BRIC+ News & comments

A picture of electrical energy and environmental considerations in Brazil:

Installed capacity as of Aug 2009, in GWs:
Hydroelectric 79.11 (72.33%)
Gas thermal 12.33 (11.27%)
Oil thermal 06.27 (5.73%)
Coal thermal 01.53 (1.39%)
Biomass 06.58 (6.02%) (Almost entirely crushed sugar cane and same fraction as oil+coal))
Nuclear 02.01 (1.84%)
Wind 00.77 (0.07%)
TOTAL 109.37

45% of Brazil’s land is occupied by only 3% of Brazil’s population. A subsidy is required to provide electricity to them. Also some hydro-electric generation is too far from load centers to be economically competitive without subsidy. These subsidies add 2% to everyone’s electric bill. Some of the subsidy supports coal and oil fired generation and is opposed by environmentalist, but others want to increase fossil fuel generation to insurance against low rain fall periods. (In some “dry years” generation capacity is inadequate to supply full demand for a few months and rationing to industry results.)

Because Brazil has the world’s largest cattle herd and because methane is approximately 10 times worse Green House Gas than CO2, and because most of Brazil’s cars run on sugar cane alcohol and because 81% of Brazil’s power generation makes no GHG pollution (and the 11.3% that does uses cleaner natural gas), cows are make more than half of all GHG pollution in Brazil. Most of the methane they produce comes out the front end (belching) not the rear end as most believe. Cows are an inefficient food production system. I.e. the same pasture area could produce about 10 times more food calories or alcohol energy.

Sugar cane production currently uses less than 2% of Brazil’s farm land. There is at least five times more abandoned pasture that could be reclaimed from the shrubs and small trees now occupying it. I.e. Brazil can greatly expand alcohol production with zero impact on food production or prices. Only doubling alcohol production could totally eliminate the use of coal and oil fuels for production of electric power. The water reservoirs would serve as energy storages facilities. I.e. make more hydro power when sugar cane is not be processed and reservoirs refill when biomass is making 14% of Brazils electric power.

In the environmental friendly energy production, Brazil is already leading the world but can still do better – i.e. the total elimination of coal and oil for electric energy production is possible in Brazil.
 
Power Grows for Striking Chinese Workers

http://www.nytimes.com/2010/06/09/business/global/09labor.html?hp

Power Grows for Striking Chinese Workers
By DAVID BARBOZA and HIROKO TABUCHI

SHANGHAI — China’s wage contagion continues to spread.

Honda Motors said Tuesday that workers at a parts plant had walked off the job just days after the company settled a separate strike by agreeing to substantial pay raises for 1,900 workers at its transmission factory.

The new walkout, at an exhaust-system factory in the city of Foshan, will force Honda to halt work Wednesday at one of its four auto assembly plants in China, the company said. The assembly plants had just reopened after closing for almost two weeks because of the earlier strike at the transmission factory, which is also in Foshan.

The second Honda strike comes amid growing signs that, in a recent and remarkable shift of labor dynamics, China’s huge migrant work force is gaining bargaining power. New pressure to raise pay and improve labor conditions, coming in part from the Chinese government, is likely to raise the cost of doing business in China and could induce some companies to consider shifting production elsewhere.

Another big employer wrestling with labor issues, Foxconn Technology — a giant contract electronics manufacturer that has also announced wage increases in China this month — said Tuesday that it was reconsidering the way it ran its operations in response to criticism of its workplace practices.

Foxconn, which has experienced a string of suicides among workers at its sprawling, citylike campuses in the southern metropolis of Shenzhen, said it was considering turning the management of some of its worker dormitories over to local governments in China.

“Because Foxconn is a commercial enterprise operating like a society, we’re responsible for almost everything for our workers, including their job, food, dorm and even personal relationships,” Arthur Huang, a Foxconn spokesman, said Tuesday. “That is too much for a single company. A company like Foxconn shouldn’t have so many functions.”

