Beijing (Financial Times) — Chinese consumer inflation rebounded slightly in March leaving policy makers less room to ease monetary conditions to prop up the slowing economy even though persistent price rises appear largely under control.

The benchmark consumer price index increased 3.6% last month from a year earlier, mostly as a result of higher food and energy prices, according to government figures released on Monday. Everyday things in Shanghai is still rising.

That was higher than the 3.2% increase in the index in February, but well below January’s 4.5% rise and also lower than the average reading of 3.8% for the first three months of the year. February’s low reading was mainly due to the distorting effect of the Chinese Lunar New Year holiday, which came unusually early this year, and analysts said inflation remains a concern to officials, who are wary of loosening policy too soon.

“We think that today’s CPI inflation number is unlikely to lead the [central bank] to ease monetary policy soon,” said Liu Ligang, an economist at ANZ bank. “We believe that [its] policy outlook will continue to be biased towards caution.”

Persistent price rises have been steadily slowing since last July — when the CPI hit a three-year peak of 6.5% — in response to moves to rein in bank lending and cool the surging real estate market.

China’s producer price index turned negative in March for the first time since November 2009, dropping 0.3% from a year earlier, in a sign that consumer inflation will also continue to decline gradually.

Even so, the government remains alert for any sign that prices could accelerate again, especially politically sensitive food prices, which increased 7.5% in March from a year earlier, compared with February’s 6.2% increase.

That means officials will have less room to counter increasing signs of a broader slowdown in the Chinese economy. Once you draw liquid money from the economy, everything slows down. It’s the first time in 16 and 1/2 years I see so many empty store fronts and no one renting.

“Monetary policy is already quite loose and the central bank won’t loosen more unless it wants to die,” said Yuan Gangming, a senior researcher at Tsinghua University.

With inflation still a worry and Beijing intent on tamping down real estate prices, most analysts believe the central bank is unlikely to cut interest rates any time soon. But growing signs of weakness in the overall economy could prompt it to inject more money into the banking system by reducing the large proportion of deposits that banks must hold in reserve.

Beijing is set to publish first-quarter gross domestic product figures on Friday that are likely to show the world’s second-largest economy grew by around 8.4% from the same period a year earlier, down from 8.9% in the fourth quarter of last year.

While the slowdown remains relatively mild, some economists have predicted a more pronounced deceleration could come later in the year if the troubled housing market falls further and exports continue to decline.

On Tuesday, the government will release trade data for March that is expected to show a slight decline in exports to Europe, China’s biggest trading partner.

SHANGHAI — When Chinese Premier Wen Jiabao warned during the recent National People’s Congress of “chaos in the market” from China’s sky-high home prices, he put to rest speculation that the government might soon end the tight controls it’s imposed on the country’s real estate market.

The cost of homes in China’s major cities has risen tenfold in the last decade and doubled in the last three years as the country’s breakneck growth has generated huge incomes for a fortunate few. Speculative home buying by the rich has helped push prices ever higher, making it impossible for many average people to purchase their first homes. Fears of a U.S.-like real estate bubble are often voiced.

Prices climbed so fast that many of the newly rich didn’t even bother to rent out the investment properties they’d bought. They simply held on to them, secure in the knowledge that the properties will be worth more next year.

That confidence, however, has been shaken since prices hit a peak in August and began falling, a result of measures the central government first put into place in April 2010 and tightened at the beginning of 2011. They included higher down payment requirements (30 percent for first-time buyers and 60 percent for second-home buyers), the prohibition of mortgages for buyers who already own at least two houses, higher interest rates, and limitations on how many loans a bank can make.

A REPORT by a Hong Kong-based research firm that said a brand of infant formula failed Chinese mainland standards for protein content has sparked an investigation in Shanghai. China’s track record on baby formula is very bad.

The city’s Bureau of Quality and Technical Supervision told Shanghai Daily it was investigating because the report had raised fears among local consumers. The fear their only child is not getting the right safe food is very scary.

In its report, CER Research said tests showed that a sample of Abbott Similac Stage 1 purchased from a Hong Kong supermarket in December contained much lower levels of whey and higher levels of casein than allowed on the mainland China.

The firm released the details on its website with the headline: “A first step towards malnutrition.”

