World
China in 2016: Economic slowdown amid race to end ageing population
New Delhi : Indian experts forecast a slowing down of the giant Chinese economy during 2016 as Beijing has girded up to implement its decision to scrap the almost four-decade-old one-child norm in the face of an ageing population. China watchers also saw Beijing continuing to flex its muscles in the South China Sea where it has disputes with neighbours Japan and Vietnam while Sino-Indian relations were likely to see an upswing with cautious movements in the strategic and security domain.
 
One of the biggest milestones in China's history was the scrapping of the 37-year-old one-child diktat on October 29, 2015, and proposed implementation of a relaxed two-child principle later in 2016. The Communist Party of China (CPC) proposed this scheme in an attempt to balance population development and offset the burden of an aging population.
 
"This change was definitely important in the socio-political domain. The need to scrap the one child policy was absolutely necessary due to China's growing aged population. But the demographic dividend will be only seen after 25-30 years and not in the near future," noted strategic expert C. Uday Bhaskar, director, Society for Policy Studies (SPS), told IANS.
 
A final plan for the change will be ratified by China's top legislature in March after which it will come into affect officially. It has been estimated that it would raise the population from the current total of 1.37 billion to an estimated 1.45 billion by 2030.
 
"Data has shown that 64 percent of China's total population still prefer the one child policy. The country will need an absolute majority for this to become a total success," Professor Srikanth Kondapalli, Centre for East Asian Studies, Jawaharlal Nehru University, New Delhi, said.
 
China's strength, its economy, took a beating when the yuan was devalued on August 11 by lowering its daily mid-point trading price to 1.87 percent weaker against the US dollar. The next day, it faced its second devaluation as it pushed down by another 1.62 percent against the US dollar. The devaluations resulted in Chinese exports getting cheaper and imports into China more expensive by that amount.
 
"China's economic slowdown will persist even in 2016. In 2010, the gross domestic product (GDP) growth rate was a 10.8 percent. I expect at least a 6.5 percent rate or possibly even lower in 2016 as market confidence is decreasing. The yuan is coming back to its actual position, and even if it may not get devalued this year, the actual value will decline," Kondapalli said.
 
According to Arvind Yelery, associate fellow, Institute of Chinese Studies, the country's economic growth will also depend on how the country manages its excessive commitments that it has made to complete by this year in terms of trade, communications and science and technology. There is speculation that a lot of fluctuations will occur after the third quarter of 2016.
 
On December 1, the International Monetary Fund included the yuan in its Special Drawing Rights (SDR) basket that will make it the fifth reserve currency after the dollar, the euro, the pound sterling and the yen. However, the final inclusion will take another six to eight months.
 
China's campaign of island building in the South China Sea has caused concerns among other regional contenders.
 
"China's claim towards the South China Sea is a matter of muscular assertiveness. The complex geo-political situation here will remain," Bhaskar said.
 
China claims most of the South and East China seas. Other countries in South East Asia have competing claims for the Spratly Islands, Paracel Islands and Scarborough Shoal, which are thought to have resource-rich waters around them. 
 
According to Kondapalli, China will not agree to others asserting claim over the South China Sea. This tussle will continue and the issue will be clinched with military power.
 
China completed construction of two lighthouses in October and the government has reiterated that China's construction completely falls within its own sovereignty.
 
In 2015, China also moved closer in terms of bilateral relations with South Asian nations including India. A golden moment in cementing India-China relations was when Prime Minister Narendra Modi visited China in May and inked a record 24 bilateral agreements, held summit level talks and signed 26 deals worth $22 billion.
 
"China and India have moved very cautiously in terms of bilateral agreements. The two countries will definitely engage more in the trade and economy sectors but when it comes to strategic and and security domain, issue will definitely prevail for China's support towards Pakistan," Bhaskar said.
 
China-Pakistan relations took a new turn with President Xi Jinping's visit in April 2015 to Islamabad, where he envisaged investments worth $45 billion and signed 51 agreements. The investments were expected for the projects that constitute the China-Pakistan Economic Corridor. 
 
"China-Pakistan relations will remain almost the same, but when Modi visited Islamabad on December 25, 2015, it did create a ripple effect. For China-India relations to flourish better, political investments are of the utmost importance," Yelery said, adding the economic front looks very optimistic as China will look to compete with the already existing and successful Japanese investments in India.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Stock manipulation: Cambridge Technology Enterprises
Cambridge Technology Enterprises shot up by 3908% between February 2014 and December 2015
 
Cambridge Technology Enterprises (CTE) is supposed to be an information technology service-provider. CTE had a big bang initial public offering (IPO) in February 2007 that smacked of price manipulation. With a listing price of Rs45, the stock shot up by 122%, to Rs100, on the day of listing. It wasn’t long before it crashed. By the beginning of April 2007, the stock was down 50%, to Rs50. After extreme volatility in the stock price over the next two years, by February 2009, the stock price was down to Rs13. In February 2014, the stock hit another low of Rs3. This marked the starting point of a steep rally. Over the next 20 months, the stock shot up by about 4452%, to Rs145.20, on 14 October 2015. After another crash of 37%, to Rs91.90, the stock price shot up, once again, to Rs138.90, on 29 December 2015. The stock is up by 4254% from its low in February 2014. 
 
As usual, for such stocks, the price rise is not supported by financials. The small-cap stock reported revenue of Rs25.34 crore for the year ended 30 September 2015, up by 6.29% over that in the same period last year. Net profit increased to Rs2.72 crore for the year ended September 2015, from Rs1.5 crore for the same period in the previous year. CTE is quoting a price-to-earnings of nearly a hundred times. In April 2007, Bhavin Chedda was charged with creating an artificial market and price manipulation in CTE and a few other companies. However, in November 2008, he was let off by the regulator, through a consent order, after paying a fine of just Rs1 lakh. It seems that the price manipulators are back and the regulator is twiddling its thumbs.

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COMMENTS

Vikash Singh

11 months ago

Shameful reporting money life. just because the price has gone up its rigged. shameful and disgusting.

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