"Le Devoir" had a small but significant article in its April 17th, 2008 issue in the Economy section, about how the increase in food prices worldwide affects China.
At the end of the first trimester, food prices in China increased by 21% from the same period last year, reported the Chinese National Statistics Bureau (NSB).
The (NSB) representative, Li Xiaochao said that "since last year, food has been the main factor of inflation, and it remains this year as well". Between January and March 2008, the CPI has increased by 8% over the same period last year, however if the food items are removed, then the increase is only 1.2%. This problem has been worsened by the increase in demand for biofuels, which leads to a transition from traditional crops like wheat towards corn because of higher sales prices.
This is a serious issue in developing countries like China, where 1/3 to 1/2 of the family revenue goes towards the purchase of food (the proportion is largest in the poor rural regions). The Chinese government is dreading social unrest caused by a food shortage, but until now nothing but the typical party rhetoric calling for increased productivity and production in the agriculture sector seems to have been accomplished.
A hungry China would be a terrible thing, with the potential to ignite a world war. The World Bank and the IMF are well aware and on Sunday they called for an urgent intervention. It remains to be seen what this intervention will be...
Thursday, April 17, 2008
Wednesday, April 16, 2008
Chinese Government Structure
I am quite convinced that most people are wondering: what is the structure of the Chinese government? The "dragon" is large and quite complex, so I tried to simplify it a bit for us, Westerners, and our limited capacity of understanding complex administrative structures.
The first flow chart explains the administrative structure of the Chinese government and the different government departments, institutions and agencies needed in order to run this large "enterprise" called China:
The following chart shows the administrative structure of the regional administrative bodies in China:
I hope this simple map will make it easier to navigate the vastly complex Chinese governmental departments and agencies landscape and reduce the personal "institutional void" for each and one of us.
The next post will bring some clarity to Mao's life and role in China's evolution from Empire to Communist Super Power.
The first flow chart explains the administrative structure of the Chinese government and the different government departments, institutions and agencies needed in order to run this large "enterprise" called China:
The following chart shows the administrative structure of the regional administrative bodies in China:
I hope this simple map will make it easier to navigate the vastly complex Chinese governmental departments and agencies landscape and reduce the personal "institutional void" for each and one of us.
The next post will bring some clarity to Mao's life and role in China's evolution from Empire to Communist Super Power.
Monday, April 7, 2008
The Three Gorges Dam
When speaking bout the size of China, one cannot ignore the newest engineering feat that's being built right now: The Three Gorges Dam. Here are some figures that provide a vision of the sheer size of this project, courtesy of Wikipedia (with all the caveats that come with it). I would like to encourage people who have better or more precise information to contribute to the posts.
The total electric generating capacity of the dam will reach 22,500 megawatts in 2011, at which point it will be the largest hydro-electric power station in the world by capacity. The dam wall is made of concrete and is about 2,309 metres (7,575 ft) long, and 185 metres (607 ft) high. The wall is 115 metres (377.3 ft) wide on the bottom and 40 metres (131.2 ft) wide on top. The project used 27,200,000 cubic metres (35,600,000 cu yd) of concrete, 463,000 metric tons of steel, enough to build 63 Eiffel Towers, and moved about 10,260,000 cubic metres (13,400,000 cu yd) of earth.
The reservoir created by the Three Gorges Dam exceeds 660 kilometres (410 mi) in length and 1.12 kilometres (0.70 mi) in width on average, and contains 39,300,000,000 cubic metres (9.43 cu mi) of water, when the water level is at 175 metres (574 ft). The dam will reach its maximum capacity by the end of 2008.
When finished, the project will have cost no more than 180 billion yuan, over 20 billion yuan less than the initial estimated budget (a public engineering project that end up under-budget... that is a great feat in itself!) of 203.9 billion yuan, just under 30 billion USD. This calculation accounts for the effect of inflation, and the lower costs are attributed to a low inflation rate in recent years. It is estimated that the cost of construction will be recovered when the dam generates 1000 TWh of the electricity, which will be sold at the price of 250 billion yuan. This will take 10 more years after the dam starts full operation.
Sources for funding include the Three Gorges Dam Construction Fund, revenue from Gezhouba Dam, policy loans from the China Development Bank, loans from domestic and foreign commercial banks, corporate bonds, and revenue from Three Gorges Dam before and after it is fully operational, with additional charges for electricity contributing to the Three Gorges Construction Fund. The additional charges are as follows: Every province receiving power from the Three Gorges Dam has to pay an additional charge of ¥7.00 per MWh. Provinces that will not receive power from the Three Gorges Dam have to pay an additional charge of ¥4.00 per MWh. Tibet does not have to pay any additional money... I am sure they are thrilled about this.
The Campus Abroad delegation will visit the Three Gorges Dam between June 25 and June 27 of 2008. We will be accompanied by top management, a favor due to the close links between HEC Montreal and the Three Gorges Dam corporation: HEC Montreal provides Management Training to their top management.
