China Watch Blog

China Watch Blog has learnt that Japanese companies have lost further ground to Chinese and South Korean companies in winning overseas infrastructure projects, dealing a blow to a planned pillar of Japan’s economic growth, the Japan trade ministry said.

From 2005 to 2010, Japanese companies won orders for infrastructure abroad, such as railways and power plants, worth around $20 billion (1.65 trillion yen) a year. But in 2010, the figure for South Korea stood at $64.5 billion while that for China was $134.4 billion. Both numbers were four times the levels five years earlier.

Those statistics were revealed by the Japan Ministry of Economy, Trade and Industry at a subcommittee meeting of the Industrial Structure Council on April 5, the Asahi Shimbun reported.

The council plans to put together a report in November to strengthen Japan’s competitiveness in exporting infrastructure. It is expected to enter discussions on a policy of nuclear-plant exports in September.

Total demand for infrastructure in fast-growing Asia and Africa has expanded to around $1 trillion a year, about three times the level a decade earlier.

For deals worth more than $1 billion in 2010, South Korea won 14 orders, including power plant construction. Japan secured just three contracts, including natural-gas processing equipment.

Region by region, Japan is facing an uphill battle.

In the value of orders for 2010, South Korea ranked second in the Middle East. China was tops in Asia and Africa. Japan, meanwhile, slipped to 11th place in Africa from fourth in 2002 and saw its standing drop in all the three regions.

Chinese and South Korean companies offer lower prices compared with Japanese firms, due mainly to lower wages in their countries.

The strong yen has also led to even higher prices offered by Japanese companies.

China Watch Blog has learnt that the World Wildlife Fund (WWF) claims that the True Cost of a Third Runway Reclamation in Hong Kong will include a HK$48 Million Loss to the Fishing Industry in a New UBC Modelling Study.

A new study by the University of British Columbia (UBC) Fisheries Centre on the impacts of reclamation on fisheries was released by WWF today. The study projects the impacts of a 650 hectares potential third runway reclamation at Hong Kong International Airport, on the recovery of the marine ecosystem and the development of sustainable fisheries in the wake of the forthcoming trawling ban and ban on commercial fishing in Marine Parks.

It shows that the fishing industry would likely suffer losses in value of their catches of HK$48 million and losses in net profit of HK$11 million over a 18 year period .

The study also reveals that the impacts on fish catches and the fishing community of a third runway reclamation are five times greater than anticipated by Airport Authority Hong Kong (AAHK).

The new UBC figure estimates the impact of a third runway to be 0.44 percent of Hong Kong’s yearly production, versus AAHK’s figure of 0.08 percent . The UBC study calculated the loss against the more healthy marine ecosystem and fishery resources that will occur when trawling stops in late 2012, and other fishery management measures.

Samantha Lee, Senior Conservation Officer, Marine at WWF-Hong Kong said, “AAHK has downplayed the impacts of the third runway reclamation to fisheries and the fishing community. Without conducting fishery modelling to look into the future, the real cost of reclamation cannot be estimated. This new information on fisheries also fills a crucial data gap needed to conduct a Social Return on Investment (SROI) study in order to measure the true environmental and social cost of a potential third runway.”

The study shows that up to 31 non-trawler fishers are likely to lose their jobs. This is because the reclamation will reduce the expected growth in marine life such as fish, shrimp and squid populations in Hong Kong following the trawling ban. Therefore, fishers’ overall catches will be lower. If the government provides full compensation and training for the fishers using current procedures, the estimated costs would be between HK$12-31 million.

Ms. Lee continued, “The proposed third runway will undermine the social and ecological benefits that will result from the trawling ban; countering the effectiveness of conservation measures to protect the fishery resources. On the one hand the government is trying to rebuild fish stocks; on the other, it seems intent on destroying substantial areas of the sea. The government should much more carefully consider the future impacts on marine ecosystem recovery and sustainable fisheries before deciding whether to proceed with such large-scale reclamations.”

This study was conducted over the past two months. By using this type of modelling, WWF and UBC have collaborated to develop a new tool to examine not just the impacts of reclamation on fisheries but also how fishery resources will recover from the trawling ban.

China Watch Blog has learnt that a senior economist of Detsche Bank (Asia China) was quoted as saying in a China Daily report that the China Railway investment target for 2012 may be too conservative.

In December 2011, the Ministry of Railway (MOR) released a 2012 railway fixed-asset investment target of 500 billion yuan ($79.27 billion), below Detsche Bank (DB) analyst’s estimate of 630 billion yuan and much lower than market expectations of between 650 and 670 billion yuan.

Ma Jun, chief economist of the bank, was quoted as saying that he believed the railway investment target may be revised up in a few months.

“However, we believe that the current MOR budget is based on a conservative expectation of the national government budget, which will not be finalized until the National People’s Congress in March,” said Ma.

Given that real economic indicators will likely worsen in the coming months, DB believes the government will get a bit more aggressive in budgeting its fiscal expansion two months from now.

