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Author: WuhuW

Annual Marathon

The marathon is a long-distance running event with an official distance of 42.195 kilometres (26 miles and 385 yards), usually run as a road race. The event was instituted in commemoration of the fabled run of the Greek soldier Pheidippides, a messenger from the Battle of Marathon to Athens.

The marathon was one of the original modern Olympic events in 1896, though the distance did not become standardized until 1921. More than 500 marathons are held throughout the world each year, with the vast majority of competitors being recreational athletes as larger marathons can have tens of thousands of participants.

  • November 22, 2018 by

The Economist: China’s mid-sized cities are enjoying a property boom

FOR years Wuhu, a city (pictured) in the poor central province of Anhui, was on the front line of a national effort to reduce a glut of unsold homes. New property developments stretched into the haze along the Yangzi river on the town’s western edge. But buyers were scarce: although Anhui has a population about the size of Italy’s, many of its people have long preferred to work in richer parts of the country. Officials in Wuhu tried to entice locals to buy homes, offering tax breaks. At one point they even promised to subsidise the cost, an act of desperation that made Wuhu an emblem of China’s real-estate woes.

Since early 2016, however, the city’s property prices have soared by more than 30%. Earlier this month the city sharply changed tack, introducing measures to curb speculation. For example, it required that buyers of new homes wait at least two years before selling. Developers were ordered to set prices within predetermined ranges. The city also vowed to expand the land available for development. The glut of unsold homes is, in other words, no more. A shortage is the new concern.

The striking improvement in Wuhu’s property market has echoes around the country. It is one of the 60 or so cities deemed to be “third tier”. The designation refers not just to their political ranking and size (medium by China’s standards, with populations of roughly 1m-3m); until recently it also summed up prevailing sentiment about their prospects. Analysts and investors have generally been positive about China’s first-tier megacities (Beijing, Shanghai, Shenzhen and Guangzhou) and its second-tier giants, especially those in good locations such as Hangzhou in the east and Foshan in the south. But there was less enthusiasm for cities ranked in the third tier and below. They were seen as suffering from weak industrial bases, flimsy social services and a steady brain-drain as their most educated residents left for more exciting places.

Yet a rally in China’s property market, which began in its big cities in 2015, is filtering down to these also-rans. Housing prices in third-tier cities are up by 7% over the past year on average, and by much more in the best performers (see chart). Their markets have remained hot this year, even while their bigger peers have cooled off. This has helped to reduce the stock of unsold homes. The amount of housing for sale has fallen almost continuously for the past 14 months, the longest sustained decline since records began in 2001.


That would seem to be unambiguously good news. But a closer look at third-tier cities suggests caution is in order. Speculation has played a large role in their new-found prominence. Capital controls, progressively tightened over the past two years, have trapped cash in the country. After a stockmarket collapse in 2015, housing became the most appealing asset—all the more so when, to boost the economy, the government began encouraging state-run banks to increase their mortgage lending to homebuyers. After a run-up in prices in big cities, investors looked to smaller markets for bargains.

Recent government efforts to douse the fervour in big cities had a similar effect. When Hefei, Anhui’s capital, started restricting purchases last year, buyers rushed elsewhere, including to Wuhu. Li Guochang, head of a property-research institute in Anhui, estimates that people from outside Wuhu account for more than a quarter of purchases this year, up from the normal level of about a tenth. There are now roughly 20% more homes owned in Wuhu than there are households in the city, he says. As he puts it: “This doesn’t seem very healthy.”

Nevertheless, it is too easy to treat the rally in third-tier cities as froth. Owner-occupiers make up a majority of the market. Many are locals who have the means to move to nicer homes, tired of the shabby six-floor walk-ups that still dominate many old city-centres. As for speculators, they might just know a thing or two. It has been striking that the price surge in third-tier cities has not been evenly spread around China, but rather concentrated in markets that have better locations. Places that fall within the gravitational pull of the most prosperous cities, particularly in the east and south, have fared the best. But thanks to better infrastructure links, there are many more locations that can be defined as good. Wuhu used to be a backwater. Today it is less than three hours from Shanghai by high-speed rail. In the north and west of China, well away from its glittering coast, housing prices are about the same as they were five years ago.

