Archive for the ‘Region: East Asia’ Category

Emerging market ETFs are over 50% concentrated in Asian equities – Market Realist

Wednesday, February 27th, 2013

According to Market Realist’s emerging markets analyst:

The MSCI Emerging Markets Index covers the performance of 817 emerging market stocks across 21 emerging markets. The index covers 85% of each country’s free float adjusted market cap, meaning it takes into account only the publicly available shares, as opposed to the total issued shares. In emerging markets it is common for companies to have low free-float percentages (e.g., in Latin American values as low as 10-15% are observable) as many family owners own a large portion of the outstanding stock, making it unavailable to the general public. Naturally countries with larger more and developed stock markets have larger market capitalizations and larger free-float percentages, and therefore end up having the lion’s share of the index.

The chart below shows the concentration for the top 5 countries in the index. China, South Korea and Taiwan account for 44% of the index. Approximately 10% more is accounted by the remaining Asian countries: Malaysia, Indonesia, Thailand and Philippines. Latin America accounts for c. 20% (driven by Brazil) and Africa for less than 10%. The two main ETFs tracking this index, Vanguard’s Emerging Markets ETF (VMO) and iShares Emerging Markets ETF (EEM) suffer from the same bias.

MSCI states that it frequently revises the composition of the index based “extensive discussions with the investment community”, though South Korea is still part of the index despite it is considered an “advanced economy” by the IMF and CIA, a “high income economy” by the World Bank, and a “developed market” by Dow Jones, FTSE and S&P. Additionally, Taiwan is considered an advanced economy by the IMF. Coincidentally, South Korea and Taiwan make up over 26% of the index.

The graph below shows the share by country grouped by regions for VMO, which closely tracks the MSCI EM Index:

For more information please see the full article link: Emerging market ETFs are over 50% concentrated in Asian equities

Chinese Debtors Offer Fingers to Loan Sharks

Monday, November 7th, 2011

November 7, 2011: Loan sharks have been a problem in the Western World for centuries. From traditional Vegas sharks to payday lenders, the poor have been subject to atrocities by creditors for years, despite government intervention. The situation today is no better for China’s small entrepreneurs. Many businessmen have been forced into bankruptcy recently as local credit has been tightening. Not able to withstand public humiliation, some choose suicide, while others find themselves under the burden of creditors and “tattooed thugs.”

According to a recent Businessweek article, Zhong Mong, a Chinese pharmacy owner, offered his fingers to a group of private lenders because if they repossessed one of his stores, it would be impossible to pay back another 130 small local creditors, many of whom are local friends and neighbors. Zhong had borrowed 30 million yuan or $4.7 million at rates as high as 7% per month to expand his franchise!

Similar to the U.S., small and medium sized businesses account for 80% of jobs in greater China, but these businesses always find it difficult to obtain local bank financing. Other forms of financing are often much more expensive, leading to complications and often default. Since April, at least 90 CEOs have fled Zhong’s city of Wenzhou for the same reason. The 400,000 businesses in the city are facing higher costs because of inflation and soaring black market interest rates because of the sudden credit squeeze. Imagine how fast a business must grow to pay Zhong’s 7% monthly interest…

Black market interest rates have doubled this year, growing faster than local profits. Informal lending has given rise to real estate developers driving prices ever higher, leading to more inflation. Similar problems have also surfaced in the industrial province of Guangdong, to the South.

Wenzhou is home to 9 million Chinese and produces 90% of China’s eyeglasses and lighters. Many residents of Wenzhou take out bank loans at 1% per month and lend out money at 2%+ per month, pocketing the difference. China’s official lending rate is only 6.56%, compared to rates between 20-40% that small businesses are charged here.

Local suicides have prompted Premier Wen to visit the city and pledge to raise bonds to help finance smaller businesses, even if NPLs are higher. Unfortunately for Zhong, it may be too late. He will probably lose his business and will be hired as a paid manager. He and his wife will probably have nothing left.

