The 1st China-US Governors Forum paves the way for closer bilateral trade and economic ties in Sino-Chinese relations...

The first ever China-US Governors Forum opened at Salt Lake City on 14th July. Its purpose is to provide a new platform in promoting cooperation between the two sides in areas of trade, investment, energy, environment and people to people exchanges.

With the full backing of both Presidents Hu and Obama, it is jointly organized by the Chinese People's Association for Friendship with Foreign Countries (CPAFFC) and the National Governors Association (NGA) of the United States. This venture was instigated by President Hu in his January visit to the United States to enhance cooperation at the local level between the two countries.

The Chinese delegation led by the Zhejiang provincial Communist party secretary Zhao Hongzhu plus leaders from a number of Chinese provincial leaders including from Anhui, Qinghai, Yunnan and Zhejiang and over 30 US governors attended the forum. CPAFFC and NGA signed a Memorandum of Understanding, pledging to make the forum a long-term fixture.

In 2010, China exports to the United States totalled US$364 billion. This compared with US exports to China of US$91 billion. Last year, exports from 24 states to China exceeded US$ 1 billion. Over the past decade, 47 US states' exports to China have grown over 100 percent.

The conference attracted a few hundred researchers and entrepreneurs from local universities, businesses and other institutions in China and the US, as they explore opportunities for new joint projects to promote trade and business, education, cultural exchanges and tourism.

According to the China Daily, this was not just a talk-fest...20 deals were inked including:
- Starbucks and Aini Group in Yunnan (one of the province's most established coffee operators and agricultural companies) signed an agreement to create a coffee business partnership between their two companies, to purchase and export high-quality arabica Yunnan coffee beans, as well as operate dry mills in Yunnan province.
- The Wuhu Economic and Technological Development Zone in East China's Anhui province reached a deal with NuvoSun on a project for thin film solar cells.
- The first China-Midwest (Shanghai -St. Louis) cargo air route operated by China Eastern poised to be a key trade hub will take flight in September creating 12–15,000jobs in St Louis, Missouri. This is subject to one final piece of legislation to be passed by Missouri state senators in September.

This is one dimension that has the highest potential to both promote improving economic relations and bolster closer social ties between the two countries. It dovetails with the signature state visits and summits held by both countries recently in 2009 and 2011…..where the almost obligatory mega-deals are penned eg Boeing planes, Caterpillar mining and construction equipment.

Casting aside any political rivalries and military tensions between the world's top two nations by GDP, it’s one small step for bilateral trade and a giant stride for Sino-US commerce.

China's new Shanghai to Beijing high-speed rail link opens on 30 June...plane wins on time but does not beat cost, comfort and convenience

Thursday, 30 June 2011, the eve of the 90th anniversary of the 1 July founding of the Chinese Communist Party, was a historic day marking the inauguration of the newly built Shanghai to Beijing high speed rail link (HSR - 国高速铁路).


Work began in April 2008 and it was completed ahead of schedule at a total cost of RMB221 billion (US$28bn). The HSR is expected to have a top speed of 300km per hour along the 1,318km route, punctuated by 22 stations with 23 trains running daily in both directions.

Linking the mainland's economic and political hubs, both cities are both currently plagued by gridlocked city centres due to the recent rapid economic growth in China and the relentless increase of middle class car ownership.

A point to point, time and cost test comparing the new hi-speed rail service with an airliner was carried out by two intrepid South China Morning Post reporters on the day. So, how long would it take to reach the downtown Beijing bureau from their central Shanghai office? Will hi-speed rail drastically cut into the time savings from flying. The results highlighted above are pleasantly surprising.

Unless one is seriously time constrained, it makes sense with some forward planning, to just hop on the express, sit back, kick off your heels, and bask in comfort watching the landscape roll by.

If this exercise is anything to go by, HSR for the 1,318km journey is a serious challenger to flying. If the original plan to run the trains at 350km per hour had forged ahead, this would have killed off the airlines slashing the rail journey to around four hours. However, reasons such as affordable pricing, increasing energy efficiency and potential safety factors put that to rest.

There will be long term benefits which the HSR will bring to the 2nd and 3rd tier cities along the route which includes 22 stations (eg real estate and infrastructure development).