The total electric generating capacity of the dam will reach 22,500 megawatts in 2011, at which point it will be the largest hydro-electric power station in the world by capacity. The dam wall is made of concrete and is about 2,309 metres (7,575 ft) long, and 185 metres (607 ft) high. The wall is 115 metres (377.3 ft) wide on the bottom and 40 metres (131.2 ft) wide on top. The project used 27,200,000 cubic metres (35,600,000 cu yd) of concrete, 463,000 metric tons of steel, enough to build 63 Eiffel Towers, and moved about 10,260,000 cubic metres (13,400,000 cu yd) of earth.
The reservoir created by the Three Gorges Dam exceeds 660 kilometres (410 mi) in length and 1.12 kilometres (0.70 mi) in width on average, and contains 39,300,000,000 cubic metres (9.43 cu mi) of water, when the water level is at 175 metres (574 ft). The dam will reach its maximum capacity by the end of 2008.
When finished, the project will have cost no more than 180 billion yuan, over 20 billion yuan less than the initial estimated budget (a public engineering project that end up under-budget... that is a great feat in itself!) of 203.9 billion yuan, just under 30 billion USD. This calculation accounts for the effect of inflation, and the lower costs are attributed to a low inflation rate in recent years. It is estimated that the cost of construction will be recovered when the dam generates 1000 TWh of the electricity, which will be sold at the price of 250 billion yuan. This will take 10 more years after the dam starts full operation.
Sources for funding include the Three Gorges Dam Construction Fund, revenue from Gezhouba Dam, policy loans from the China Development Bank, loans from domestic and foreign commercial banks, corporate bonds, and revenue from Three Gorges Dam before and after it is fully operational, with additional charges for electricity contributing to the Three Gorges Construction Fund. The additional charges are as follows: Every province receiving power from the Three Gorges Dam has to pay an additional charge of ¥7.00 per MWh. Provinces that will not receive power from the Three Gorges Dam have to pay an additional charge of ¥4.00 per MWh. Tibet does not have to pay any additional money... I am sure they are thrilled about this.
The Campus Abroad delegation will visit the Three Gorges Dam between June 25 and June 27 of 2008. We will be accompanied by top management, a favor due to the close links between HEC Montreal and the Three Gorges Dam corporation: HEC Montreal provides Management Training to their top management.
Introducing China: It's Big... really Big!
Here are some numbers that will give you an idea of how Big China really is, in every sense of the word (these numbers are taken from Knowledge News, a very interesting publication providing general knowledge to the North Americans who actually care about this kind of stuff):
"Big Geographic Numbers
3.7 million – China's total area, in square miles (9.6 million sq km). Only Russia and Canada are significantly larger. China is about the same size as the United States. Whether it's slightly larger or slightly smaller depends on whether you count certain disputed territories.
14 – Number of countries that border on China. China's longest borders are with Mongolia, Russia, and India. Each is more than 2,000 miles (3,200 km) long.
Big Population Numbers
1.3 billion – China's total population. That's more than four times as many people as live in the United States, and about a fifth of the people on Earth. India is the only other nation with more than a billion people, and it still has 200 million fewer than China.
33 – Number of top-level administrative divisions in China, including 22 provinces, 4 municipalities, 5 autonomous regions (including Tibet), and 2 special administrative regions (Hong Kong and Macau). Each of the eight most populous provinces has at least 64 million people--more than Britain, France, or Italy. If any of those provinces were an independent nation, it would rank among the world's 20 most populous.
10 million – Population of Shanghai, China's largest city. Beijing, the capital, is home to about 7.5 million people, and Hong Kong to another 7 million. Since the 1950s, China has urbanized rapidly, but most of the people--around 60 percent--still live in rural areas.
Big Economic Numbers
7 trillion - China's gross domestic product (GDP), in U.S. dollars, adjusted for purchasing power parity (PPP). That's second only to the United States, whose GDP (PPP) is nearly $14 trillion. Basically, a nation's GDP is the value of all the goods and services it produces in a year. Economists adjust GDP for purchasing power parity to account for the fact that a dollar buys more in some places than it does in others.
Tenfold – Increase in China's GDP since 1978, when the communist regime opened up to foreign investment and began implementing market-based reforms.
53 – Percentage of China's population that lived in poverty in 1981, according to the World Bank. By 2001, the number had fallen to 8 percent. Of course, given China's size, that still amounts to more than 100 million people.
59 billion – Amount China says it will spend on its military in 2008, in U.S. dollars. The Pentagon says China's actual military expenditures will be much higher--perhaps more than twice that much. But that's still far less than the $583 billion the U.S. military has budgeted for 2008." by Steve Sampson
Of course, we will also have to mention the Chinese Wall, the only human built structure visible from space, the Grand Canal as well as the Three Gorges Dam that spans the Yangtze River in Sandouping, Yichang, Hubei. (More information about the dam will be provided in the next blog... )It is for good reason that China has been labeled "the sleeping Dragon". And guess what: it's not sleeping anymore!
China series
Stay tuned for a series of articles on China, in preparation of the HEC Montreal MBA Campus Abroad experience...
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