Oil Should Spike Higher Following Saudi Riots and Nigerian Elections in April – Report Attached

Thursday, March 10th, 2011

The following special report on oil (LA Blog Only, discusses the oil market, providing reasons to be bullish  on the commodity given unrest in the Middle East, Nigerian elections in April, and rising domestic consumption in oil producing countries, including Venezuela, Nigeria, and Iran.  According to the article, the rise of oil prices could easily cause the next recession.   In 2010, soft commodities outperformed energy, but that will certainly change given the political headwinds abroad and continued monetary easing in the developed world.  Therefore, the Bernanke “Put,” combined with political unrest will be to blame for continued sharp price increases in the energy commodity sector.

Emerging market demand, especially in China, which now consumes nearly 10mm barrels of oil per day, will also be driving the demand side of the equation.  Money supply in China was also up 19.7% in 2010, because of the rapid credit growth the country has experienced over the past 2 years.

On the supply side, Middle Eastern youth continue to riot, causing political unrest across the globe.  In Egypt, Libya, Morocco, Saudi Arabia, Tunisia, and Bahrain, youth unemployment is over 20%, which is a severe concern, given the oil wealth of these nations.  The Iran crisis could also re-emerge as the country continues to develop nuclear weapons.  As Iran is mostly Shiite, it poses a great threat to its Sunni neighbors, including Saudi Arabia.  Major risks in the area include that the Straights of Hormuz and Malacca could be blocked in the Middle East if major riots break out.  These two passages account for 32 million barrels of crude transport per day.  The Straight of Hormuz alone carries 33% of oil transport by sea.  Furthermore, one should question how much Saudi Arabia can increase supply, as the country overstated its oil reserves by nearly 300 billion gallons in 2010.  Even if it does increase supply, how will this supply be transported to the West if passages are blocked?

There has not been one year in recent history where Nigerian elections have not posed a threat to the country’s oil supply.  Elections are often bloody, and there is no reason for the upcoming 2011 elections being held in April to be different.

To make things worse, the IEA increased its oil demand forecast by 1.6%.

On December 6th, Brent futures were traded in backwardation for the first time in two years, which means that futures with shorter maturities are more expensive than those with longer maturities (similar to an inverse yield curve).  Backwardation occurs in tight markets, whereas contango occurs when there is oversupply.

What will be the effect of these changes in the oil supply/demand equation?  Well, an increase in oil price tends to affect the economy with a time lag of at least 4-6 months.  An increase an oil price of $10 would cause GDP to fall by 25 bps and S&P earnings to fall by $3.00.

According to the IEA, 4.1% of GDP was spent on oil consumption in 2010.  A sustained price above $100 would mean that the percentage would increase to 5%.  Oil at $120 would mean a percentage increase to 6%, which would be devastating.

Special Report Oil March 2011

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Nomura Hires First Female CEO – Junko Nakagawa

Thursday, March 10th, 2011

September 2011: According to BBC News, Nomura made a very bold move this week by appointing its first female CEO.  Junko Nakagawa joined Nomura Securities Co. in 1988, working at its underwriting and finance divisions before leaving the company in 2004.  This could start a trend in upward mobility for women in the investment banking field:

Japan’s largest brokerage house, Nomura, has appointed its first female chief financial officer in an unusual move for a top Japanese company. Junko Nakagawa will take up her position on 1 April. Nomura also announced the promotion of Jesse Bhattal to deputy president of the firm’s wholesale banking division. The move is part of a wider effort by some big Japanese companies to offer roles to foreigners to help them move into overseas markets, analysts said. “We have not named Ms Nakagawa as chief financial officer because she is a woman but because she has the capacity to do this job and assume the responsibilities,” Nomura said. “That said, we think is good to encourage diversity in our business.” The promotion is an unusual move in Japan where senior business positions are generally filled by men. “It is rare for a Japanese financial institution to give this type of promotion to a woman,” said Azuma Ohno at Credit Suisse in Tokyo.“It’s an impressive move.”

Most Common Face in the World – National Geographic

Thursday, March 3rd, 2011

National Geographic Magazine released a video clip, below, showing the most “typical” human face on the planet as part of its series on the human race called “Population 7 billion.”

The researchers conclude that a male, 28-year-old Han Chinese man is the most typical person on the planet. There are 900 million of them.  No wonder I see so many on Wall Street.  The Chinese are showing prowess both at home and abroad!

