Downturn drives expat exodus from Shanghai's Little Korea
By Patti Waldmeir in Shanghai and Kathrin Hille in,Beijing

Published: February 25 2009 02:00 | Last updated: February 25 2009 02:00

Until recently, half the 100,000 Koreans who had made Shanghai their home lived clusteredon the outskirts in "Little Korea", a district where the street signs are in Korean and the shops sell LG kimchi, pickled cabbage, and other products catering to their tastes.

But with the economic -crisis hitting the South Korean economy and currency hard, Little Korea is being rapidly vacated.

Korean companies are shipping workers home, cutting off school fees and repatriating wives and children without their menfolk to cut costs.

They are the first large wave of expatriates to have begun leaving China's financial capital as a result of the global economic crisis. But their departure raises the prospect of a broader exodus of foreigners who may take investment, skills and job creation opportunities with them.

The press officer of the South Korean consulate in Shanghai could not answer questions about the exodus of her compatriots - because her post had just been abolished and she was being sent back to Korea.

Kim Hee-won, president of Seoul Plaza, Little Korea's central shopping complex, estimates that 20 per cent of Shanghai's Korean population has returned home - many of them in the past few weeks.

"Almost no one comes in any more," says a clerk in Seoul Plaza's golf boutique. Throughout Ms Kim's 4,000 sq m department store, Korean-speaking staff loiter next to Korean-branded toys, clothing and furniture, with no customers in sight.

Japanese relocation companies, meanwhile, report a marked rise in families returning home to Japan from Shanghai compared with last year. They expect the pace to pick up further during the traditional peak relocation months of March and April.

Each of the Japanese housewives minding toddlers at the vast Mandarin City housing complex, where an estimated 70 per cent of residents are Korean or Japanese, say they know at least one family that has been sent home while the breadwinner remains in China.

The Japanese consulate estimates there were 48,000 nationals in Shanghai 18 months ago, but says it has no figures for the number that might have left since.

The pain has not been limited to Shanghai. A parent with children enrolled in an expensive Beijing international school says most of her daughters' Korean classmates have left the school almost overnight.

A labour activist in the northern province of Shandong, where Korean investment has totalled $23.4bn (€18.4bn, £16.2bn) since 1988 and has accounted for 40 per cent of total foreign inflows, says the owner of a Korean-invested furniture factory left before the Chinese lunar new year in January and it has yet to reopen.

Korean groups invested $99m last year in Chengyang, a district of Qingdao, Shandong's biggest city. While that still made Koreans the largest source of foreign direct investment in the area, their share was down almost 10 percentage points to 29 per cent.

Some Korean factory owners in Qingdao have left without paying workers or suppliers. The entire Korean management of Yantai Shigang Fibre vanished last year, leaving debt and thousands of workers jobless.

"I would guess that even more have been closing since then, given the worsening macroeconomic environment," says Prof Yuan Xiaoli, of Qingdao science and technology university.

Back in Little Korea, Ms Kim says the flow of Koreans is not one way. "Workers are going home, but entrepreneurs are coming here from Korea," she says. "Our Korean people think [that since] China is bigger than Korea, there must be more opportunities here than in Korea. There is no dream in Korea, but our Korean people think there is still a dream in China."

Ms Kim is putting her money where her mouth is. She is planning to open a big golf goods store in Seoul Plaza early next month.

Additional reporting by Yan Jin in Shanghai
Copyright The Financial Times Limited 2009

한국인들이 상하이에서 탈출하고 있다. 중국에 진출한 기업들이 위원화 상승에 대한 압박을 견디지 못하는 듯 하다. 이는 비단 한국만의 문제는 아닐 것이다. 중국의 외국자본이 빠져나가고, 현지법인이 철수하면 중국내수도 줄어들게 분명하다. 중국은 미래의 희망이지만 지금은 중국에 투자해서는 안된다고 했던 그의 말이 맞았다.

Korea fund encourages banks to lend more
By Christian Oliver in Seoul

Published: February 25 2009 07:34 | Last updated: February 25 2009 17:13

South Korean banks, whose shares have fallen heavily in recent weeks amid worries about souring loan books, have to the end of the week to apply for funds from a Won20,000bn recapitalisation fund, according to the country’s financial regulator.

The fund, which is due to be launched next month, is intended to catalyse lending to cash-starved small and medium-sized businesses, according to the financial services commission.

Some Won12,000bn ($7.9bn, €6.2bn, £5.5bn) from the fund will be available as soon as it begins running.

