Posts Tagged ‘red tape’

Tariffs Aren’t China’s Strongest Weapon Against the U.S. — American companies in China could be in for trouble

July 2, 2018
As Beijing works out how to retaliate against the Trump administration’s trade policies, it can draw on a long tradition of bureaucratic obstruction. The biggest loser will probably be American multinationals in China. Those that sell easily replaceable goods and services could lose market share in a hurry.
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Image result for china's flag, photos

Chinese officials love to brag about their civilization’s 5,000 years of history. More pertinent these days is the country’s 5,000 years of bureaucracy.

As Beijing works out how to retaliate against the Trump administration’s trade policies, it can draw on a long tradition of bureaucratic obstruction. The biggest loser will probably be American multinationals in China. Those that sell easily replaceable goods and services could lose market share in a hurry.

Mr. Trump often asserts that the U.S. will win any trade conflict because China, with its $300 billion trade surplus, has more to lose. That might be true if the conflict was to remain confined to exports. But it ignores the billions of dollars worth of sales made by U.S.-invested companies in China—about nine times the amount that their Chinese-invested counterparts make in the U.S., according to consultancy Gavekal Dragonomics.

Sure, Beijing may be unwilling to mess too much with companies like Apple, whose supply chains employ so many Chinese workers. That may be less true in cases where U.S. companies engage in businesses with a ready substitute. Chinese leader Xi Jinping recently hinted that European and Asian conglomerates might soon find themselves benefiting as China punches back against the U.S.

Chinese President Xi Jinping in Beijing on June 21. He recently responded to the Trump administration’s trade-clash escalations with a bare-knuckle approach.
Chinese President Xi Jinping in Beijing on June 21. He recently responded to the Trump administration’s trade-clash escalations with a bare-knuckle approach. PHOTO: ANDY WONG/AGENCE FRANCE-PRESSE/GETTY IMAGES
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In turn, that means American firms in China could soon find their new product models at the bottom of the regulatory pile for things like safety approvals, or their state-owned Chinese partners might shift resources toward European joint ventures instead.

China has a history of this sort of bureaucratic malfeasance, with its consumers often helping out. During a dispute with Japan over contested islands in 2012, Japanese car makers’ Chinese market share dropped nearly 10% in a matter of months. And when Beijing tussled with South Korea over hosting U.S. missile defense technology, it simply banned sales of packaged group tours to Korea.

This time around, it might suddenly become inadvisable for employees at state-owned or important private businesses to drive American cars, flaunt new iPhones or take holidays in the states as officials heed Mr. Xi’s words. U.S. auto sales in China look likely to come under particular pressure—a big problem for companies like General Motors, which now sells more vehicles through its China joint ventures than in the U.S. The travel sector could suffer too: Chinese people spent $18 billion on U.S. travel in 2016, about twice as much as Japanese visitors.

Consumer goods and entertainment also look vulnerable. Starbucks ’ aggressive expansion plans in China could face renewed obstacles. Hollywood could find China’s notorious summer “blackout” periods for foreign films extended.

Mr. Trump’s trade agenda may have certain U.S. industries—like steel—flashing smiles. American companies operating in China, though, can expect to lose a few teeth.

Write to Nathaniel Taplin at nathaniel.taplin@wsj.com

https://www.wsj.com/articles/tariffs-arent-chinas-strongest-weapon-against-the-u-s-1530497088

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NATO in Europe needs ‘military Schengen’ to rival Russian mobility

September 13, 2017

NATO has reformed its military capabilities to be able to deploy forces much more quickly. But could leftover Cold War bureaucracy prevent a rapid response? NATO General Ben Hodges told DW he wants a “military Schengen.”

US-General Frederick B. Hodges (picture-alliance/dpa/V. Kalnina)

With an unverifiable number of Russian soldiers preparing to practice war against fictional Western countries in so-called “Zapad” exercises, the US general in charge of the US military in Europe, Ben Hodges, recently spoke with DW about the differences between his ability to summon forces quickly and that of Russian President Vladimir Putin.

“[Putin] is able to move a lot of stuff real fast which is what got my attention and made me start thinking, how do we achieve at least the same speed that he has,” Hodges explained. PreviousZapad drills, which are held every four years, honed the Russian ability to launch the massive “snap exercises” seen ahead of the invasion of Crimea in 2014, and earlier, the aggression against Georgia in 2008.

Read more:Things to know about international military exercises

When Hodges, on the other hand, wants to move tanks or other heavy vehicles and weaponry across Europe, he needs to stop at every national – sometimes regional – border and deal with unique controls.

Troops jump out of helicopter during Zapad in 2013 (picture-alliance/dpa/A.Druginyn)Zapad 2013 ended with a mock nuclear strike against Sweden, NATO says.

“I think most people would be astounded to find out what we have to do,” he said, “to submit a list of all the vehicles, the drivers, what’s in every truck – which they don’t do with gigantic commercial trucks moving back and forth across borders.”

He says in many European countries, it takes weeks to get the permission to move through. In Germany every state requires its own procedure.

NATO hampered by red tape

It means, Hodges fears, that it wouldn’t matter if NATO’s new “very high readiness task force” were at “very very very very” high readiness to be deployed for a crisis – it simply couldn’t slog through the red tape fast enough to effectively counter an acute threat anywhere on its periphery.