The image above is a composite of nearly 200,000 photos of men who fit that description.

Don’t get used to the results, however. Within 20 years, the most typical person will reside in India.

A similar resource exists for the most common female faces in the world. According to UK Daily mail, these are the average faces of women from 24 different nations, all quite beautiful. Observations here include that Peruvians and Iranians have bigger mouths, Ethiopians and Samoans have curlier hair, and fringes seem to be big in Latvia and Poland.

Some anomalies can be explained by how the pictures were compiled. The prevalence of mousy hair is a result of blondeness being easily ‘diluted’.

South African Photographer Mike Mike – who inspired the images with a web project called The Face of Tomorrow compiling the faces of various cities – explains: ‘Blonde hair gets lost pretty quickly when you start averaging.

‘You’d need a population 75 per cent blonde to get it visibly remaining. You’d probably have to go to Iceland for that result.’ Please see their pictures below:

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Moody’s Cuts Japanese Debt Outlook to Negative

Wednesday, February 23rd, 2011

Japanese Prime Minister, Naoto Kan, has been working to garner lawmakers’ support for measures to reduce national debt, including possible sales tax increases. Prime Minister Kan must work to persuade legislators to back his budget related bills, which include plans for financing the national budget with increased sales taxes. Yoshimasa Maruyama, a senior economist at Itochu Corporation in Tokyo commented on the national debt crisis, stating, “Japan can’t sustain its borrowing needs without real tax hikes. The more the government delays this, the more its debt burden’s going to swell. We’re running out of time.”  This political impasse will continue to strain efforts to control the country’s debt, which is currently predicted to surpass twice the size of the economy this year, and will reach up to 210 percent of gross domestic product by 2012 – compared to an estimated 101 percent for the United States.  This marks the biggest debt burden held by any country and the highest percent of GDP of all the countries tracked by the Organization for Economic Cooperation and Development.

Moody’s Investors Service, a credit rating agency which performs international financial research and risk analysis on commercial and government entities, lowered Japan’s debt rating outlook from stable to negative. Moody’s stated that they believed Japan’s economic and fiscal policies “may not prove strong enough to achieve the government’s deficit reduction target and contain the inexorable rise in debt.” Along with Moody’s Investors Service, Standard & Poor’s lowered its rating stating that the Japanese government did not have a  “coherent strategy” for addressing the current debt situation. The decrease in rating had lowered the nation’s rating to AA-, comparable to China.

Japan’s debt rating outlook was lowered to negative from stable by Moody’s Investors Service on concern that political gridlock will constrain efforts to tackle the biggest debt burden of any nation.

Economic and fiscal policies “may not prove strong enough to achieve the government’s deficit reduction target and contain the inexorable rise in debt,” Moody’s said in a statement today. The rating is Aa2, the company’s third highest. Standard & Poor’s cut its rating last month to fourth highest.

Today’s move adds pressure on Prime Minister Naoto Kan as his public approval rating slides and he struggles to secure lawmakers’ support for measures to reduce debt, including a possible sales-tax increase. Japanese shares accelerated declines after the announcement and amid tensions in the Middle East. The Nikkei 225 Stock Average slid 1.8 percent today.

“Politicians will take today’s announcement as a warning sign, but their biggest priority right now isn’t Japan’s fiscal health — it’s maintaining their seats in parliament,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. “Japan can’t sustain its borrowing needs without real tax hikes. The more the government delays this, the more its debt burden’s going to swell. We’re running out of time.”

The risks to Japan’s credit rating are “predominantly on the downside,” Thomas Byrne, senior vice president at Moody’s, said at a Tokyo news conference today.

Financing Budget

The dollar traded at 83.10 yen as of 5:38 p.m. in Tokyo compared with 83.14 in New York yesterday.

Finance Minister Yoshihiko Noda told reporters he won’t comment on decisions by private rating companies. Japan needs to maintain fiscal discipline and push ahead with efforts to make its finances healthy, Chief Cabinet Secretary Yukio Edano said at a regular news conference today.