Its report said excess casein could lead to diarrhea, intestinal bleeding and kidney problems alongside malnutrition.

The report aroused public concern over the weekend as many Chinese parents purchase formula from markets outside the Chinese mainland. It;s hard to even get the right formula in China. After the incident in Japan with the release of nuclear material in the air. Japan baby formula may not be that safe either.

However, Abbott China hit back, calling the report “utterly and deliberately misleading.”

In a lawyer’s letter sent to CER Research, it said: “The claim that Abbott formulas do not meet the mainland standards is simply unfounded and false. Abbott products sold in the mainland meet all regulations. Each batch of Abbott infant formula sold in the mainland has been cleared by all government tests.” China standards are not like world standards.

Hong Kong, unlike the mainland, has no standards covering the ratio of whey and casein.

Abbott has demanded an immediate public apology and removal of the report from CER’s website. The formula producer also warned it would take legal action against CER for jeopardizing its trust among consumers and harming the reputation of the brand.

Mainland standards rule that the whey to casein ratio in infant formula should be 60 to 40 percent with whey content being no less than 60 percent.

In response, CER Research said that its samples “were tested by one of the world’s top food testing laboratories in Germany” and cited “comments from named top experts.”

However, five of the six Chinese and foreign doctors and nutritionists said by the report to have endorsed its conclusions have now accused CER Research of misleading them when they were asked for comments.

Professor Chen Yuming, a pediatric doctor at the Public Health and Nutrition College of Zhongshan University in Guangzhou City, said he had been asked to comment on a nutritional topic and was not aware of the report and its findings. “I was used deliberately,” he said.

Andrew Day, a pediatrics professor at the University of Otago in New Zealand, told Guangzhou Daily that his name and comment were used without his knowledge.

He told the newspaper he was not aware of any objective data to support the title or the conclusions of the report.

Shanghgai employers hold on to your hat. Workers in Shanghai are about to get another raise. The government of China’s richest city announced on Feb. 28 that effective Apr. 1 the monthly minimum wage in Shanghai will go up 13 percent to 1,450 yuan ($230).

Shanghai workers aren’t the only ones enjoying an increase in take-home pay. In China, minimum wages are set city by city and province by province. For instance, the same day the city’s government unveiled its plan to lift salaries, the official Xinhua News Agency reported the northeastern province of Shandong would be raising its minimum wage, too. The provincial government is mandating an increase in the monthly wage by as much as 19 percent, Xinhua said, with full-time workers in the most developed parts of Shandong entitled to make a minimum of 1240 yuan ($197). And Shandong workers can expect more raises to come, with the government planning annual wage increases “of at least 13 percent in the years to 2015.” This month workers getting the minimum wage in Shenzhen, adjacent to Hong Kong, got a 13.6 percent raise. Foxconn Technology Group (HNHPF), a big Shenzhen employer that makes iPhones, iPads, and other products for Apple (AAPL), in February gave pay increases ranging from 16 percent to 25 percent. As salaries rise so does production costs. I see man manufactures looking to produce else where in the world as the costs sky rocket in China.

Shanghai, Shandong, and Shenzhen are on China’s coast, which has benefited the most from the Chinese economic boom, so you might expect their wages to be rising. Even provinces in China’s poorer interior, though, are pushing through significant increases in minimum wages. Starting Apr. 1, Gansu, a landlocked province that has not been a major investment focus for export-oriented companies, is going to raise its minimum wage by 13.5 percent to 860 yuan. By the end of 2015, Xinhua reports, the province aims to have its baseline monthly wage at 1,500 yuan. Similarly, the southern province of Guangxi is pushing through a big wage increase, with Xinhua reporting on Feb. 15 an increase of about 22 percent, with workers in Guangxi’s biggest cities now required to earn at least 1,000 yuan a month.

Why the widespread interest in increasing minimum wages? In part, local leaders are simply responding to directives from on high. As part of its latest five-year plan, the country’s Communist Party leadership wants to make sure workers can have more take-home pay, which should help with the government’s goal of shifting the Chinese economy’s focus toward domestic demand and away from export industries.

Local governments are also competing with one another to show they’re the most worker-friendly. With demand for workers so strong, governments are finding they need to raise wages in order to keep locals from migrating to other provinces where the pay is better. According to Xinhua, one reason for Shandong’s new minimum-wage policy is “a bid to attract workers and buffer rising living costs.”