Read more: Zapad games – what does Russia want?

NATO’s Supreme Allied Commander Europe (SACEUR), the alliance’s top military executive, does have some enhanced powers to speed up the process if the threat is urgent enough, but that wouldn’t circumvent national rules and it doesn’t by any means bring the continent up to what could be considered a “military Schengen zone.”

That’s the catch-phrase used to describe what Hodges would like to see Europe do for military travel, to bring down border bureaucracy to something emulating the visa-free system agreed to by 22 European Union states along with four other European countries.

NATO doesn’t use the term “military Schengen zone” because it feels that excludes allies that are not part of Schengen. The Baltic states, which are on the potential frontline of any Russian overstep, are backing Hodges’ call.

But even a reduction in border bureaucracy wouldn’t be enough; there are many unresolved questions about issues as diverse as how resources at, for example, Deutsche Bahn could be shared or how much weight and width some of Europe’s old roadways could withstand.

Hodges feels Europeans have not adequately considered the limitations they are allowing to exist. He wants a procedure created Europe-wide that would grant NATO movements within 48 hours.

Soldiers sitting on tank (picture-alliance/dpa/M. Bielecki/PAP)The waiting game – red tape affects NATO troop movements

One military official from a NATO country who declined to be identified agreed with Hodges that the current system is untenable. “It’s not out of the ordinary that another country wants to know where you are and where you will be and they will want to give you certain routes through the country,” the official explained.

“But at the moment it just takes way too long. It will never be like the real Schengen area where you just enter another country obviously, because you are carrying dangerous goods or things like that,  but it can be much much much simpler which will allow us to deploy more rapidly.”

Dutch demand NATO-EU cooperate

The Dutch government has taken the first public step toward demanding changes.  In June, Dutch Defense Minister Jeanine Hennis-Plasschaert wrote to both NATO Secretary General Jens Stoltenberg and EU High Representative Federica Mogherini insisting the “obstacles to cross-border military transport in Europe must disappear”.

Hennis-Plasschaert urges NATO and the EU to step up cooperation on this matter. “The alliance has expertise and experience in military transport, while the EU has jurisdiction in customs matters and the transport of hazardous substances,” she wrote.

The European Defense Agency (EDA), which coordinates the EU’s defense cooperation, has been tasked with taking the lead on this and things are finally moving with more haste.

An EDA official, who spoke with DW on the condition of anonymity, explained the agency has asked EU governments to formally identify where the holdups are within their own territory, be it crumbling roads or 10-day waits for permission. Next year the EDA aims to produce a report, drawing in both NATO and EU authorities. The Dutch ambition is to actually have the problems “resolved” within a year, though EDA is not committing to a strict timeline.

Hodges: 48-hour maximum delay

One of those solutions crafted by EDA is expected to be, as Hodges desires, a standardized form used by all European countries for granting permission for military transport quickly – not quickly by the standards Putin enjoys to move rapidly across Russia, but certainly more rapidly than Europe’s situation today.

The military official acknowledges perhaps this should have happened earlier along with other enhancements NATO has made, but explains that it just hasn’t been treated as a priority. But now, he says, it’s time to “do the homework”.

“Basically we’ve already enhanced the NATO response force, saying…at least the spearhead of the force can deploy within a couple of days,” he said. “We’re doing that because of Russia’s change in posture. [What] we’re doing now is to make sure that we can actually do it in every situation.”

http://www.dw.com/en/nato-in-europe-needs-military-schengen-to-rival-russian-mobility/a-40470302

Why can’t Indians gain possession of the homes they own?

April 6, 2017

Corruption, tax dodging and land disputes are big problems hampering India’s property market.

  • 6 April 2017
    BBC News
  • From the sectionBusiness

Chinese government launches fact-finding mission to boost private investments amid economic slowdown — Investment from the private sector down 50 percen

May 29, 2016

Chinese economy is “stuck on stupid”

By Wendy Wo
South China Morning Post

Amid an ailing economy, the State Council sends high-level teams to 18 regions to get on-the-ground feel of how policies are being implemented

 

The mainland government has launched a high-profile mission to remedy sluggish private investment amid the ailing economy and the slow progress of reforms, but the impact could be limited, economists warn.

The State Council has sent nine teams to 18 regions, including Guangdong, Zhejiang (浙江), Jiangsu (江蘇) and northeastern provinces from May 20 to get an on-the-ground feel of implementation of policies to support private investment.

Ministerial-level officials in charge of economic affairs, ­including the National Development and Reform Commission and the Ministry of Finance, were part of the inspection teams, soliciting feedback from private businesses about their operational and investment difficulties.

he move comes at a time when investment from the private sector, which generates more than half of new jobs each year, plunged more than 50 per cent in the first four months of this year.

Meanwhile, President Xi Jinping (習近平) toured the northeastern province of Heilongjiang (黑龍江) while Premier Li Keqiang (李克強) visited Hubei (湖北) on fact-finding trips to expedite ­reforms in state-owned firms and revive regional growth.

 China’s Xi Jinping at an innovation center in harbin. Xinhua photo

Executives at private firms mentioned teething problems such as market access restrictions, hurdles to obtaining bank loans, unfair competition from state rivals and tedious red tape, according to Xinhua news agency.

