Hedging Asia: China Versus India

The article was copied from forbes website.

Hedging Asia: China Versus India
Drobny Global Advisors 12.26.06, 6:00 AM ET

The imposition and subsequent removal of capital controls in Thailand last week was a stark reminder of the risks inherent to investing in emerging markets. The episode illustrated the importance of understanding the global macro picture associated with international equity positions. (Thai closed-end funds include the Thai Fund (nyse: TTF - news - people ) and the Thai Capital Fund (other-otc: TCPF - news - people ). The one-day 14% decline in Thai stocks (and subsequent 11% recovery the following day) demonstrated the significance of foreign investment flows in emerging market equities, especially in today’s liquidity-driven investment environment.

India

Get inside the trading strategies of the exclusive global hedge fund managers like George Soros and Jim Rogers. Click Here to Subscribe to Drobny Global Advisor's NEW Inside Global Markets.

India has been one of the biggest beneficiaries of foreign investment flows, receiving an estimated 25% of total portfolio flows into emerging markets. According to Morgan Stanley, in the three years through 2005, non-foreign direct investment flows accounted for 83% of total capital flows in India, compared with an average of only 32% for a basket of other top emerging markets, including Russia, Mexico, Turkey and China. This is a staggering piece of data, because unlike Foreign Direct Investment flows, portfolio flows can--and often do--reverse suddenly and without warning. Liquidating a factory that one has built in India cannot be accomplished overnight, but all it takes for an investor to liquidate Indian stocks is a few clicks of the mouse.

Special Offer: Drobny Global Advisor has been providing research to the most exclusive and smartest hedge funds for years. Now Forbes is offering an inside look at global macro hedge fund strategies in a new publication Inside Global Markets. Click here to become a Charter Subscriber.

The amount of portfolio investment capital flowing into India spiked sharply higher in 2003 and contributed to a virtuous circle--higher capital flows into India resulted in an appreciating currency, the stronger currency helped push down real interest rates, lower interest rates encouraged rising borrowing, increased borrowing resulted in strong credit-driven economic growth, and strong economic growth encouraged even more capital to come into India.

This kind of positive macroeconomic feedback loop works fine until something happens to break the cycle. And investors were given a preview of what that might look like this past summer, when India suffered huge equity outflows in May and June. This sudden reversal in portfolio flows hammered Indian stocks, with the SENSEX index plummeting 29% before bottoming on June 14.

India’s SENSEX stock index, like just about every other major global equity index, has since recovered to make new highs, and net investments by foreign institutional investors in Indian equity markets rose to a record high $2.04 billion USD in November. But if the past three years is any guide, the recent sharp increase in portfolio fund flows may mean that Indian stocks are once again highly vulnerable to a correction. Whenever portfolio flows reached similar levels in the past three years, Indian stocks experienced a sharp correction not long thereafter.

India’s Worsening Macroeconomic Fundamentals

The macro picture in India is looking increasingly troubling. India’s current account deficit almost doubled to $10.6 billion USD in the fiscal year ending March 31 and is likely to widen in 2007-08. Despite higher interest rates, the pace of bank lending has remained stubbornly high; India’s bank lending growth has averaged nearly 30% per year since 2004, running well in excess of deposit growth and pushing the loan-to-deposit ratio to record levels. Housing loan growth is currently running at a rate above 50% over the previous year, and commercial real estate loan growth has surged 102% over year-ago levels causing real estate prices to soar, with properties in the primary metropolitan areas of India having jumped as much as 300% in the past three years.

Special Offer: Read advice from the same experts that the World's top billion-dollar global hedge fund managers subscribe to. Click here for timely trades from Drobny Global Advisor's new publication, Inside Global Markets and get a complimentary copy of Steve Drobny's Inside The House of Money when you subscribe.

Signs of excess in the economy are starting to worry the Reserve Bank of India (RBI), which jolted the markets earlier this month with an unexpected increase in the Cash Reserve Ratio (CRR) of 50 basis points, causing a three-day decline of 7% in Indian stocks. There are also concerns that the rapidly rising wages being reported by some Indian companies may spill over into the broader inflation measures.

