China"s Infrastructure Boom Heading For Rapid Slowdown In 2018

There have been signs since October’s Party Congress that China’s infrastructure boom was about to cool off as the leadership seeks to contain debt levels and focus on the quality not the quantity of growth. Subway building is one sector which has seen some high-profile project cancellations. In mid-November 2017, Caixin reported that China’s top economic planning authority, the National Development and Reform Commission, was “raising the bar for subway proposals” – increasing scrutiny in terms of fiscal conditions, population and GDP. In recent weeks, we’ve seen two large subway projects shelved, one in Hohhot, the capital city of Inner Mongolia (worth 27 billion Yuan) and another in Baotou, another Inner Mongolian city (worth 30 billion Yuan). As Caixin noted.

The cancellation of the Inner Mongolia subway projects is having a ripple effect in other cities. Several city governments, including those of Xianyang in Shaanxi province and Wuhan in Hubei province, said in statements that their subway plan are unlikely to win immediate approval under the central government’s crackdown on financial risks related to borrowing for such projects.

The crackdown on local government debt, a key source of infrastructure financing, will have a knock-on effect on Chinese GDP growth. A difficulty for China’s central planners is that the infrastructure share of Chinese fixed asset investment has been on a rising trend, surpassing 20% during 2017 versus just over 15% in early 2014. While we’ve been expecting China’s infrastructure spend to slow next year, we are surprised by the rate of slowdown estimated by Bloomberg, which surveyed a large number of forecasters.

China’s frenzied construction of roads, bridges and subways is set for a major slowdown, adding a headwind to economic growth in 2018. The nation’s fixed-asset investment in infrastructure will grow 12 percent next year, according to the median estimate in a Bloomberg survey, down from almost 20 percent in the first ten months this year. All 18 economists in the survey anticipated a moderation, adding to reports by Morgan Stanley, Goldman Sachs Group Inc. and UBS Group AG predicting a similar trend.

The cooling construction fever is taking shape as authorities renew a pledge to focus on debt management following the Communist Party Congress in October. In a rare move, China has suspended subway projects in some cities, and scrutiny has also toughened on public-private partnerships -- until now a widespread way to fund projects. The easing could even threaten global capital expenditure growth, as China represents one-fifth of the world’s total investment, according to estimates by Oxford Economics.

Infrastructure investment "grew much faster than other investments in the past five years," Larry Hu, chief China economist at Macquarie Securities Ltd. in Hong Kong, wrote in a note. "Policy makers might be able to accept slower growth for infrastructure spending from next year, as the growth in the past five years is unsustainable."

Slowdown or not, the scale of spending on Chinese infrastructure remains vast, about $1.7 trillion during January-October 2017. The pick-up in spending during the last two years followed efforts by the authorities to promote PPP (public-private partnerships) to finance infrastructure projects as one way to limit the growth in local government debt. As is the case with many things related to investment in China, the policy was quickly subject to abuse. In the majority of cases, the “private” partner in PPP projects turned out to be a state-owned firm, which merely added to the state’s debt burden via a different route. Eight local governments have been reprimanded by the finance ministry and the National Audit Office for “disguised borrowing”. We can only imagine the degree of abuse when local governments guaranteed returns on PPP-funded projects. According to Bloomberg.

The Ministry of Finance last month banned local governments from guaranteeing returns for private investors in PPP projects or backing a project’s debt. The national watchdog for state-owned enterprises also published rules to regulate state companies’ participation -- a potential blow to a major source of funding.

"A change in central government’s attitude towards PPP does not bode well for infrastructure in 2018," according to Yao Wei, chief China economist at Societe Generale SA in Paris. "A slowdown from the rapid pace this year looks inevitable."

The challenges for Xi Jinping and his top bureaucrats are mounting, as 2018 looks like it will see the convergence of a host of major reforms of which slower infrastructure spending and altering PPP funding arrangements are a small part. Other major ones include cooling the property market, reducing overcapacity in heavy industry, pollution control, continuing the crackdown on corruption, deleveraging and reforming the out-of-control shadow banking sector.