Economists, however, ­acknowledged that these ­problems were not new, and the government’s bid to address them had had a negligible impact.

Official figures show private investment rose only 5.2 per cent in the first four months, in sharp contrast with a 23.5 per cent rise from state-owned enterprises.

China Economics and Business Monitor Group , an institutional investment research firm, said in a report that private firms had no access to less risky but profitable public service sectors such as hygiene and water projects.

“The government has not only dominated these sectors, but ­accelerated its entry into high-

return monopolised sectors,” it said. Even in non-monopolised sectors such as culture and entertainment, government investment outstripped that from the private sector by up to 40 percentage points this year.

“After the State Council ­inspection, the gap between private and government investment may narrow in the second quarter. But a real revival of private capital – to become a key support for the economy again – cannot be accomplished in one stroke,” the report said.

The State Council launched a public-private partnership (PPP) programme last year to lift private investment, but the effects are far from satisfactory.

The absence of clear rules to regulate the operation of PPP projects and concerns about official reshuffles at the local level had kept private businesses on the fringes, economists said.

“Reform is a long-term process and needs private capital. The inspection may not be enough to solve all problems ­regarding private investment,” said Lu Zhengwei, chief economist at Industrial Bank.

Besides, funds were diverted to the bond market and commodity futures market after the stock market meltdown last summer. The speculative fever lured private investors to seek higher returns, instead of expanding production and contributing to the real economy.

In a rare address in March, Xi sent a message that “new ties ­between politics and business” should be “cosy and clean”. He said Beijing continued to cement the state firms’ significant role in the economy, but gave an assurance that government support for the private sector would flourish.

The State Council pledged earlier this month to open market ­access and create a level playing field to boost the private sector.

But corruption and nepotism remain deeply ingrained in the public sector.

A manager of a carpet factory in Tianjin (天津) said she had to ­offer bribes to a government functionary to get up and running.

“It is a big headache to deal with government employees, especially those related to sunset industries. I choose not to cooperate with ambitious entrepreneurs but those who have strong local government connections,” she said.

China International Capital Corporation, a leading broker on the mainland, said there was much room to improve the business environment, including lowering taxes and fees.

http://www.scmp.com/news/china/economy/article/1957943/chinese-government-launches-fact-finding-mission-boost-private

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20,642 New Regulations Added in the Obama Presidency

May 23, 2016

James Gattuso / / Diane Katz / / May 23, 2016

There are already more than 2,000 proposed or final rules in the pipeline—including 144 that are expected to cost $100 million a year or more. (Photo: Aude Guerrucci/UPI/Newscom)

The tide of red tape that threatens to drown U.S. consumers and businesses surged yet again in 2015, according to a Heritage Foundation study we released on Monday.

More than $22 billion per year in new regulatory costs were imposed on Americans last year

More than $22 billion per year in new regulatory costs were imposed on Americans last year, pushing the total burden for the Obama years to exceed $100 billion annually.

That’s a dollar for every star in the galaxy, or one for every second in 32 years.

>>>Read the Full Heritage Foundation Report: Red Tape Rising 2016

The consequences of this rampant rulemaking are widespread:

  • Restricted access to credit under the hundreds of rules unleashed by the Dodd–Frank financial regulation statute
  • Fewer health care choices and higher medical costs from the Affordable Care Act
  • Reduced Internet investment and innovation under the network neutrality rules dictated by the Federal Communications Commission

These are just a few of the 2,353 regulations of 2015—and there have been 20,642 since Obama took office in 2009.

The worst of last year’s wave—in terms of cost, at least—was the Environmental Protection Agency’s “Clean Power Plan.”

The rule represents the first direct regulation of so-called greenhouse gas emissions from power plants, at a cost of $7.2 billion a year (and far more according to critics). Despite the huge costs, the plan will do nothing to mitigate global warming.

America’s problem with excessive regulation did not start with the Obama administration, of course.

His predecessor George W. Bush was hardly a paragon of deregulation. Although Bush showed restraint during his first term, the number of regulations soared during his final years in office. Under the two administrations combined, their new rules added $176 billion in annual regulatory costs on Americans.

And there is much more to come. Obama’s final year in the White House could be his busiest. Historically, rulemaking increases as presidents scramble to fulfill their regulatory agenda before leaving office.

There are already more than 2,000 proposed or final rules in the pipeline—including 144 that are expected to cost $100 million a year or more. These include yet more energy-efficiency mandates for home and commercial appliances, additional food-labeling requirements, stricter fuel economy standards for vehicles, and more stringent limits on consumer access to credit.

In a post-Obama era, the need for reform of the regulatory regime will be greater than ever before. Immediate reforms should include requiring legislation to undergo an impact analysis before a floor vote in Congress, as well as requiring that every major regulation obtain congressional approval before taking effect.

Sunset deadlines should also be imposed for all major rules, and independent agencies should be subject to the same White House regulatory review as executive branch agencies.

The unparalleled increase in regulatory burdens spells a decline in economic freedom and individual liberty, with a concomitant increase in political gamesmanship and cronyism—all of which inhibits innovation, investment and job creation, increases prices, and curtails consumer choice.