Foxconn, a subsidiary of Hon Hai Precision Industry of Taiwan, makes devices for companies like Apple, Dell and Hewlett-Packard. Hon Hai’s shares fell more than 5 percent Tuesday in Taiwan, to their lowest since last August, after the company said it would seek to pass on its higher labor costs to clients.

As the company held annual shareholder meetings in Taipei and Hong Kong, small groups of people demonstrated outside, urging the company to improve conditions for workers.

Turning over management of employee dormitories to the government authorities would be a drastic change for Foxconn, which, like thousands of other manufacturers in southern China, has lured peasants from rural areas to work at giant, gated factory compounds.

One of the company’s Shenzhen campuses employs 300,000 workers and covers about one square mile. The campus has high-rise dormitories, a hospital, a fire department, an Internet cafe and even restaurants and bank branches. Some workers have complained, though, that the long workdays they are expected to put in, with few days off, give them little free time to take advantage of any amenities.

Foxconn said Sunday that it planned to double by October the salaries of many of its 800,000 workers in China to 2,000 renminbi, or nearly $300, a month. The announcement of a big raise by one of the country’s biggest exporters seems likely to put pressure on other companies to follow suit, analysts say.

The chairman of Foxconn, Terry Gou, told the Taipei shareholders’ meeting that the company was looking to shift some unspecified production from China to automated plants in Taiwan, Reuters reported.

After years of focusing on luring foreign investment, Chinese government officials are now endorsing efforts to improve conditions for workers and raise salaries. The government hopes the changes will ease a widening income gap between the rich and the poor and prevent social unrest over soaring food and housing prices.

On Friday, Beijing’s municipal government said it would raise its minimum wage by 20 percent. Ma Jun, a Hong Kong-based economist at Deutsche Bank, said last week that more cities and provinces would soon raise their minimum wages 10 to 20 percent.

“We therefore believe that a faster-than-expected labor cost increase has now become a political imperative,” Mr. Ma said in a report, citing comments from Beijing’s leadership about improving social justice.

But analysts say wage pressure is also coming from labor shortages in coastal cities as the country’s declining birth rate reduces the number of young people entering the work force.

Factories in southern China that used to advertise in search of employees 18 to 24 years old are now recruiting much older workers.

The labor shortages are being worsened by an economic boom and improving job prospects in inland provinces that have long supplied a steady stream of migrant workers to industrial areas.

TPV Technology, a contract manufacturer that produces computer monitors with about 16,000 workers in five cities in China, said it raised salaries by 15 percent in January and planned to raise them again, perhaps as early as July.

“We’ll adjust our salary to the market and to our competitors’ level,” said Shane Tyau, a vice president at TPV, which is based in Hong Kong. “If Foxconn announces another round of pay raises, we’ll reconsider our wage level, too.”

Economists say that China’s labor force is growing increasingly bold and that over the last year, periodic strikes in southern China — some supposedly involving global companies — have been resolved quietly or not reported in the media.

But the Honda strikes, like the spate of Foxconn suicides, are noteworthy for having generated considerable public attention.

To resolve the strike at its transmission plant, Honda last week offered workers raises of 24 to 32 percent. That strike had forced Honda to shut down its four assembly plants in China.

Now Honda has been a target again. The exhaust-system factory is controlled by a joint venture between a Honda subsidiary and a Chinese company. Honda said the strike would force it to stop work at its Guangqi Honda Automobile assembly plant in the city of Guangzhou.

Honda owns a network of production facilities in China, including the car assembly factories and three auto parts manufacturers, as well as two motorbike plants, two plants that make generators, pumps and other power equipment and three research centers.

Those numbers do not include factories opened in China by Honda subsidiaries like Yutaka Giken, which separately runs four auto parts manufacturers in the country.

Honda declined to speculate Tuesday on whether it was vulnerable to additional strikes for having already shown a willingness to raise wages at the transmission factory. “It’s not at all clear at this point whether the two strikes are related,” said Natsuno Asanuma, a Honda spokeswoman.

“It’s too early at this point to say whether we are looking at some kind of chain reaction.”

Tomoo Marukawa, a professor on the Chinese economy at Tokyo University, said that Japanese firms could be especially vulnerable to labor strife because they tended not to give Chinese workers a chance to rise within the company.