The China bulls will undoubtedly downplay the scale of these challenges, expecting little deceleration in Chinese growth, helped by a near seamless transition from investment to consumer-led growth. We will be amazed very impressed if Xi can pull it off.
 

The Crazy Trick That Lets You Re-Grow Herbs From Just One Plant

Image source: Pixabay.com

Do you love herbs, but shudder at the price? Here’s some good news: With a single potted plant (or grocery store remains) you can easily grow your own by cutting from the original plant or bunch.

Clone these four herbs and get a bigger harvest, faster.

Basil

The garden favorite is very easy to propagate — which means creating a new plant from an existing plant. (Pesto fans, rejoice!) Cut the basil right below where two or three leaves join the main stem, usually from the top. That’s what’s called the “leaf node.” (Leave at least 5 leaves on the plant you cut from, and it will grow back.)

Clip leaves about 3 to 4 inches from the top, right below the leaf node, where the leaf joins the main stem. Remove any leaves that are in the area 2 inches from the bottom, and use those for cooking. (They will rot in the water.) Add the stems to a glass of water, and place in a sunny spot. Depending on the size of your glass, you can put 3 to 6 cuttings in each; just don’t over-crowd them.

In a week, you’ll see tiny white roots growing, but wait until the roots are 2 inches or so long before planting. Continue to change the water every other day. Once the roots are about 2-inches long, plant them in a spot with a lot of sun, since basil prefers heat. If you’re using a pot, make sure it has good drainage. Soon, the little cutting will start growing and rooting exponentially. Want more basil? Keep cutting! Just leave at least 5 leaves on the plant you cut from, and it will grow back.

Mint

Like basil, mint is easy to re-grow. From a healthy, strong green plant, or from a grocery-store produce bunch, cut a sprig about 4 inches long. Remove the lower leaves, add to a glass of water and sit on a sunny windowsill. Change the water every other day, and you’ll see roots in about a week. Once the roots get about a half-inch long, they’re ready to plant. It’s best to plant any mint in a pot, because a mint can, eventually, overtake your entire garden.

Lavender

This herb is not only culinary, but is widely recognized as helpful for sleeping. It’s best to use fronds from a mature plant. You’ll need some peat-free compost, some organic rooting powder and a suitable pot.

Using branches that have never flowered allows the plant to concentrate its energy on rooting. Gently pull the branch from the stem, including a small bit of bark. Remove any leaves from the bottom and trim excess the “heel” of the bark, where the rooting happens. Put these in warm water while you ready the medium.

When you’re ready to plant, make a small well with your finger in the compost, dip the cut end into the rooting powder and add it to the pot. Water, and cover with a plastic bag, and seal. Leave it for four weeks, uncover occasionally to prevent fungal growth, until they start rooting. Once the plants are rooted, plant them into pots or your garden.

Rosemary

Like basil, this plant is easy to grow and re-grow, but it takes longer. Cut some from an existing plant, or root some leftover from some bought at the grocery or farmer’s market.

Cut and use the softer top tip area, 3 to 5 inches long (like what you buy at the grocery), and remove the bottom leaves. Then make a small diagonal cut on the bottom of the stem, and add to water. Keep watching and changing the water, and in a few weeks, roots will appear. Once the roots get a little longer, it’s ready to plant in a pot, or in your garden. Keep the soil a little moist, but don’t over-water it; do that and you’ll kill the plant.

Green onions

You’ll always have them available if you buy a bunch or two at the grocery. Cut the white root ends about 4 inches or so long, and put them into a glass of water (don’t submerge them). Use the green parts as you normally would, and watch the white parts grow back green in a matter of days. You can keep clipping and using them, changing the water, or you can plant them when they begin re-growing. Repeat until you have a supply you can cut regularly.