India thus faces a dangerous double-edged sword--strong foreign capital inflows have contributed to the RBI’s growing concerns about excess liquidity in the system, but without these capital inflows from abroad, India’s current account deficit would become unmanageable.

In the very near term, we are unwilling to bet against the wave of momentum that propelled almost all emerging-market equity markets to big double-digit gains in 2006. But after three years of uncommonly strong portfolio inflows, record-high equity valuations and a tightening global liquidity environment, a short position in Indian equities combined with a long position in a better-positioned emerging market seems like a nice risk/reward trade. Chinese equities look like a good candidate for the long side of this trade.

China: A Very Different Story

Unlike India, China posted its second-largest trade surplus ever in November and will see its full-year trade surplus swell 65% to a record US$168 billion in 2006 from $US102 billion in 2005. China also benefits from a very high national savings rate of approximately 40% of GDP versus 25% for India. And, unlike India, where the central bank is becoming increasingly concerned about excesses in bank lending and real estate prices, China has experienced an orderly moderation in sectors like construction that policymakers tend to view as worrying.

What is more, U.S. policy makers continue to pressure China to let the renminbi rise against the dollar. Barring any misguided efforts by U.S. lawmakers to force an extreme currency revaluation with tariffs or some other kind of anti-China protectionist legislation, the macroeconomic and political factors exerting upward pressure on the renminbi should be a net positive for Chinese securities.

The positive macro outlook in China means that the Chinese markets should be better insulated from any sustained reversal in global portfolio fund flows making the Chinese/Indian equity pair attractive.

We also see less reason to worry that the rally in Chinese equities has already run its course because strength in Chinese stocks has been a more recent phenomenon. While India and most other emerging markets made big gains in 2004 and 2005, Chinese stocks did next to nothing. Yet beginning in December 2005, Chinese stocks began to outperform. Now, as we approach the end of the year, India’s SENSEX index is up more than 45% (Indian closed-end funds include the India Investment Fund (nyse: IIF - news - people ) and The India Fund (nyse: IFN - news - people ), and there is also the newly issued exchange traded note (nyse: INP - news - people )), but the HSCEI index of Chinese stocks has soared more than 70% (components of this index that trade in the U.S. as ADRs include PetroChina (nyse: PTR - news - people )Huaneng Power (nyse: HNP - news - people ) and China Life (nyse: LFC - news - people )). It is also significant that domestically traded Chinese shares, which fell more than 20% from March 2003 through the end of 2005, are up more than 100% year-to-date. This suggests to us that the recent outperformance of Chinese stocks has become a broad-based phenomenon supported by domestic investors. The 2008 Beijing Olympic games should add another driver for increased investment next year.

The investment conclusion seems clear to us: Between Asia’s two fast growing giants, China is the buy and India is the sell.

Excerpted from the December issue of Inside Global Markets

ICBC Overtakes HSBC as Largest Non-U.S. Bank by Value

The Bloomberg news reported the big jump of the ICBC's market value after its IPO in Hong Kong and Shanghai stock market on Oct. 26, 2006.


Shares of Industrial & Commercial Bank, known as ICBC, surged by the daily limit of 9.9 percent to close at 5.21 yuan in Shanghai, valuing the firm at $214.2 billion. HSBC had a market capitalization of 106.5 billion pounds ($208.4 billion) at the close of trading in London on Dec. 22, behind Citigroup Inc., the largest financial firm, at $268 billion and Bank of America Corp. at $239.6 billion.

State-controlled ICBC's shares have soared 67 percent on the domestic stock exchange since its debut on Oct. 26, as investors bet a customer base bigger than Russia's population will drive profit growth in the world's fastest-growing major economy. ICBC has 153 million customers, 10 million more than the people who live in Russia.

A four-year investment boom has powered annual economic expansion of 10 percent, double the global average, pushing China past the U.K. to become the world's fourth-largest economy. ICBC, Bank of China Ltd., China Construction Bank Corp., Bank of Communications Ltd, and China Merchants Bank Co. have raised more than $47 billion from share sales since June 2005.

Bank of China

Shares of Bank of China Ltd. gained 7.5 percent to 4.30 yuan in Shanghai, catapulting the bank to the world's sixth-largest lender with a market capitalization of $135.9 billion. It overtook Mitsubishi UFJ Financial Group Inc.