“Honda’s labor conflicts are not just happening because of disputes over wages,” Professor Marukawa said. “Many Chinese probably see little future in a company where locally hired staff are shut out from promotions,” he said. “It’s a problem that is common to many Japanese companies operating overseas."

Honda has declined to talk about specifics of its settlement with workers at the transmission plant, including whether it involved any changes in its promotion policies.
 
As quick summary of Esoteric post (from NYT):

In contrast to US it is workers, not jobs, that are in short supply in China. Thus minimum wage is up 20% and many factories are raising salaries ~30%, some after strikes by now stronger workers groups. Conditions are rapidly improving in the interior so migration to the coastal areas for a job is down. Article also blames lower birth rates for shortage of workers but as that only shows up in 15+ years, I doubt it is of much current importance.
 
BRAZIL going strong but under control:

Yesterday GDP growth in first quarter of 2010 was reported to be 9%, so today newspaper reports that Brazil's "FED" has raised the basic interest rate to 10.25%
Brazil has the most responsible central bank and "FED" in the world - no printing press money here, only the guts to keep inflation under control.
 
China does invent (a little):

"... Sonny Wu, managing partner at China-based GSR Ventures. He's spearheaded the firm's six investments in companies that produce light-emitting diodes, or LEDs. One of those is LatticePower, which is launching an LED light bulb for the mass market--invented in Nanchang, China, by a former university physics professor and his startup team. ..."

From: http://www.forbes.com/2010/06/06/pfizer-ipad-invention-intelligent-technology-china_2.html
 
kmguru said:
We knew this will be coming... http://online.wsj.com/article/SB10001424052748704289504575312560305201680.html?mod=fox_australian
Click to expand...
China has made currency swaps with many central banks in recent years so this is "old news." For example if they want to buy beef from Argentina, there is no need to use the dollar. They just pay the rancher with Yuan. He needs pesos so he transfers this yuan credit to his central bank and gets Argentina pesos. And conversely for the Argentina shoe retailer importing shoes from China - he can pay with pesos. I am not sure but think the contract can be written this way - do not need to use dollars.

Brazil does have a bilateral agreement with Argentina that allows / encourages/ the contract to be in Brazilian Real or Argentine pesos. (but of course dollar based contracts are still legal and enforceable).

The dollar is mainly used for international commerce because of historical reasons, including that US has never defaulted, but it is becoming less important for comerce, in part because FX markets are so well developed.
 
"Agricultural Bank of China (AgBank), seeking to raise more than $23 billion in what would be the world's biggest initial public offering, said it will launch the Shanghai portion of its IPO this week. ..."

Billy T comment: The question is (in addition to how well the IPO will go) is to whom will they lend the money? To the exporting factories to boost production for export economy or to boost the domestic economy (more apartments, more shopping centers, more or expanded car factories, more hospitals and clinics, more buses, trains, subways and planes, etc.)?

I strongly think they will mainly increase the domestic economy as the CCP fears the US and EU will sink back into recession (if not depression as I do when the huge US production of green paper makes everyone realize that is all it is - green paper.)
 
China will continue to balance domestic consumption with export. Too much in one or the other does cause trouble. The catch is whether it is a multivariable nested issue or use a simple mathematics - that will be difficult to judge. Even US with its fancy Universities could not figure that out.
 
kmguru said:
China will continue to balance domestic consumption with export. Too much in one or the other does cause trouble. The catch is whether it is a multivariable nested issue or use a simple mathematics - that will be difficult to judge. Even US with its fancy Universities could not figure that out.
Click to expand...
I am not sure what you are saying in last sentence but can perhaps clarify my POV on the first:

I believe that China has implemented a new and better economic system. I.e. they centrally plan with long time horizon the needed infrastructure of their society, but let the market place make decisions about "domestic consumption" (First time I have used that phase, I think, and don't mean it to be "domestic investment", which is what most of China's huge stimulus is now making.)