“We will not be surprised if the fixed asset investment target of the MOR is revised up again to 600 billion yuan for 2012,” Ma said.

China Watch Blog has learnt that work on the Hong Kong-Zhuhai-Macau bridge will be speeded up so that it will be completed on time to meet its slated commissioning in 2016.

Speaking at the launch of the works for the Hong Kong boundary-crossing facilities of the Hong Kong-Zhuhai-Macau bridge, Chief Executive Donald Tsang says the local projects had been delayed about one year due to a judicial review case last year.

He said the administration would strengthen the manpower and adjust the construction methods to shorten the works programme, to complete the works as scheduled.

“The bridge is the first major cross-boundary infrastructure project jointly undertaken by Guangdong, Hong Kong and Macau. With the active participation and involvement of the governments of the three places, consensus has been reached in various areas such as construction, financing and operation arrangements, resulting in a multi-win proposal,” Tsang said.

The bridge will be the world’s longest dual three-lane carriageway in the form of a bridge-and-tunnel-structure sea-crossing, linking the three places.

Tsang said the bridge will save time and money for passengers and cargo shipments, and cities in the Pearl River Delta will fall within a three-hour commuting radius of Hong Kong.

The Hong Kong boundary-crossing facilities include the construction of an artificial island of about 150 hectares in the waters northeast of Hong Kong International Airport.

To minimise the reclamation’s environmental impact, a non-dredge seawall construction method, used for the first time, will be adopted for the reclamation works. The amount of marine mud to be dredged and disposed of will be reduced by about 97%.

China Watch Blog has learnt that the Guangzhou-Shenzhen section of the Guangzhou-Shenzhen-Hong Kong high-speed rail could open by the end of December.

According to a Southern Metropolis Daily report, a test run on the section, which was suspended Oct. 26, resumed on Nov 27, the city railway administration said.

Some experts said on microblog that the opening date for the section was scheduled for Dec. 8, but this was denied by an unidentified rail official from the Guangshen Railway Group.

According to a press conference in March, the Guangzhou-Shenzhen section of the line would open before the Universiade. It had a test run July 26 but the opening was postponed after the rail crash in Wenzhou in Zhejiang Province on July 23.

The reason for the suspension of the Oct. 26 test was not revealed, the newspaper said.

The line connects Shenzhen with Guangzhou, Wuhan, Changsha and other large cities. When it opens, it will take only 25 minutes to reach Guangzhou and four hours to Wuhan. It will take eight hours to reach Beijing next year when the 2,200-kilometer Beijing-Guangzhou-Shenzhen high-speed railway opens.

China Watch Blog has learnt the good news that Hong Kong legislators have endorsed the funding of the HK$48.5 billion (US$6.23 billion) mammoth Hong Kong-Zhuhai-Macau Bridge projects that will create an estimated 14,000 new jobs.

Speaking to the media after attending a Legislative Council Finance Committee meeting, Secretary for Transport & Housing Eva Cheng said the approval reflects the sentiment of Hong Kong people who do not want to see huge infrastructure projects delayed.

The money will fund Hong Kong boundary crossing facilities, the Hong Kong Link Road as well as the detailed design of Tuen Mun-Chek Lap Kok Link.

“For the three funding approvals today we are talking about an addition of 14,000 jobs to be created. We welcome these funding approvals and we will now proceed in earnest,” she said.

“We will start the works before the end of this year. Our target now is to complete these facilities in line with the main bridge completion of 2016.”

Although the start of the works has been delayed for a year, Ms Cheng said the administration will catch up on the progress through the compression of programmes, and by implementing additional machinery and manpower.

China Watch Blog has learnt that about 7,000 visitors, representing 120 stakeholder companies and 800 delegates attended the JEC Asia 2011 event which closed its annual session on a vigorous demonstration of the buoyant outlook for the composites industry in Asia currently valued at S$31.7 billion, US$24.8 billion or Euros 18 billion.

The three days of conference and exhibition attracted 345 participating companies, with a more than 10% increase of the size of their booths and exhibition vs. 2010, representing 60 countries.

The event saw deals and announcements reflecting the dynamism of a market that could represent 51% of the worldwide market in 2015.

“Composites research budgets, either academic or industrial are expanding at rates substantially higher than before,” says Mrs Frederique Mutel, President & CEO of JEC Group.

“The composites sector is forging a bright future with sustainable innovations that were showcased at JEC Asia”, she says, adding that: “We were impressed by the novelties in the field of advanced specialty resins, glass fiber and carbon fiber applied to significant markets. For instance, nanocomposites in energy storage devices for electric cars.”

“We noted innovative building solutions for infrastructures and construction responding to the huge local needs. For instance, Japan exhibited an emergency house that can be set up in 60 minutes by 4 people in case of tsunami or floodings.

“Windmills suppliers proposed new high technologies or biobased solutions like bamboo integrated wind blades. Related to this, we can underline that two major wind energy companies recently opened research centers in Singapore.”