“We want our banks to take legitimate risk,” said Rhee Chang-yong, vice-chairman of Korea’s main regulator. “We want our banks not to be so risk-averse.”

Asia’s fourth-biggest economy has been felled by a plunge in demand for its exports and is expected to contract 2 per cent or more during 2009.

Korea’s small and medium-sized companies are vulnerable in an economy dominated by mighty conglomerates, but they account for almost 90 per cent of jobs.

Half of the Won20,000bn fund comes from the central bank. The state-run Korea Development Bank will lend Won2,000bn and public financial institutions such as the national pension fund will put in Won8,000bn.

Woori Bank has confirmed that it plans to seek Won2,000bn. The regulator said other major banks were also sympathetic to the idea. Kookmin Bank and Shinhan Bank would be eligible for Won2,000bn, while the smaller Hana Bank would be able to raise Won1,500bn.

The banks would access the fund by selling preferred stock, hybrid bonds and subordinated bonds to it.

Korea has been at pains to insist that its banking system remains robust by international standards.

Use of the fund is voluntary, restricted only by an injunction that the financing should not be used for mergers and acquisitions.

The regulator and central bank have rejected reports that Korean lenders are headed for crisis in March as a result of an inability to service debts. They insist that the banks can meet all obligations even in extreme circumstances thanks to foreign reserves of about $200bn, the world’s sixth largest.

Tackling the Achilles heel of Korea’s economy, the new finance minister, Yoon Jeung-hyun, said the weak Won could help exports.

“If we manage it well, it could help us overcome the troubles,” he said of the battered currency, which plummeted 25 per cent last year and has slumped a further 16 per cent this year.

His predecessor, Kang Man-soo, tried to pursue a weak Won policy but became the focus of severe criticism when the currency crashed. He spent much of his time in office battling to prop up the currency and Seoul burned through its reserves at an alarming rate.
Copyright The Financial Times Limited 2009

정부가 중소기업에 대출을 하기 위해 공적자금을 조성해서 펀드를 만들었다. 정부기관과 은행권들이 모은 자금이 20조에 달한다. 과연 20조가 중소기업에 전부 들어갈 수 있을지 궁금하다.

현재 한국경제는 수출이 급격히 감소하면서 침체에 빠졌다. 경기침체로 자금이 빠져나가면서 환율은 오르고 있다. 윤증현 장관은 원화가 하락하면 수출이 늘어날 거라고 하는데 과연 그런가? 엔화도 다시 하락하는 추세에서 우리 기업이 일본기업에 맞설 수 있을까?

[FT] Japan’s exports down 45%

Japan’s exports down 45%
By Michiyo Nakamoto in Tokyo

Published: February 25 2009 04:42 | Last updated: February 25 2009 19:20

Japanese exports fell at their fastest rate in more than 40 years last month, as a rapid deterioration in global demand pushed the country’s trade balance to a record deficit.
일본의 수출량이 40년 이래 최저치를 기록했다. 글로벌 경제위기로 제품수요가 급속도로 줄고 있다.

The gloomy economic data on Wednesday fuelled fears that the recession in the world’s second largest economy would be longer and deeper than expected.
우울한 경제전망으로 세계에서 두번째인 일본경제의 침체가 더욱 길어지고 깊어질 것이다.

In the rest of Asia, there was fresh evidence of weakening economic activity. Hong Kong saw a 2.5 per cent year-on-year contraction in its economy for the final quarter of last year. Thailand cut its benchmark interest rate by half a percentage point.
아시아의 여타국가에서도 상황은 마찬가지다. 홍콩은 2.5%감소했고, 태국은 이자율은 0.5% 낮췄다.

Japanese exports fell 45.7 per cent in January, eclipsing a 35 per cent drop in December and big declines last month for Taiwan and South Korea.
일본의 수출량은 1월에 45.7%감소하면서 대만과 한국이 급격하게 줄었던 것과 자국이 12월달에 35%감소했던것을 무색하게 했다.

The slide in exports was the steepest since 1957 and highlighted the severe impact of the global slowdown on demand for Japanese products ranging from cars to heavy machinery and electronics. Exports to the US fell 52.9 per cent and those to China were down 45.1 per cent .
1957년 이래로 가장 급격한 하락이다. 자동차부터 전자제품까지 모든 영역에서 수출이 감소했다. 대미수출량은 52.9%, 대중수출량은 45.1% 감소했다.

