Computers crash. The computers of banks crash. It happens all over the world. The writer has been involved in one such crash when, after the code was dumped and inspected, at about the millionth line was the epic reminder phrase: ‘Something important must go here.’ A programmer had put it in as a reminder and then forgotten about it.

Banks strain the limits of IT and a rough rule of thumb is that the average utilization rate of host computers should not exceed 60%. The figure on the business systems at five major commercial banks in China stands at 67%.

When the Olympics open on August 8 there will be a surge of foreign visitors and they will be using their credit cards.

Beijing is expected to have 800,000 visitors from abroad and 900,000 domestic tourists during the Olympics. The city government has announced plans to install point of sale (POS) terminals at 90% of the retail outlets at or near the Olympic venues by the end of June.

Which could easily lead to a melt down.

Guo Ligen, vice-chairman of the China Banking Regulatory Commission (CBRC), in a statement on the commission’s website warned that a combined surge in card use and stock trading could overload the country’s electronic payments system. He Guo urged banks to have trial runs, beef up equipment and expand the operating capacity of their IT systems. He announced that the CBRC would inspect major banks’ IT systems between February and July.

Guo Ligen said, ‘We can’t bring the problems to the Olympics and spread hazards outside the banking industry.’
Source: Window of China

The Independent is a newspaper in Britain that lives up to its name. It keeps to an independent line and while many other newspapers — The Australian is a prime example — keep looking for negative stories on China The Independent presents a balanced view.

It leads:

Here comes the world’s newest superpower. The rest of the world is gloomily contemplating economic slowdown and even recession. Not in Beijing. China is set to make 2008 the year it asserts its status as a global colossus by flexing frightening economic muscle on international markets, enjoying unprecedented levels of domestic consumption and showcasing itself to a watching world with a glittering $40bn Olympic Games.

The world’s most populous nation will mark the next 12 months with a coming-of-age party that will confirm its transformation in three decades from one of the poorest countries of the 20th century into the globe’s third-largest economy, its hungriest (and most polluting) consumer and the engine room of economic growth.

So, yes, there is a little bit of needle in there but it is a fair summary of the situation.

And it is correct when it writes:

It will be a celebration viewed with consternation by many, as China’s authoritarian regime shows little sign of relaxing its grip on power and continues to expand its influence overseas from the oil fields and metal mines of Africa to the City of London. Appropriately, 2008 marks the Year of the Rat, an animal considered in Chinese folklore to be a harbinger and protector of material prosperity.

It quotes Stephen Perry, chairman of the 48 Group Club, a Sino-British business network, who said: ‘China has become an international player much more quickly than it would have wanted to do, in part to meet its need for natural resources. But I don’t think China has any intention of taking on American power. The West is important to China in this stage of its development as it seeks inward investment. But that is beginning to be much less important and it is looking more to the development of a strong Asia, in which it is one of the strongest players because of its enormous consumer base.’

Read the full story by clicking on source. It is not biased either way.
Source: The Independent

According to the Nielsen Company, which has released its annual Personal Finance Monitor (PFM) on China, credit cards are becoming more and more popular in China as consumers now prefer using ‘plastic’ rather than paying in bundles of money. This is especially true in key cities in the country.

The survey involved 11,500 consumers in 18 cities and found, at least in one city, that four out of ten people now have credit cards and that half of them have more than one card. Those consumers aged between 18 and 24 use their credit cards more often than in any other age bracket.

In an earlier report released by consultancy firm McKinsey, the number of credit cards in China in 2006 numbered about 40 million, about double the number recorded in the previous year.

There is little doubt that the Olympics will boost that again. Probably as high as 80 million.

Do not take this as a case of China catching up with the world. Pats of the world, yes. But not all.

In some European cities credit cards are looked at askance. Many hotels and restaurants will not accept them although they will accept European checks. This may have more to do with getting around the tax system that a resistance to credit cards as such.
Source: AHN

According to economists a post-Olympics economy crash is highly unlikely.

Jonathan Anderson, chief Asia economist at UBS, dug up some numbers suggesting that Beijing 2008 will barely leave a dent on China’s economy. Comparing the populations of recent Olympics host cities to their corresponding national populations, Beijing came in last place, representing 1.1% of China’s population and less than 3% of its GDP. The impact of the games was strongest in South Korea and Greece — Seoul has 20% its country’s population and Athens 40%.

There will, of course, be some effects. Retailers and hoteliers, for example, will probably experience demand ‘lumps’ during the games, but this is unlikely to affect annual averages. And the Olympics infrastructure can be adapted for commercial use. On top of which only two years after the Olympics China will host Expo 2010.

Still there are assorted forecasters who insist that a correction, a downturn is coming.
Jonathan Anderson said, ‘We don’t expect the markets to crash in the near future — but in our view this has nothing whatsoever to do with the Olympics. If there were to be a correction, it could happen before or after.’

So there may be a slump at some time. But it will not be connected directly to the Olympics. For which relief, much thanks.

The illustration is of the Guangdong Olympic Stadium which is pretty damn impressive.
Source: BusinessWeek