What advice would you add on propagating herbs? Share your tips in the section below:

 

Britain"s Gravest Economic Challenge Isn"t Brexit

Authored by Paul Wallace, op-ed via Reuters.com,

Few British budgets have mattered as much as the one that Philip Hammond will deliver to the House of Commons on Nov. 22.

The chancellor of the exchequer must shore up Theresa May’s perilously shaky government ahead of a vital Brexit summit of European leaders in mid-December. At the same time Hammond has to keep a grip on the public finances.

But the gravest challenge he faces is economic: Britain’s persistent productivity blight.

Productivity – output per hour worked – is the mainspring of economic growth.

In the decade before the financial crisis of 2007-08 productivity was increasing in Britain by just over 2 percent a year, outpacing the average for the other economies of the G7. But since the crisis British performance has been dismal. Although productivity jumped in the third quarter of 2017, prolonged weakness means that it is barely higher than its pre-crisis peak a decade ago. The recovery in GDP has been driven overwhelmingly by more labor input, a source of growth that is running dry – not least since the vote to leave the European Union delivered a message to curb immigration.

Other advanced economies have also experienced setbacks to productivity growth following the financial crisis. Where Britain stands out is in the severity of its reverse. The shortfall in productivity is the main reason real wages are now 4 percent lower than 10 years ago, a potent reason why the leave campaign prevailed in the Brexit referendum.

Productivity is so central to prosperity and to macroeconomic management – by determining how fast the economy can sustainably grow – that a gaggle of economic researchers have been busy in their labs trying to diagnose the now decade-long disease. Early detective work highlighted the impact of the financial crisis itself, which was especially severe in Britain. This held back productivity by throttling bank credit to new potentially fast-growing ventures and by jamming up the usual way in which capital moves from declining to advancing sectors. 

But as the crisis has receded and British banks have become better capitalized this explanation is less convincing. Longer-term forces appear to be in play in Britain and elsewhere. Firms at the technological frontier continue to forge ahead in raising productivity. However, the diffusion of their best practices within economies has slowed. An aging workforce is now acting as a drag. And the contribution to productivity from improved educational attainment is falling.

One reason the productivity setback has been particularly severe in Britain is that its apparently robust performance before the crisis was overstated and unsustainable. Banking activities ballooned on the basis of what turned out to be economically and socially harmful practices such as risky securitizations. Despite making up less than a tenth of the economy, the financial sector has been responsible for nearly a third of the productivity slowdown. Longstanding weaknesses in qualifications and skills have also become more damaging as business becomes more knowledge-based. Over a quarter of British working-age adults perform poorly in numeracy or literacy or both.

Investment is inadequate, too. Although firms have stepped up their capital spending after it collapsed during the recession, they have done much less so than in previous recoveries. Business investment is only 5 percent above its pre-crisis high a decade ago. At a similar stage in the recoveries following recessions at the start of 1980s and of the 1990s it was 63 percent and 30 percent higher than the respective previous peaks.

The reluctance to invest in turn is rooted in a financial and business culture that is especially and perniciously short-termist in Britain. Firms under pressure from the markets are reluctant to make the strategic investments needed to keep productivity moving ahead. And too many British managers are simply not good enough.

Although a definitive diagnosis of the British productivity disease remains elusive there is a surprising degree of consensus about the treatment needed to resuscitate the patient. The chancellor’s to-do list should include steps to tackle congested roads and overcrowded trains, to support the sciences, to foster R&D in the private sector, and to upgrade Britain’s poor skills. Since competition spurs higher productivity as new and smarter firms drive out older and less productive businesses, Hammond needs Britain to be as open an economy as possible.

The remedies make good sense but they will not rescue the chancellor, who has in any case already announced more spending on infrastructure. First, they will take time to be effective. Second, finding more money for austerity-hit public services such as policing and health will add to the pressures on the public finances. And third, Brexit is now contributing to the productivity malaise as businesses respond to corrosive uncertainties by curbing their investment plans and as Britain becomes less open to trade by leaving the EU. Raising taxes is always an option for a cash-strapped chancellor, but it would be highly unpopular − not least in the bitterly divided Conservative party.

