Highlights from the EO print edition, No. 589, Oct 8, 2012

A Change is Taking Place in the Global Manufacturing System
News, page 3-7
~ During the most recent round of changes to the structure of the global manufacturing system, China was able to become the workshop of the world.
~ Due to both the global economic crisis triggered by the subprime mortgage crisis in the U.S. four years ago and the ongoing European debt crisis, a new round of changes to global manufacturing is now taking place.
~ At the beginning of the year, U.S. President Obama announced policies aimed at reviving the U.S. manufacturing industry. States in America's west, such as Ohio, Michigan, Wisconsin and Pennsylvania are now attracting clothing, textile and furniture manufacturers back from lower-cost countries and regions such as Mexico, Southeast Asia and China.
~ The European debt crisis has had less of an impact on Germany due to its well-developed manufacturing industry, which also reminded other European countries that they must achieve a certain scale of manufacturing. Meanwhile, over the past two years, Germany continued to attract investment, including from enterprises in China keen to establish factories in Germany.
~ The impact of "re-industrialization" in developed countries on China's new emerging industry seems larger than expected. "China's high-tech, new energy, electronics and automotive-related industries will be affected" according to Li Muqun (李牧群), chief researcher of Samsung Economic Research Institute.
~ Li believes that the current system is still in a state of upheaval, but after a gradual process, it will eventually be settled. By that stage, Li argues, most of the high-end of the world's industrial chain will be based in United States and Europe.
~ For example, it's possible that Apple will once again manufacture their products in the U.S. On the other hand, the processing industry at the most low-end of the industrial chain will be transferred to Southeast Asia and Africa.
~ What role can China play in this new system? According to Li, "China should produce products with high-added value and innovative elements."
~ The trend of high labor cost in China is now irreversible. For China's manufacturing industry, transformation and upgrading is the only way. "According to our model, China's overall labor force will be reduced during 2015-2019, by that time the wages will reach the same level as in developed countries or moderately developed countries, but if China is unable to find industries in which it can compete, then it will certainly suffer a setbacks," Li said.
~ Through this latest round of industrial restructuring and upgrading and before labor cost reach a higher level, China must identify in which industries it has a competitive advantage and government should offer support.
Original article: [Chinese]

Yangcheng Lake Crab Farmers Doing it Tough Despite Boom
Nation, page 10
~ It's already been three days since the ceremony to mark the beginning of the annual harvest of China's famous Yangcheng Lake hairy crabs (阳澄湖大闸蟹) was held, but crab farmer Zhu Ahjian (a pseudonym) hasn't been able to sell a single crab.
~ Zhu and his wife have taken two baskets full of their own hairy crabs to the resturauts and crab market of Repulse Bay (浅水湾) everyday since the ceremony was held in late September. Zhu hasn't been able to close a single deal over the past three days, no restaurant owners have come to purchase his catch, nor have any crab merchants shown any interest.  
~ Zhu says he is already used to the fact that the hairy crab market appears to be booming outside the area but has remained quite cool around the lake itself.
~ "For the past two years no [crab] merchants have come to purchase our crabs, I don't know where all the Yangcheng Lake hairy crabs out there come from," Zhu said.
~ With the sudden rise in popularity of hairy crabs from Yangcheng Lake, many business people have been able to make money off the brand name. The local government is also trying to take advantage of the situation by drawing up a plan to attract tourists and investment, but it's ordinary crab farmers like Zhu that appear to have been forgotten in this wave of prosperity that started with the crabs.
Original article: [Chinese]

Special Feature: The War of Money
Market, page 17-22
~ China's economic structure is undergoing profound changes and this change is resulting in huge transfers of wealth.
~ At the end of 2011, over 16 trillion yuan of assets were under management by financial institutions, equivalent one-third of the gross domestic product (GDP) for that year.
~ This year, this ratio is still increasing. So far, nearly one hundred listed companies have issued announcements saying that they plan to use idle funds to purchase financial products, the total amount invested in such products has already reached into the tens of billions of yuan.
~ A more shocking figure reveals that in the first half of 2012, the amount of funds managed by securities companies dramatically increased from 282 billion yuan at the end of 2011 to 480 billion yuan.
~ What's causing this rapid increase in the amount of funds managed by financial institutions? In the view of one chief economist at a listed financial institution, the macroeconomic controls that have been put in place for the past few years have altered the economic structure, and funds which had originally been tied up in housing and the export industry are now flowing to financial insitutions. In addition, enterprises have accumulated funds but have nowhere to invest and many investors are turning towards financial products in order to protect the value of their savings being whittled away by inflation.
~ All these factors have led to the rapid development of asset management services provided by China's financial institutions.
Original article: [Chinese]