When you live in a country with a red-hot economy but paltry bank interest rates you need to get creative. A nickel trader tells me that the other day an old woman walked into his office with a bulging bag of RMB100 notes. How could he help her? This was her villages’ savings and she’d been sent to Shanghai to buy 2 tons of nickel. Sadly the trader was not allowed to sell retail. But why did she want 2 tons of nickel? Well, the villagers had been on the internet and seen nickel prices soar, so they thought it a good thing to punt their savings on in the hope of a decent return! Not necessarily a bad strategy. However, the only problem never resolved was, had she been able to buy 2 tons of nickel how exactly did she plan to get it back to her village?
Visited the Beijing International Literary Festival in March, which is always a pleasure. This year the event, organized by the Beijing Bookworm, was carbon-neutral. The independently audited carbon footprint included international and domestic flights and hotel accommodation for authors, gas and electricity use for the two weeks of the festival, local and long haul deliveries and even use of refrigerants. The offset will be through the purchase of voluntary carbon credits issued by a small hydro-project in Sichuan. Hopefully this will become a trend at festivals.
The budget hotel sector appears to have reached saturation point. Some chains are now offering rooms at RMB100 (US$14.60) a night and others doing two-for-the-price-of-one room deals. The evidence of saturation is compelling – according to the Beijing Bureau of Statistics, budget hotels in the city saw their revenues dip 22.2% year-on-year in 2009 as rooms lay unoccupied. Yet still the chains are expanding at a furious rate and rolling out nationwide, so there is the potential for prices to fall even further.
This month’s buzz word? The "ant tribe," apparently coined to describe China’s estimated 3 million jobless college graduates. Beijing’s call on firms not to fire people may have saved those already in jobs, but naturally most companies have imposed a hiring freeze. This has created a growing bottleneck of young unemployed. Being the educated Little Emperors of the one-child policy generation, and consequently rather spoilt, the idea of trading down to an interim McJob has little appeal. They seem content to wait around for an employer to appear and are sadly displaying stunningly un-entrepreneurial attitudes.
Confusion on the streets of Beijing! The government has introduced a RMB1 fuel surcharge for journeys over 3 kilometers. However, they introduced the new charge before including it as an additional charge on the meter. The result? Angry passengers accusing taxi drivers of price-gouging. One exasperated cabbie told me he’s had so many arguments with non-Chinese speaking foreigners that he’s now just taking the hit in his own wallet.
Foreign analysts seeing China through their own faraway prism is a theme of this column. Here’s another example: Analysts in London and New York are worried about a Chinese property bubble, the cry being they’re all "overleveraged" and "overextended." This neglects that most people are providing cash down payments of between 30-40%, which greatly reduces everyone’s exposure. On a recent trip to the US, I noticed real estate developer billboards offering new properties for just a 3.5% down payment, and in the UK 90%+ mortgages are back with a vengeance. Who’s over-exposed here?