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How China fudges its employment figures



How China fudges its employment figures

[vc_row][vc_column][vc_column_text]While its minister has warned of half-a-million job cuts in the manufacturing sector, his promise of rehabilitating these workers in the service sector seems hollow as the figures available simply do not add up

By Sujit Bhar

Here are two news items on the employment scenario in China. Together they present an interesting mosaic on the employment scenario in China.

The first, reported by the Associated Press and (AP) carried by US’ leading daily USA Today, says that Chinese labour minister Yin Weimin said at a press briefing in Beijing that China will cut 500,000 more steel and coal jobs this year “to reduce excess production capacity.”

This was purportedly in reaction to complains in international trading circles of the dumping of cheap Chinese products, wreaking havoc with price structures and weights on commodity exchanges.

The second, issued by news agency IANS on March 2, also from Beijing, and also quoting the same minister, Yin Weimin, talks about how China had “created over 13 million urban jobs for four consecutive years, despite downward pressure and industrial restructuring in the Chinese economy.” This piece of information was provided by the minister to the People’s Daily Online.

Trying to understand Chinese double-speak is like studying Egyptian hieroglyphics, where every gesture and every picture could have many meanings. 

Let us try to make sense of these two.

The bad news first.

AP talks about China’s huge effort to shrink its bloated industries including steel, coal, cement, aluminium and glass. It is a known fact that China had more installed capacity than even the worldwide demand. Aided by subsidies, these conglomerates (mostly government-owned or partly state-owned) pushed goods across the oceans, dumping cheap products in western countries and also India, taking advantage of WTO loopholes.

With the arrival of President Donald Trump on the American scenario, the clamour for restricting Chinese supplies has grown. Europe, too, has been up in arms to protect local industries. This has resulted in massive job cuts. The minister had said at the press conference that those laid off will get government help to find other jobs, start companies or retire.

Yin was quotes as saying: “This year, to reduce excess capacity, we need to make accommodation for 500,000 workers.” This, in plain speak, means half a million will be sacked.

Last year 726,000 workers lost their jobs in the same sector.

The minister said that this was 40 percent of the 1.8 million jobs that were to go. While the minister said that they too were provided help to restructure their lives and finances, several reports elsewhere have narrated how these workers simply had to return home to their farms, jobless, hopeless.

Now the supposed good news.

Yin has reportedly said that the “unemployment rate in Chinese cities was relatively low over the past four years.” How has he arrived at such a conclusion? He talks about four factors.

The first is the most stupendous, contradicting all major studies around the world. This is about what Yin calls “sustained economic development”. He talks about last fiscal where China’s GDP growth was 6.7 per cent, pushing the country’s GDP to $10.8 trillion.

However doubtful the first assumption (or clarification) may be, the second lets you peek into the truth. He talks about constant restructuring of industry, to optimise each sector. What does that mean? Yin reveals in his next statement.  “Tertiary industry can create on average 20 per cent more jobs than the secondary industry,” he has said.

He pointed out that “last year, the tertiary industry’s contribution to China’s GDP was as high as 51.6 per cent, 11.8 percent higher than that of the secondary industry.”

We need to talk about this in further detail, but the third factor Yin mentioned about was “reform.” This actually elaborates on the second factor, as we will come to know in a while.

Regarding reform, the minister talked about administrative reforms in government and “business reforms”, “cultivating mass entrepreneurship and innovation.”

So what manner of number crunching has the ministry engaged in while explaining two apparently disparate industry factors?

To get to the bottom, we need to understand the nature of “tertiary industry”.

Tertiary industry, as per definition, is “industry that provides services rather than producing goods, or these industries considered as a group.”

China has been, as announced, moving more towards the service sector, trying to reduce its dependence on the manufacturing sector. But how does that explain the employment scenario?