Falling demand has forced manufacturers such as Toyota and Sony to cut production and jobs. It has reinforced concerns the economy will suffer another quarter of falling output. Gross domestic product shrank 3.3 per cent in the last three months of 2008, the largest fall in 35 years.
소니나 토요타같은 제조기업들은 수요가 하락하기 때문에 생산량과 일자리를 줄이고 있다. 이때문에 다음 분기에도 경제는 어려울 것이라는 걱정이 있다. 2008년 4/4분기 동안 국내총생산량은 3.3%나 하락하면서 지난 35년동안 가장 크게 하락했다.

“The speed and extent of the decline in exports have increased. Exports are declining across a wider variety of products and a broader range of geographic regions,” said Kyohei Morita, an economist at Barclays Capital in Tokyo.
지역과 제품에 구분없이 수출량은 빠르고 넓게 감소하고 있다.

Japan’s stock market shrugged off the gloomy figures, with the benchmark Nikkei average rising 2.7 per cent to close at 7,461.22.
경제에 대한 우울한 전망으로 니케이지수는 2.7% 하락했다.

The yen touched a three-month low of Y97 against the dollar. Some analysts said the yen was likely to fall further against other currencies as the Japanese downturn accelerated, but added that the decline was unlikely to help exporters in the short term.
경기침체에 대한 우려로 엔화가치가 3개월래 최저치인 97엔을 기록했다. 엔저가 단기간내에 일본의 수출에 도움을 주지는 않을 것이다.

Automotive exports – about 20 per cent of the total – suffered a particularly large decline, falling 66 per cent year on year. The trade deficit widened to a record Y952.6bn.
전체 수출량 중 20%를 차지하는 자동차는 전년대비 66% 감소했다.

A slump in imports underscored the weakness of domestic demand, which has been hit by rising unemployment. Imports fell 31.7 per cent in January, the steepest drop in over 50 years.
실업이 증가하면서 국내수요도 줄어 수입은 31.7% 감소했다.

Pascal Lamy, secretary-general of the World Trade Organisation, called on global leaders to increase their efforts to resuscitate global trade by concluding the Doha round of trade talks.
WTO의장은 세계무역을 증대시키기 위한 노력을 하고 있다고 했다.

“A successful completion of the Doha round based on what is currently on the table [would result in] $150bn in global tax cuts on imports, a global stimulus that could help jump-start our economies,” Mr Lamy said in Tokyo.
관세를 줄여서 세계무역을 촉진하면 국제경기부양을 할 수 있다.

Copyright The Financial Times Limited 2009

우선, 최대 수입국인 미국의 소비가 급속히 감소하는 상황에서 관세를 줄인다고 생산량이 얼마나 늘어나겠는가. 게다가 미국은 원래 관세가 낮은 국가라서 관세효과도 없다. 금융위기를 빨리 털고 과도하게 투자한 부문을 구조조정하는 게 급선무다.

[Economist] Japan's currency Up and away

Japan's currency
Up and away

Feb 5th 2009 | TOKYO
From The Economist print edition
Suddenly, talk is back of intervention to stem the yen’s rise

SINCE the summer, the yen has shot up against all major currencies. It is now 23.2% higher than last year’s low-point against the dollar, 46.7% higher against the euro, and 65% up against the tumbling pound. Manufacturers are screaming. Japanese exports are down by over a third compared with a year ago, and carmakers and electronics firms are slashing production and jobs. On February 2nd the Keidanren, a big-business club, declared the value of the yen, at under ¥90 to the dollar, to be manufacturers’ most critical problem. They were, it said, “crying out” for the government to weaken the yen, either alone or in league with other countries.

They may cry in vain. In trade-weighted terms the currency is not overvalued by historical standards (see chart). A long undervaluation has merely corrected itself. The exporters driving Japan’s recovery from 2002-07 made two false assumptions as they built new capacity: that American consumers would always buy Asian exports, and that ¥100-120 to the dollar was the sustainable long-term rate. Both were chimeras.

The yen’s undervaluation was what Eisuke Sakakibara, a former vice-minister of finance, calls a “cheap-yen bubble”. Exceptionally low global financial-market volatility in the middle of the decade helped spur the famous yen carry trade. Foreign banks and hedge funds borrowed yen at low interest rates which they then sold, swapping the yen into higher-yielding currencies and profiting from the yield difference. Japanese retail investors followed a similar ploy, buying quantities of foreign-currency bonds for their higher yield. Some of what they bought were structured products sold by banks that protected investors against currency losses.