Congress needs to take immediate action to control the continued expansion of the administrative state, prevent further harm to the economy, and stem the erosion of individual liberty.

20,642 New Regulations Added in the Obama Presidency

China’s Premier urges less red tape to bolster economy — Fear China’s “great employment pressure” could spark unrest

May 23, 2016
Markets | Sun May 22, 2016 8:13pm EDT

Reuters

China should reduce red tape to ensure the development of a healthy economy, the official Xinhua news agency reported Premier Li Keqiang as saying.

Li also pledged to further cut administrative examinations and approvals, cut the process of establishing businesses and give colleges and scientific research institutes more autonomy, Xinhua said late on Sunday, citing a transcript of a speech Li delivered on May 9.

Li added that a level playing field will be created for private investors, adding that the State Council is mulling detailed measures to promote private investment.

Li said that although China has to some extent streamlined administration, overhauled market regulation and optimized government services, there is still much work to be done.

He cited unfair law enforcement, arbitrary inspections and inadequate supervision as loopholes in market regulation.

The premier said China’s traditional international competitiveness has weakened, leading to a decline in growth of foreign trade and use of foreign capital.

“This is associated with changes in our resources, sluggish external demand and business environment,” said Li, citing the relocation of some foreign-funded manufacturers from China to other countries.

“We should guide some of them to move from eastern coastal areas to the central, western and northeastern regions,” said Li, adding that manufacturing could create jobs and help address China’s “great employment pressure”.

(Reporting by Engen Tham; Editing by Kim Coghill)

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By William Ide

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As China’s economy continues to slow, powerful resistance is stalling efforts by Chinese leader Xi Jinping to push through much needed reforms, despite suggestions he is the country’s most powerful leader in decades.And based on details about the economy revealed in a recent high-level interview in a top Communist Party newspaper, there is a risk that that defiance could develop into a full-blown struggle.

Authoritative person

Figuring out what is really going on with the Chinese economy or decision making in China has long been a challenge, but an unidentified “authoritative person’s” interview with the People’s Daily this month has given a rare peak beyond the veil.

FILE - An investor looks at an electronic board showing stock information at a brokerage house in Huaibei, Anhui province, Jan. 29, 2016.

FILE – An investor looks at an electronic board showing stock information at a brokerage house in Huaibei, Anhui province, Jan. 29, 2016.

In the interview, the “authoritative person” talks at length about the challenges China’s economy is facing, including a frank assessment that while tracking with “expectations,” growth will continue to be slower for more than two years.

The interview mentioned several times the problem of so-called “zombie enterprises” or inefficient and debt ridden state-owned enterprises. It also talked about how China must take on challenges such as overcapacity, bad loans and local government debt, or face even greater risks.

Some believe that President Xi or someone close to him gave the interview, and because of that, it was perhaps a shot across the bow [warning] aimed at China’s two key economic policy leaders, Premier Li Keqiang or perhaps Vice Premier Zhang Gaoli, for not doing enough.

It also could be a possible sign that Premier Li in particular might not survive an upcoming leadership reshuffle expected in late 2017.

But, others argue Zhang and Li have been raising the same concerns as well – and frequently – and could have been the source of the article.

SOEs in cross hairs

Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, said what seems clear from the interview is that the real opponent is state-owned enterprises (SOEs) and their backers, not the premier.

“Their backers in the provinces, the railroad ministry, the traditional very investment oriented agencies that would like to continue things the way they are,” Kirkegaard said.

Francesco Sisci, a Beijing-based China commentator said that while one cannot rule out that Li or those in charge of economic affairs might be the target of the interview, the piece really seems to be aimed more at those who are resisting economic reform and state-owned enterprises.

FILE - A maintenance worker rides a scooter past banners reading "Development" and "Prosperity" in English and Chinese on a street in central Beijing, July 15, 2015.

FILE – A maintenance worker rides a scooter past banners reading “Development” and “Prosperity” in English and Chinese on a street in central Beijing, July 15, 2015.

But determining who is fighting against whom is a difficult to say. And the reform of state-owned enterprises is not just one group against another, he said.

“It is a massive group of interests, pervasive, which have built interests and clout and power and they are supported by trillions of dollars,” he said.

What is clear from the interview is that warning shots are being fired (warnings are being made) and threats are being issued, but all-out war (major disagreement) has not broken out, just yet. But, he adds, it could.

“This could spin into an all-out power struggle. Either these guys will yield or the leadership will have to yield to them or there will be power struggle,” Sisci said.

Reform agenda struggling

Since coming to power, Xi has been a strong advocate of reforming state-owned enterprises. It has been a key policy agenda of his leadership. And during recent political meetings in March, the government vowed to cut overcapacity in the coming years and that millions of layoffs were on the horizon. But so far, there has been little news of more pending layoffs.

More recently, there have been concerns that some state-owned enterprises, which were previously shut down, have begun to open up again. During the first three months of the year, China saw a massive surge in credit that many analysts have attributed to continuing support to state-owned enterprises.

FILE - Chinese President Xi Jinping attends the closing session of the annual National People's Congress in Beijing's Great Hall of the People, March 16, 2016.

FILE – Chinese President Xi Jinping attends the closing session of the annual National People’s Congress in Beijing’s Great Hall of the People, March 16, 2016.

