of the puzzle. Chinese consumers do not have a greater propensity to save than Chinese in Hong Kong, Singapore, and Taiwan; they all save about 30 percent of disposable income. The big difference is that the share of China’s GDP going to the household sector is below 50 percent, leaving little for consumption. Everyone in China believes they must own the apt they live in. People in China do not believe in renting. As the real estate in Shanghai and Beijing soar, the pressure for the average Joe to own an apt is high. No apartment no marriage as every girl that wants to get married requires the man to own an apt.
Several Chinese policies have led to a massive transfer of income from politically weak households to politically powerful companies. A weak currency reduces household purchasing power by making imports expensive, thereby protecting import-competing SOEs and boosting exporters’ profits.
Low interest rates on deposits and low lending rates for firms and developers mean that the household sector’s massive savings receive negative rates of return, while the real cost of borrowing for SOEs is also negative. This creates a powerful incentive to over invest and implies enormous redistribution from households to SOEs, most of which would be losing money if they had to borrow at market-equilibrium interest rates. Moreover, labor repression has caused wages to grow much more slowly than productivity.
To ease the constraints on household income, China needs more rapid exchange-rate appreciation, liberalization of interest rates, and a much sharper increase in wage growth. China does not want to not want the currency to get stronger as that will stall the growth and the GDP of China. You can not just stop a speeding train all at once. If the economy drops even 2% from the GDP. China will stall and the world will fell the major affects. More importantly, China needs either to privatize its SOEs, so that their profits become income for households, or to tax their profits at a far higher rate and transfer the fiscal gains to households. Instead, on top of household savings, the savings—or retained earnings—of the corporate sector, mostly SOEs, tie up another 25 percent of GDP.
But boosting the share of income that goes to the household sector could be hugely disruptive, as it could bankrupt a large number of SOEs, export-oriented firms, and provincial governments, all of which are politically powerful. As a result, China will invest even more under the current Five-Year Plan. The rich are getting richer but the average person in China is getting poorer. As inflation is picking up the salaries can not keep up with the inflation in China. Shanghai and Beijing prices for stable foods are soaring out of control.
Continuing down the investment-led growth path will exacerbate the visible glut of capacity in manufacturing, real estate, and infrastructure, and thus will intensify the coming economic slowdown once further fixed-investment growth becomes impossible. Until the change of political leadership in 2012-13, China’s policymakers may be able to maintain high growth rates, but at a very high foreseeable cost. They are running out of things to build.
Trial of Beijng-Shanghai train begins
BEIJING, Feb. 21 (Xinhuanet) — The Shanghai section of the Beijing-Shanghai high-speed railway began a joint trial on Sunday. The project includes testing the new-generation bullet trains and its power system.
The Shanghai section of the route covers 645 kilometers and connects Zaozhuangxi in Shandong province to Hongqiao in Shanghai. The track linking Zaozhuangxi and Bengbu in Anhui province has finished its test run. Trains travelling that section can reach speeds of 486 kilometers per hour. The trial is expected to be completed by May.
The Beijing-Shanghai line is China’s longest high-speed rail line. It covers more than 13-hundred kilometers and connects two major economic zones in the Bohai Sea Rim and the Yangtze River Delta. The high-speed train is expected to be in operation in June. It will shorten the trip between Beijing and Shanghai from 10 hours to under four hours.
New Home Transactions Fall 39% In Shanghai
February 21 — Shanghai recorded a 39 percent year-on-year decline in the transaction area of commercial properties to 20.56 million square meters in 2010, reports yicai.com, citing the Shanghai Bureau of Statistics.
The average transaction price of new commercial residential properties in 2010 was 14,213 yuan per square meter.
A total of 11.67 million square meters were sold outside the outer ring, accounting for 69.2 percent of the total transaction area of new commercial residential properties.
A total of 694,700 square meters of commercial residential properties inside the inner ring were sold, accounting for 4.1 percent of the total transaction area of new commercial residential properties.