Homeward bound

A cascade of development has also changed the economies of mid-sized cities. As land prices and wages have risen along the coast, companies have moved inland. Wuhu, for example, now boasts numerous robotics firms. Population flows are changing, too. Anhui is one of the main sources of the migrants who staff factories and work on construction sites around the country. But its permanent population has risen by 1.7m since 2014, buoyed by the return of some of its migrant workers.

Similar reversals are also occurring in two other big out-migration provinces: Sichuan in the south-west and Hunan, Anhui’s neighbour. Some migrants are returning because of old age—the government restricts their access to health care and other benefits in places other than where they were born (to control prices, some cities have recently limited their ability to buy homes, too). Others are lured by an improvement in job opportunities. A teacher at a vocational college in Wuhu says most of his students now stay put.

The central government wants to promote this trend: it believes it will help it achieve its goal of curbing the growth of the biggest cities. Shanghai’s population has nearly doubled since 1990, to 24m. Between now and 2040, the city is aiming for a maximum of 1m more residents. Smaller cities, meanwhile, are being encouraged to attract outsiders. Some, such as Wuhu, offer special grants to university graduates who choose to live in them.

China’s campaign to control city sizes may end up causing economic harm, placing artificial limits on the most productive urban centres. It is also deeply unfair to migrants from the countryside who have toiled for years in big cities but who have little hope of settling down permanently in them . But Wuhu and its third-tier brethren are not complaining: the restrictions, loathed by so many, are helping to give them life.

Let’s all go green and explore its real economic benefits

Girls in traditional Chinese costumes enjoy a spring tour in Fantawild park in Wuhu, Anhui province. (Lai Xinlin / For China Daily)
Prose writer Liu Liangcheng wrote his book In Xinjiang with a tribute to the ancient town of Kuqa, claiming that “in this field, grass can grow old heartily without worries of being eradicated. A tree does not need to worry about choosing a wrong place for growth … Birds nest in the branches and catch insects in the wheat fields underneath.”

But, he laments, “in many places, people have been too diligent, changing the Earth to an unearthly state that only suits themselves for a living … There, except for the edible grain, the land no longer has any right to grow anything else.”

Much so in an era of industrialization and urbanization, so I tried to find an example which goes against this trend, and got one: Wuhu, a city in Anhui province sitting on both banks of the Yangtze River.

This past spring, I toured its God Mountain Park. Strolling around, I could hear birds chirping, see many people walking, playing or doing exercises, and encounter lakes dotted with lotuses and reeds, five mountain ridges flanked by trees, flowers and weeds, as well as small rivers abuzz with fish and insects.

I told the city’s information office chief Ma Tao, who accompanied me on the trip, that the city must have forgone a lot in preserving this 326-hectare parkland, as the area might have been packed with many cash-earning high-rises, as Wuhu is renowned for its Chery cars, Conch cement, Fantawild travel and booming industrial and high-tech zones.

He nodded, adding: “But you can see so many people enjoying themselves here. On weekends, there are more. Their enjoyment and ensuing improved health are our gains. We all know that for everything forgone, there’s a gain.”

So that’s their gain. By forgoing a trade-off of possible high-rises, they gained pleasure and better health.

Years ago, when I read Thomas Sowell’s A Citizen’s Guide to Economics, I was deeply impressed by its quotation from Ann Landers: “You can’t have it all. Where would you put it?”

Wuhu gave us an answer. And so do numerous other places. Nanjing’s Translations magazine reported recently that in the German city of Hanover, local residents have fought for more than 600 years to protect the Waldstation Eilenriede, a 600-hectare sea of forests from occupiers, logging thieves, builders, designers and even the city government. They eventually saved this forest sanctuary for them to seek enjoyment and peace.

The Christian Science Monitor reported the U.S. Fish and Wildlife Service on Oct 25 completed the establishment of the Great Thicket National Wildlife Refuge, including 15,000 acres of land mainly consisting of shrubland teeming with animals and insects. It will be the country’s 566th, joining a network of protected areas covering over 150 million acres of land.

