That is the headline story from the latest data on foreign ownership of US Government debt.  Mainland China’s holding fell to $755.4 billion at the end of December from a peak of $801.5 billion last May.  The country also shifted into longer-dated Treasurys.  Japan is, on paper, again the largest foreign holder of US government debt.

Behind those bare facts, however, the picture gets murkier.  in fact, it isn’t clear that China is shifting out of Treasurys at all, while firm conclusions over its preference for short or long term US debt are hard to reach.

How so?  The key is to look at US Treasury holdings in the UK and Hong Kong.  Both have at least doubled in the past year.  At the end of December, the UK holdings totalled $302.5 billion, and Hong Kong’s were $152.9 billion.  In the Treasury International Capital data analysts suspect a large portion of the holdings from those places – perhaps as much as half – in fact originate in China.  The problem arises because Treasurys are often held on behalf of clients in financial centres like Hong Kong or London.  For the data compliers it is hard to unearth the ultimate owners of the debt.

Wall Street Journal – 18 Feb 2010

Post from: China Insight 689

Post from: China Insight 689

Officials in one of the world’s fastest-growing telecoms markets said the consortium, which also comprises Minerva of Dubai and GiCell, understood to be a small Nigerian telecom, has 10 days to pay 30 percent of the fee and a further 50 days to secure a 75 per cent holding in Nitel.

Financial Times – 17 Feb 2010

Post from: China Insight 689

The Shenzhen Mobile Communications Association intends to take a dozen of its members to visit India this month to negotiate related ventures.

“The goal is to set up several production or assembly lines with a total capacity of up to 10m units”, Tang Rujin, executive president said.  The manufacturers hope production will help them gain political capital in the country, and comes after India last year started to crack down on Chinese-made grey market handsets.

Financial Times – Feb 17 2010

Post from: China Insight 689

Since the adoptions of a fairly progressive decision on intra-party democracy at September’s plenary session of the Chinese Communist Party Central Committee, political reforms have stalled.  The foreign business climate has also deteriorated bady, with multinationals complaining of a host of new operating constraints and protectionist measures.  Some western executives with long experience in China say it is the worst they have since 1989-92.  Meanwhile the country’s trade and currency surpluses continue to balloon.

Financial Times – Feb 17 2010

Post from: China Insight 689

Why not join me at Linkedin.com?

Post from: China Insight 689

China’s intercity bus market is largely controlled by regional leaders like Shanghai Bashi and Beijing Public Transport Holdings, but deals have allowed foreign capital to gain a foothold.  Already 15 years on China’s roads, Spanish-based ALSA was the only foreign player in the local coach travel market until summer 2009 when Singapore’s Mass Rail Transit (SMRT), the city state’s largest transport operator, spent RMB 320 million on a 49% stake in ZONA, the Shenzhen subsidiary of National Express Transportation Group.

China International Business – Nov 2009

Post from: China Insight 689

Lee’s new company will provide angel funding for Chinese start-ups, unlike most funds in China which prefer to invest in mid- to- late-stage companies.  Lee plans to hire over 100 graduates from China’s top universities who are eager to build up their own businesses, giving them scope to develop projects from scratch to implementation and expansion.  Lee’s company has already attracted investment from many famous Chinese entrepreneurs including Steve Chen (co-founder of YouTube), Guo Taiming from Foxconn Technology Group, Liu Chuanzhi founder of Lenovo and New Oriental Education & Technology Group’s Yu Minhong.

Drawing on his strong background with Apple, Microsoft and Google, Lee aims to pursue three major directions for his company; e-commerce, cloud computing and mobile computing.  He believes that these businesses are at an inflection point in China and that now is the time to develop them further.

Lee joined Google four years ago after a highly publicised legal battle between the company and Microsoft, which later sued Google claiming that Lee violated his employment contract when he switched jobs.  He successfully built up a working team for Google China, despite Google only capturing a small share of the online search market from Baidu.  Confident in the success of Innovation Works, he maintains that he won’t snatch talent from Google China and that new talent will be offered enticing share options upon joining the new company.

China International Business – Nov 2009

Post from: China Insight 689

Leading the company’s China sales and marketing efforts is Bjorn Hauber.  Below are some comments from an interview.

“The target audience for Mercedes-Benz is constantly extending.  At the start of 2009 we introduced the first B-Class – our first car below RMB 300,000.  We did that for various reasons, one being to attract a totally new clientele; young people , those that are just about to get married and moving out (of their family homes) for the first time.  These are people we have not yet had within our customer area before, and now with the B-Class we’re able to attract these young people.

The same is true for the Smart brand, which is a separate brand.

If we are talking in general, then the target group for Mercedes-Benz is entrepreneurs and senior executives in the companies – those who understand the value of Mercedes-Benz and are able to afford one of our cars.”

“The average of our customers is 40.  We have a very young customer base in China, which also partly explains why we have so many first-time buyers.”

“Chinese buyers are very different from those in other parts of the world.  First of all, everybody pays cash, so the product needs to be available when somebody walks into the dealership.  Brand plays an important role, but its also a bit fragile because this market is so young.

Brand building is important because the Chinese customers are not yet so familiar with our reputation and with the value that the brand stands for so they don’t yet have the same loyalty as they would in the more developed markets.”

“If you look at the way cars are equipped here in China, you will find the equipment standard is very high.  Chinese customers are very demanding when it comes to car equipment; they want to have everything inside the car.  A good example for us is the S-Class; we offer it in nine different versions compared to the US where the product portfolio is a lot thinner.

The Chinese are very demanding; they tend to go for a fully-equipped car.  There are still a high number of chauffeur-driven cars in China, so the rear seat area is much more important than in Europe where, of course, you are more often driving the car yourself.”

“If you look at the Chinese customers they develop their needs very fast, and the way they use their cars.  A couple of years back it was important to drive from A to B.  Today it’s more important how you drive from A to B, so there’s a weekend car; there’s a family car; there’s a business car.  They develop their scope, and that’s why we also continuously increase our product portfolio because this need has developed strongly over the past couple of years.”

China International Business – Nov 2009

“The

Post from: China Insight 689

Why not join me at Linkedin.com, and follow my tweets on Twitter.com?

Regards Peter

Post from: China Insight 689