Chinese economy's second coming; Housing slump in India; Apple without Jobs will slide, says Ellison

1 Chinese economy’s second coming (Kevin Yao & Alan Wheatley in Sydney Morning Herald) The first phase of China’s development, industrialisation, shook the world. Commodity-producing countries boomed as they fed China's endless appetite for natural resources. Six of the 10 fastest-growing economies last decade were in Africa. The second stage of China's development promises to be no less momentous. Consumption will take over the growth baton from investment. Services will grow as a share of the economy, while industry shrinks. Commodity-intensive mass manufacturing based on cheap labour will give way to greener, cleaner ways of making things.

More of the value added by a better-educated, more productive workforce harnessing new technologies will stay in China instead of going to multinational companies. That's the plan, anyway. China will remain the most powerful engine of global growth for the next couple of decades, but it will no longer be just processing imported raw materials and components for re-export, said Li Jian with the Chinese Academy of International Trade and Economic Cooperation, the Commerce Ministry's think tank.

A lot is at stake for the global economy too. Philip Schellekens, an economist with the World Bank in Washington, said the importance of the reforms Beijing intends to make cannot be overstated. As China changes, so will the rest of the world. On balance, commodity-exporting developing economies stand to be affected more than rich nations - an obvious exception being Australia, where the end of a China-driven mining boom was a big issue in Saturday's election. China buys a third of Australia's exports.

One bonus is that big emerging markets such as India and Indonesia will have a chance to move into basic manufacturing sectors that China is vacating. Bangladesh has quickly become the world's second-biggest textile exporter. Zhu at JP Morgan expects investment to drop from 48 per cent of GDP to 35 per cent by 2018-20 as consumption (household and government) rises to 60-65 per cent from 50 per cent.

2 Housing slump in India (Keith Bradsher & Neha Thirani Bagri in The New York Times) The real estate market in cities across India is crumbling as the Indian economy slows. The rupee has dropped nearly 20 percent against the dollar since early May, scaring away foreign investors. 

 

Sanjay Dutt, the executive managing director for South Asia at Cushman & Wakefield, the world’s largest privately held commercial real estate company, predicted that prices would fall 10 percent in big Indian cities and 15 percent on the outskirts of large cities, where many speculative projects have been built. 

Bimal Jalan, a former chief economic adviser to the Indian government said that the broader Indian economy could escape serious harm even if real estate prices did decline. India has low rates of homeownership, so families are less likely to be worried about falling home prices and cut household spending.

While foreign investors in Indian real estate are licking their wounds after the 17.5 percent fall in the rupee against the dollar since the start of May, they do have one consolation. The longstanding shortage of space in many Indian cities because of regulatory barriers to new construction translates into high occupancy rates and steady rental incomes for commercial and residential real estate, at least in rupee terms.

3 Apple without Jobs will slide, says Ellison (Andrew S Ross in San Francisco Chronicle) For those wondering if Apple has lost its mojo as it steps forward with its latest offerings, one oracle has already made a prediction. "We conducted the experiment. I mean it's been done. We saw Apple with Steve Jobs. We saw Apple without Steve Jobs. We saw Apple with Steve Jobs. Now, we're gonna see Apple without Steve Jobs."

Thus spoke Oracle CEO Larry Ellison in an interview with Charlie Rose last month. You mean Apple is doomed without Jobs? "You're shorting Apple? You just said to me Apple is going down without Steven Jobs," Rose replied, after Ellison hemmed and hawed a bit. "OK. OK. I'll say it publicly. Yeah. They - I don't see how they - how they can - how they can - they will not (be) nearly so successful because he's gone."

On Monday, Apple, with a market cap of $460 billion, continued to be the most valuable company in the world. Its new operating system, iOS7, was the second-hottest search term on Google, just behind Monday Night Football. The reportedly imminent deal with China Mobile (700 million subscribers at last count) will mean tens of millions of new iPhone buyers. Not bad for a company going down the tubes.

Maybe Ellison wasn't in the best of moods. His copyright lawsuit against Google over the latter's use of Java APIs in its Android operating system had not gone well in court, and 30 prominent computer scientists had filed an amicus brief opposing Oracle's appeal in June.