But, are there real gains behind green economics?

Wuhu information office chief Ma pointed out residents’ enjoyment and their ensuing improved health, which I believe might lead to reduced medical bills.

The U.S. group Defenders of Wildlife said that the major benefit of the Great Thicket National Wildlife Refuge would be that it would attract birdwatchers and other visitors.

The U.S. Fish and Wildlife Service cited a 2013 national report, saying that spending by visitors to the refuge generated nearly $343 million in local, county, state, and federal tax revenue in 2011, while supporting more than 35,000 jobs.

In Guangdong province, seven villages at the foot of Luofu Mountain have transformed themselves into a “sea” of flowers－instead of planting crops－since 2015, attracting urban dwellers to take weekend tours there.

Nanfang Daily reported that the villagers’ gains are obvious. During the May Day holiday this year, they attracted around 80,000 visitors, netting 5.6 million yuan ($836,000) from fruit and vegetable sales, and catering.

So that’s real. Let’s all go green, and fully explore what it can bring.

By MA CHENGUANG

Wuhu’s robotics rush shows how its debt can get out of control

Reuters  WUHU, CHINA – Wednesday, August 03, 2016 11:00

A robot is presented at Wuhu robotics center in Wuhu, Anhui Province, China, June 30, 2016. Picture taken June 30, 2016.

A robot is presented at Wuhu robotics center in Wuhu, Anhui Province, China, June 30, 2016. Picture taken June 30, 2016.

 

Down a side street bracketed by massage parlors and cheap hotels in this city on the banks of the Yangtze river, a humanoid food service robot trundles around the corner of a table in a cafe, red eyes flashing in tune with synthesized classical music.
The Wuhu Hands On Café’s waiter, named “Hero,” has no customers on a drizzly Friday morning. He is, though, a symbol of Wuhu city’s hopes of becoming a major center for robotics, and the local government’s ability to chase that dream through the debt markets, whether it makes commercial sense or not.
“Hero” was the result of six months research at a nearby robotics park that has cost 2.2 billion yuan ($332 million) to establish. For the park’s next stage, including a hotel, an exhibition center and a cultural plaza, Wuhu is raising another 1.2 billion yuan through a so-called local government finance vehicle (LGFV), and offering a raft of incentives for firms to set up there.
The problem is it is not alone. Dozens of other medium-sized Chinese cities like Wuhu, which is west of Shanghai in Anhui province and has a population of around four million, have similar robotics park plans.
And the ease with which municipalities can use off balance companies like LGFVs to finance infrastructure – some needed, some not – is rapidly boosting China’s already high debt burden. Meanwhile, investors gambling that Beijing will not allow the debt to default while infrastructure remains a critical support for growth, have bid up LGFV bonds to new highs.
Beijing’s drive to make the nation a leader in robotics through its “Made in China 2025” initiative launched last year has set off a rush as municipalities up and down the country vie to become China’s robotics center.
The investment boom comes as the industry is already showing warning signs of overcapacity, despite increasing demand for robots in auto manufacturing and electronics.
Growth in demand for industrial robots in China fell by more than two-thirds to 17 percent in 2015 – and yet more than 40 robotics parks have sprouted throughout the country in the last two years, according to industry data. In June, the National Business Daily reported Vice Minister of Industry and Information Technology Xin Guobin warning that China’s robotics industry is showing signs of over investment and of “a high-end sector becoming low-end.”
China’s Ministry of Industry and Information Technology had no immediate comment when contacted by Reuters.
Shoring up growth
LGFVs first gained popularity in China in the 1990s as a way to fund municipal projects without running afoul of new restrictions on cities’ official borrowing.
Fireworks explode over a tourist resort in Wuhu, Anhui province, China April 30, 2016.

