Siam News Network

As if the reputation of China’s economic data wasn’t shaky enough already, an odd bureaucratic tug of war is casting new doubt on one of the country’s more closely watched indicators.

China’s official Purchasing Managers Index (PMI), a gauge of the nation’s manufacturing activity, has been jointly released by the National Bureau of Statistics and an industry association called the China Federation of Logistics and Purchasing (CFLP) since 2005. Now, however, each body is trying to claim the data for itself.

The dispute originated with a statement posted on the Bureau of Statistics website on January 6 (in Chinese) saying it was the bureau that conducted the manager surveys that underpin the index conducted by the bureau. According to the statement, the CFLP merely published the survey under the authorization of the bureau.

The statement also quoted Pan Jiancheng, deputy director of the bureau’s China Economic Monitoring & Analysis Center, as saying the bureau planned to integrate all economic climate surveys and publish them as a group because “whoever conducts the survey should be the one to publish it.”

Three days later, the federation said in a statement on its own website (in Chinese) that PMI would not be part of the official climate surveys to be published by the statistics bureau.

“Somebody from the Bureau of Statistics is unhappy that we are doing such a good job with the PMI and decided to get tricky,” Cai Jin, deputy director of the CFLP, told the Shanghai-based Oriental Morning Post this week (in Chinese). “This has very negative influence on China’s PMI data.”

CFLP said in its statement that it submitted a request to establish the index in 2004 and that the NBS said it supported the proposal but asked the federation can make use of bureau’s existing enterprise survey resources to avoid redundancy. “Our federation is responsible for the release, analysis and interpretation of the survey,” CFLP said in its statement, adding that it is common practice for independent organizations to publish PMI to ensure objectivity.

According to its website, the CLFP, which claims to have thousands of purchasing manager members, is the only purchasing industry association approved by the State Council, China’s cabinet.

In the days since the Bureau of Statistics published its statement, Mr. Cai said, financial institutions and news media have pelting the CLFP with questions, expressing concern that the bureau might manipulate PMI based on other macroeconomic data.

“That’s why we have to clear things out,” Oriental Morning Post quoted Mr. Cai as saying.

China’s Purchasing Managers Index rose to 50.3 in December compared with 49.0 in November, indicating an increase in manufacturing activity. The rise came after HSBC Holdings PLC’s survey of purchasing managers showed manufacturing activity contracting in December, though at a more moderate pace than in the previous month.

The HSBC PMI has showed contractions in manufacturing in all but one of the past six months, painting a significantly less optimistic picture than the Chinese government’s competing PMI. Analysts say the HSBC PMI has been weaker because it surveys more purchasing managers from smaller firms, which have had difficulty accessing loans from banks.

– Liyan Qi

Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment.

In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years.

China is the world’s fastest-growing major economy, with an average growth rate of 10% for the past 30 years.

Available energy is insufficient to run at fully installed industrial capacity, and the transport system is inadequate to move sufficient quantities of such critical items as coal.

Agricultural output has been vulnerable to the effects of weather, while industry has been more directly influenced by the government.

China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites, but most of its industrial output still comes from relatively ill-equipped factories.

China’s ongoing economic transformation has had a profound impact not only on China but on the world.

Both forums will start on Tuesday.

But “this is just a beginning.

It also aims to sell more than 15 million of the most fuel-efficient vehicles in the world each year by then.

Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s.

Agriculture is by far the leading occupation, involving over 50% of the population, although extensive rough, high terrain and large arid areas – especially in the west and north – limit cultivation to only about 10% of the land surface.

Except for the oasis farming in Xinjiang and Qinghai, some irrigated areas in Inner Mongolia and Gansu, and sheltered valleys in Tibet, agricultural production is restricted to the east.

China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork).

Oil fields discovered in the 1960s and after made China a net exporter, and by the early 1990s, China was the world’s fifth-ranked oil producer.

China is among the world’s four top producers of antimony, magnesium, tin, tungsten, and zinc, and ranks second (after the United States) in the production of salt, sixth in gold, and eighth in lead ore.

China also has extensive hydroelectric energy potential, notably in Yunnan, W Sichuan, and E Tibet, although hydroelectric power accounts for only 5% of the country’s total energy production.

There are railroads to North Korea, Russia, Mongolia, and Vietnam, and road connections to Pakistan, India, Nepal, and Myanmar.