UBS AG expects the seven publicly traded Chinese banks it covers to post average earnings growth, when weighted for size, of 27 percent next year, according to a Nov. 24 report. The gains will be driven by average 14 percent loan growth and an improvement in interest margins.

Beijing-based ICBC expects net income to rise 26 percent in 2006 to 47.2 billion yuan, based on international accounting standards. Bad loans at the bank were 4.1 percent of total credits as of June, down from a high of 34 percent in 2000.

Tribals of Orissa's iron-ore-rich Keonjhar have a sorry tale to tell

http://www.dailyindia.com/show/95097.php/Tribals-of-Orissas-iron-ore-rich-Keonjhar-have-a-sorry-tale-to-tell

By Pankaj Yadav

Keonjhar, Dec 20 (ANI): It's a sad tale of about 16 lakh tribals in Orissa's Keonjhar District. Despite being the top revenue-generating district in the state, through the export of iron ore and other minerals, Keonjhar's residents are at the receiving end of an indifferent treatment from the state government, claims local MP Ananta Nayak.

The number of unwed mothers, the number of HIV/ AIDS cases in the district have been on the rise, so has soil erosion. Most of its people suffer from malaria, tuberculosis, malnutrition, pre and post-natal deaths, and the district is also home to the highest number of student dropouts from primary schools, as per official records of the past three years.

A second time MP from the district, Nayak, a tribal himself, says he has approached every authority, right from the State Chief Minister, Navin Patnaik to Prime Minister Manmohan Singh, and even UPA Chairperson Sonia Gandhi, but has failed to get the desired results.

He claims that his district produces nearly 36 percent of the country's quality iron ore, 30 percent chromites, and about 40 percent manganese deposits, and provides raw materials to several steel plants in the country.

But, thanks to the apathy of the state government, there are no basic facilities or infrastructure available to the local populace. Everyday, as many as 15,000 trucks pass through the nearly 150-km long single road (National Highway # 215), leaving absolutely no space for other vehicles to pass by. Resultantly, nearly 1100 road accident deaths have been reported over the past three years, says Nayak.

Lately, in order to launch a movement against the 'suppressing attitude' of the state government, which happens to a BJP-BJD alliance, the locals have grouped themselves under the banner of the Keonjhar Citizens' Forum.

Himansu Sekhar Kuanr, the secretary of the Forum, describes how poor and indifferent the response from both the state and Centre Governments has been. According to him, very soon, the Railway Ministry would inaugurate a railway line that would be used only for transporting iron ore and other minerals.

"When we approached one of the Railway Board members with the proposal that at least one passenger train should be sanctioned on the newly laid rail line, we were abruptly told that this could not be done", adds Himansu.

He further says that in order to meet its greed for foreign exchange, the state government is exporting most of its minerals to China, who in turn, is simply dumping it for future use.

"But the big question before us is that what we would leave for our future generations, after a few years the mineral deposits would be exhausted," says Himansu.

Giving details of miseries the people in Keonjhar are going through, he says that in last three years, 1186 people have died in road accidents involving trucks carrying iron ore to the Paradeep Port and thousands have been left wounded;

-- 27 people died inside ambulance being not able to reach hospitals

-- In the past three years 640 students couldn't reach the secondary school examination centers due to sever road congestion, and more than 2000 people were issued with non-bailable warrants because they couldn't attend the court dates in time.

-- Millions of tons of iron ore is being transported on road to Paradep Port for export, rendering the entire district unsafe for public mobility since there is no alternative route;

-- Around 76 percent of the people in the district live below the poverty line, despite it being rich in valuable mineral deposits.

The Keonjhar Citizens' Forum, a non-political body representing the cross section of the people of the district, is sincerely trying to bring these facts of human miseries and detriment act of national interest at various levels for the last four years.

"But, to our dismay this colonial exploitation and political apathy towards Keonjhar is not coming to an end," says Himansu.

Forum members come to the Capital at least twice every year at their own expense, around the time when the Parliament session is on. And, their MP's official bungalow in South Avenue acts like a perfect abode for the cash-stricken tribals! (ANI)

150 million rural kids to enjoy free schooling

This is my 100th post on this blog. Let's cheers for what is happening in China today---Real compulsory education for all rural kids.