Since the summer, foreigners have unwound the yen carry trade with a vengeance, driving the yen up. Not only are retail investors (and writers of structured products) sitting on capital losses; overseas yields have also plummeted. Households’ holdings of overseas securities, says Tohru Sasaki of JPMorgan Chase, remain huge—¥13.9 trillion at the end of September, the latest figures available, double the amount of a year earlier. He says that with unemployment set to jump and the economy set to shrink by, say, 5.7% this year, households will bring yen home. Mr Sakakibara predicts that a climb to ¥85 against the dollar will trigger a wave of stop-loss orders, sending the exchange rate quickly to ¥80 or even ¥75. The government would then face huge pressure to intervene for the first time since March 2004.

It will not want to dive in alone. In government a decade ago, Mr Sakakibara moved markets with his utterances. But in 1995-96, he points out, American and Japanese interests were perfectly aligned. This time, the support of Timothy Geithner, America’s new treasury secretary, is not assured. None of the industrial countries is keen to risk a round of competitive devaluations. Japan’s finance ministry may, some believe, have pulled out its swimsuit, but it remains reluctant to take the plunge.

[Economist] India's urban environment

India's urban environment

Heavy baggage
Jan 29th 2009 | DELHI
From The Economist print edition

India’s capital tries to ban plastic bags and much else besides


A CITY of 16m people, Delhi struggles to provide its residents with adequate water, decent sewers and steady electricity. But in a kind of urban leapfrogging, its failure to provide basic amenities has not discouraged it from pursuing modish causes. In recent months the city has revived its efforts to curb honking, smoking and the pestilence of plastic bags.

January 1st was declared “No honking day” by an NGO backed by the Delhi traffic police, which threatened to fine any driver blowing his horn without good reason. The day passed without any discernible drop in noise. The state government has shown more zeal in enforcing a national ban on smoking in public places. Its “mobile squads” have fined over 4,000 smokers (many of them on buses) since the law came into effect in October. It has also approved a plan to “decentralise enforcement”, by allowing hoteliers, shopkeepers and restaurateurs to impose fines on the city’s behalf.

The ban on plastic bags, introduced in January, is equally ambitious. Bags litter the roadside and decorate the city’s trees with a polythene blossom. Cattle ingest them and drains are clogged with them. J. K. Dadoo, the most senior bureaucrat in Delhi’s environment department, blames them for the 2005 floods that killed hundreds in Mumbai. Thinner bags are a particular menace, because they are of little value to Delhi’s “rag-pickers”, who sift rubbish for anything they can sell or recycle. “By touching the bag and feeling it, the rag-picker knows its value,” says a scientist.

The government has tried to curb plastic bags before. But its regulations were recently found wanting by the Delhi High Court, which then banned bags in markets and shops, as well as hotels, hospitals and malls. It also banned thin bags (less than 0.04 millimetres thick) outright. This should make enforcement easier. Plastics manufacturers complained to Mr Dadoo, who could say his hands were tied by the court.

Recalcitrant baggers could, in principle, face fines of up to 100,000 rupees ($2,000) or up to five years in jail. The penalties have to be stiff, says Mr Dadoo, since “the desire to pay the penalty is sometimes greater than the desire to change your mindset.” But the government plans to act against manufacturers before shopkeepers or their customers. First restrict availability, then the habit may change, they argue.

It may be an uphill struggle. In Delhi, “Civic sense leaves a little to be desired,” says Mr Dadoo. It is sometimes described as “nobody’s city”, inhabited by refugees from India’s 1947 Partition or by job-seeking migrants. One of the department’s campaigns declares, “Delhi is my home. My city. And I am proud of it.” Delhi’s honking, smoking, littering residents perhaps need this gentle reminder.

IMF almost halves Asia’s growth prospects

By Raphael Minder in Hong Kong

Published: February 3 2009 05:37 | Last updated: February 3 2009 10:12

The International Monetary Fund on Tuesday forecast Asia would grow by just 2.7 per cent this year, a sharp cut from the 4.9 per cent that it had predicted for Asian growth as recently as November.

However, the region will rebound to twice that rate of growth next year if the rest of the world economy also posts a clear improvement, according to the head of the International Monetary Fund.

Among individual Asian countries, the IMF issued its most worrying prognosis for South Korea, predicting that its economy would contract by 4 per cent this year, compared with the 2 per cent growth forecast by the Korean central bank.

Dominique Strauss-Kahn, the IMF’s managing director, also warned that the continent’s economy could slow even further than the latest forecast.

“It’s very uncertain,” he told journalists in Washington on Tuesday morning, Asia time. “A worse outcome can not be ruled out. There’s some upside risk but there’s a lot of downside risk.”