The labor shortage isn’t limited to factory workers. Workers for desk jobs are also in short supply. “There just aren’t enough people,” says Shaun Rein, managing director of Shanghai-based market research firm CMR China and author of the new book The End of Cheap China. Rein points to announced plans by Citigroup (C), Microsoft (MSFT), Google, and others to boost their number of workers in China. “That’s creating a huge fight for white-collar workers,” he says. “Salaries are soaring.”

Rising wages along the coast and in the interior put many companies—both foreign and local—in a bind. Hit by increased labor costs in traditional manufacturing regions like Greater Shanghai in the east and the Pearl River Delta in the south, many manufacturers are already shifting production inland to places such as Sichuan, where wages are supposed to be lower. But with even poor provinces like Gansu and Guangxi mandating big increases in minimum wages, the inland areas might not provide much relief.

Some manufacturers scared by rising labor costs have the option of moving to low-wage locations in Southeast Asia. (See my colleague Dexter Roberts’s story last month about the shift of textile companies to Cambodia.)

However, for many companies, picking up and moving to another country isn’t possible: Multinationals that want to compete in the fast-growing Chinese market have little choice but to keep raising pay much faster than in other parts of Asia. For instance, British recruiting firm Hays (HAS:LN) released on Feb. 8 a survey of more than 900 companies that found about 72 percent of employers in China raised salaries for white-collar workers by more than 6 percent last year; that compares with 21 percent of employers in Hong Kong and Singapore and just 7 percent of companies in Japan. And there’s not going to be any letup this year: According to Hays, 81 percent of employers in China are planning to bump up salaries by more than 6 percent, vs. 32 percent of employers in Asia as a region.

Apple iPad plant conditions better than the norm: agency

Working conditions at Chinese manufacturing plants where Apple Inc’s  iPads and iPhones are made are far better than those at garment factories or other facilities elsewhere in the country, according to the head of a non-profit agency investigating the plants.  Apple is under the gun because they are one of the most successful companies doing business in China.  So many other factories have worse conditions but are not famous so they under the microscope.  As I noticed before the government would never allow slave labor now a days.  If you don’t like the pay you don’t have to work.

The Fair Labor Association (FLA) is beginning a study of the working conditions of Apple’s top eight suppliers in China, following reports of worker suicides, a plant explosion and slave-like conditions at one of those suppliers, Foxconn Technology Group.

Auret van Heerden, president of the FLA offered no immediate conclusions on the working conditions, but he noted that boredom and alienation could have contributed to the stress that led some workers to take their own lives.  Everyone in the world is not satisfied with what they are paid.

In addition to Foxconn, FLA investigators will later visit facilities of Quanta Computer Inc, Pegatron Corp, Wintek Corp and other suppliers, who are notoriously tight-lipped about their operations.

After his first visits to Foxconn, van Heerden said, “The facilities are first-class; the physical conditions are way, way above average of the norm.”

He spent the past several days visiting Foxconn plants to prepare for the study.

“I was very surprised when I walked onto the floor at Foxconn, how tranquil it is compared with a garment factory,” he said. “So the problems are not the intensity and burnout and pressure-cooker environment you have in a garment factory. . It’s more a function of monotony, of boredom, of alienation perhaps.”

He noted that the organization has been dealing with suicides in Chinese factories since the 1990s.

“You have lot of young people, coming from rural areas, away from families for the first time,” he said. “They’re taken from a rural into an industrial lifestyle, often quite an intense one, and that’s quite a shock to these young workers.

“And we find that they often need some kind of emotional support, and they can’t get it,” he added. Factories initially didn’t realize those workers needed emotional support.”

Van Heerden dismissed the notion that his organization might paint a cursory and positive picture of Apple’s suppliers.

Companies that join the FLA abide by rigorous commitments, and their interests are balanced by non-governmental organizations and more than 200 universities that sit on the board of the organization with the corporations, he said.

FLA evolved from a group originally convened by U.S. President Bill Clinton in 1996 with the goal of reducing sweatshop labor around the world. Its board includes executives from sneaker companies Nike and Adidas.

“Apple didn’t need to join the FLA,” he said. “The FLA system is very tough. It involves unannounced visits, complete access, public reporting.