“Considering the remarkable growth trajectory of JEC Asia with larger booths and new exhibitors from North America, Europe, Russia, Middle-East, South Korea and Indonesia, we are committed to delivering another iconic and strategic event next year in Suntec Singapore 26-28 June 2012.”

China Watch Blog has learnt that the Government has published a notice in the Gazette on Oct 20, 2011 on the proposed reclamation, road works and sewerage works for Hong Kong boundary crossing facilities relating to the Hong Kong-Zhuhai-Macau bridge, boosting long term logistics services in the area.

The Chief Executive in Council has authorised the reclamation and road works, and the Director of Environmental Protection has authorised the sewerage works.

Reclamation for the Hong Kong-Zhuhai-Macau bridge is proposed to form approximately 130 hectares of land for the construction of the bridge’s Hong Kong boundary crossing facilities, within an area of approximately 267 hectares of foreshore and sea-bed situated in waters off the north-east of the Hong Kong International Airport.

Road works for the bridge involve three projects, namely the road works for the Hong Kong boundary crossing facilities, for the Hong Kong link road and for the Tuen Mun – Chek Lap Kok link.

China Watch Blog has learnt that Denver-based Fentress Architects, a global leader in airport architecture with a portfolio totaling more than 52 million square feet of airport terminals and facilities, is inviting architecture and engineering students to present their vision for the airport of the future, in its first-ever Global Challenge.

The aviation industry supports $3.5 trillion in annual economic activity, 32 million jobs and 2.4 billion passengers per year; therefore airport design has become more important than ever.

In the last 15 years, spurred by globalization and urbanization, there has been a resurgence of new airports in almost every city around the world.

Continually pushing the forefront of airport design, Curtis Fentress is known for his focus on enhancing the human experience from “curbside to airside,” offering passengers the latest in innovations, efficiency and comfort. Fentress Architects’ portfolio includes:
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Denver International Airport (Best Airport in North America, Business Traveler Readers’ Survey, Denver International Airport Passenger Terminal Complex, 2008)
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Incheon International Airport (Best Airport Worldwide, Airports Council International, 2005-2010)
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Mineta San Jose International Airport (World’s Most Technologically Advanced Airport, Airport Improvement Magazine, 2010)
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Los Angeles International Airport (Best Construction and Design Projects, California Construction and Design, 2010)

Fentress Architects is a learning organization, fostering an environment where creativity and leadership thrive. The studio invites students to share their innovative ideas about the future of airport architecture through the 2011 Fentress Global Challenge, which ponders:

What is the future of airport design? How will the Airport of the Future look and function?
What is the human experience within this future airport?
Evaluated in areas such as Creative Approach, Response to Site, Sustainability and Functionality, the winning student will earn a prize value of $10,000, which includes $3,000 cash
and a paid internship at Fentress Architects during the summer of 2012. The winning design will also gain international exposure in a traveling museum exhibit. Second and third place winners will receive prize values of $1,000 and $500 respectively.

FENTRESS GLOBAL CHALLENGE 2011 SCHEDULE
Competition Announcement Friday, July 22, 2011
Registration Deadline Monday, October 31, 2011
Question Submission Deadline Monday, November 7, 2011
Design Submission Deadline Saturday, December 31, 2011
Winners Announced Wednesday, February 15, 2012
Winning Designs Exhibited July 2012- 2015
Internship at Fentress Architects Summer 2012

China Watch Blog has learnt that Zhejiang Province in eastern China will issue 8 billion yuan (US$1.25 billion) worth of bonds to fund infrastructure this year, as part of the central government’s trial programme to allow local governments to sell bonds directly.

The issuance, consisting of 50-percent three-year bonds and 50 percent five-year bonds, has been ratified by the central government, according to the provincial government, the People’s Daily reported.

The money will be used to fund city-level and county-level infrastructure projects that are under construction, especially low-income housing projects, said Qian Juyan, head of the Zhejiang Provincial Department of Finance. New projects will be strictly controlled from getting the fund.

It is unclear when exactly the government will issue the bonds. However, it is a beginning of a shift in how local government’s projects are financed.

According to China’s budget law, local governments are prohibited from issuing bonds on their own. But they set up special investment platforms to raise fund. In 2009, the Ministry of Finance introduced a program that it issued bonds on behalf of local governments.

Qian said the finance ministry has selected two provinces and a municipality to participate in the trial in order to explore new financing channels for local governments.

The move came amid increased concerns that the pile-up of local debt under the investment vehicles faces risks of default after local authorities borrowed heavily to help finance China’s four-trillion yuan stimulus package amid the global financial crisis since 2008.

According to the National Audit Office, the debts of local governments stood at a little more than 10.7 trillion yuan (about US$1.67 billion) at the end of last year.

The central government has reiterated orders to clean up local debt and regulate local borrowing, and urged banks to refrain from providing loans to local governments for unapproved projects and vehicles to prevent debt increases.