In South Korea, meanwhile, the IMF sees growth rebounding to 4.2 per cent in 2010.

For China, the IMF maintained its forecast for 2009 economic growth of 6.7 per cent. Mr Strauss-Kahn suggested, however, that an additional stimulus package could help Beijing reach its own 8 per cent target.

”In China, we see some scope for even more fiscal stimulus,” he said.

His comments came after Wen Jiabao, the Chinese premier, said in an interview with the FT published on Monday that Beijing was considering further measures, beyond the fiscal stimulus plan of Rmb4,000bn announced in November, which will target funding of infrastructure and other projects.

Mr Wen told the FT that “we may take further new, timely and decisive measures.”

The IMF’s latest Asian forecast comes after several countries recently downgraded sharply their own predictions, notably Japan and Singapore, which said last month that the city-state’s economy could contract by as much as 5 per cent this year.

While calling on Asian governments to take adequate steps to boost their economies and reduce their reliance on exports, Mr Strauss-Kahn acknowledged that Asia would not rebound without a worldwide recovery.

“It’s impossible for Asia to have a recovery while the rest of the world is in bad shape,” he said.

Copyright The Financial Times Limited 2009

Outlook for Japan’s economy worsens

Outlook for Japan’s economy worsens

By Mure Dickie in Tokyo

Published: January 30 2009 03:13 | Last updated: January 30 2009 19:23

A grim picture of Japan’s deepening recession emerged on Friday when official data showed a record fall in industrial output, a big rise in joblessness and sharply slowing inflation.
일본의 경기침체에 대한 잔인한 그림이 정부가 발표한 산업생산량 하락과 실업율 상승, 물가상승률 하락으로 드러났다.

As some of Japan’s biggest corporate names unveiled heavy losses, Kaoru Yosano, minister for economics and fiscal policy, admitted it was impossible to say when the world’s second-biggest economy would bottom out. Economists warned the country was heading for its worst postwar recession.
일본의 거대 기업들이 잇따라 큰 손실을 입었다고 발표하면서 재정경제상인 카오루 요사노는 세계에서 두번째로 큰 경제가 아직 바닥을 벗어났다고 말할 수는 없다고 확인했다. 경제전문가들은 일본이 전후 최악의 경기침체로 가고 있다고 경고했다.(가고 있다는 데 주목!)

Japan’s benchmark Nikkei 225 share index tumbled 3.1 per cent to 7,994.05, leaving it down 9.8 per cent over January as a whole, its second-worst start to a year on record. The 9.6 per cent month-on-month slide in industrial production in December was Japan’s second record fall in a row. A government survey of manufacturers’ expectations pointed to continued contraction, with a further 9.1 per cent decline forecast for this month.
니케이지수 3.1%하락, 1월동안 9.8%하락. 이는 역대 연초기록 중 2번째로 나쁜기록이다. 산업생산이 전달대비 9.6% 하락한 것도 역대 2번째로 나쁜 기록이다. 정부가 조사한 생산자기대지수는 9.1%하락하면서 경기위축이 지속될 것으로 나타났다.

Neighbouring South Korea, Asia’s fourth-largest economy, matched the Japanese gloom by announcing its own record 9.6 per cent month-on-month decline in industrial output for last month. In Thailand, the central bank reported that manufacturing output had fallen nearly a fifth year-on-year in December.
아시아에서 4번째로 큰 경제규모를 가진 이웃나라 한국은 산업생산량이 9.6% 감소했다고 발표하면서 일본과 우울한 전망을 함께 했다. 태국에서는 중앙은행이 5분의 1정도로 생산량이 줄었다고 발표했다.

Japan’s unemployment rate jumped from 3.9 per cent in November to 4.4 per cent last month. Rising job insecurity is likely to add to downward pressure on spending.
일본의 실업률은 11월달 3.9%였던 것이 지난 달에는 4.4%로 뛰었다. 일자리 불안이 늘어나면서 지출에 대한 압박도 늘어났다.

Core consumer price inflation fell to an annual rate of 0.2 per cent in December, down sharply from November’s 1 per cent.
알짜 소비자 물가 상승율은 11월에 기록했던 1%에서 0.2%로 급격히 하락했다.

Copyright The Financial Times Limited 2009

일본의 하락은 진행중이고, 끝이 보이지 않는다. 물론 한국도 마찬가지다.

세계경제가 모두 불안한 가운데 한국 원은 가치가 떨어지고 있다. 한국경제를 특히 불안하게 생각하는 이들이 많다는 증거다.