And this has led some to wonder whether Xi can really pull it off (succeed).

“He (Xi) may be the most powerful individual, president in China’s recent history. But clearly he doesn’t seem to have the actual power to push through what he wants to do, at least not to date,” said Kirkegaard.

And yet calls to move forward continue.

On Friday, China’s official Xinhua news agency reported that during a meeting of the Central Leading Group for Comprehensively Deepening Reform, a body that Xi chairs, he urged China to seize its window of opportunity and push forward with reforms.

Xi said that while reforms might bring short-term pains, not pushing ahead with them now could mean more pain in the long run.

http://www.voanews.com/content/as-chinese-economy-slows-risk-of-a-struggle-rises/3338596.html

Is China making life difficult for foreign companies? European and American companies in China say China is becoming more hostile — Best days for foreign companies in China are reaching an end

May 2, 2016

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Once, China welcomed them with open arms, but now overseas firms are complaining about the country’s increasingly hostile business environment as concerns rise over protectionism, forced technology transfers and tightening censorship

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By Wendy Wu
South China Morning Post
May 2, 2016

Is China becoming unfriendly to foreign companies? That’s the concern of some foreign firms – a group once relied upon by China to attract capital and technology to bolster its growth.

“Challenging”, “hesitant” and “doubtful” are the kind of words European and American companies in China are using to describe their environment.

Concerns over the business climate are mounting, and range from rising protectionism and slow progress in market access to forced technology transfers and tightening internet censorship.

All these come at the time when China – with rising economic influence and seeking a bigger voice in the global political and economic issues – is steering growth towards a heavier reliance on internal consumption rather than exports.

For foreign companies in China, right now is perhaps the most distressing and unhappy time that I have seen
JAMES MCGREGOR

Some experts sense a subtle change in the world’s second-largest economy – that it is no longer as passionate about pursuing foreign capital.

Yet few foreign companies dare publicly to express their worries. A common tactic is to express discontent to embassies and business lobby groups.

“For foreign companies in China, right now is perhaps the most distressing and unhappy time that I have seen. They are afraid of filing trade actions, or talking publicly about their problems as they fear that retribution would be very strong,” said James McGregor, a business executive who lived in China for more than two decades.

 Germany’s Foreign Minister Franz-Walter Steinmeier at a partnership promoting event on Germany and China. AFP photo

Despite acknowledging there had been progress in sectors such as intellectual property rights (IPR), diplomats and business representatives said implementing rules had become a big headache.

For years, Hugo Boss, a well-known German clothing maker which registered its trademark in China in 1987, has been struggling with the alleged IPR infringement by BOSSsunwen, a Chinese clothing brand that carries a very similar brand name.

Hong Kong’s High Court in April last year banned the use of BOSSsunwen’s trademark in the city but Hugo Boss has lost two cases on the mainland, with the second one announced two months ago.

“We have discussed this with [the mainland’s] Trademark Review and Readjudication Board, but so far to no avail,” said German ambassador to China Michael Clauss.

He said German companies would stay in China because of the importance of the Chinese market, but the embassy had received an increasing number of complaints about exporting agricultural products to China and licensing of pharmaceutical products.

They feel that the best days for foreign companies in China are reaching an end
JAMES MCGREGOR

He said it was taking much longer to get a licence for new pharmaceuticals. Doing so used to take two years, he said, but now could take longer and pharmaceutical companies suspected protectionism was behind the delays.

“In part the problem lies in overlapping competences and an insufficient number of administrative staff, but mainly it lies in testing procedures that differ from the ones commonly used in the rest of the world.”

A business survey by the American Chamber of Commerce in China this year showed that 75 per cent of member companies felt they were less welcome in China. The survey has not raised the question before.

“They feel that the best days for foreign companies in China are reaching an end,” McGregor, who is also the author of No Ancient Wisdom, No followers: the Challenges of Chinese Authoritarian Capitalism, said.

 German ambassador to China Michael Clauss

The latest white paper issued by the US business lobby group expressed disappointment about the slow pace of reforms, saying the reforms focused more on cutting red tape rather than on opening the market in an “identifiable and immediately utilisable” way.

Clauss said new hurdles, such as the security and cyber laws, had emerged.

One closely watched issue is that foreign tech firms are required to transfer technology as a precondition for investment.

“Technically, companies agree to this arrangement “voluntarily” but the reality is that if they do not transfer technology, they cannot do business or invest in China,” said Clauss.

IBM raised eyebrows last year when it conditionally allowed Chinese regulators to access its data.

“It is all for business as China is still a lucrative market. My game, my rules,” said a senior Chinese executive with Beijing-based internet technology firm.

It is all for business as China is still a lucrative market. My game, my rules
CHINESE EXECUTIVE

A lawyer with a Chinese financial conglomerate said Beijing was cleaning up various measures that favoured foreign investment and working on unified procedures for domestic and foreign business.

“This is the reality, regardless of how the government attempts to clarify and downplay the concerns,” he said.

The Chinese government has repeated its commitment to further open market access and a level playing field.

Zhang Xiangchen, the deputy international trade representative, said at the business forum in mid-April that the door of reform and opening up was already open and it could only open more.