When he presents his budget, Hammond can be expected to put a brave face on things. He will point to the fall in the budget deficit from a peak of almost 10 percent of GDP after the financial crisis to 2.3 percent of GDP in the financial year ending in March 2017. But what matters now is the future path of the public finances. Britain’s poor productivity prospects will box the chancellor in because GDP is the tax base and future revenues will be smaller to the extent that output per hour worked continues to stall.   

The harsh reality is that Brexit will blight the public finances by hurting productivity. While Prime Minister May might see Britain’s overriding priority as ensuring that next month’s summit enables the Brexit talks to move on to trade, she’ll have to broaden her focus if she hopes to stay in office long enough to secure a deal that minimizes the damage Brexit is inflicting on the economy.

2,000 Years Of Economic History (In One Chart)

Long before the invention of modern day maps or gunpowder, the planet’s major powers were already duking it out for economic and geopolitical supremacy.

Today’s chart tells that story in the simplest terms possible. As Visual Capitalist"s Jeff Desjardins notes, by showing the changing share of the global economy for each country from 1 AD until now, it compares economic productivity over a mind-boggling time period.

Originally published in a research letter by Michael Cembalest of JP Morgan, we’ve updated it based on the most recent data and projections from the IMF. If you like, you can still find the original chart (which goes to 2008) at The Atlantic. It’s also worth noting that the original source for all the data up until 2008 is from the late Angus Maddison, a famous economic historian that published estimates on population, GDP, and other figures going back to Roman times.

A MAJOR CAVEAT

If you looked at the chart in any depth, you probably noticed a big problem with it. The time periods between data points aren’t equal – in fact, they are not close at all.

The first gap on the x-axis is 1,000 years and the second is 500 years. Then, as we get closer to modernity, the chart uses mostly 10 year intervals. Changing the scale like this is a big data visualization “no no”, as rightly pointed out in a blog post by The Economist.

While we completely agree, we have a made an exception in this case. Why? Because getting good economic data from the early 20th century is already difficult enough – and so trying to find data in regular intervals before then seems like a fool’s errand. Likewise, a stacked bar chart with different years also doesn’t really do this story justice.

We encountered similar historical data issues in our Richest People of Human History graphic, and at the end of the day decided it was primarily for fun. Like today’s chart, it has its share of imperfections – but ultimately, it provides a great amount of context and serves as a conversation starter.

OUR INTERPRETATION

Caveats aside, there are many stories that materialize from this simple chart. They include the colossal impact of the Industrial Revolution on the West, as well as the momentum behind the re-emergence of Asia.

But there’s one other story that ties it all together: the exponential rate of human economic growth that occurred over the last century.

For thousands of years, economic progress was largely linear and linked to population growth. Without machines or technological innovations, one person could only produce so much with their time and resources.

More recently, innovations in technology and energy allowed the “hockey stick” effect to come into play.

It happened in Western Europe and North America first, and now it’s happening in other parts of the world. As this technological playing field evens, economies like China and India – traditionally some of the largest economies throughout history – are now making their big comeback.

Editor’s note: We have adjusted the main graphic as of Sep 10, 2017 to change the description of the chart. It now says “Share of GDP (World Powers)” instead of the previous “Share of world GDP”, which was technically an inaccurate description.

The Health Benefits of Peppermint Oil

Essential oils are an excellent way to concentrate the benefits of therapeutic herbs and essential oils for nearly all herbs are available. One of the most beneficial is peppermint oil, which is extracted by steam distillation from the peppermint, or mentha piperita, plant. The primary component of peppermint oil is menthol which provides the familiar flavor and cooling sensation, but peppermint oil also contains various minerals, vitamin A, vitamin C, and fatty acids.

Peppermint oil can be used to address a wide range of health ailments, both internally and externally. It’s an ingredient in many lotions and ointments. Topical application can relieve aches and pains, benefit the skin, and a few drops on the wrist is even a common recommendation to relieve a headache. Peppermint oil is commonly used in aromatherapy, many people will inhale the vapors to sooth their respiratory tract and lungs. Peppermint oil also has internal use to combat indigestion and harmful organisms.