I.e. domestic consumption decisions are made by the Chinese masses. - Big ticket decisions like whether to buy a Ford or a Chery car. Whether to rent or buy and apartment. etc. all the way down to the tiny consumption decisions such as those made in the food store: whether to buy pork or chicken for tonight's dinner or perhaps to eat out.

Domestic infrastructure decisions are made by CCP and its committees, agents, engineers, etc. Big ones would be things like: How much to invest in supper heated coal, vs nuclear vs hydro-electric, vs wind vs smart grids, vs solar etc. OR how many new cities and how big each should be and on what construction schedule*

It is hard to give a tiny domestic infrastructure investment decision, but perhaps exactly where on the river the new bridge will be built is one. Should the new small dam have 40 or only 30 meter water head for power generation might be another. etc. - These the CCP leaves to it engineers, and there is plenty of room for graft as where the bridge goes and how much and who's farms will be flooded are of great local importance - just as they are in the USA.

The biggest, top level, infrastructure decision is how much to to boost exports capacity and how much to boost domestic infrastructure. I think The CCP has very clearly come down strongly on starving export capacity to greatly increase the domestic investment - For example, they and economic conditions in the US and EU have closed many factories that formerly exported cheap toys.

Even several heavy industries have been prohibited from expansion - steel making for one. China will buy more / import more steel / for its internal domestic infrastructure investment.** (high rise apartments, high speed train track rails, towers for wind machines and smart grid, natural gas pipelines, new bridges, etc.) Part of this is the economy inherent in shipping the steel made elsewhere instead of iron ore from Brazil etc. Part of the prohibition on steel is that China has closed many ship building factories. Part of the decision to prohibit expansion of steel industry is the rapid increase in the price of iron ore and the termination of the 40 year old annual price system for iron ore - now price is fixed for only three months at the spot price.

-------------
*BTW they have answered that: 100 new cities for population of at least 1 Million each, all in the interior, at least a dozen to be in some phase of construction at any one time. Some are already finished. - The most famous one is White Horse Village as BBC had about 6 or 8 half hour documentaries on it at various phases of construction and the problems. One not yet mentioned by me was that to get local support the local CCP told the local villagers how great the new schools would be and they are very modern with teachers assisted by internet delivered special classes etc.

The problem was that the children of the pig farmers, etc. who lived in the original White Horse Village were not equiped, socially or educationally, to go to these good schools, and of course the children of all the engineers, social planners, local CCP officials, skilled construction workers from the coastal areas, who built the new modern White Horse Village, filled the class rooms to capacity. So the local barefoot kids still went to a school with dirt floor in a nearby village, but now had a half hour bus ride to get there! (Some people are more equal than others.)

**China is investing in a steel plant in Brazil - near to the ore - so much less to ship to China. (And for the other reasons cited above.) That also helps it spend dollars from its reserves before they lose too much value.
 
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Yes, I wrote an algorithm for the Chinese on a Steel beneficiation to production to international sales model that used 300 programmers to program in the old VAX computers. By now, I am sure they have expanded that to the whole country. I do not think we have any realistic models in our country.
 
(Billy T inserts in blue below)

“… Entering into rapid industrial expansion, India and China … now need expanding energy availability to sustain a widening production base. Otherwise, the result would be an economic implosion. {China has the cash, from reserves, to pay up front for decades of specified oil delivery and is doing so as China wishes to spend dollar before they lose value. I.e. China is using future oil delivery contracts as a hedge against the dollar decline.} India is importing both more crude oil and more finished products. It is also showing signs of increasing its domestic energy stockpiling system, similar to that already seen at much higher levels in neighboring China. That means it is intensifying competition for imports. …

New Delhi, in 2002, introduced a full range of subsidies on all oil products - from gasoline through kerosene, cooking oil, and especially diesel (the primary fuel for private electricity generation across the country). That helped to offset some of the inflationary pressure building in the economy, but …The government has been running an increasing budget deficit because of the subsidies, while local oil companies have been forced to sell product at low prices - sometimes below cost. This is unsustainable. … Both the central budget and oil companies racked up considerable losses from the artificially low retail prices, so 25June10 the government decided to phase in a "let the market decide the price" approach. …”

Today’s Email from: Dr. Kent Moors (but text has been reorganized by BT) <customerservice@oilandenergyinvestor.com>
{Some months ago, I predicted oil near $100/ barrel by end of 2010. This move by India and BP’s gulf mess makes that almost certain IF Obama can continue to delay the inevitable depression in US & EU until then.}
 
"... The number of Chinese Internet users hit 420 million, with 277 million accessing the Internet via cell phones, portal website sina.com.cn reported, citing a report published by China Internet Network Information Center. ..."