Moody’s also lowered the credit-rating outlook for Japan’s three largest banks to negative from stable, saying “the government debt rating is a key input into the supported senior unsecured ratings for the Japanese banks.” The change relates to long-term debt at the banking units of Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc.

The cut by Standard & Poor’s last month was the company’s first in nine years for Japan and reduced the nation’s rating to AA-, on a par with China.

Political Opposition

Kan’s task of securing legislation to finance the national budget for the year starting April 1 is more difficult because the opposition controls the upper house of parliament. Sixteen lawmakers in his party last week vowed to oppose a plan to increase the sales tax, further complicating his efforts to pass the budget-related bills.

The prime minister’s public approval rating fell to 20 percent in an Asahi newspaper survey taken Feb. 19-20, down 6 percentage points from January and the lowest since he took office in June, the paper reported yesterday.

There is “increasing uncertainty over the ability of the ruling and opposition parties to fashion an effective policy reform response to the debt and growth challenges,” Moody’s said in today’s statement.

Fitch Affirms Rating

Fitch Ratings affirmed its AA- rating for Japan, with a stable outlook, in an e-mailed statement today.

Japan’s gross domestic product contracted in the fourth quarter and the nation was overtaken last year by China as the second-biggest economy.

The nation faces “chronic deflationary pressures” and can’t grow its way out of debt, making fiscal adjustments essential for mending its finances, Moody’s said. At the same time, Japan’s large economy and deep financial markets can help the nation withstand shocks and the ratings company doesn’t see any funding crisis “in the near- to medium-term.”

A downgrade could be triggered by a failure to push through tax reform, a swing to a current-account deficit, or a drop in household savings cutting the domestic appetite for government debt, Moody’s indicated.

While Moody’s could keep Japan’s Aa2 rating, “the risks are predominantly on the downside unless there are very good results for the tax reform program and also good results for the government’s efforts to revitalize economic growth,” Byrne said.

Japan’s public debt is set to exceed twice the size of the economy this year and reach 210 percent of gross domestic product in 2012, the highest among countries tracked by the Organization for Economic Cooperation and Development, compared with an estimated 101 percent for the U.S.

The debt will probably swell to 997.7 trillion yen ($12 trillion) in the year starting April 1, Japan’s Finance Ministry said last month. When Standard & Poor’s lowered its rating, the company said the government lacks a “coherent strategy” for tackling the debt.

Aziz Premji Foundation Works to Revolutionize Indian Education

Wednesday, February 23rd, 2011

Aziz Premji, an Indian business tycoon, started his non-profit, Azim Premji Foundation, in 2001 with his own financial assets. The foundation’s main goal is to provide quality universal education in India. The initial focus has been on revolutionizing the public school education system. The new approach encourages students to be more creative when learning; writing stories and conducting independent projects, rather than mindless memorization and stressful year end exams that many children fail. Most students drop out before they reach tenth grade. India has a literacy rate of only 64%, quiet different from China, whose government focus on education has effectuated a literacy rate of 94%. Premji hopes to cause maximum impact by providing help and support to public schools around the country, giving his foundation $2 billion worth of shares in his company. The shares will be used to set up a university in Bangalore, and help spread the new program to 50 of India’s 626 school districts.

PANTNAGAR, India — The Nagla elementary school in this north Indian town looks like many other rundown government schools. Sweater-clad children sit on burlap sheets laid in rows on cold concrete floors. Lunch is prepared out back on a fire of burning twigs and branches.

But the classrooms of Nagla are a laboratory for an educational approach unusual for an Indian public school. Rather than being drilled and tested on reproducing passages from textbooks, students write their own stories. And they pursue independent projects — as when fifth-grade students recently interviewed organizers of religious festivals and then made written and oral presentations.

That might seem commonplace in American or European schools. But such activities are revolutionary in India, where public school students have long been drilled on memorizing facts and regurgitating them in stressful year-end exams that many children fail.

Nagla and 1,500 other schools in this Indian state, Uttarakhand, are part of a five-year-old project to improve Indian primary education that is being paid for by one of the country’s richest men, Azim H. Premji, chairman of the information technology giant Wipro. Education experts at his Azim Premji Foundation are helping to train new teachers and guide current teachers in overhauling the way students are taught and tested at government schools.