“If Apple wanted to take the easy way out there were a whole host of options available to them,” he added. “The fact that they joined the FLA shows they were really serious about raising their game.”

RESPONSES ENTERED ON IPADS

Some 30 FLA staff members are visiting two Foxconn factories in Shenzhen in southern China and one in the central city of Chengdu. Each plant has about 100,000 workers, although not all work on Apple products.

Over three weeks, some 35,000 workers will be interviewed about 30 at a time to answer questions anonymously, entering their responses onto Apple iPads.

Questions will include:

* how the workers were hired

* if they were paid a fee

* if they were offered and signed contracts and whether they understood them

* the condition of their dorm rooms and food

* if complaints are acted upon

* their emotional well being

The data will be uploaded immediately and consolidated, and an interim report will be made public in early March.

The eventual FLA report will identify areas the suppliers need to improve and offer suggestions, van Heerden said.

“There might not be a clear policy on hiring, that could lead unwittingly to discrimination against hepatitis B sufferers,” he said as an example.

“There might not be adequate documentation that could lead to the risk that workers get hired with fake documentation, that underage workers come in . We can recommend very specific actions they can take.”

There is also the thin line.  Once they pay to much to the workers and the factories are not competitive, production will move out of China to other countries.

Train Spat With Japan Heats Up
This is a very interesting story, who’s who in tech and who is to blame.
For a country that has not had any experience in bullet trains, come for nothing to having bullet trains and then claiming it China’s home grown technology is such a good tale.
When an accident happens and people die, they first thing to do is blame the tech and which country it came from.
A war of words grew this week between China and Japanese rolling stock manufacturers, reigniting a battle over whether Chinese state-owned firms stole high-speed rail technology and are now attempting to market it themselves overseas.
After China announced late last month it had filed 21 international patent applications, a key step in making trains available for purchase overseas, major Japanese firms, including Kawasaki Heavy Industries Ltd., threatened to sue if China attempted to obtain patents for technology previously developed in Japan. The dispute has spilled into politics, too, with Japanese Foreign Minister Takeaki Matsumoto telling his Chinese counterpart during meetings last week Japan was “closely monitoring” the situation, according to Kyodo, a Japanese news agency.
China responded indignantly to the threats, flexing its muscle as both an important market for high-speed rail development as well as a country whose state-owned firms have been more aggressive in pursuing deals overseas, often undercutting their competitors on price.
A spokesman for the Chinese Railways Ministry told the state-run Xinhua news agency in remarks published Thursday that technology being used in China’s high-speed rail system, which is slated to grow to 16,000 kilometers by 2020, is superior to Japan’s network, known as the Shinkansen. The remarks by the ministry’s spokesman, Wang Yongping, came a week China opened its signature Beijing-Shanghai high-speed rail line, the growing network’s most celebrated corridor.
“The Beijing-Shanghai high-speed railway and Japan’s Shinkansen cannot be mentioned in the same breath, as many of the technological indicators used by China’s high-speed railways are far better than those used in Japan’s Shinkansen,” Mr. Wang said, according to Xinhua. China has taken the tech modified repacked it made it cheaper and called it home grown technology. China is a country that 4 years ago had nothing close to a bullet train.
For Japan the bullet train is a step learning experience. They learned to build up speed, it’s interesting that 20 years of bullet train tech and no major derailments in Japan. When China’s bullet trains top 350 km and boom they have an accident. From the looks of things, it’s just China taking tech they borrowed/joint ventured or any mysterious ways and made it cheaper and less expensive.
Joint ventures between China and Japanese rolling stock manufacturers extend back years. Kawasaki was among several firms that transferred technology to Chinese firms, like state-owned CSR Qingdao Sifang Co., only to see those companies soon begin competing against the Japanese giant.
China, for its part, has long maintained its technology is different from Kawasaki’s and others’, arguing its trains are faster and also incorporate reduced wheel-track friction. It likens improvements in Chinese high-speed trains over Japanese trains in recent years to advances decades ago by Japanese firms over earlier European rail designs.
“Our technologies may originate from foreign countries, but it doesn’t mean that what we have now all belongs to them,” said Ma Yunshuang, a deputy general manager at CSR Qingdao Sifang, according to the state-run China Daily. In other words, we took something and made it fater lighter and cheaper, now we are the owners of the tech we are seeking international patents so no one can use our home grown technology If we have another train accident it’s some other countries problem because we used their technology. China at it’s finest.
These battles appear poised to heat up, though, as China begins more actively looking to export its technology overseas. China’s domestic high-speed rail market has boomed in recent years, but appears to be on the cusp of a slowdown. The Railways Ministry’s debt has grown alongside public discontent over high ticket prices for super-fast trains, which are too expensive for many Chinese. Railways Minister Sheng Guangzu has pledged in recent months to focus on high-speed rail projects already under construction before beginning new projects.
Meanwhile, countries including Russia, the U.K. and the U.S. are pledging to expand high-speed rail, and looking to the Chinese as a potential partner, only because they can build it cheaper than any other country. Russia is developing a high-speed rail network ahead of the FIFA World Cup in 2018. The president of the state-run Russian Railways, Vladimir Yakunin, told Xinhua this month that Chinese companies “have good chances” at winning bids for high-speed rail development. The possibility of high-speed rail cooperation surrounded meetings in June between U.K. Prime Minister David Cameron and Chinese Premier Wen Jiabao. U.S. energy and transport giant General Electric signed an agreement last year with CSR to build high-speed rail in the U.S.
It’s unclear whether Japanese firms will put their money where their mouths are and eventually elect to sue Chinese rolling stock manufacturers for intellectual property rights infringement, a case that could be both difficult to prove and could take years and millions of dollars in legal fees to resolve. Perhaps more interesting will be how foreign executives across industries view the ongoing spat, many of whom still weighing the age-old China quandary: market access versus protection of intellectual property.