Excerpt from:
China’s Stats Bureau in Odd Ownership Spat Over Important Index

Author: Arjuna Dibley, ANU

Eclipsed by the clamorous debate surrounding a 14 year-old Australian boy allegedly caught purchasing marijuana in Bali recently, some important developments in Australia’s relationship with Indonesia went largely unnoticed.

In Jakarta, 20 Australians and Indonesians met at the inaugural Indonesia-Australia Dialogue (IAD) on 5–6 October. The IAD, aimed at boosting people-to-people links between the two countries, comes on the back of Prime Minister Julia Gillard’s earlier announcement of a Ken Henry-led White Paper, Australia in the Asian Century, examining ways that Australia can best engage with and benefit from the economic growth of Asia — including Indonesia. One issue relevant to the IAD, and which the White Paper will undoubtedly confront in its inquiry, is the appalling state of Indonesian language learning in Australia.

Federal government figures report that between 2005 and 2008 less than 1 per cent of Year 12 students in Australia were enrolled in Indonesian language courses. Additionally, Murdoch University research released this year suggests that there has been a 30 per cent drop in student enrolments for Indonesian language learning among most of the Australian universities that taught the language between 2002 and 2009. Although three Australian universities have reported a slight increase in Indonesian language students this year, the overall trend is alarming. And this is especially true in light of Indonesia’s current and future economic growth potential: the country is currently the third-largest economy in the G20 — behind China and India — and according to a recent Citibank report is expected to become the world’s fourth-largest economy (PPP) by 2040.

The shrinking number of Australian students with Indonesian expertise, then, is a significant problem to which the White Paper and the IAD need to turn their attention if Australians are to truly understand and benefit from Indonesia’s rapid economic and strategic growth. But in the struggle to have more young Australians studying and developing expertise about Indonesia, boosting language learning alone is not enough.

The few students who study Indonesian at Australian universities graduate with specialised language skills as well as an understanding of the culture, politics, economy and legal system of an important neighbour to Australia. Yet Australian employers are not capitalising on these skills.

As an example, many Commonwealth government department graduate programs with a strong presence in Indonesia, such as AusAID and the Department of Foreign Affairs and Trade (which houses its largest embassy in Jakarta), seek talented generalists, not regional specialists. As a consequence, graduates in these programs, who have spent years cultivating specialised country-specific skills, may spend most of their careers working on a country for which they have no relevant background. Similarly, private sector graduate programs in businesses with a strong presence in Indonesia do not promote opportunities for graduates in Australia with specialist Indonesian skills.

This sends a clear message to students that some of the country’s largest employers — including the federal government, that is itself calling for greater Asia literacy — are not interested in employing graduates with specialist Asia-focused skills. Graduates may then ultimately work in jobs where they do not apply and cultivate their expertise, or they might work in-country, but not always for Australian organisations.

If Australia wants to capitalise on the economic growth in Indonesia and elsewhere in Asia then Australian students need to develop Indonesian language and other specialised skills; but career opportunities where these Asia-literate graduates can use their skill-sets to the benefit of Australia’s prosperity must also be created.

One way of doing this is for Australian employers to offer graduate programs that create more Asia-focused opportunities for young graduates. Commonwealth government and private sector graduate programs, for instance, could seek out graduates with specialist Indonesian or other Asian skills, rather than generalists, and offer opportunities to rotate through Asian offices in the early part of their careers. This would allow departments to make use of the expertise that graduates have developed at university, and encourage graduates with an interest in Indonesia and Asia more broadly to work for Australian organisations, rather than seeking opportunities abroad.

If enrolments in Indonesian language courses have any hope of increasing in Australia, students must be able to see that Australian employers value this knowledge. By offering more Indonesia-focused career opportunities, it will hopefully be young Indonesia-literate Australians, rather than tourists caught up in drug scandals in Bali, who come to dominate the relationship.

Arjuna Dibley is a Bachelor of Asian Studies/Laws student at the Australian National University and is currently finishing his degree in Jakarta as a Prime Minister’s Australia Asia Award scholar. 

1. Asia literacy: making a good policy better
2. Australia’s Asia literacy and an Asia Pacific Community
3. Beijing and the reality of international competition

Follow this link:
How to improve Australia’s Asia literacy

Author: Thee Kian Wie, LIPI, Jakarta

The Indonesian economy continued to grow strongly at 5.8 per cent (yoy) during the third quarter of 2010, which was slightly lower than during the second quarter of  the year when growth reached 6.2 per cent.