China has the world's longest HSR network with about 8,358 km (5,193 miles) of routes in service as of January 2011 including 2,197 km (1,365 miles) of rail lines with top speeds of 350 km per hour (220 mph). Since the introduction of high-speed rail on April 18, 2007, daily ridership has grown from 237,000 in 2007 and 349,000 in 2008 to 492,000 in 2009 and 796,000 in 2010. This vision was only realised via extensive cooperation and through technology transfer agreements with foreign train makers Siemens, Bombardier and Kawasaki Heavy Industries.

Going forward, Chinese train-makers and rail builders have signed agreements to build HSRs in Turkey, Venezuela and Argentina; bidding on HSR projects in Saudi Arabia, Russia, the United States and Brazil. They are competing directly with the established European and Japanese manufacturers, and sometimes partnering with them.

Back on the train...all that remains is to iron out the glitches from the poor mobile phone reception encountered on this first day. Then the business community could really catch on...

World Bank appoints a new treasurer Madelyn Antoncic...ex-Chief Risk Officer of Lehman Bros...

The newly appointed Vice President and Treasurer of the World Bank was the Chief Risk Officer at Lehman Brothers when they went bankrupt in 2008.

Antoncic had been with them since 1999...so how much did she know about the underlying asset quality of the bank's assets before they imploded...she can't say she didn't know what was going on...can she?

World Bank Group President Robert B. Zoellick said...“Known for her forthrightness, I am delighted Madelyn is taking up this important role. She brings to the Bank an extensive background in the financial industry and a demonstrated record of leadership, innovation, and integrity.”

Antoncic holds a Ph.D. in Economics and Finance from New York University. As treasurer she will be responsible for maintaining the World Bank's high standing in financial markets and for managing an extensive client advisory, transaction, and asset management business.

It's a zany world out there across the big pond...

A new Eurozone stress test... Denmark shuts its borders to immigration...

On 11 May, Denmark shocked the European Union (EU) by announcing it will install permanent stations along its frontiers to curb crime and illegal immigration. Control booths will be erected at crossings to Germany and Sweden and in harbors and airports.

This contravenes the spirit of the 1985 "Schengen Agreement" — a free-travel system that has removed compulsory passport controls between many internal borders in Europe. The Schengen Area currently consists of 25 states, all but 3 of which are members of the European Union; the non-EU members being Iceland, Norway and Switzerland.

The system has been under pressure recently with the EU Commission considering reintroducing national border controls in the face of a flood of North African immigrants. The agreement in Denmark was made to meet demands from the government's nationalistic ally, the Danish People's Party, and is expected to be approved by Parliament.

With the Arab Spring in which conflagrations blew up in Algeria, Libya and Egypt, Mediterranean border nations like Greece, Italy, Spain and Malta have also complained that the 27-nation EU has dumped its immigration issues and the costs of dealing with illegal immigrants on their backs.

Coupled with recent economic fissures appearing inside the EU and aversion by some states to come to the rescue of fellow members, the bailouts of Greece, Ireland and Portugal have already dealt a crushing blow to the euro. Spain's fate looks sealed too. With the Denmark butterfly now flapping its wings, this could be a harbinger of a wider European fragility.

Nationalism looks to be increasingly asserting itself on both the ecoonomic and social fronts...the liberal fabric of Europe is be about to be sorely tested...

China cracks down on Unilever...for daring to raise prices.

On May 6, the Chinese Government declared it will fine Unilever RMB 2 million (US$ 308,000) for announcing in the media its intention to raise prices on a range of its consumer products. Apparently this had led to hoarding.

The National Development and Reform Commission, China’s top economic planning agency, said in a statement sales on some products surged 100 times above "normal" levels. The government has stamped its authority to control inflation as a top priority and the central bank stated on May 3 “stabilizing prices and managing inflation expectations are critical.”

The NDRC reminded China’s Price Law disallows operators from fabricating and distributing information about price increases, raising prices collectively and pushing up prices excessively. Consumer prices in China jumped 5.4% in March, the biggest increase in 32 months, exceeding the government’s 4% full-year target every month this year.

It's interesting how Unilever could respond to this in the long term as it also confronts the rising trend of commodity price. Shackled by pricing constraints, it may have to put the China business model under the microscope. To stay competitive and serve this growing market, does it need to evaluate and source from another low-cost manufacturing location within SE Asia or India? Capped and/or diminishing profit margins are not the basis of sound sustainable businesses.