Taiwan post..of 'sino-cism' and 'de-sinicisation'

Taiwan government is pursuing a drive to remove references to 'China' or 'Chinese' from the names of state owned companies, in an attempt to assert a stronger Taiwanese identity. There have been a spate of name changes recently and some more may be in the offing. Chinese Petroleum Corp has become CPC Corp, Taiwan, while China Shipbuilding Corp has become CSBC Corp, Taiwan and Chunghwa Post Co will be known as Taiwan Post Co. Earlier Chiang Kai Shek International Airport was renamed as Taiwan Taoyuan International Airport, as the current independence leaning ruling dispensation seeks to downplay the historic links with the mainland. This was also reflected in recent changes in history textbooks.

The Democratic Progressive Party of president Chen Shui-bian considers establishment of an independent Republic of Taiwan under a new constitution as its objective and its move to mobilise support for the same is leading to sharp political divides. Although Taiwan is a de facto sovereign state, it exists only under the official name of the Republic of China and has little diplomatic recognition. China considers Taiwan as a part of its territory and has even threatened use of force to prevent any attempt to declare independence. US, Taiwan's strongest ally, and most of the international community favour the status quo to be maintained.

DARE TO DIFFER !!

Comments, discussions, debates, different points of view - these are an integral part of a blog. I am grateful to all of my readers who have commented on my posts and shared their views. I am going to give a link to their blogs here (they are not in any particular order).

Tanguy (Local Lingo)

Sanketh Adiga (Freelancer Online)

Dr. Ashok Dhamija (A few weird thoughts)

Alex M Thomas (Undergraduate Economics)

Ranjan Varma (Musings on Money, Business, Finance and Things Intriguing)

Hiren Shah (Stray Thoughts)

Amit Shekhar (Bombay Today)

Pankaj (Lilylalalali..... Online Magazine)
Matthew C Keegan (Mortgage Paradise)

Dattaprasad Parab (Techniques in Civil Engineering)

WHAT'S HOT NOW

Come, join the ongoing debates on GlobeWatch and AKT on Markets. Here are some of the hot topics.

China's Red Hot Growth
Will the boom last? Will the 21st century be the 'Chinese century'? Will the stock market and property bubbles burst? Will the bad loans of Chinese banks trigger a crisis? Will the growing rich-poor divide lead to social unrest? Will the economic reforms lead to political reforms? Is India better placed ? Is there room for two Asian giants to co-exist on the global stage?

India's Inflation
Will the government's recent measures be effective in containing inflation? Is RBI's response adequate? Have we run out of options to fight inflation? What next? Is high inflation inevitable? What to do to improve the distribution network for agri-commodities? How to tackle hoarding? Do the WPI numbers represent the correct picture?

Home Loan Rates
Are bankers right in jacking up the rates? What is better - fixed or floating? How far will the rates go? Should floating rates have a cap?

What can IT Industry do for India?

IT industry's contribution to the resurgence of India as a major economic power on the global stage need not be over-emphasised. What can it do for the transformation of Indian society? And, why should we burden the industry with a 'social obligation' ? Why should it be expected to do more than what happens automatically from its normal business operations ?

These are some of the questions which Amartya Sen dwelt upon in his Keynote Address at the NASSCOM 2007 India Leadership Forum in Mumbai earlier this month on "I.T. and India". He talked about the possibility of the IT industry to reach out beyond its traditional domain. While acknowledging the enormous contributions made by the industry, the nobel laureate emphasised that it can do even more, indeed in some ways, much more.

"This is partly because the reach of information is so wide and all-inclusive, but also because the prosperity and commanding stature of the IT leaders and activists give them voice, power and ability to help the direction of Indian economic and social development."

Full text of the address is available at The Hindu website. This is a must read for all Indian IT professionals. I am highlighlighting some important points from the lecture.

Amartya Sen has elaboarted on the connections between the success of IT in India and some particular features of India's past - intellectual traditions of Indian society that have tended to support the pursuit of specialized excellence, a general attitude of openness influences from far and near, etc.

Social obligations of the IT industry go beyond the very obvious charitable activities such as building hospitals, research centres and other social institutions which have traditionally been performed by Indian industry, including many of the major IT leaders. As information is key to societal change, the IT industry can take a central role in this regard and make a big difference.

"As it happens the key to the success of IT, namely accessability, systematization and use of information is also very central to social evaluation and societal change. There is, in fact, a very foundational connection between information and social obligation, since the moral - and of course the political - need to pay attention to others depends greatly on our knowledge and information about them."

........"This foundational connection also gives the information industry a huge opportunity to help India by trying to make its contribution to the systematization, digestion and dissemination of diverse clusters of information in India about the lives of the underdogs of society - those who do not have realistic opportunity of getting basic schooling, essential health care, elementary nutritional entitlements, and rudimentary equality across the barriers of class and gender. This can also be said about problems of underdeveloped physical infrastructure (water, electricity, roads, etc.), as well as social infrastructure, that restrain the broad mass of Indians from moving ahead. There are particular causal connections also here: an enterprise that hugely depends on the excellence of education for its success - as the IT sector clearly does - has good reason to consider its broad responsibility to Indian education in general."