Peppermint Oil and Irritable Bowel Syndrome (IBS)

It’s no secret that peppermint oil can relax the smooth muscles of the respiratory tract, but did you know it can do the same to the smooth muscles in your GI tract? ^[1] There are many OTC remedies for symptoms of IBS and many of them contain peppermint oil, with good reason. The Department of Complementary Medicine at the University of Exeter in the UK examined over a dozen studies that collectively indicated peppermint oil was effective at relieving IBS symptoms. ^[2] Much evidence suggests that, when compared to available drugs for IBS, peppermint oil may be the best choice to alleviate symptoms and improve quality of life for IBS patients. ^[3]

Peppermint Oil and Harmful Organisms

Many essential oils are known to be resistant to most harmful organisms. Peppermint oil is no exception and its menthol content has even been found to be effective against mosquitos and head lice. ^[4] [5]

Peppermint Oil and Bacteria

Peppermint oil is toxic to bacteria by way of chemicals which have antioxidant potential. ^[6] When evaluated for resistance to bacteria, peppermint oil and its components: camphor, menthol, and carvacrol have been found to be effective; notably, carvacrol has the highest activity. ^[7] [8] Other studies have evaluated and confirmed the antioxidant and potential of peppermint oil and a Syrian study even found peppermint oil to be effective against a strain of microbes known to target livestock. ^[9] [10]

Peppermint Oil and Fungus

The general resistance of essential oils to fungus is well documented and peppermint oil is no exception. Indian and Iranian researchers have shown that peppermint oil holds potential for managing fungal infections, including candida. ^[11] [12] Their assertion was backed up by the Institute for Biological Research in Serbia where researchers observed fungicide behavior from peppermint oil. ^[13] The Tehran University of Medical Sciences in Iran also, after comprehensive review, concluded that menthol is resistant to fungus, including candida. ^[14] Similarily, Brazil’s State University of Campinas found essential oils of three different peppermint varieties to be anti-candida. ^[15]

One of the most positive discoveries about peppermint oil was found by the US Air Force 375th Medical Group Family Medicine Residency Program who conducted a study of 18 participants suffering from fungal nail infection. During the 48 week study, the participants applied a vapor rub that contained menthol to their nails. All 18 reported positive changes to their nail appearance by the end of the study. ^[16]

References (16)

1. Grigoleit HG, Grigoleit P. Gastrointestinal clinical pharmacology of peppermint oil. Phytomedicine. 2005 Aug;12(8):607-11. Review.


2. Pittler MH, Ernst E. Peppermint oil for irritable bowel syndrome: a critical review and metaanalysis. Am J Gastroenterol. 1998 Jul;93(7):1131-5.


3. Grigoleit HG, Grigoleit P. Peppermint oil in irritable bowel syndrome. Phytomedicine. 2005 Aug;12(8):601-6. Review.


4. Talbert R, Wall R. Toxicity of essential and non-essential oils against the chewing louse, Bovicola (Werneckiella) ocellatus. Res Vet Sci. 2012 Oct;93(2):831-5. doi: 10.1016/j.rvsc.2011.11.006. Epub 2011 Dec 15.


5. Samarasekera R, Weerasinghe IS, Hemalal KP. Insecticidal activity of menthol derivatives against mosquitoes. Pest Manag Sci. 2008 Mar;64(3):290-5.


6. Sharafi SM, Rasooli I, Owlia P, Taghizadeh M, Astaneh SD. Protective effects of bioactive phytochemicals from Mentha piperita with multiple health potentials. Pharmacogn Mag. 2010 Jul;6(23):147-53. doi: 10.4103/0973-1296.66926.


