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Newsletter for Apr 16, 2009

A weekly sampling of news, analysis and opinion on economic issues of India, China and the U.S. Articles and opinion pieces are from a variety of sources and viewpoints and do not necessarily reflect those of ICA Institute. Access to some articles may require free registration to the site or may not be cited to the original source. Access archive.

In this issue
  • Smart Globalization- In the Age of China and India
  • China Goes Global Call for Papers
  • Headlines
  • Energy
  • ICT
  • Agriculture
  • Real Estate
  • Innovation
  • Logistics | Transportation
  • Newsletter staff

  • Smart Globalization- In the Age of China and India

    University of Maryland's Robert H. Smith School of Business presents:
    Smart Globalization- In the Age of China and India
    April 23-24

    Discover how you and your company can begin to plan and execute a strategy to succeed in the world's largest markets. Join us for "Smart Globalization in the Age of China and India" on April 23 and 24 at the Ronald Reagan Building and International Trade Center in Washington, DC. Presented by the Office of Executive Education at the University of Maryland's Robert H. Smith School of Business, this conference and executive seminar bring together leading scholars, senior corporate leaders and seasoned entrepreneurs for comprehensive discussion of what it takes to succeed in China and India. Participants will not only learn from specialists in the field and experienced practitioners, but will also have the opportunity to network with others doing business in India and China or currently planning new ventures there.

    Thursday, April 23 is open to a broad audience and welcomes executives, entrepreneurs, government and nonprofit, as well as graduate students. Sponsored by the Smith School Center for International Business Education and Research (CIBER), this conference will feature keynotes by Anil Gupta and Simon Johnson in addition to discussions with executives and entrepreneurs from multinational corporations.
    Friday, April 24 provides corporate leaders with an all-day, executive seminar conducted by Dr. Anil Gupta, researcher, teacher and consultant to multinational companies. Dr. Gupta, Professor of Strategy and Organization at the Smith School of Business, is one of the foremost authorities on global strategy, author of The Quest for Dominance and Getting China and India Right.

    Register now!

    China Goes Global Call for Papers

    Call for Papers
    3rd China Goes Global Conference
    September 30 - October 2, 2009
    Harvard University, Cambridge, USA

    This century has been dubbed the Chinese Century. But will the naming of this Century be congruent with the country's performance in the global political economy? As part of a series of conferences on the topic China Goes Global, held at Harvard Kennedy School and Rollins College, we issue a new call for papers on the globalization of China and Chinese companies, focusing on the following broad questions:
    1. What are the social, political and economic influences of China's globalization?
    2. How will China's globalization effect the business environment of firms in developed and emerging countries?
    3. Will China really replace the US economic, political and business leadership in the 21st Century?
    4. What are the factors associated with China's emerging global economic prowess?
    5. Can Western political/economic models and theories help explain China's current trajectory, either on a macro or a micro level?

    Important Dates
    Deadline for Submission: May 15, 2009
    Paper acceptance/rejection: July 1, 2009
    Revised paper submission: August 15, 2009
    Registration Fee
    Please note that all presenters and participants must register to attend the conference. The early bird registration fee of USD 495 is due on July 5, 2009, and the regular registration fee of USD 595 is due on August 15, 2009. The registration fee includes refreshments, lunches, reception, conference dinner, and a copy of the book China Rules: Globalization and Political Transformation (Palgrave McMillan, 2009). Conference registration does not include accommodation or travel costs.

    Organizational Committee
    Dr. Ilan Alon, Petters Professor, Director Rollins China Center, Crummer Graduate School of Business, Rollins College, Asia Programs Visiting Scholar, Harvard University
    Dr. Julian Chang, Executive Director, Asia Programs, Ash Institute, Kennedy School of Government, Harvard University
    Dr. Marc Fetscherin, Assistant Professor, Crummer Graduate School of Business, Rollins College, Asia Programs Visiting Scholar, Harvard University
    Dr. Christoph Lattemann, Assistant Professor of Corporate Governance & E-Commerce, University of Potsdam, Asia Programs Visiting Scholar, Harvard University
    Dr. John R. McIntyre, Professor, Director of Georgia Tech CIBER, Georgia Institute of Technology

    For more information, visit the conference website


    India votes in world's largest election (AFP, Apr 15)
    ndians voted in their tens of millions Thursday as the world's largest democracy kicked off month-long, five-stage elections, with little hope of a clear winner emerging at the end of it all. From the southern tropical state of Kerala to the Himalayan foothills of Kashmir in the north, they cast their ballots at the start of a process so complex and spread out that six million civil and security personnel are needed to keep it on track. Neither the ruling Congress party nor its main rival, the Hindu nationalist Bharatiya Janata Party (BJP), is expected to win outright when voting wraps up on May 13, setting the stage for some old-fashioned political horse-trading to build a coalition that can govern India's one billion people.

    China's Economic Growth Slows in First Quarter (New York Times, Apr 16)
    China's economy grew more slowly than usual in the first quarter, and joblessness increased, but fairly strong investment and consumer spending helped prevent falling exports from dragging down economic output even further, the government said Thursday. China's economic output was 6.1 percent higher in the first quarter than a year earlier, the National Bureau of Statistics said, but a range of statistics showed that March was better than January or February.