For Mr. Premji, 65, there can be no higher priority if India is to fulfill its potential as an emerging economic giant. Because the Indian population is so youthful — nearly 500 million people, or 45 percent of the country’s total, are 19 or younger — improving the education system is one of the country’s most pressing challenges.

“The bright students rise to the top, which they do anywhere in any system,” Mr. Premji said over lunch at Wipro’s headquarters in Bangalore, 1,300 miles south of Uttarakhand. “The people who are underprivileged are not articulate, less self-confident, they slip further. They slip much further. You compound a problem of people who are handicapped socially.”

Outside of India, many may consider the country a wellspring of highly educated professionals, thanks to the many doctors and engineers who have moved to the West. And the legions of bright, English-speaking call-center employees may seem to represent, to many Western consumers, the cheerful voice of modern India.

But within India, there is widespread recognition that the country has not invested enough in education, especially at the primary and secondary levels.

In the last five years, government spending on education has risen sharply — to $83 billion last year, up from less than half that level before. Schools now offer free lunches, which has helped raise enrollments to more than 90 percent of children.

But most Indian schools still perform poorly. Barely half of fifth-grade students can read simple texts in their language of study, according to a survey of 13,000 rural schools by Pratham, a nonprofit education group. And only about one-third of fifth graders can perform simple division problems in arithmetic. Most students drop out before they reach the 10th grade.

Those statistics stand in stark contrast to China, where a government focus on education has achieved a literacy rate of 94 percent of the population, compared with 64 percent in India.

Mr. Premji said he hoped his foundation would eventually make a difference for tens of millions of children by focusing on critical educational areas like exams, curriculum and teacher training. He said he wanted to reach many more children than he could by opening private schools — the approach taken by many other wealthy Indians.

Mr. Premji, whose total wealth Forbes magazine has put at $18 billion, recently gave the foundation $2 billion worth of shares in his company. And he said that he expected to give more in the future.

Those newly donated shares are being used to start an education-focused university in Bangalore and to expand and spread programs like the one here in Uttarakhand and a handful of other places to reach 50 of India’s 626 school districts.

The effort’s size and scope is unprecedented for a private initiative in India, philanthropy experts say. Even though India’s recent rapid growth has helped dozens of tycoons acquire billions of dollars in wealth, few have pledged such a large sum to a social cause.

“This has never been attempted before, either by a foundation or a for-profit group,” said Jayant Sinha, who heads the Indian office of Omidyar Network, the philanthropic investment firm set up by the eBay founder Pierre Omidyar.

Although the results in Uttarakhand are promising, they also suggest that progress will be slow. Average test scores in one of the two districts where the foundation operates climbed to 54 percent in 2008, up from 37.4 percent two years earlier. (A passing mark is 33 percent or higher.) Still, only 20 of the 1,500 schools that the foundation works with in Uttarakhand have managed to reach a basic standard of learning as determined by competence tests, enrollment and attendance. Nagla is not one of the 20.

“We are working with the kids who were neglected before,” said D. N. Bhatt, a district education coordinator for the Uttarakhand state government. “You won’t see the impact right away.”

The Premji Foundation helps schools in states where the government has invited its participation — a choice that some educational experts criticize because it seems to ignore fast-growing private schools that teach about a quarter of the country’s students, including many of India’s poor.

Narayana Murthy, a friend of Mr. Premji and chairman of Infosys, a company that competes with Wipro, said he admired the Premji Foundation’s work but worried it would be undermined by the way India administers its schools.

“While I salute Azim for what he is doing,” Mr. Murthy said, “in order to reap the dividends of that munificence and good work, we have to improve our governance.”

Mr. Premji says his foundation would be willing to work with private schools. But he argues that government schools need help more because they are often the last or only resort for India’s poorest and least educated families.

Mr. Premji, whose bright white hair distinguishes him in a crowd, comes from a relatively privileged background. He studied at a Jesuit school, St. Mary’s, in Mumbai and earned an electrical engineering degree at Stanford.

