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1 More signs of China slowdown (Sydney Morning Herald) A Chinese manufacturing index unexpectedly fell, underscoring the risk that leaders will need to add stimulus to meet this year’s economic-growth goal. The Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics dropped to 48.1 in March, the companies said.
Weakening manufacturing would make it more difficult for Premier Li Keqiang to meet a growth target of about 7.5 per cent this year amid efforts to curb pollution and financial risks from surging debt. The State Council, or cabinet, said this month that China will speed up construction projects and other measures to support the world’s second-largest economy after a slowdown in industrial-output and investment expansion.
“Weakness is broadly-based with domestic demand softening further,” Qu Hongbin, Hong Kong-based chief China economist at HSBC, said in a statement. “We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower.”
The recent economic data and retention of the same growth target as last year have spurred speculation that China will loosen monetary policy. Eleven of 21 economists surveyed by Bloomberg this month see a cut in banks’ reserve-requirement ratio in 2014, compared with six out of 18 analysts in February. Premier Li, speaking March 13 at an annual press briefing, said there’s some flexibility around the growth target this year, without specifying how much of a slowdown he would tolerate. He also indicated confidence in achieving the goal without stimulus.
2 India vote and irrational exuberance (Sadanand Dhume in The Wall Street Journal) Every five years, another Indian election represents the world’s largest democratic exercise. The upcoming general election, staggered across five weeks in April and May, involves 814 million eligible voters, 930,000 polling stations in 35 states and territories, and 28 major political parties plus scores of minor ones. Given the stakes—the chance to rule a nation of 1.2 billion people—the contest will supply the sort of drama, spectacle and backstabbing usually reserved for the movies.
While any election involving a sixth of humanity matters, the upcoming one matters more than most. A decade of policy drift under the populist Congress Party has cooled India’s once red-hot economy. And for the first time in a generation, a series of staggering corruption scandals spanning telecom, coal and real estate have placed graft center-stage in an Indian election. Will India’s voters—still largely poor—punish the weak governance and reckless populism of the past decade? Most likely, yes. And will the new government that emerges after votes are counted May 16 have the will and capacity to put the country’s economy back on the rails? Only maybe.
Delhi’s Centre for the Study of Developing Societies estimates that the ruling Congress Party will suffer its worst ever defeat, winning only about half of its current 206 seats in Parliament, while the opposition Bharatiya Janata Party will win between 192 and 210 seats, putting it within striking distance of the 272 seats needed to form a government. The US-based Pew Research Center found that the BJP’s prime ministerial hopeful, Gujarat Chief Minister Narendra Modi, has a favorability rating of 78%. Nationally he is 28 percentage points ahead of the Congress Party’s vice president and putative prime ministerial nominee Rahul Gandhi. India’s stock markets, buoyed by optimism that the business-friendly Mr. Modi is on his way to the prime minister’s office, have surged.
But markets should temper their exuberance. The chances of Mr. Modi implementing the sweeping policies needed to return India’s growth to the double-digit rates it enjoyed until a few years ago depend on two unknowns: the nature of the coalition he will lead, and his willingness to go beyond the relatively cautious positions he has offered on the campaign trail.
To be sure, Mr. Modi boasts a stellar pro-business record in Gujarat and is the first grassroots politician in India to master the art of communicating reformist ideas such as low taxes to a lay audience. (He likens the government to a honey bee and the economy to a flower). He also has the backing of business and most of India’s most prominent market-friendly economists. But until we know the final contours of India’s next government and the policy positions of the prime minister once in office, euphoria about India’s economic comeback will be more sentiment and guesswork than anything we can bank on.
3 A nanny for drivers (Khaleej Times) Researchers at the Swiss Federal Institute of Technology, Lausanne, have now developed a new device that can actually track your emotions and try fix them as you try to get from point to point, stuck in the confines of your car. The institute, which specialises in facial expressions, monitoring and analysing them, will use their expertise to figure out exactly what is going through the driver’s mind when he/she is behind the wheels.
Working with auto people PSA Peugeot Citroen, the scientists have made a device that will use an infra-red camera behind the steering wheel to track facial expressions on the driver’s face to catch signs of rage, irritation and fatigue, among other things. It is when they are in highly emotional states that drivers usually get into incidents on the road that can lead to accidents or danger to them or other drivers on the road.
“Additional research aims to explore updating the system in real-time — to complement the static database — a self-taught human-machine interface or a more advanced facial monitoring algorithm,” one of the researchers on the project said recently. We think any device of this kind, that will help avert the daily tragedy that we witness on roads, will find a ready market.