But he said foreign companies should “be more patient, confident, smart, and involved” as China’s market was “broader, more complex and more competitive than ever”.

“China is favouring local companies. It has very aggressive policies on technology and high-end industrial sectors. The government seems to figure that it is time for Chinese companies and not so much for foreign companies,” said McGregor, chairman of APCO Worldwide in China, a consulting firm.

In 2012, the WTO ruled that China had unfairly discriminated against US credit card companies who wanted to start yuan transaction businesses. In 2014, the State Council said it would open its domestic credit card market, opening the door for Visa and MasterCard to compete with China UnionPay, the dominant clearing agency in China.

The government seems to figure that it is time for Chinese companies and not so much for foreign companies
JAMES MCGREGOR

But till today no detailed regulation has been issued on how to get a licence to start such businesses, which effectively hinders Visa and MasterCard from entering the market.

Another example is different treatment on financial licence approvals, according to Timothy Stratford, a former deputy trade representative for the US.

He said foreign insurers had to apply for only one licence at a time when they planned to start a business in China, and it usually took six to eight months to get approval.

But Chinese rivals could submit a whole package of applications and obtain approval quickly – even though the government vowed equal treatment on policy documents.

“The Chinese market is still a big cake, and it has gained bargaining power in many sectors along with its rising economic influence. It has to protect its core interests, especially in the financial sector and state-owned companies,” said Frank Tang, an economist with UK-based investment bank NSBO.

Its financial system is fragile as it is easily affected by external shocks
FRANK TANG

“Its financial system is fragile as it is easily affected by external shocks. It wants to be more integrated with the outside but is not confident enough. Therefore it insists on advancing on its own chosen steps, not yielding to external pressure,” he said.

Observers said they did not expect substantial improvement this year as reform is less a priority at a time when Beijing is making efforts to prevent the growth outlook from worsening and ahead of a personnel reshuffle in the Communist Party next year.

“The opportunities for foreign companies in China today depend on whether what they do is deemed useful for China or not, and whether China can do what you do or not,” said McGregor.

“It depends on Chinese politics and policies whether such an unfriendly situation would continue. This is now a very interesting and uncertain time.”

http://www.scmp.com/news/china/diplomacy-defence/article/1940397/china-making-life-difficult-foreign-companies

Caixin Summit: Despite Economic Headwinds, China Must Press On with Reform, Economists Say

November 7, 2015

Government should make greater efforts to see that market forces are allowed to play their role, economist Wu Jinglian says

By Han Wei
Caixin

China Sixth Caixin Summit

(Beijing) – China must continue to transform its economy and deepen many of the reforms it is pursuing even as growth encounters headwinds, economists speaking at the Sixth Caixin Summit on November 6 said.

“The most important thing is for laggard social and political reforms to catch up,” said Wu Jinglian, a leading economist. “For instance, an institutional arrangement should be in place to streamline administrative procedures and give more power to the market.”

Wu said China’s economy is at a crucial stage because it faces challenges from slower growth, pressure from structural adjustments and the after-effects of previous stimulus policies.

“The massive stimulus issued after 2009 has resulted in the rising leverage ratio,” Wu said. “Many economists have issued warnings about the breakout of systemic risks since last year.”

The only way to deal with those risks is to push forward economic transformation and seek new engines of growth, he said, changes that would mean bolstering innovation and efficiency.

The economist also said China should make more progress in reforms to state-owned companies and in measures supporting Shanghai’s free-trade zone.

He added that interest rate liberalization has made more progress than expected, but that efforts to improve supervision of the financial services industry have lagged.

Chi Fulin, president of China Institute for Reform and Development, also highlighted the need to promote oversight of financial services because the industry is increasingly being integrated into other industries. Chi said the government should set up a body to supervise the sector and close loopholes.

Huang Haizhou, managing director of China International Capital Corp., said the major reform task of the next five years will be boosting the services sector and by extension the contribution that consumption makes to the economy.

“An important part of reform is to fully open the services sector,” he said. “The key is breaking up administrative and market monopolies. Opening the service sector is closely linked to the overall reform arrangement in the 13th Five-Year Plan.”

Huang warned that 206 will be a tough year for emerging markets because the United States and European Union will start to tighten monetary policies.

In face of the mounting pressure on the global economy, Zhu Guangyao, the vice minister of finance, said the main problems are on the demand side, which is related to investment, consumption and exports.

But Wu disagreed, saying: “Improving the demand side is important, but in the short term. The long-term problem must be solved from the supply side, by increasing the labor force and improving efficiency.”

http://english.caixin.com/2015-11-06/100871251.html

Related:

Opinion: The Philippines Military Modernization Severely Snagged

September 22, 2015
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President Benigno S. Aquino III, accompanied by Philippine Nay (PN) Flag Officer-in-Command (FOIC) Vice Admiral Jose Luis Alano, tour and inspect the facilities of the BRP Ramon Alcaraz (PF16) in 2013.

The Philippines’ armed services modernization program took a strange and alarming turn recently as President Benigno Aquino III’s final term comes to a close.