At 21, when his father died, Mr. Premji took over his family’s cooking oil business, then known as Western Indian Vegetable Product. He steered the company into information technology and Wipro — whose services include writing software and managing computer systems — now employs more than 100,000 people. He remains Wipro’s largest shareholder.

While the foundation has been welcomed by government officials in many places, the schools in Uttarakhand provide a glimpse of the challenges it faces.

After visitors left a classroom at Nagla school, an instructor began leading more than 50 fifth-grade students in a purely rote English lesson, instructing the students to repeat simple phrases: Good morning. Good afternoon. Good evening. Good night. The children loudly chanted them back in unison.

Another teacher later explained that the instructor was one of two “community teachers” — local women hired by a shopkeeper to help the understaffed school. Although under government rules Nagla should have nine trained teachers for its 340 students, it has only four.

Underfunding is pervasive in the district. But so are glimmers of the educational benefits that might come through efforts like the Premji Foundation’s.

Surjeet Chakrovarty, now a 15-year-old secondary school student, is a graduate of Nagla and still visits his old school regularly. The son of a widower who is a sweeper at a local university, Surjeet aspires to become a poet and songwriter — something he attributes to the encouragement of his former teachers at Nagla.

“My teachers here gave me so much motivation to write,” he said.

One of those Nagla teachers, Pradeep Pandey, shared credit with the Premji Foundation, and its assistance in developing new written and oral tests.

“Before, we had a clear idea of the answers and the child had to repeat exactly what we had in mind,” Mr. Pandey said. “We can’t keep doing what we did in the past, and pass them without letting them learn anything.”

China’s Renminbi Heads for Floating Exchange Rate

Saturday, January 15th, 2011

It was announced earlier this week that China has launched its Yuan for free trade in the open market. China has managed to keep the value of the Yuan, also know as the Renminbi, at a depreciated value, which some analysts argue is undervalued by up to 40%. The Bank of China’s decision to move towards a floating exchange rate, though still tightly controlled, offers hope to those who believe China’s weak currency policy is the root cause of the global economic imbalance. The gradual inflation of the Renminbi may help take away China’s disproportionate advantage in export goods and bring jobs back to the US.

Call it liberalization by a thousand cuts.


The Bank of China, one of the country’s main state-owned lenders, is now allowing American firms to trade in renminbi, another step in China’s effort to position the renminbi on the world stage.


In July, China started a renminbi settlement system for cross-border trade in Hong Kong, but it placed limits on how much currency could be exchanged.


Currency trading in the renminbi was already possible at other banks, but the move by a state-owned lender signals a shift in official policy.


The Chinese central bank bowed to international pressure last summer and agreed to make its currency more flexible; the renminbi is now allowed to move as much as 0.5 percent each day. At the same time, the country is cautiously pursuing a strategy of making the renminbi into an international exchange currency.


“China sees the global financial system as too U.S.-centric and dollar dependent,”’ said Robert Minikin, senior currency strategist at Standard Chartered in Hong Kong. “That created issues during the financial crisis.”


Now, he said, the country is trying to take a step away from that dependence. “Conditions are in place for sustained yuan appreciation against the U.S. dollar,’’ he said, predicting that it would increase by 6 percent this year, to 6.20 renminbi per dollar.


With a forecast for high inflation in the expanding Chinese economy, an appreciating currency could help the country dampen so-called imported inflation by making foreign goods less expensive.


With the Bank of China move, China is promoting the renminbi to Americans at a time when loose monetary policy on the part of the United States Federal Reserve has some concerned that the dollar’s value will continue to decline.


The Bank of China said in an announcement on the Web site of its New York branch that trading firms and individuals could now open accounts in renminbi, buying the currency from and selling it to the bank.


While the limits on personal accounts are $4,000 a day and $20,000 a year worth of renminbi, and those accounts are largely for the purposes of exchange and remittance, the bank is also soliciting business from trading firms.


China’s decision to keep the renminbi effectively pegged against the dollar at an exchange rate that favors its exports has long been a source of contention between Washington and Beijing. China’s trade surplus with the United States was $181 billion last year, a 26 percent increase from the previous year, The imbalance is likely to put further pressure on the exchange rate.