The average transaction price of new commercial residential properties inside the inner ring was 48,032 yuan per square meter while that between the inner and outer ring was 14,831 yuan per square meter. For new commercial residential properties beyond the outer ring, the average transaction price was 11,961 yuan per square meter.
A total of 198.07 billion yuan was invested in real estate development in Shanghai in 2010, up 35.3 percent year-on-year. Of the total, 114.46 billion yuan were invested in commercial residential properties, an increase of 38.5 percent year-on-year, and accounting for 62.7 percent of total investment.
Office buildings attracted investments of 20.41 billion yuan, up 8.7 percent year-on-year and accounting for 11.2 percent of total investment.
Construction area of commercial properties rose 13.4 percent year-on-year to 112.95 million square meters, of which commercial residential properties hit 73.14 million square meters, up 11.6 percent.
Completed construction area of commercial properties declined 7.8 percent year-on-year to 19.41 million square meters in 2010.
Completed construction area of commercial residential properties dropped 7.5 percent to 16.85 million square meters.
A total of 28.02 billion yuan worth of mortgage loans were issued by the Public Housing Fund, down 44.7 percent year-on-year.
Shares of Poly Real Estate Group (600048) rose 0.39 percent to close at 13.03 yuan today.
Food Costs Elevate Chinese Inflation
BEIJING (AP) — A double-digit jump in food prices pushed China’s inflation higher in January, adding to pressure on Beijing to cool living costs with more interest rate hikes and other measures.
Consumer prices rose 4.9 percent, driven by a 10.3 percent jump in food costs, data showed Tuesday. That was up from December’s 4.6 percent rate and close to November’s 28-month high of 5.1 percent.
Beijing has hiked interest rates three times since October to cool rapid economic growth and tamp down inflation. But analysts say it needs to do more to curb soaring bank lending while it also tries to increase food supplies to bring down prices.
“The government is battling with all sorts of problems coming from every front,” said Standard Chartered economist Jinny Yan. “The peak of inflation is yet to be seen.”
Inflation is politically dangerous for Beijing because it erodes the Chinese public’s economic gains and threatens acceptance of communist rule. China’s poorest families spend up to half their incomes on food and are hit hard by price rises.
The government has set a 4 percent inflation target this year, but private sector analysts expect up to 6 percent, which would include an even sharper rise for food.
In January, the price of fresh fruit soared by 34.8 percent over a year earlier, while eggs rose 20.2 percent, the National Bureau of Statistics reported.
Adding to a squeeze on food supplies, China’s wheat-growing northeast is in the grip of a severe drought that threatens its crop. Beijing has launched a $1 billion emergency campaign of cloud-seeding and expanded irrigation.
Economists say Beijing responded too slowly to rising inflation pressures after China rebounded quickly from the 2008 global financial crisis on the strength of massive stimulus spending and a flood of lending by state-owned banks.
Economic growth that hit 9.8 percent in the final quarter of last year is expected to slow this year but stay strong, supporting higher demand for food and consumer goods and helping to push up prices.
Analysts expect at least two more rate hikes by midyear but say monetary policy alone cannot resolve China’s economic challenges.
“Inflation is unlikely to come down substantially in the first half of the year,” said Mark Williams of Capital Economics. Rate hikes alone “aren’t going to bring more crops to the markets.”
Inflation could spill over into higher Chinese export prices. That might raise costs for Western consumers but also could help countries such as Vietnam and India compete with China as suppliers of clothing, furniture and other low-cost goods.
Global Sources, a company that connects Chinese suppliers with foreign customers, said this week that a survey of 232 Chinese companies found 74 percent of them raised prices last year — some by up to 20 percent — due to higher costs for materials and components.
A separate Global Sources survey of 385 foreign buyers last month found 31 percent were increasing purchases from Vietnam due to higher Chinese prices.
Higher inflation also might prompt Beijing to slow the rise of its currency, the yuan, against the U.S. dollar to help its exporters compete. That might add to strains with Washington and other governments that complain the yuan is kept undervalued, giving China’s exporters an unfair advantage and adding to its huge trade surplus.