The following pie chart shows how the Chinese depict their stride into the service sector world (2013):

One would expect this to be good news, till one studies this Slate.com graph on the employment in the different sectors in 2010.Basically the “reform” is moving workers out of the manufacturing sector and retraining them for the service sector. The numbers don’t add up, sadly. The claims are as hollow as the overall system in China is. For the service sector to absorb all excesses in the manufacturing sector there has to be massive domestic demand (in India, the GDP is spurred by a huge 56 percent domestic demand).

China’s export-driven economy has not been able to adjust as quickly as it would have wanted. Only a small percentage of those laid off are being re-absorbed, also at lower salaries. How that provides such a boost to the overall GDP is a mystery.

Double-speak is a nature of Chinese diplomacy. Reading between the lines should be a nature we should develop in understanding Chinese diplomats.[/vc_column_text][/vc_column][/vc_row]

India News

Tata Group’s EV Future: to establish Rs 13,000 crore manufacturing plant in Gujarat

By 2070, Prime Minister Narendra Modi wants India to become a carbon net zero country. Electric vehicles, or EVs are more efficient and environmentally friendlier than conventional gasoline-powered automobiles. Rising fuel prices is also the main reason to switch to electric vehicles.



Tata Group

Salt-to-software conglomerate Tata Group has signed an agreement with the Gujarat government to establish a giga-factory for manufacturing of lithium-ion cells, with an initial investment estimated at approximately 13,000 crore. According to a state government document posted on its website, Tata Agaratas Energy Storage Solutions Pvt., a subsidiary of Tata Group, signed a memorandum of understanding on Friday to establish an electric-vehicle battery plant with a production capacity of 20 gigawatt hours, creating direct and indirect employment for more than 13,000 people.

In past also, Tata Group has been investing heavily in the electric vehicle (EV) market. In 2018, Tata Group launched The Tata Tigor EV for the commercial market. The Tigor EV can be charged up to 80% in 90 minutes and has a range of up to 142 km on a single charge.

The Nexon EV, Tata Motors’ first EV for the personal market, was introduced in 2019. The Nexon EV can be charged up to 80% in 60 minutes and has a range of up to 312 km on a single charge. The Tata Group subsidiary Tata Power also participates in the EV industry.

According to the state government, the Tata facility will establish Gujarat as a global leader in the production of lithium batteries, and the company would receive support in establishing a production eco-system in the region. A spokesman of the Tata Group declined to comment.

By 2070, Prime Minister Narendra Modi wants India to become a carbon net zero country. Electric vehicles, or EVs are more efficient and environmentally friendlier than conventional gasoline-powered automobiles. Rising fuel prices is also the main reason to switch to electric vehicles.

India is expanding the use of EVs nationwide in an effort to become an EV-efficient nation. Although the demand for these vehicles is now being driven by the two- and three-wheeler segments, automakers are already either introducing models or announcing plans to do so in the near future.

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India News

Withdrawal of Rs 2,000 notes statutory exercise not demonetisation: RBI tells Delhi HC



The withdrawal of Rs 2,000 banknotes is a statutory exercise, not demonetisation, the Reserve Bank of India (RBI) told the Delhi High Court on Tuesday.

The high court was hearing a petition challenging the decision by the RBI and SBI that enables the exchange of Rs 2,000 notes without the requirement of an identity proof. The plea filed by Advocate Ashwini Kumar Upadhyay said the decision was arbitrary and against the laws enacted to curb corruption.

Responding to the plea, the RBI said the decision to enable the exchange of Rs 2,000 notes was taken for operational convenience as the withdrawal is not demonetisation but merely a “statutory exercise.”

In his plea, advocate Upadhyay said he wasn’t challenging the decision withdraw the Rs 2000 notes but the decision to exchange the said denomination without requiring any slip or identity proof. The petition argued that the exchange of currency should only be allowed through bank accounts linked with Aadhaar.

It claimed that the current arrangement would only enable mafia and gangsters like “Atiq Ahmed’s henchmen” and Maoists while arguing that today almost every poor person has a Jan Dhan account and BPL persons are also connected to bank accounts.

A Delhi HC bench of Chief Justice Satish Chandra Sharma and Justice Subramanium Prasad said an appropriate order will be passed on the plea.