Strong Q4 Growth in Japan, Doubts Still Persist

Japan's economy has posted better than expected growth in the last three months of 2006. The annual rate of 4.8% recorded in the quarter is the fastest rate in almost three years and has been driven by resurgent consumer spending and capital investment in factories and equipment. Consumption, which makes up more than half of Japan's gross domestic product, rose 1.1% from the previous quarter, rebounding from an equal drop in the July-September period. For the whole of 2006, Japan's GDP grew 2.2%, up from 1.9% in 2005 and down from 2.7% in 2004. Private consumption in the year increased 0.9 percent, down from the 1.6 percent rise in the previous year.

However, doubts still persist regarding strength of the economic recovery. The economy is witnessing its longest expansion since second world war after stagnating in the 1990s. The 5-year expansion seems to be losing steam as growth rates have been stuck in low gear. The Bank of Japan's policy board meets on 20-21 February and the opinion is divided on whether or not it will go for a rate hike.

The country's central bank is waiting for stronger signs of growth and particularly a rise in inflation. The Bank of Japan raised interest rates by a quarter percentage point last July ending the long period of zero rates and would like to raise them further to a more normal level, but signs of strong growth and inflation have proved elusive on one hand and the govenement has shown an inclination for cotinuance of low interest rates, on the other, to keep the economic recovery on track. Meanwhile, Japan's trading partners, notably European nations, have shown concern on the continued weakness of the Japanese curency Yen and would like to see Japanese interest rates being raised to counter this and protect their trade interests.

Related Posts

Bank of Japan's Assessment of Economic & Financial Developments (Jan 2007)

Politics and Economics of Interest Rates (Jan 2007)
Japan Interest Rates on Hold - for Now (Nov 2007)
Japan's Growth Beats Forecasts, Rate Hike May Come Sooner (Nov 2006)

The Surging Inflation - Other Views

India growth story is hot. And, so are the debates on soaring prices and overheating. As the government is trying its best to dowse the inflation and the political heat it has generated (and RBI doing its part on the monetary side), I decided to check out what the blogging community is saying on this. Are rising prices a necessary side-effect of high growth which we must learn to live with or are they symptoms of a deeper malaise? Why has the government not succeeded in containing the prices despite a series of measures over last few months? What should be done immediately? What should be done in the longer run? How to address the supply bottlenecks?

I came across some very good pieces on the subject. The common thread running through most of the discussions on the blogosphere is about supply side constraints especially those relating to agriculture commodities. It's interesting that many of them refer to onions. The ubiquitous onion seems to have become a symbol of price rise affecting common man and having a potential to affect electoral politics.

I am prividing links to two of the blog articles that I found interesting.

The first one is Inflation + Price of Onions. Kamla Bhatt in this post says that infrastructure bottlenecks should be adressed, as lack of food is not an issue as much as lack of an effective distribution channel.

"Inflation is on the rise and you can see it all around you. Price of onions, wheat, oil have all been climbing northwards and have hit the pocket book of many consumers. The economy is overheated and there is no question about that. ...There is no question that infrastructure is one of primary bottlenecks in India. If the infrastructure bottleneck is addressed it will lead to swifter movement of goods and reduce the transportation costs and the overall cost of products."

The second post is from "chutney spears" How to solve inflation in India? The author Shivaji Das talks about the signs of high prices as experienced in an Indian city. In a lighter vein, he offers some suggestions for controlling inflation, including putting curbs on the Bacchan family’s visits to temples to pray for happy marital life for Aishwary-Abhishek and firing the people publishing such high inflation numbers.

Please give your opinion on this.

Inflation defies monetary and fiscal measures, uptick continues

The annual wholesale price index-based inflation continued its upward march, touching 6.73 per cent for the week ended February 3, up from the previous week's 6.58 per cent. The contributory factors remain the same - pulses, cereals, vegetables and non-vegetarian food articles within primary articles, besides Manufactured Products including cement, steel and machinery items. The inflation estimate for the week ended Dec. 9 has also been revised to 5.63 percent from 5.32 percent. The government revises the inflation rate with a lag of two months on additional price data.

The continued 'pincer movement' - the strategy adopted by the government and monetary authorities to fight inflation from both supply side and demand side - has so far not delivered desired results and we may be approaching a stage where all the weapons in the armoury are exhausted.

To tackle the demand side (i.e. inflation arising from rapid growth and credit expansion), the central bank has been tightening the monetary policy. The most recent monetary policy measures include hike in repo rate and cash reserve ratio in quick succession. The Indian economy is expected to expand at a record 9.2 percent in the year ending March 31, following a 9 percent growth last year. Bank loans increased more than 30 percent in each of the past two fiscal years, outpacing the 23 percent growth in deposits.