The taller buildings get, the faster we need elevators to go so as to keep travel times at an acceptable level. It sounds ludicrous to have to worry about time spent in an elevator, but when you’re talking about buildings hundreds of meters tall, speed is essential.

The latest structure to require an elevator system is the 632 meter tall Shanghai Tower in China. As far as I know, the fastest elevator to date is located in the Taipei 101 building and travels at 1,010 meters per minute. If that got installed in the Shanghai Tower, it would take all of 37 seconds to go from the ground floor to the top.

Mitsubishi has been tasked with developing the elevator for the Tower, and it clearly wasn’t happy with 1,010 meters per minute. Its new elevator will become the world’s fastest when installed, as it travels at 1,080 meters per minute. That means the height of the Shanghai Tower can be traveled in just 35 seconds.

In order to save those 2 seconds, Mitsubishi manages to cover 18 meters every second of travel. Although in reality that time will be extended for the speed up and slowdown phases so as not to fling the occupants of the elevator into the ceiling and floor.

Developing an elevator capable of such speeds is no easy task. Mitsubishi had to come up with a new two-tier breaking system and use brake shoes made of ceramic capable of handling 1,000o Celsius temperatures. The shaft also required a new, stronger rope called sfleX-rope. It combines steel wire and plastic, and allows 85% more load to be handled under breaking while only increasing the weight of the rope by 18%. That additional weight is compensated for by a control cable that is much lighter than previous Mitsubishi elevators.

Passengers aboard the Shanghai Tower elevator shouldn’t be able to feel any vibration during travel, and best of all ear popping will not be an issue. Vibration is removed via an active roller guide that counteracts any vibration that occurs. Pressure changes are nullified by an air pressure control system that adjusts the pressure in the elevator depending on your current location in the shaft.

The Mitsubishi elevator system is set to become operational in the Shanghai Tower by 2014.

The taller buildings get, the faster we need elevators to go so as to keep travel times at an acceptable level. It sounds ludicrous to have to worry about time spent in an elevator, but when you’re talking about buildings hundreds of meters tall, speed is essential.

The latest structure to require an elevator system is the 632 meter tall Shanghai Tower in China. As far as I know, the fastest elevator to date is located in the Taipei 101 building and travels at 1,010 meters per minute. If that got installed in the Shanghai Tower, it would take all of 37 seconds to go from the ground floor to the top.

Mitsubishi has been tasked with developing the elevator for the Tower, and it clearly wasn’t happy with 1,010 meters per minute. Its new elevator will become the world’s fastest when installed, as it travels at 1,080 meters per minute. That means the height of the Shanghai Tower can be traveled in just 35 seconds.