    China bank lending may slow, but not dramatically (Wall Street Journal, Apr 16)
    Chinese banks will likely moderate their lending activity in the remaining months of 2009 after making a burst of loans in the first quarter, but the slowdown won't be so dramatic as to halt the mainland's economic recovery in the tracks. Rather, the banks could lay more emphasis on medium- to long-term lending and balance the mix of the loans they have already made so far this year, analysts said. "There has been too much short-term loans and bills [financing] over the last three months. That has to slow. It's not sustainable, and I think the central bank will address that issue," said Kevin Lai, an economist at Daiwa Institute of Research.


    Oil, Gas and Ore | The (Chinese) government is weighing the timing of readjusting its tax policy on fossil fuels (Beijing Review, APR. 16, 2009)
    With increasing demand for fossil fuels and other natural resources to propel the country's rapid economic development, economists and experts have expressed discontent and criticism over the low resource tax rate, arguing the quantity-oriented tax-collecting mechanism has failed to live up to the goal of effective utilization and conservation of resources and has not meshed with the government's goal of establishing a resource-efficient society. They point out that the amount of resource tax only accounts for a very small portion of overall taxation categories. The main goal of reforming the resource tax is to lift the threshold of fossil fuel energy and mine resource taxes and tax-related enterprises on the basis of resource price instead of quantity. Although no specific rates have been set, industry insiders estimate the government will impose a 10-percent tax on resource sales.

    Energy Secretary Chu, on Power Sources Old and New (The Washington Post, Apr 16 2009)
    Chu: The issue here is that if you consider, for example, the countries that have coal, two-thirds of the known coal reserves lie primarily in the United States, China, India and Russia. The United States actually has the most known coal reserves in the world, and over 50 percent of our electricity is generated by coal. Even if the United States turns its back on coal, China and India will not, given the state of affairs. I would prefer to say let's try to develop technologies that can get a large fraction of the carbon dioxide out of coal. Start with 70, 80 percent and build up to over 90 percent, but start now and try to get it out.


    India Approves Satyam Stake Sale to Tech Mahindra (, Apr 16)
    India's Company Law Board approved Satyam Computer Services Ltd.'s sale of a 31 percent stake to Tech Mahindra Ltd. for 17.6 billion rupees ($355 million). Tech Mahindra on April 13 won the bidding for control of Satyam, the software exporter at the center of India's biggest fraud inquiry, beating U.S. billionaire Wilbur Ross and Larsen & Toubro Ltd. with a $579 million offer. The sale needed the law panel's approval after the government took control of the company in January in the wake of its founder Ramalinga Raju's admission that he'd inflated assets by more than $1 billion.

    Dell, HP Launch Netbooks for China's 3G Standard (PC World, Apr 16)
    Dell and Hewlett-Packard announced netbooks that support China's 3G standard Thursday as China Mobile, which is promoting the next-generation mobile technology, seeks new ways to attract scarce users. The netbooks, Dell's Inspiron Mini 10 and HP's Mini 1000, launched in China with built-in data cards for the 3G standard used by China Mobile, TD-SCDMA (Time Division-Synchronous Code Division Multiple Access). Chinese PC makers including Lenovo also launched 3G netbooks this week. Lenovo launched three models that can climb online through either TD-SCDMA or one of the 3G standards offered by China Mobile's rivals, Lenovo said in a statement.


    China Keeps Buying U.S. Soybeans (Farm Futures, Apr 16)
    Purchases by China, the world's largest soybean buyer, again dominated U.S. sales in the latest week, according to data released this morning by USDA. Total exports reached 29.8 million, well above trade guesses, with China taking about half the total. The strong showing comes after reports this week that China was continuing to be an aggressive buyer, and keeps soybeans on track to beat USDA's current forecast for the marketing year. While most of China's recent purchases have been sourced from Brazil, lack of Argentine supplies are extending the sales season for the U.S.

    China warns of slower income growth in rural areas (Reuters UK, Apr 15)
    Income growth in rural China will slow this year as farms struggle to absorb millions of workers laid off from factories hit by the global financial crisis, officials said on Wednesday. Despite government efforts to narrow the gap between urban and rural incomes, farmers' incomes -- on average 4,761 yuan last year -- have slipped farther and farther behind those of city dwellers.

    India Benchmarking Saemangeum Reclamation (Korea Times, Apr 16)
    India will model a monumental reclamation plan after the Saemangeum project of coastal reclamation, the centerpiece of which is a 33-kilometer barrage in the West Sea bordering North Jeolla Province. According to a recent India Times report, the state government of Gujarat announced that it will incorporate Korea's technical expertise in implementing the long-pending Kalpasar project, with its essence being the construction of a 34-kilometer dam across the Gulf of Khambat. The project seeks to ease a shortage of electricity in Gujarat, while supplying water for irrigation in drought-prone areas and developing the ports along its coastline. Gujarat experiences drought once every three years, resulting in reduced agricultural productivity and impoverishment.