A total of 150 million rural students in China will be exempted from paying tuition and incidental fees for their nine-year compulsory education when the second phase of the programme is implemented in the spring semester of 2007, a senior official at the Ministry of Education said yesterday.

The move is expected to cost 15 billion yuan (US$1.88 billion) per year, Wang Xuming, spokesman of the Ministry of Education, told China Daily.

But children of migrant workers, who are from the rural areas and studying in the cities, are not included, Wang said.

The exemption was announced by Premier Wen Jiabao in a speech in March 2005. It is part of a major move to relieve the financial burden of farmers and to develop a new countryside.

Exemption of agricultural taxes across the country were also announced this year.

Starting from next year, every primary school pupil in the rural areas will save 140 yuan (US$17.5) and every secondary school student 180 yuan (US$22.5). Students at boarding schools in poverty-stricken areas will be able to save as much as 550 yuan (US$68.8).

"It may not be a big sum of money for an urban family, but it can be something important for a rural one, especially one in poverty-stricken areas," said Liu Shangxi, deputy director of the Financial Science Research Institution under the Ministry of Finance, which has allocated funds for the move.

The average net income of rural residents was 2,936 yuan (US$367) in 2004, according to the National Bureau of Statistics.

In the first phase of the programme, which started in the spring semester of 2006, more than 50 million rural students in China's western provinces were exempted from paying tuition and incidental fees, according to Wang.

To implement the exemption decision, governments in the provinces involved have already drafted or published regulations concerning the issue, said a Xinhua News Agency report yesterday.

For example, the provincial government of Central China's Henan Province published a series of regulations about relieving farmers' financial burdens on Monday, and one of them stipulated that rural students will be exempted from paying tuition and incidental fees from next spring.

"All the basic expenses of rural schools will be included in the governmental budget," it said.

"No school should charge fees from students to pay for its expenses or debts."

Children of migrant workers who are studying in the cities will be the responsibility of those governments.

"Governments of different places have different policies - some may cover their fees and others may not," Wang told China Daily.

There are more than 370,000 such children in Beijing, according to statistics from the Beijing municipal government.

Nearly 40 per cent of them are not admitted by local public schools and have to study at schools set up by migrant workers, most of which are illegal.

There were 239 such schools in Beijing last year, according to statistics from the municipal bureau of education.

Remove iron ore and Indian exports to China will be halved

When Chinese president Hu visited India, both countries agreed to set the US$40 billion trade target for 2010. This report reveals some difficulties on the India side: India's weak industry sector cannot provide something competetive for China even China's market is so open today.

As the euphoria over Chinese President Hu Jintao's visit to India subsides, industry on both sides is waking up to the huge amount of work to be done for bilateral trade between the two nations to touch $40 billion by 2010.

Even as the two sides are studying the possibility of a regional or free trade agreement, an inter ministerial group set up by the Prime Minister's Office to formulate a policy on iron ore exports will decide the flow of bilateral trade at least in the shorter term. As on 2005, India exported 90 million tones of iron ore and as much as 83 per cent of it went to China alone.

In fact a deeper analysis shows iron ore alone has led the charge in Indian exports to China, as its share went up from 20 per cent to almost 50 per cent of total exports between 2001 and 2005. Overall bilateral trade itself achieved some much needed critical mass after 2001 as the two countries realised each others potential. In 1990 trade flows between the two countries stood at $260 million and rose to $2.988 billion in 2001 and to $17.62 billion in 2005 with a cumulative aggregrate growth of 42.6 per cent.

In such a scenario a ban or a cap on ore exports may have some dramatic but short-term impact on trade and may need redrawing some targets. “The surge in exports has only been due to ore and if it is capped or banned the buoyancy will be lost and the target of $40 billion for 2010 will not be achieved,” said Federation of Indian Mineral Industries secretary general R.K. Sharma.

But what concerns industry and the commerce ministry is that the trade deficit is growing overwhelmingly in China’s favour (see table). While ore exports have checked the deficit to some extent, it is an exhaustible resource being used by China to manufacture steel that’s export back to India. No wonder commerce minister Kamal Nath and minister of state for commerce Jairam Ramesh have been stressing the need to expand India's trade basket.