 

They played a key role in shoring up economic growth in the global financial crisis but also became a major source of China’s debt burden. Outstanding debt was $26.56 trillion, or 255 percent of gross domestic product at the end of 2015, up from 220 percent just two years before, according to the Bank for International Settlements.
A short-lived crackdown by Beijing on LGFV financing in late 2014 was quickly watered down as growth sputtered to a twenty-five year low last year.
In China as a whole, LGFV bond financing climbed 72 percent in the first five months of 2016 from the same period last year to 740 billion yuan, while the vehicles’ total outstanding bond debt now stands at around five trillion yuan, according to Everbright Securities data sourced from the Chinese information provider WIND.
“Loads of infrastructure-investing companies are exhausting every means they can get to get money,” says Li Yujian at Bohai Trust, which offers high-interest loans to companies who cannot get all the financing they need in mainstream debt markets.
Commanded not controlled
For a command economy, China has a very decentralized fiscal system with local governments responsible for about 85 percent of fiscal spending but receiving only 50 percent of tax revenues. Officials turn to debt to fill the gap.
As a result, Beijing often lacks a clear picture of what local governments are doing, and cities have little reliable data on their neighbors, leading to a dangerous tendency for duplication – especially when Beijing throws its weight behind a given sector, like robotics.
The convoluted work-arounds to funnel cash to oftentimes risky local projects also tend to muddy the question of who is actually responsible should matters go awry.
“We are just a financing platform. We raise money and we lend it out,” says Yang Bin of the Wuhu city-owned Jiujiang Area Construction Investment Corporation, which sold the bonds for the robotic center’s expansion.
The money will be spent by building contractors for the robotics park. There are also local and central government subsidies to attract firms to use the facilities.
The lynchpin of this elaborate edifice remains government backing, implicit and sometimes explicit. Market participants say investing in LGFV debt is essentially a bet on Beijing’s interest in keeping credit flowing smoothly to local governments.
“All of those companies have very weak standard credit metrics. The reason they can borrow is because of local government support, which depends on central government policy,” says Jie Peng of Western Asset Management in Singapore, which invests in some LGFV debt in large Chinese cities.
The support, including a 3.2 trillion yuan Beijing-backed local government debt swap last year, means LGFVs can offer relatively high interest rates while allowing bondholders to feel they are not likely to be heavily exposed to the consequences if investments sour.
The yield to maturity on the Jiujiang Area Construction Investment Corporation’s 1.2 billion yuan bond is 3.8 percent, about 0.5 of a percentage point higher than official local government debt in the same part of China.
To many investors, that looks like a good deal – LGFV debt has outperformed most other corporate debt over the past year as defaults in other sectors have risen.
robotb_dahi

A participant operates a robot during a competition in Wuhu, Anhui Province, China, June 22, 2013.

 

The local debt boom, though, has raised fears of a new round of wasted investment. Elsewhere in China, cities are building gargantuan sports stadiums, far bigger than they need; hundreds of amusement parks, many of which do not have the attractions to compete against rivals in neighboring towns; and innovation centers without enough entrepreneurs.
Aspirational start-ups
It is unclear whether the National Wuhu Robotics Park, which currently produces around 1,000 industrial robots a year but plans to boost output to 10,000, will be a success.
Firms are eligible for subsidized rent, subsidized loans, debt guarantees, and monetary awards to attract top talent.
But despite such support, the park contains only a handful of large established enterprises – including Anhui Effort Intelligent Equipment Co Ltd, a major manufacturer of automotive and industrial robots.
Most of the approximately 20 robot manufacturers are aspirational start-ups, or equipment firms hoping to find a new niche. The latter include firms like Anhui Goodluck Science and Technology Co Ltd – which also makes agricultural equipment, chainsaws, and lawn mowers.
Robotics park officials and the Wuhu City Jiujiang Economic Development Zone Committee declined to be interviewed for this article, while a park spokesperson did not respond to an emailed request for comment.
Some of the items under development border on novelties, like “Hero” made by a company called Okayrobot. Besides waiters and military grade segways, Okayrobot is also investing in items as diverse as air conditioned helmets, horizontal showering pods for hospitals and robotic exoskeletons that allow the very old and the disabled to walk.
“Allowing 75-year-old mothers and fathers to live like young people, that is what Okayrobot wants to do,” says general manager Wang Lipeng, gesturing to a PowerPoint showing an exoskeleton-clad man hoisting a woman in his arms, next to another emerging from a fireball.
“The policies here are very good,” added Wang. “And that has drawn the interest of a lot of firms to invest and produce.”