7. Soković M, Glamočlija J, Marin PD, Brkić D, van Griensven LJ. Antibacterial effects of the essential oils of commonly consumed medicinal herbs using an in vitro model. Molecules. 2010 Oct 27;15(11):7532-46. doi: 10.3390/molecules15117532.


8. Hussain AI, Anwar F, Nigam PS, Ashraf M, Gilani AH. Seasonal variation in content, chemical composition and antimicrobial and cytotoxic activities of essential oils from four Mentha species. J Sci Food Agric. 2010 Aug 30;90(11):1827-36. doi: 10.1002/jsfa.4021.


9. Mimica-Dukić N, Bozin B, Soković M, Mihajlović B, Matavulj M. Antimicrobial and antioxidant activities of three Mentha species essential oils. Planta Med. 2003 May;69(5):413-9.


10. Al-Mariri A, Saour G, Hamou R. In vitro antibacterial effects of five volatile oil extracts against intramacrophage Brucella abortus 544. Iran J Med Sci. 2012 Jun;37(2):119-25.


11. Saharkhiz MJ, Motamedi M, Zomorodian K, Pakshir K, Miri R, Hemyari K. Chemical Composition, Antifungal and Antibiofilm Activities of the Essential Oil of Mentha piperita L. ISRN Pharm. 2012;2012:718645. doi: 10.5402/2012/718645. Epub 2012 Dec 13.


12. Pattnaik S, Subramanyam VR, Bapaji M, Kole CR. Antibacterial and antifungal activity of aromatic constituents of essential oils. Microbios. 1997;89(358):39-46.


13. Soković MD, Vukojević J, Marin PD, Brkić DD, Vajs V, van Griensven LJ. Chemical composition of essential oils of Thymus and Mentha species and their antifungal activities. Molecules. 2009 Jan 7;14(1):238-49. doi: 10.3390/molecules14010238.


14. Azimi H, Fallah-Tafti M, Karimi-Darmiyan M, Abdollahi M. A comprehensive review of vaginitis phytotherapy. Pak J Biol Sci. 2011 Nov 1;14(21):960-6. Review.


15. Duarte MC, Figueira GM, Sartoratto A, Rehder VL, Delarmelina C. Anti-Candida activity of Brazilian medicinal plants. J Ethnopharmacol. 2005 Feb 28;97(2):305-11. Epub 2005 Jan 5.


16. Derby R, Rohal P, Jackson C, Beutler A, Olsen C. Novel treatment of onychomycosis using over-the-counter mentholated ointment: a clinical case series. J Am Board Fam Med. 2011 Jan-Feb;24(1):69-74. doi: 10.3122/jabfm.2011.01.100124.

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98% Of Greeks Consider Their Economic Situation As "Bad", Survey Says

Nearly a decade after the worst economic downturn since the Great Depression, economic spirits are reviving, a PEW survey found. Economic spirits reviving everywhere? No. Not everywhere. Greeks remain pessimistic. No wonder about that, as they see no present and no future.

As KeepTalkingGreece,com reports, according to a survey conducted by Pew Research Center, many Europeans, Japanese and Americans feel better today about their economies than they did before the financial crisis. More broadly, in 11 of 18 countries from across the globe that were surveyed in both 2016 and 2017, publics feel more positive about their economy than they did a year ago.

The Dutch, Germans, Swedes and Indians see their national economies in the most positive light. While global publics are increasingly upbeat about economic conditions, the overall view of the economy is still in negative territory in many countries. Overall, a median of only 46% in the 32 nations surveyed this year say their current economy is doing well.

But as the table below illustrates, a staggering 98% of Greeks view their current economic situation as "bad."

At the same time, many are concerned about the future: A median of just 41% believe that a child in their country today will grow up to be better off financially than their parents. The most pessimistic about prospects for the next generation are the French, Japanese and Greeks.

People in advanced economies are quite pessimistic about young people’s financial prospects, just 34% believe they will be better off than the current generation.

Such despair is particularly strong in Greece, Japan, France, Australia, Canada, Spain and the UK, where roughly seven-in-ten people say today’s children will be worse off.