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The program took a nasty hit in July when the newly installed chief of staff General Hernando Irriberi, called for and successfully led an effort to push back the shore-based missile project in favor of purchasing more helmets, body armor, squad weapons and tactical radios. Then came the one-two punch, with another newly minted flag officer—navy Rear Adm. Cesar Taccad—stating during his August swearing-in, “No expansion is happening. They [China] are just pursuing their interests”—a stunning commentary in light of accelerated reclamation efforts by the People’s Republic of China in the contested Spratly Islands.

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The developments are both alarming and puzzling, given Aquino’s platform and track record to improve the nation’s external defense posture. More important, it comes on the heels of several stalled key acquisitions that were to be delivered during his term, including the on-again, off-again frigate program, the long-range maritime patrol aircraft and the air defense radar network.

As a lame-duck incumbent, Aquino’s reticence in responding to such contradicting moves on his agenda is a sign of local political culture; he is leaving the cleanup and next moves to whomever inherits his office. Chief of Staff Irriberi’s motivation appears purely patriarchical; the army has received the smallest share of the overall modernization budget—to date approximately 10 percent of the monies allocated. Notably, he would neither account nor comment on previous tranches of the same equipment for which the missile systems were sacrificed—thousands of pieces of force protection gear, including vests and other items obtained in the past few years that never made it into service; the gear languishes in warehouses, labeled as defective and remaining untested. Admiral Taccad’s comments appear to be a circling of the wagons—every move made since the acquisition of the former U.S. Coast Guard Hamilton cutters has been aimed toward improving the incremental capabilities of the sea service, with a mind to increasing presence in the disputed areas of the Western Philippine Sea.

These latest developments have put a huge dent not only in the modernization progress of Asia’s weakest military, but potentially into American foreign policy as well. With sequestration still a significant factor, the U.S. pivot to Asia is counting more than ever on improving the capabilities of friendly regional powers, without having to invest significant amounts of money or to commit additional military forces. Such a strategy relies heavily upon each of those nations making the necessary efforts and expenditures to stand up a military that can interoperate with U.S. forces and provide some of the presence operations sorely needed to check China’s Nine-Dash Line agenda.

 The Philippine navy frigates BRP Gregaorio del Pilar (PF-15), left, and BRP Ramon Alcaraz (PF-16), left, are underway with the Arleigh Burke-class destroyer USS John S. McCain (DDG-56) in 2014. US Navy Photo

The Philippines still has only a tenuous hold on its claims in the Spratlys, and even having pulled out of a 13-year “death spiral” of declining spending and degraded capabilities, the culture of American dependence has not yet been fully broken. Despite an influx of net-new platforms (various army vehicle transports, navy and air force helicopters, medium lift turboprops), the bulk of assets within all service branches are aging or excess defense articles (EDA). It is the latter category that is complicating and potentially delaying progress in the modernization program; as regional and superpowers upgrade their own systems, the discards become part of an EDA effort to boost lesser-equipped allies. It is strongly believed that the recent announcement by Japan to start retiring their license-built P-3 Orions in favor of homebuilt Kawasaki P-1 jets may have put a wrench in the Philippines’ intentions to buy new maritime patrol planes. Japan’s Orions are generally acknowledged to be the best maintained out of all existing models currently in service; it would not have been a far jump for the Philippines to succumb to the idea yet again of gaining incremental improvements at a lower acquisition cost. It is that type of thinking that needs to be burned out of national defense planning.

Photo: P-3 Orion maritime patrol aircraft in service in Japan.

While the policy reversals by Aquino’s military leaders may simply boil down to branch politics and lame-duck hi-jinks, the impacts are all too real. Further delays and distractions to a modernization program beset by corruption and failed bids negatively impact the ability to exert territorial control and preserve Philippine claims in the contested areas.

It is increasingly obvious that the Philippines need to pursue several courses of action. For modernization, the program must get back on track and focus solely on new Day 1 turnkey weapon systems. The capability gap is too large to bridge by relying solely upon EDA. Even in cases where new build is achieved, such as the purchase of strategic sea lift vessels from Indonesia, the ships are missing weapon systems and potentially sensor/communication suites upon delivery. This so-called “fitted for but not with” practice degrades any initial investments in modernization by deferring to properly provision an asset and become fully mission capable. Secondly, despite a dearth of assets, the Philippines has a baseline of equipment from which they should start reasserting its claims and presence.

One particular area that needs such tending is to address the Chinese presence at Scarborough Shoals, less than 200 nautical miles from the main island of Luzon. Finally, while the Philippine defense reformation effort at large has turned around a sinking vessel, it is still very much in doubt if the destination can be reached. There are still significant areas of improvement to be made, to reduce the potential of corruption, and to vastly improve the procurement and bidding practice to make purchases more flexibly and timely.

http://news.usni.org/2015/09/21/opinon-the-philippines-military-modernization-severely-snagged

Photo: The arrival of a Japanese navy warship in the Philippines for joint training with the much smaller Philippine navy

Grim Omen of the VA Health Care Scandal — Par for the course in government-run health care

May 19, 2014

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Lengthy wait times, bureaucratic abuse, rationed care: par for the course in government-run health care.