Property backlog allows cheap deals for the poor in Wuhu

Click here to watch the video

 

Chinese property market saw faster de-stocking in May. Over 7 million square metres of residential properties in stock was cleared last month. But smaller cities seem to have more trouble getting rid of what they’ve built.

This offers a chance to the country’s underprivileged to own properties in smaller cities. Wu Hu in central China’s Anhui Province is one such city that came up with incentive policies to help the poor. 

China still has 455 million square meters of unsold housing space as of April.  Despite calls to reduce properties stock, the backlog still increased by over 12 million square meters in the first four months of this year, compared with the end of 2015.

While the highly-sought-after big cities have attracted most of the cash-ready customers, properties in third and fourth tier cities are mainly left for farmers and migrant workers. Demand for a home of their own is strong, but so is their financing pressure.

“It is impossible for a migrant worker to apply for a loan in a commercial bank,” said Dong Hongwu, migrant worker from Wuhu, Anhui.

Wuhu in Anhui Province was the first in China to set up a property financing company for migrant workers. Farmers who come to work in cities can apply for housing loans with a small downpayment.

“It only took about three days for the loan to come through. Normal mortgage rate is over 5 percent, I got it for 3 percent from the property financing firm. The government subsidized for 10,000 yuan. This has saved us a total 30,000 yuan which would be enough to renovate our new 100-square-metre-apartment,” Dong also said.

Local Wuhu government statistics show that migrant workers have bought 1,400 units of apartments in the first five months of this year, accounting for 80 percent of the total sales. Government incentives have also helped high skilled talents with moderate incomes.

“We subsidize maximum 500,000 yuan for high skill talents who wish to buy a property here. We have analysed the demographic breakdown of our city, and about 60 percent of the population hold at least some kind of diploma,” said Luo Hongqi, deputy director of Housing & Urban Construction, Wuhu Gov’t.

Experts say these subsidizing policies are so far proving effective in terms of reducing property backlog, but long-term effect on local economy is still subject to debate.

Hefei-Wuhu-Bengbu Aims to Evolve into an Industrial Innovation Hub

The Chinese government said on Monday that it gave the nod to the establishment of two national innovation demonstration zones in Anhui and Fujian provinces, respectively.

One of the zones, consisting of high tech zones in Hefei, capital of Anhui province, as well as in Wuhu and Bengbu cities, is intended as an influential hub of industrial innovation, according to the written approval.

The Hefei-Wuhu-Bengbu innovation demonstration zone will take the lead in reforming sci-tech systems and implementing innovation-related policies, the government said in the statement.

In addition, the zone will strive to grow into a template for commercialization of research findings, a driving force behind industrial innovation and upgrading, and an ecological quarter for mass entrepreneurship and innovation.

The three cities will enhance their core competitiveness largely concerning independent innovation and innovation-driven development, Zhou Yunfeng, a local economist, said in an interview with the Paper.cn.

Hefei, Wuhu and Bengbu will be given priority in acquiring innovation resources, Zhou added.

The annual output of Anhui’s strategic emerging industries has risen by roughly 30 percent in recent years, official statistics showed. Standing out among them were electronic information, high-end equipment manufacturing, modern medicine and new energy.

Regionally, Hefei is competitive in information technology, while Wuhu and Bengbu are renowned for robot-making and green energy, respectively.

The zone should work together with its counterparts across the country, including Shanghai’s Zhangjiang, Hubei province’s Donghu and Sichuan province’s Chengdu high tech zones, in a bid to ‘form a complete regional chain for innovation,’ an official with the Anhui Provincial Development and Reform Commission said on condition of anonymity.

The central government has approved the establishment of 16 national innovation demonstration zones, according to the Paper.cn.