From: http://www.chinadaily.com.cn/china/2010-07/15/content_10112957.htm

Billy T comment 100 million more users than total US population may be why Google is trying to get back into China, I think.
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"...China's foreign direct investment (FDI) swelled to $13 billion for the month of June - an increase of nearly 40 percent over the same period last year. ..."

Billy T comment Yes, China wants to buy real assets and reduce it holdings of US Treasury' paper promises.
 
India has unveiled a $35 computer prototype as part of its program to provide connectivity to its students and teachers at affordable prices. ... The ministry said the price would gradually fall to $10 apiece.

India said connectivity to all its colleges and universities is key to achieving its education goals. Home to a billion-plus population, the country's literacy rate stands at 65 percent, according to the 2001 census figures. Nevertheless, the South Asian nation has made giant strides in various areas since it opened up its economy in the early 1990s.

The country ushered in a telecom revolution that delivered mobile telephony to nearly 600 million people in just a little more than a decade with highly competitive call tariffs. ... Recently, it auctioned off its airwaves for third-generation services to enable super-fast multimedia streaming of wireless.

The move is aimed at bringing India's online market on a par with its booming cell-phone business through Internet penetration with technology allowing quick access, data transfer and entertainment on mobile handsets.

The country has announced plans to link up all its 250,000 village councils by 2012 in a bid to plug massive broadband divides between rural and urban communities as it emerges as one of the world's few growth markets.

From: http://www.cnn.com/2010/WORLD/asiap...ive.dollar.laptop/index.html?npt=NP1&hpt=Sbin
 
"... BEIJING - The ultimate goal of China's exchange rate reform is to make the yuan a fully convertible currency, Yi Gang, head of the State Administration of Foreign Exchange (SAFE), said Friday.

Yi, also deputy governor of the People's Bank of China, the central bank, made the remarks in an interview with Caixin media's China Reform magazine, which is posted on the SAFE website. ..."

From: http://www.chinadaily.com.cn/china/2010-07/31/content_11076674.htm

Billy T comment: As I suggested about a year ago, one major step to this would be to back the Yuan with gold, but only for central banks. I.e. central banks could buy gold from China's central bank, paying with their issued bonds. (China gains interest on an otherwise "dead asset.")

China is already the world's largest producer of Gold, with great expansion potential. This fact combined with fact few central banks would want to pay interest monthly to hold "dead gold," means Yuan backed by gold for central banks only is very feasible already for China.

Central banks generally do not want to hold much gold. They could easily buy more but most have been net sellers, with India being an exception as its population wears a lot of gold. China has already encouraged its population to hoard /save silver but Chinese holding gold is illegal.
 
00221917dead0dbf442a0f.jpg
Anyone know why a night time launch was used?

"... China successfully launched its fifth orbiter into space at 5:30 a.m. Sunday, as a part of its indigenous satellite navigation and positioning network.
It is the 126th flight for the country's Long March series of rockets. {Billy T insert: They can deliver ICBMs to any US city. - I.e. WWIII is economic, not like WWII, and China is winning it.} The satellite will join another four satellites in orbit to form a network that will eventually consist of 35 satellites.

China started building its own satellite navigation system to end its dependence upon the US GPS system in 2000. The system, code named "COMPASS", is a crucial part of the country's space infrastructure for providing navigation and positioning services in transportation, meteorology, petroleum prospecting, forest fire monitoring, disaster forecast, telecommunications and public security among others. The system is designed to provide navigation, time and short message services in the Asia and Pacific region before 2012 and will be capable of providing global navigation services by 2020.