    Real Estate

    In China, Property Sales Show Signs of Picking Up (Wall Street Journal, Apr 13, 2009)
    China's real-estate market continued to show signs of improvement in March, official data show, with price declines easing and government support measures helping property sales pick up.Analysts said the data contained signs of an early recovery in the property sector, key to revival of the world's third-largest economy. Beijing's 4 trillion yuan ($585 billion) stimulus plan relies mostly on government-led infrastructure investment, but it also is meant to mobilize private-sector investment in sectors such as real estate. "The government measures to improve affordability have had a very big impact," said Michael Klibaner, head of China research at Jones Lang LaSalle, a real-estate- services company. "Between lower interest rates, lower transaction costs and lower down-payment requirements, affordability has improved enough that the number of people that can participate in the market has increased a lot. To us, that means that this recovery can last more than a month or two and will be more sustainable."

    Credai will request govt to remove service tax on rentals (Indian Express, Apr. 15, 2009)
    Confederation of Real Estate Developers' Associations of India (CREDAI) clarified its outlook and vision for the Indian real estate sector, at a press briefing held recently. The veterans of the real estate sector discussed various issues, like 'affordable housing', 'public-private partnership and infrastructure development', 'finance and banking', 'state reforms', 'taxation issues', 'need to educate home buyers', having impact on real estate development in India. Credai will recommend the government to remove service tax on rentals of commercial properties, which ultimately add to the burden on consumers. It also proposes to initiate public-private partnership in low-income housing wherein land bank available with the government may be provided to the developers. Credai intends to form a legal committee, which shall oversee all legal issues pertaining to the real estate sector. The body would pursue the introduction of Value Added Stamp Duty (VAS) for the housing industry, wherein, any stamp duty paid towards the purchase of land will be adjusted from the stamp duty paid at the time of sale of the property.


    Growth in the Making | China will introduce a Growth Enterprise Market to help small innovative businesses ride out the liquidity crisis (Beijing Review, APR. 16, 2009)
    After a 10-year deliberation, China's securities watchdog finally gave a nod to the launch of the long-awaited Growth Enterprise Market (GEM), providing timely relief to small businesses unable to get easy bank loans. Modeled after the U.S. Nasdaq market, the GEM segment is designed to help China build multilevel capital markets and offer a new financing platform for cash-strapped startup and small businesses that show solid growth potential, especially technology companies. Furthermore, the GEM will help address the financing difficulties of small and medium-sized enterprises (SMEs). "The growth board will serve mainly SMEs that cannot meet the qualification requirements for main board listing and provide them a financing channel in order to survive the crisis," said Yao Gang, Vice Chairman of the China Securities Regulatory Commission (CSRC) at a press conference.

    Logistics | Transportation

    No Small Wonder: The Tatas Launch the Nano (India Knowledge@Wharton, APR. 09, 2009)
    On March 23, the day Tata Motors launched the Nano -- its long-awaited small car priced at US$2,000 -- the company's web site crashed. It had received more than 40 million hits in a short span of time and was unable to cope with the traffic. Visitors had come to the site to learn more about what is probably the world's most economical car and to join the queue to buy it. The Nano's introduction comes at a time when things are not going very smoothly for the Tata Group, and Tata Motors in particular. A few days before the launch, Kotak Institutional Equities Research, the domestic brokerage arm of the Kotak Group, reported that the Tatas would end the current financial year Rs. 1 trillion (US$20 billion) in debt. That's a worrisome number, but it is manageable given the cash flow and the resources of the group.

    China Eastern Air Sees No Profit Till 2011;Cuts Capex (The Wall Street Journal, Apr 16)
    China Eastern Airlines Corp. (CEA) said Thursday it expects its losses to narrow significantly this year as it cuts costs, but it doesn't expect a return to profitability until 2011. The Shanghai-based airline said it hopes to reduce costs by at least 15% this year and will slash capital expenditure plans to CNY10.0 billion from CNY12.3 billion in 2008. "We aim to cut back or put off nonessential investments this year that aren't related to our operational and safety requirements," China Eastern's newly-appointed president Ma Xulun told a news conference. China Eastern said Wednesday it swung to a net loss of CNY15.27 billion in 2008, based on Hong Kong accounting standards, due to high fuel costs and weak passenger demand that knocked down revenue by 4%. The carrier hopes to narrow that loss this year, then break even or show a small loss in 2010 before returning into the black in 2011, said Ma. He said the airline hopes to receive more financial support from Beijing, though added that the government thus far has made no commitments.

    Newsletter staff

    International Contributors Editorial Board
    Prashant Das - Co-Editor
    Roxanne Russell - Co-Editor
    Geoff Hiscock - Australia
    Priya Roy- China (Shanghai)
    Harsha Harjani - Hong Kong
    Dr. Nilay Yajnik - India
    Farhad Mirzaei - Iran
    Asha Hemrajani- Singapore
    Melissa Steinmetz - UK
    Dr. Daney Jackson - USA
    Dr. Sudhanva Char - Academic Resources
    Shree Pandya - Engaging Youth
    Laurel Askue - Environment & Conservation
    Christopher Chan - Intellectual Property

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