That said, the renminbi hit a new high of 6.6128 against the dollar on Wednesday, an auspicious prelude to a visit to Washington next week by China’s president, Hu Jintao.


Separately, the city of Shanghai said it was creating a new investment window, allowing qualified private equity firms to buy renminbi and invest in mainland companies. Reuters reported that the pilot project could grow to be worth $3 billion.

China Censorship Laws Go Overboard, Ongoing Dispute with Google, Inc.

Sunday, May 9th, 2010

China’s “Great Firewall” has been around for too long.  It blocks websites for various sensitive topics and has been forcing U.S. based Google to abide by its censorship laws.   Many believe that the views of the Chinese government with respect to censorship  should be reassessed, especially after the country’s recent altercation with Google over what began as a mining incident in Vietnam (more details below).

The country screens through thousands of blogs and articles a day to hide literature regarding democracy, the treatment of the Dalai Lama, and other topics.

Officials now require a photo ID to create a domestic website.  The influence of online media is greater than ever, as internet users in the country have jumped from 30 million to over 400 million from 2000 to 2009.

According to the NYT, “Google, fresh off a dispute with China over censorship and intrusion from hackers, says it has identified cyber-attacks aimed at silencing critics of a controversial, Chinese-backed bauxite mining project in Vietnam.

In attacks it described as similar to but less sophisticated than those at the core of its spat with China, Google said malicious software was used to infect “potentially tens of thousands of computers,” broadly targeting Vietnamese speaking computer users around the world.

Infected machines had been used to spy on their owners and to attack blogs containing messages of political dissent, wrote Neel Mehta of the company’s security team in a post late Tuesday on Google’s online security blog.

McAfee, the computer security firm, said in a separate blog posting that it believed “the perpetrators may have political motivations and may have some allegiance to the government of the Socialist Republic of Vietnam.”

It added: “This incident underscores that not every attack is motivated by data theft or money. This is likely the latest example of hacktivism and politically motivated cyberattacks, which are on the rise.”

Google said that while the malware itself was not especially sophisticated, “it has nonetheless been used for damaging purposes.”

“Specifically, these attacks have tried to squelch opposition to bauxite mining efforts in Vietnam, an important and emotionally charged issue in the country.”

Bauxite is a key mineral in making aluminum and one of Vietnam’s most valuable natural resources. Plans by the Vietnamese government to exploit bauxite in the Central Highlands region, in partnership with a Chinese state-run company, have generated much local criticism, including from a well-known war hero, Gen. Vo Nguyen Giap.

General Giap and other opponents say the project will be ruinous to the environment, displace ethnic minority populations and threaten the south-east Asian country’s national security with an influx of Chinese workers and economic leverage.

The role of China in the bauxite project also has stirred up anger in a nation that still fears its bigger neighbor: Vietnam was a tributary state of China for 1,000 years and was invaded by China in 1979, and the two countries continue to joust for sovereignty in the South China Sea. ”

Australian Super Tax on Resource Producers Could Slow Down Commodities: Traders Wary

Sunday, May 9th, 2010

Australia is the largest supplier of coal and iron ore to developing nations such as China.  Government officials have been watching for the past five years as their resources have been exported to these ever-growing nations.    A resource tax was recently imposed on the largest Australian exporters of raw materials, so that Australian could benefit from the exploitation of their resources.  Unfortunately, this tax is both too high and comes at the worse time, as the western world begins to recover from the deepest recession since the 1930s.  Commodities producers have already halted projects in Australia in shock.  Talk about bad timing…as Greece falls into an abyss, other nations impose taxes to cut down production.

According to Ms. Daley of Bloomberg, “Australia will impose a 40 percent tax on the profits of resource companies like BHP Billiton Ltd. and Rio Tinto Group to pay for infrastructure, retirement and company levy changes as part of the broadest overhaul of its tax system since the Second World War.

The government, commenting on Treasury Secretary Ken Henry’s 10-year tax plan, said the tax would start in 2012 and raise A$12 billion ($11.1 billion) in the first two years. The move to better tap into the nation’s mining boom, fueled by commodities demand from China and India, comes as Prime Minister Kevin Rudd prepares for an election later this year.