Advocate Upadhyay claimed in his public interest litigation (PIL) that the notifications by the RBI and the State Bank of India (SBI) that enable the exchange of Rs 2000 notes without requiring a requisition slip and identity proof were arbitrary, irrational and offend Articles 14 of the Indian Constitution.

The PIL claimed that cash transaction in in high value currency is the main source of corruption and used for illegal activities like terrorism, naxalism, separatism, radicalism, gambling, smuggling, money laundering, kidnapping, extortion, bribing and dowry, etc. and a large amount of the currency has reached either in individual’s locker or has “been hoarded by the separatists, terrorists, Maoists, drug smugglers, mining mafias & corrupt people”.

RBI counsel, Senior advocate Parag P Tripathi argued that the emphasised that the court cannot interfere in such matters and the decision was taken to allow exchange of the Rs 2000 currency note for “operational convenience” as the said banknote is not commonly used and other denominations continue to meet currency requirements.

Advocate Tripathi said that no points mentioned by the petitioner impinge or deal with constitutional issues and as such the court cannot interfere.

On May 19, the RBI had announced withdrawal of Rs 2,000 currency notes from circulation, and said existing notes in circulation can either be deposited in bank accounts or exchanged by September 30.

However, the 2,000 notes will continue to be legal tender, it had said, adding that the notes can be exchanged for other denominations from any bank starting May 23, albeit with a limit of Rs. 20,000 per transaction.

Both the RBI and the SBI issued notifications stating that no requisition slip or identity proof is required for exchanging the Rs 2,000 notes.

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India News

Factually baseless: SEBI on claims of investigations against Adani Group since 2016

The Securities and Exchange Board of India (SEBI) on Monday told the Supreme Court that all claims that the market regulator has been investigating the Adani Group since 2016 are “factually baseless” and one must not jump to “premature and wrong conclusions” in the case.



Adani Group

The Securities and Exchange Board of India (SEBI) on Monday told the Supreme Court that all claims that the market regulator has been investigating the Adani Group since 2016 are “factually baseless” and one must not jump to “premature and wrong conclusions” in the case.

In an affidavit filed in the Apex court, SEBI said that no listed company of the Adani Group was among the list of 51 companies that it had investigated for issuing of Global Depository Receipts or GDRs.

According to the affidavit, filed in response to a plea claiming that SEBI had been investigating the Adani group since 2016 and had opposed a six-month extension to its ongoing probe, the market regulator clarified that the ‘investigation’ “referred to in paragraph 5 of the reply affidavit has no relation and/or connection to the issues referred to and/or arising out of the Hindenburg Report.”

It further said that matter pertains to the issuance of GDRs by 51 Indian listed companies which the SEBI was investigating, adding that no listed company of Adani Group was part of the aforesaid 51 companies.

Read Also: Karnataka CM fight: Siddaramaiah emplanes for Delhi, Shivakumar says did not receive invitation from high command

The SEBI said that after the completion of the investigation, appropriate enforcement actions were taken. Hence, the claims that the SEBI is investigating the Adani Group since 2016 are “factually baseless.”

The regulator said the six-month extension is to ensure that a thorough investigation is carried out keeping in mind the interest of investors and the securities market.

The Supreme Court had on March 2, directed the SEBI to investigate violations by the Adani Group, if any, before and after the release of the damning Hindenburg report.

The SEBI had been asked to file a report within two months, however, on April 29, the regulator filed for a six-month extension to complete the investigation.

Adani Group endured over $120 billion in market losses- nearly half of the conglomerate’s estimated value—since the damning report released by US short-seller Hindenburg Research.

In its critical report, Hindenburg Research accused the Adani Group of indulging in improper use of offshore tax havens and stock manipulation while also raising concerns about high debt and the valuations of seven listed Adani companies.

Punjab court summons Congress chief Mallikarjun Kharge for comparing Bajrang Dal to SIMI, Al Qaeda in Karnataka manifesto

Karnataka gave befitting reply to BJP: Kerala CM Pinarayi Vijayan on poll results

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