In the long run, industry is upbeat about trade prospects. “In the times to come textiles, pharma, food products, steel and chemicals will be the products that will see a jump in exports to China. Share of iron ore exports are at a peak right now and has to come down and stabilise at 10-15 per cent in the longer run,” said CII head, trade policy international agreements T.S. Vishwanath.

Ficci feels trade is already at a higher level but for the problem of logistics which needs third country involvement. “We’ve recommended setting up a core group to tackle the problem. Even if 30 per cent of indirect trade is converted into direct between the two nations, the resulting trade inflow will more than offset any uncertainity arising out of ore exports,” said Ficci Secretary General Dr Amit Mitra. The chamber has also recommended core groups on harmonisation of data, IPR rules for pharmaceuticals and chemicals and Sanitary and Phyto-Sanitary(SPS) standards for food processing.

“There’s a will to work jointly on IPR issues, which China is working on currently. We’ll have to enlarge our trade even if iron ore exports aren’t capped or banned. We can’t have a sustainable model based on that as the steel upcycle will not last forever in China,” Mitra added.

Hu Jintao's visit may not herald a revolution in trade between the two countries but it has brought a note of caution for Indian industry that trade cannot increase solely on the basis of iron ore. While the $40 billion trade target is not unachievable, it can’t be taken for granted.

sumant.banerji@expressindia.com

China Pursues Major Role in Particle Physics

The article originated from New York Times.

By DENNIS OVERBYE
Mao Zedong dreamed of splitting an electron.

This was no idle diversion. According to natural dialectics, which formed the philosophical underpinnings of Marxism, the entire universe, from top to bottom, was seething with tension and change. As a result, Mao thought, nature should be infinitely divisible.

“Take a footlong stick and remove half every day. In 10,000 years it will not run out,” Mao, who rarely missed the chance to chat up physicists, often said. “This is truth. If you don’t believe it, you may test it. If there is an end, there is no science.”

Suitably inspired by such thoughts, in the 1960s Chinese physicists invented a sort of onion-layer theory of particles called the straton model, in which both protons and electrons have a common constituent. Sheldon Glashow, the physicist and Nobelist now at Boston University, once suggested that such a particle, if found, should be named the Maon.

But Mao’s Cultural Revolution, which was unleashed in 1966, closed universities and journals and set back Chinese physics for a generation. In the meantime, quarks beat out Maons as the constituents of protons. To this day the electron remains undivided.

Mao’s enthusiasm for particle physics nevertheless left a legacy.

Ever since 1989, in a collection of buildings occupying about a city block in Beijing, Chinese physicists have been quietly shooting electrons and their evil-twin opposites — positrons — around a 80-yard-diameter underground track at nearly the speed of light, and then banging them together in little fireballs of energy.

Over the years, the work at the Beijing collider has produced results that are critical to efforts on the frontier of particle physics at more famous and much larger accelerators — those that have racetracks miles around and trillion-electron-volt energies, like the Tevatron at the Fermi National Accelerator Laboratory, known as Fermilab, outside Chicago, and the Large Hadron Collider, scheduled to open next year at the CERN laboratory near Geneva.

Next fall, the Beijing collider, which is shut down for a major upgrade, will be reborn with the ability to produce 100 times as many collisions it did before, enabling physicists to investigate the quantum property called charm and resolve some standing puzzles about quarks.

By the end of the decade, as the world’s physicists shift their attention and money to the new CERN collider, experiments at the Stanford Linear Accelerator Center in Menlo Park, Calif., and the Fermilab are expected to shut down. The Beijing collider then will be one of the few other particle accelerators still doing physics experiments left in the world, and Chinese physicists are trolling for collaborators.

“Although collaborations are still modest, golden physics opportunities exist in China,” Hesheng Chen, director of the Institute of High Energy Physics in Beijing, recently wrote in the physics magazine Symmetry.

More important, Chinese particle physicists are poised to make a major contribution to one of the grandest collaborations of all, a proposed giant accelerator called the International Linear Collider, or I.L.C. The world’s physicists have already determined that it will be the Next Big Thing, but how many billions it will cost and where it will be built have yet to be decided.