“This will use super profits on resources owned by all Australians,” Rudd told reporters in Canberra, saying he’s prepared for a backlash to the measures. “This will help convert Australia’s strong economic position today into enduring prosperity.”

The changes set up a potential clash between Rudd and resources companies that make up 9 percent of the economy and last week warned that a 40 percent levy and double taxation with state royalties would threaten $108 billion worth of planned investment.

“If implemented, these proposals seriously threaten Australia’s competitiveness, jeopardize future investments and will adversely impact the future wealth and standard of living of all Australians,” BHP’s Chief Executive Officer Marius Kloppers said in an e-mailed statement today. The company’s effective tax rate will increase to 57 percent from 2013 from 43 percent now on its Australian earnings, it said.

Profit Cut

BHP, the world’s biggest mining company with 51 percent of its assets in Australia, will have earnings cut by 19 percent as a result of the tax, Merrill Lynch & Co. said in an April 27 report on the 40 percent tax. Rio, the world’s second-largest iron ore exporter, which has about a third of its assets in Australia, would see a 30 percent earnings cut.

The proposal may erode Australia’s “competitiveness, severely curtail investment and limit job growth,” said David Peever, Rio’s managing director for Australia.

“Altering the rules for existing multibillion dollar projects in mid stream, after large amounts of capital have already been put at risk over many years, would be the worst possible message Australia could send to investors,” Peever said in a statement.

The government today said it will compensate companies for the state royalties they have paid.

‘Highest’ Taxes

“Under the plan announced today, Australia will have the highest taxed mining industry in the world,” Minerals Council of Australia Chief Executive Officer Mitch Hooke said in an e- mailed statement. “Australia’s hard-earned reputation as a stable investment environment will be dramatically undermined.”

The government runs the risk of “taking away from Australia the strongest industry we have and the one that saved us from the global financial crisis,” said Keith De Lacy, chairman of Brisbane-based Macarthur Coal Ltd., the world’s largest producer of pulverized coal. “Always 50 percent of our net profits went into development and exploration and so much of that is going now so obviously we’ll grow slower.”

The introduction of the resource tax would cut Australia’s competitiveness, Citigroup Inc. said on April 28 before the release of the review. Mining companies’ tax burden currently stands at 35 percent, Citigroup said in its report last week.

Chinese and Indian demand for resources from Australia, the world’s biggest exporter of coal, iron ore and alumina, helped the A$1.2 trillion economy skirt recession during the global financial crisis. China is the nation’s largest resource customer.

Aging Population

Rudd’s Labor government, which has led the opposition Liberal-National coalition in opinion polls, commissioned the tax review two years ago to create a simpler and fairer system to meet the needs of a growing and aging population. One quarter of a projected population of 36 million will be aged 65 and over by 2050, increasing pressure on roads, rail, ports, schools and hospitals.

The government will use the resource tax revenue to create a A$5.6 billion infrastructure fund, cut company taxes to 28 percent in mid-2014 from the current 30 percent and boost retirement funds, now worth A$1.3 trillion. It will also give a tax concession for resource exploration, including geothermal, affecting 4,300 companies, Treasurer Wayne Swan said.

The company tax rate, reduced to 30 percent from 36 percent by the previous Liberal-National government, will be cut to 28 percent by mid-2014, with 720,000 small businesses getting a one-year head-start. The government may decrease the rate further.

Retirement Funds

The government will also increase the amount companies have to pay into people’s retirement fund to 12 percent from 9 percent of their gross salary in mid-2019. Australia will also make it more attractive for some 8.4 million Australian workers to increase their own contributions to the pool and the changes will add A$85 billion to the A$1.34 trillion fund, Swan said.

In total, the government’s tax policy changes will add 0.7 percent a year to the nation’s economy.

Economic growth in Australia will accelerate to 3.5 percent in 2011 from 3 percent this year, and the country will continue to be among nations leading the world on raising borrowing costs, the International Monetary Fund said on April 21. Glenn Stevens, the first Group of 20 central bank governor to raise rates after the global recession, also expects Australia’s economic growth to strengthen this year.”