In order to save those 2 seconds, Mitsubishi manages to cover 18 meters every second of travel. Although in reality that time will be extended for the speed up and slowdown phases so as not to fling the occupants of the elevator into the ceiling and floor.

Developing an elevator capable of such speeds is no easy task. Mitsubishi had to come up with a new two-tier breaking system and use brake shoes made of ceramic capable of handling 1,000o Celsius temperatures. The shaft also required a new, stronger rope called sfleX-rope. It combines steel wire and plastic, and allows 85% more load to be handled under breaking while only increasing the weight of the rope by 18%. That additional weight is compensated for by a control cable that is much lighter than previous Mitsubishi elevators.

Passengers aboard the Shanghai Tower elevator shouldn’t be able to feel any vibration during travel, and best of all ear popping will not be an issue. Vibration is removed via an active roller guide that counteracts any vibration that occurs. Pressure changes are nullified by an air pressure control system that adjusts the pressure in the elevator depending on your current location in the shaft.

The Mitsubishi elevator system is set to become operational in the Shanghai Tower by 2014.

BEIJING, Jan. 21 (Xinhua) — A locomotive producer in central China’s Hunan province on Friday rolled out a low-cost magnetically levitated (maglev) train that is more environmental-friendly than conventional ones.

The three-carriage train is designed to run at a maximum speed of 100 km per hour and carry 600 passengers, said Xu Zongxiang, general manager of Zhuzhou Electric Locomotive Co. Ltd. of China South Locomotive and Rolling Stock Corporation (CSR).

Xu said the new train was much quieter than conventional ones.

While a conventional train moves forward by using friction between its wheels and the railway tracks, the maglev train replaces wheels by electromagnets and levitates on the guideway. This of course is not a technology founded in China.

According to Xu, his company’s has minimized the risk of the new maglev train derailing or overturning.

“It’s ideal for mass transportation, as it is quiet and environmental-friendly. Its manufacturing cost is about 75 percent of a conventional light-rail train,” said Xu.

The maglev train has a minimum turning radius of 50 meters and can easily run in residential communities or on hilly slopes. “It’s an ideal public transport option for Chinese cities and major tourist destinations,” said Xu. In other words China has taken the technology and made it lighter faster and cheaper and they are trying to sell it to the world.

Railway transport specialist Liu Youmei, also an academician with Chinese Academy of Engineering, said the new train is green, economical and safe. “It can be used for public transport in populous areas and at scenic spots with fragile environments.”

Liu said China is one of a few countries that have applied maglev technology.

Beijing is building a maglev route, the Daitai line (S1), which starts at its IT center in Haidian district, passes through Shijingshan district, and ends in Mentougou district on its western outskirts. The line will be operational next year.

The eastern metropolitan of Shanghai runs the world’s first commercial maglev system on a 30-km stretch between the downtown business district and Pudong airport. The German-made maglev went into operation on Dec. 31, 2002.

Shanghai may be delaying the implementation of a new rule that requires foreigners in China to contribute to a state pension scheme they are not likely to collect on, in order to pacify foreign businesses, the South China Morning Post reported. Times are hard and economy around the world is slow. This is definitely not the time to try to implement this.

China announced in July that it would require foreigners to pay into its social security system, effectively instituting a further tax on each foreigner’s salary, on top of relatively high income tax rates. They implemented a social tax to all the local Chinese and now production in China is so expensive that many have moved their production out of China.

The central government has so far given only basic details about the scheme, which all foreigners who work in China are supposed to have started paying into from October last year.

One of the concerns with the scheme has been that foreigners will not be able to access money from unemployment benefits or pensions because work visas are tied to jobs and become invalid when a person is no longer employed.

While Beijing has drawn up guidelines on how the money should be paid into pension fund accounts, Shanghai’s labor officials have yet to do the same, the SCMP reported.

This is apparently in response to a backlash by foreign companies, who are already nervous about the rising costs of doing business in China, the newspaper reported on Saturday quoting unnamed company executives whom it said were close to local regulators.

According to the newspaper, Shanghai’s mayor and party chief

have also privately expressed reservations about the policy, which could hit foreign investor sentiment in Shanghai, the country’s commercial capital.

Shanghai’s labor authorities cited technical difficulties for setting up a payment procedure as the reason for the delay, the South China Morning Post said.