Still in planning stages, the linear collider would be designed to carry international research beyond any new laws of physics and forms of matter that may be discovered using the new machine at CERN.

“China is certainly interested in the I.L.C.,” said Dr. Chen, who is a member of the steering committee for the international collider, and one of the organizers of a meeting this week in Beijing, where Chinese scientists and industry and government leaders will start talking about what role to take in the project.

Jie Gao, a physicist at Beijing’s Institute of High Energy Physics and a member of the big collider’s design team who helped instigate this week’s meeting, said he hoped the conclusion was positive, “for the good of sciences, economy, education, a harmonious and peaceful world, and a sustainable development of human being.”

It wasn’t until the early 1970s, after the turmoil of the Cultural Revolution began to wind down, that Chinese physics began to recover. Zhou Enlai, China’s premier, took advantage of Mao’s enthusiasms to endorse the development of high-energy physics, including a long-dormant dream of building a Chinese particle accelerator. It didn’t hurt that particle physics was closely connected to nuclear weapons.

Zhou got support from so-called overseas Chinese scientists, who had begun to visit their homeland in droves, like Chen-Ning Yang, then of Brookhaven National Laboratory in Upton, N.Y., and Tsung-Dao Lee, of Columbia University, who were Nobelists and heroes in China, and who talked up the importance of basic research to Mao and others.

A group of Chinese physicists toured Western laboratories in 1973 and returned with their hearts set on building a collider that would bang protons together at energies of 50 billion electron volts. When Wolfgang Panofsky, the former director of the Stanford accelerator, first visited China in 1976 in the wake of the Tangshan earthquake that killed hundreds of thousands, and after the deaths of Mao and Zhou, he was struck by the desire of the Chinese people to carry on, even though many were living in tents in the streets.

But Dr. Panofsky and others, including Dr. Lee, argued that a more modest machine would serve China better.

“We talked them out of it,” Dr Panofsky said. In 1982, in the midst of economic difficulties, the proton machine was canceled in favor of one that would collide electrons and positrons at the much lower energy of around 2 billion electron volts. Such a machine would produce synchrotron radiation, which has medical and other uses as well as a role in particle research. The site of the accelerator was also moved from a remote area outside Beijing near the Ming tombs into the city.

President Deng Xiaoping himself showed up to shovel dirt at the groundbreaking.

Dr. Panofsky remembered being in Beijing for a presentation on physics and the collider.

“Deng shut us up and gave an hour-and-a-half lecture on the beauty of high-energy physics,” Dr. Panofsky said. To learn the business, a group of Chinese accelerator engineers spent a summer at the Stanford accelerator.

“It was quite a scene,” Dr. Panofsky recalled. “We had 30 Chinese engineers in Mao suits running in and out of our lab.” It only took four years, an astonishingly short time, to build the Beijing collider.

“It was finished on time and on budget,” said Dr. Chen, who had returned to China from the Massachusetts Institute of Technology in the 1980s to work at the physics institute. where he became director in 1998. The size of the Beijing collider was based on what could be achieved at the time, but it turned out to be a fortuitous choice.

“The energy was lower but it was more interesting,” Dr. Chen said.

Particle colliders get their oomph from Einstein’s famous equivalence of mass and energy. The more energy they can pack into those tiny fireballs, the closer physicists approach the conditions of the Big Bang itself, and the more massive and strange particles can be created — as permitted by the laws of physics prevailing at those temperatures and times.

New particles, heralding perhaps new laws, are often first glimpsed by the mighty proton colliders. But such collisions are intrinsically messy and hard to understand because of all the junk that lives inside protons, and physicists often leave new particles behind and unstudied in their rush to build the next bigger machine and, in effect, go farther back in time.

The energy range of the Beijing collider, 1 to 2.2 billion electron volts per beam, contained a lot of puzzling left-behind physics, including the tau, a sort of superfat electron, for which nature has no obvious purpose, and the so-called J/psi. The J/psi, consisting of a pair of quarks each exhibiting the quantum property known whimsically as charm, set off a revolution and led to Nobel prizes when it was discovered in 1974.