The central govenrment, on the other hand, has taken a series of steps to address the supply side constraints. These include ban on export of items wheat and milk powder, lifting restrictions on import, reduction in customs duties, invoking restrictive storage laws and delisting a couple of essential commodities from the futures trading exchanges. The latest one is a cut in petrol and diesel prices.

Though all these fiscal and monetary measures will act with a time lag and may help contain the spiralling prices, these may be 'too late, too little' - especially the fiscal measures, monetary tightening measures beyond a point are not desirable as they will hurt the economic growth. On fiscal side, more needs to be done in the immediate term. And, much more on a long-term basis to improve the farm output.

Business Line editorials on the suject

De-fuelling inflation

Weaponless in price war

Related posts on AKT on Markets

War on inflation intensifies - CRR raised again

RBI raises repo rate

THE NEW HINDU RATE OF GROWTH
Indian economy is on a high growth trajectory
CSO has upped the FY07 growth forecast to 9.2%


Indian economy is expected to grow by 9.2% in the current financial year ending March 2007, driven by robust growth in manufacturing and services sectors.

This will be the fastest rate in 18 years and follows a strong 9% growth in the previous year, according to the Central Statistical Organisation (CSO). The highest-ever growth rate of 10.5% was recoded in 1988-89, but it was preceded by two low-growth years on account of drought (3.8% and 4.3%). The current boom marks the best-ever growth phase in recorded history. The growth story is largely being led by industry (more specifically, manufacturing) and services. While industry as a whole is expected to grow by 9.9%, the corresponding rate for manufacturing is 11.3%. The services sector is set to expand by 11.2%,

Agriculture languishing
While industry and services sectors are booming, the agriculture sector remains an area of concern. The sector which employs about 60% of the population is expected to expand by a mere 2.7 % on top of the 6% growth last year. Agriculture's share in the economy has been consistently declining – it would account for about 18.5% of GDP, down from the 23.9% in 2000-01 and 32.2% in 1990-91.

The past four years of sustained high growth have generated a great deal of euphoria and optimism on one hand and fears of overheating on the other hand as the economy moves into unchartered territory. Raising the farm output will be key to sustaining the high level of growth and spreading the benefits of economic boom to different sections of the society.

Impact of rating upgrade by S&P

S&P has raised India's sovereign debt rating to investment grade in view of the country's strong economic outlook, its rising foreign exchange reserves and the depth of financial markets.

The Indian economy has registered an average growth of over 8 percent in the past three years and is expected to grow at a record 9 percent in the current fiscal year ending March 2007. The rating upgrade from BB+ to BBB- is an acknowledgement of the improved fundamentals of the economy. According to S&P, gradual reforms and consistent monetary and fiscal policy stances have sustained macroeconomic stability and India's huge foreign-exchange reserves provide a buffer against changes in investor confidence.

Although the rating upgrade should attract more overseas funds into the economy and enable corporates to raise funds at better terms, it is largely seen as a (long overdue) affirmation of what has already been factored in by global investors. The bullishness on the Indian economy has been attracting large capital inflows in the equity market pushing the market to record highs. Hence it may not have a dramatic effect on the level of capital inflows.

The information on which this is based has been known and factored in, still the rating upgrade lends credibility to the continuance of the India story. Now that all three major rating agencies S&P, Moody’s and Fitch have an investment grade rating on India, more long-term and stable money such as pension funds can invest in Indian markets with greater confidence. Many such funds have the mandate to invest only in investment grade papers. On the other hand, medium-sized companies will benefit from the improved rating and they will be able to borrow abroad at lower rates (bigger companies already enjoy good pricing power in respect of their global bond issuances).

India's Mobile Revolution - the Great Leveler

The story of growth of mobile networks in India is nothing but revolutionary. The booming Indian telecom industry is adding over six million mobile connections every month and it is connecting various sections of society like taxi drivers, paanwallahs, farmers, fisherfolk.

Shashi Tharoor in a recent article published in International Herald Tribune says that the “mobile miracle” has accomplished something India's old Socialist policies talked about but did little to achieve — it has empowered the less fortunate. Hailing the transformation of India in communications as dramatic, he says the cell phone revolution is exciting not only as a sign of India's economic transformation, but as a symptom of something far more important, a change in the attitude of India's governing classes.

“Now to anyone who grew up in pre- liberalization India, that is astonishing. Bureaucratic statism committed a long list of sins against the Indian people, but communications was high up on the list; the woeful state of India's telephones right up to the 1990s, with only eight million connections and a further 20 million on waiting lists, would have been a joke if it wasn't also a tragedy — and a man-made one at that.”

Decrying the government's indifferent attitude to the need to improve communications infrastructure in the pre-liberalisation era, Shashi Tharoor says that perhaps the key contribution of the government has been in getting out of the way — in cutting license fees and streamlining tariffs, easing the overly complex regulations and restrictions that discouraged investors from coming in to the Indian market, and allowing foreign firms to own up to 74 percent of their Indian subsidiary companies.