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Briefly…Top Ten Tweets (From Unreliable Figures, Non-Performing Loans & Competition, To Challenges, Consumers & Brands)

This week’s review of last week’s news follows below:

The latest estimate of GDP growth for 2010 comes from the Chinese economist at the World Bank, and suggests 10% – inline with the estimate from Development Research Center of the State Council a couple of weeks ago. Inflation, as then, remains a worry.

China’s overseas investment continues to heat up, with US$100 billion estimated by 2013, according to the China Industrial Overseas Development and Planning Association. People’s Daily notes that “In the first half of 2010, China’s direct investment in the United States reached 605 million U.S. dollars, 3.6 times the same period of 2009, and China’s direct investments towards ASEAN reached more than 1.2 billion U.S. dollars, an increase of nearly 126 percent compared with 2009…In addition, China’s direct investment in the European Union reached 406 million U.S. dollars, an increase of more than 107 percent compared with 2009”

While economic and ODI growth has been positive, what should be made of the China banking regulator’s claim that the top 5 banks has a non-performing loan ratio of just 1.46%? The sector as a whole has be said to risk levels of 20%, while may risks will take time to flow through the system. We’ll have to wait and see.

We all know that statistics can be complicated…and unreliable [1]. This seems to be true of China’s data on income. A recent report from the National Economic Research Institute in Beijing, noted that “ the present statistics on residential incomes have major distortions, especially in the part concerning the disposable income of high-income residents in urban areas,” The Wall Street Journal reported the reports figures: “China’s average annual per-capita income for 2008 is nearly twice the 15,781 yuan (about $2,300) estimated by the NBS. And this is primarily because of unreported “gray income” among higher-income groups”. Anecdotal evidence does suggest significant unreported income, and even an NBS official has suggested this is the case. Remember that research results often need to be researched before use….

All that income that is hidden from the tax man may yet be seen by the salesman. A Forbes’ blog article noted that “the Chinese middle class will wield enormous spending power as it reaches 600 million to 800 million people in 15 years. As their incomes rise, so will consumption, making China the third-largest consumer market in the world after the United States and Japan.” And some.

With all those high-spending consumers it is perhaps no wonder that local brands are stepping up to the plate – including the likes of Shanghai Jahwa, Li Ning, Me & City, 9you – all of which have been noted in recent news, along with news of more foreign celebrity endorsements.

While some local brands may be improving their branding, Chinese education (as we have previously noted) [2] has some reputational issues to deal with. The latest blow relates to the quality of PhDs China is producing. According to China Daily “The number of PhD students in China reached 246,300 in 2009”, but “About 70 percent of employers complain that employees who hold PhDs show little innovation in their work performance”.

Despite a lack of innovative PhD’s China is still managing to make high-tech progress, and to become more competitive in a range of sectors – from aircraft [3] to autos and construction equipment. While sales of these national champions will be domestic initially, they could represent significant competition in international markets, especially when Chinese growth eventually eases and new markets are needed. It will be an interesting transition to watch.

SOE successes may be good, but are they sustainable? Paul Denlinger writes in the China Tracker that “China has become too dependent on its own state-owned enterprises to maintain growth and employment at all costs”, and goes on to say that “It is time to rebalance Chinese society so that the private business sector and farmers have a greater say in China’s future”.

Finally, we return for an update to an old story [4]– Rio Tinto’s trials (literally) and tribulations in China. The New York Times reported that “last month, Rio signed a deal to develop with Chinalco a huge iron ore project in the West African country of Guinea. And this last week, on a visit to Shanghai, Thomas Albanese, Rio’s chief executive…declared China not just a customer but a partner…“The key for what we want to do in China is to develop long-term relationships…He declined to discuss the highly publicized trial, instead noting that Rio had “faced some challenges in China over the past year.” A bit of an understatement, but also a reminder that (political and resourceful) business can move quickly in China.

For more real-time news and views, see our ChinaBlogTweets [5] Twitter stream, or subscribe to the rss feed [6].

1. GDP RT @ChinaPrime: Lin Yifu: China’s economic growth may reach 10%, the Chinese economy has room for further development… http://ow.ly/2sUGU [7](also see: RT @ChinaPrime: Interest rates to stay put despite inflation, “The CPI may possibly surpass 3.3% in August…” http://ow.ly/2uG7D [8])

2. ODI RT @ChinaPrime: China’s overseas investments may reach US$100 billion in 2013…http://ow.ly/2uFko [9]

3. Subject to revision..? RT @chinaeconreview: CBRC: Combined NPL ratio for China’s top 5 banks is 1.46% http://dlvr.it/47K0L [10] (see also: RT @chinaeconreview: China’s banks curb lending to local governments http://dlvr.it/4K5lY [11]; Stimulating mortgage fraud RT @NiuB: Fraud Case Shows Credit Boom’s Dark Side (China Real Time Report, WSJ): http://bit.ly/aC0Sul) [12]

4. Corrupted statistics RT @fonstuinstra: Shining Light On China’s ‘Gray Income’ – China Real Time Report – WSJ http://ht.ly/2vI2L [13](see also: Stat attack RT @NiuB: Gray income…controversy; China’s National Bureau of Statistics says figures are unreliable: http://bit.ly/aQK4Ru [14])

5. RT @hhwang: RT @tweetmeme China’s Booming Consumer Market – China Tracker – What a superpower wants – Forbes http://bit.ly/93oFxy [15](by me) (see also: RT @BeyondBrics: [Hey Bric Spender] The politics of Chinese consumption http://bit.ly/9taWxi [16])

6. Brands – Shanghai Jahwa, Li Ning RT @BeyondBrics: [Hey Bric Spender] Chinese brands step up their game http://bit.ly/baEDqi [17](see also: More on brands – Me & City, 9you RT @hhwang: AP: Big in China: Brands import foreign celebrities. http://apne.ws/cRgfVq [18])

7. Education RT @chinahearsay: China Daily: PhDs: High in number low in quality http://is.gd/eDPVc [19]

8. Building competitors RT @wolfgroupasia: The Real Question for China’s Construction Equipment Makers: http://wp.me/pgrML-ox [20](see also: RT @GE_Anderson: Perkowski at Forbes China Tracker: Chinese auto brands gradually winning domestic market share. http://is.gd/eH5CP [21]; It’s gonna fly RT @raykwong: China’s C919 Jet, Ball-Buster for Boeing and Airbus. (Forbes China Tracker, by me) http://twurl.nl/47g1z7 [22])

9. @jamesahudson RT @marcwan: China’s Outdated Practice Of Capitalism by @pdenlinger (Forbes – The China Tracker): http://bit.ly/a6ybbH [23] (via @niub)

10. Following “some challenges”… RT @live_china: Rio Tinto Strives to Repair Its China Ties – New York Times (blog) http://ff.im/-pyR6b [24]