From: http://www.chinadaily.com.cn/china/2010-08/01/content_11077343.htm
 
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Currently China has NO PROPERTY TAXES !!!

"China plans to start implementing a property tax in two or three years on a trial basis, ... But the ministry source indicated that it was still not clear whether the trials would start in 2012 as the government had chalked out a three-year time frame for launching the program. The property tax program would be tested in some cities before it is implemented on nationwide basis, the source said. ...

Property tax is expected to boost the coffers of local governments and will also help curb realty speculation by increasing the holding costs.

In May this year, the State Council had approved the guidelines submitted by the National Development and Reform Commission for systematic reform of the economy. Prominent among the proposals was the clause to "gradually push the reform of the tax on the holding of properties". ...

Nie Meisheng, president of the China Real Estate Chamber of Commerce, said fixing the criteria for such a tax might take a long time, as the government needs to assess the value of properties and employ millions of professional appraisers to carry out the exercise. ... Some analysts indicate that the cost of implementing the tax may turn out to be higher than expectations. ...
Liu Shangxi, deputy director of the Research Institute for Fiscal Sciences under the Ministry of Finance, said the cost of imposing such a tax would be huge and policymakers will need to reconsider its necessity before taking any major steps.

ANZ economist Liu Ligang feels that the government may decide to impose a tax of around 0.8 percent of the market value of the property for owners of multiple apartments, beginning with the second home. According to Liu, people with multiple homes account for over 20 percent of the nation's real estate market.

The levying of the tax will have little impact on home prices and local governments may have to incur high costs for assessing houses and identifying the right people, he said.

From: http://www.chinadaily.com.cn/bizchina/2010-07/23/content_11042059.htm#1

Billy T comment:
It seems that it will be a decade or more before China has property taxes like the US has, especially if they only apply to second homes as those owners tend to be "more equal than others" if not mainly the elite and powerful.
 
Who says China is not innovative?

slide_9151_121540_large.jpg
Bus's rear looking Radar tells too tall trucks not to enter, etc.
slide_9151_121536_large.jpg
Power from rails on top & posts. 10% of cost of equal capacity subway trains.
"... {The tunnel bus} is 4-4.5 m high with two levels: passengers board on the upper level while other vehicles lower than 2 m can go through under. Powered by electricity and solar energy, the bus can speed up to 60 km/h carrying 1200-1400 passengers at a time without blocking other vehicles' way. Also it costs about 500 million yuan to build the bus and a 40-km-long path for it, only 10% of building equivalent subway. It is said that the bus can reduce traffic jams by 20-30%.{without cost to widen roadways!} … construction of the first 115 miles of track will begin in Beijing's Mentougou district at the end of 2010. ..."

10 more photos at: http://www.huffingtonpost.com/2010/08/02/3d-express-coach-pictures_n_667452.html#s121540

See 6 minute video animation that shows more power details, how to board and evacuate after collision accident, etc. at: http://www.youtube.com/watch?v=5l8WXStaafw
 
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kmguru said:
Interesting dynamics http://www.nytimes.com/2010/07/14/business/global/14angolabiz.html
Click to expand...
Yes and the Brazilian telephone market is a hot target and very complex.
In 2002, Spain's Telephonica and Portugal Telecom formed the Brazilian phone company Vivo. I think telephonica paid PT 17.2 billion Real, R$, to make this union. Then three years later for 7.5 billion Euros Telephonic bought out PT to become sole owner of Vivo. Then with 8.44R$ PT bought 22.4 % of another Brazilian phone company, Oi, and also bought out some private owners of Oi.

Next a long dead Brazilian government telephone company, TelMar, was brought back to life by the left wing leaning government about a year ago. Now world's richest man, Mexican Carlos..... is trying to merge his telephone company with some in Brazil.

I am sure there is big money to be made by buying shares of the right telephone stock, but be damned if I can tell which. Three governments are involved, they have different laws protecting minority share holders, which may or may not come into effect and half a dozen companies are trying to eat parts of others. - It is too complex for me to understand who will win and who will lose, so basically I have stopped trying and will not invest in any.
 
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