The slightly lower growth during the third quarter of 2010 was due to the unusual weather conditions caused by continuous rains. This had an adverse effect on some sectors, including agriculture, construction and trade.

Growth for the whole of 2010 is forecast to range between 6.0 per cent  to 6.3 per cent,  compared with 4.5 per cent in 2009 and 6.1 per cent in 2008. These figures indicate that the Indonesian economy has successfully weathered the Global Financial Crisis (GFC). The higher growth in 2010 is supported by strong growth in consumption, investment, and exports, which is estimated to be sustained in 2011. For 2011 the Indonesian economy is forecast to grow at 6.0 per cent to 6.5 per cent, and at 6.1 per cent to 6.6 per cent in 2012.

Although there has been increased inflationary pressure in recent months, Bank Indonesia has managed to control inflation at a manageable level, with the latest CPI inflation in November 2010 reaching 0.6 per cent (mtm) or 6.3 per cent (yoy), slightly higher than in October 2010.  Inflation during 2010 is likely to be higher than the target corridor of  5+ or – per cent .  The higher inflation during 2010 is mostly due to the volatile food prices and the administered prices, but core inflation may be lower than the historical level.  In 2011 inflation is estimated to be 5 + or – 1 per cent.

On the fiscal side, Indonesia has continued to pursue a prudent fiscal policy in 2010, with a strong commitment to fiscal consolidation, aimed at continuing declining public debt to GDP ratio, diversification of the government debt portfolio, and reduced reliance on funding from the international capital market.

Investment has been growing strongly throughout 2010 due to the improved investment climate and the nascent global recovery. Exports have remained high, although it grew at a slower rate (13.4 per cent)  than imports (15.2 per cent). The balance of payment’s current account in the third quarter of 2010 recorded a surplus of about US$1.3 billion due to the good performance in the non-oil and gas trade balance, the gas trade balance, and current transfers. This current account surplus was less than the surplus of US$1.8 billion in the second quarter due to higher deficits in the services and income accounts.

The capital and financial account during the third quarter of 2010 recorded a surplus of US$6.5 billion, an increase from the US$4.4 billion surplus in the second quarter of 2010.  These surpluses are due to inflows of foreign direct investment (FDI) and particularly to vast inflows of portfolio investment. The surge in portfolio investment is due to excess liquidity in the global financial markets, the uncertain economic prospects in the US and the European Union, and the more attractive returns on investment in Indonesia. The increased FDI inflows are due to an improvement in Indonesia’s investment climate and the stable macroeconomic conditions.

In 2011 Bank Indonesia has to remain vigilant to the following challenges: increased inflationary pressure; the adverse impact of massive portfolio capital inflows; and excess domestic liquidity.  To deal with these risks, Bank Indonesia will implement a mix of monetary and macro prudential policies.

Looking further ahead, one of the major challenges facing the Indonesian economy in the near future is the continued weak performance of the manufacturing sector which after the Asian financial crisis has been growing at low single digit rates. In contrast, during the three decades of the Soeharto era, Indonesia’s manufacturing sector recorded a double digit growth. In fact, after the Asian financial crisis the tradeables sector (agriculture, mining and manufacturing) recorded a much slower growth than the non-tradeables sector. This development is worrying, as employment opportunities are generated to a much greater extent in the tradeables sector, particularly the manufacturing sector. Greater employment opportunities in manufacturing are also a good way to reduce absolute poverty, as the recent experience of China has indicated.

Indonesia is a resource-rich country, and in recent years it has mostly relied on the exports of primary commodities, just like it had during the Dutch colonial period. This reliance was stimulated by rising commodity prices, driven by the voracious demand of Asia’s two rapidly growing economies of China and India, particularly for crude palm oil, coal, copper and rubber. Indonesia thus appears to suffer from the ‘resource curse,’ unable to diversify its economy away from its reliance on primary exports.  Nor, unfortunately, has the Indonesian government thus far made clear how it will or can escape from this curse.

Thee Kian Wie is a senior economist at the Indonesian Institute of Sciences (LIPI) in Jakarta.

This is part of the special feature: 2010 in review and the year ahead.

1. Indonesia’s economy continues to surprise
2. Indonesia and the BRICs
3. Indonesia’s strong balance sheets—key to weathering the global financial crisis

See the article here:
Indonesia: Blessed by strong economic growth and the curse of resources