By John Fund

If our government has any obligation to fulfill its many promises on health care, it should be first and foremost to the men and women who served in our armed forces. But the scandal over hidden waiting lists at a growing number of veterans’ hospitals (seven so far) — wherein dozens of veterans died while waiting months for vital treatment, and the VA covered up the lengthy wait times — should make everyone wonder whether we can place our trust in a government-managed health-care system. The Dayton Daily News reported on Sunday that its investigation of a database of claims paid by the Department of Veterans Affairs shows that the words “delay in treatment” were used 167 times. The VA paid out a total of $36.4 million to settle the claims. There could well be many more cases of “death by delay” at the VA that never came to light.

Are there lessons in the VA scandal for the rest of us if Obamacare survives and even expands?

You betcha. The first lesson is that as government expands taxpayer subsidies for health care, the demand will always outstrip supply. Here is President Obama in a speech to disabled veterans in August 2013:

 

The last time I was with you, I pledged to cut the backlog, slash those wait times, deliver your benefits sooner. And I’m going to be honest with you; it has not moved as fast as I wanted. Part of it is all these new veterans in the system who came in — Agent Orange, PTSD. It means a lot more claims, and despite additional resources, it’s resulted in longer waits. And that’s been unacceptable — unacceptable to me, unacceptable to [Department of Veterans Affairs] Secretary [Eric] Shinseki.

A few weeks later, President Obama had to admit that he found the fiasco of the HealthCare.gov website also “unacceptable.” Last week, his aides told reporters he was “madder than hell” over the veteran waiting-list scandal.

There’s a lot to be mad about at the Department of Veterans Affairs. Michael Tanner of the Cato Institute notes that more than 344,000 claims for veterans’ care are backed up and waiting to be processed. It takes an average of 160 days for a veteran to be approved for health benefits, and the VA itself estimates that is has an error rate of at least 9 percent in processing claims. According to VA figures for 2012, as reported by the Washington Post, “a veteran who takes an appeal through all available administrative steps faces an average wait of 1,598 days.” That’s more than four years of waiting.

Obamacare will dramatically expand access to the health-care system at the same time that many surveys show doctors are likely to retire or cut back their hours. It is almost inevitable that we’ll see more waiting-list scandals as the need to ration care grows.

This is the record of many single-payer health-care systems, and both Obama and the Senate majority leader, Harry Reid, have said that establishing a single-payer system is their long-term goal. In 2003, Obama, then an Illinois state senator, told an AFL-CIO conference: “I happen to be a proponent of a single-payer universal health-care program. . . . But as all of you know, we may not get there immediately.” Similarly, Majority Leader Reid told a PBS interview show in Nevada, in October 2013: “What we’ve done with Obamacare is have a step in the right direction, but we’re far from having something that’s going to work forever.” When he was asked by a panelist whether he meant that ultimately the country would need a health-care system that abandoned insurance as the means of accessing it, Reid said: “Yes, yes. Absolutely yes.”

But, if the experience of other countries is any guide, a single-payer health-care plan or even government-managed care brings all kinds of waiting lists with it. In 2012, it was discovered that more than 7,000 patients in just a few Scottish hospitals had been wrongly removed from waiting lists for surgery in order to pretend to meet government targets for treatment. One trick was offering to perform surgery on a date when hospital officials knew a patient would be away on holiday, then dropping the patient from the wait list for “refusing” the date.

Sarah Boyack, a member of the Scottish Parliament, called the figure of 7,000 “astonishing,” given that “an extra five million pounds [$8 million] has been pumped into the NHS [National Health Service] to help cut the waiting list” in the affected hospitals.

Not that NHS patients in hospitals without waiting-list scandals are that much better off. In all of the United Kingdom, NHS patients wait an average of about eight weeks for treatments that require admission to a hospital, four weeks for out-patient treatments, and two weeks for diagnostic tests. While NHS patients have a choice of hospitals, they cannot always choose their specialist.

Red tape?

The situation in Canada, a nation whose government-run health-care system has long been touted by liberal supporters of government in health care, is also dire. Last year, the respected Fraser Institute published a study on Canadian wait times for surgery. Among its finding are these:

In 2013, those requiring orthopaedic surgery were forced to endure waits of more than nine months (39.6 weeks) to receive treatment, while others had to wait for slightly more than four months (17.4 weeks) just to receive an appointment with a neurosurgeon. On the other hand, cancer patients in line for radiation therapy faced the shortest expected wait times for treatment after referral by a general practitioner (3.5 weeks).

Currently, one in 34 Canadians may be in pain, off work, or suffering from depression as they wait their turn for treatment.

The 2013 median waiting time of 18.2 weeks is about three days longer than 2012, and substantially longer than 1993 when it was just 9.3 weeks.

Bacchus Barua, the Fraser Institute’s senior health-policy analyst and the report’s lead author, writes: “Simply putting someone on a list is not the same as providing necessary medical attention in a timely manner.”

The veterans’ hospital scandals now in the news in the United States show just how bad things can get when the pressure of patient demand and waiting lists affects bureaucratic behavior. As many as 40 veterans reportedly died at a Phoenix veterans’ facility because they couldn’t get the care they needed. VA administrators there and at other hospitals apparently covered it up by establishing secret waiting lists and falsifying reports.

No one is suggesting that such scandals are widespread in the general health-care system. But they should serve as a warning sign of what could happen as the pressure to ration, inherent in all government-managed health care, is applied to the general population.

— John Fund is national-affairs columnist at National Review Online.