“There is a lot going on in that energy region,” said Frederick A. Harris, a professor of physics at the University of Hawaii, who works often at the Beijing collider. By tuning the energy of their colliding beams, the Chinese researchers have been able to measure the mass of the tau very precisely, as well as carry out detailed studies of the J/psi and similar particles.

In the collider’s energy range, Dr. Chen said simply, “We dominate.”

Among the collider’s achievements, Dr. Harris said, was the most precise measurement yet of a number called “R.” In the so-called standard model, which currently rules particle physics, this parameter measures the likelihood of fireballs produced in the collider to materialize into so-called hadrons, particles made of quarks as opposed to other, simpler particles known as muons. That involved “changing the machine energy 91 times,” explained Dr. Harris.

When physicists at CERN fire up their new Large Hadron Collider, which will eventually collide protons with 7 trillion electron volts of energy, in search of new particles and clues to new unified laws of physics, the Beijing data on this parameter will be critical to their analyses.

“They are all dependent on measurements made in China at lower energy,” Dr. Harris said.

Dr. Panofsky, of the Stanford accelerator, said: “Most economic growth is not due to new invention, but making things faster and cheaper. High energy physics mirrors this. In China they measure things known to exist better and with higher accuracy than in the West.”

The improvement of the Beijing collider will extend the Chinese hegemony over this energy range, allowing the experiments to gather 100 times more data on rare events.

Recently, there has been a flurry of sightings at other particle experiments of other particles made of multiple quarks, including a proton and antiproton stuck together to make a six-quark particle first predicted by the Italian physicist Enrico Fermi in 1948. Confirmation of the existence of such particles would be an important clue for theorists who try to navigate intractable equations to calculate the properties of quarks.

“Do they exist or not?” Dr. Panofsky asked. “Tune in next year.”Completing the Beijing improvements, Dr. Chen has said, will also free Chinese accelerator experts to concentrate their energies on the international effort to build the proposed International Linear Collider some time in the next decade.

The proposed I.L.C. would shoot electrons and positrons at each other with 500 billion electron volts of energy through a tunnel 20 miles long. An approximate price tag will be announced when the international collider planning team meets in Beijing this February.

Since this collider is being planned to follow up on discoveries made at CERN, and is likely to cost several billion dollars, it probably won’t be approved by the governments that would have to do the heavy financial lifting until the end of the decade — when the new CERN collider has something to show for itself.

“The I.L.C is still a mythical beast,” Dr. Panofsky said.

Yet the jockeying for where to put the machine has already begun. The host country for the collider would have the advantage of being the center of 21st-century physics, but would have to bear a larger share of the cost.

Last spring, a report from the National Academy of Sciences urged the United States to do what it takes to get it built here rather than in Europe or Asia, or face the prospect of relinquishing traditional leadership in physics.

Barry C. Barish, a California Institute of Technology physicist who is head of the design team for the international collider, said the “informal plan” is for China’s role to grow in the coming years. Just how much depends on what kind of commitment the Chinese government decides to make.

Dr. Harris said, “The rate China is growing, this is something they could contemplate hosting in 10 years.” Although few accelerator experts expect China to be that aggressive, nobody really knows what the future holds. Given the explosive growth of China’s economy and the vow of the country’s leaders to emphasize science and technology, it is natural to wonder whether some future particles will have Chinese names the way many of the bright stars in the sky have Arabic names. Thanks to the Beijing collider, said Dr. Chen, “A new generation of accelerator engineers and data engineers is growing up.”

It has helped them that “now a person can have a reasonable life if you are interested in science,” said Dr. Chen, who spent part of the Cultural Revolution years as a high school teacher.

A middle generation of scientists have returned from the diaspora to pitch in. Among them is Dr. Gao, who came back to China a couple of years ago after spending 15 years in France. He is leading the design of the so-called damping rings that will keep the particle beams of the international collider tightly focused. Dr. Gao said he was struck by the pace of life in today’s China.

“Another big surprising change is that all Chinese are very busy in all fields, the work is busy and the life is busy,” Dr. Gao said. “I am terribly tired, but very happy, there are too many things to learn, to do and to improve.”

Metros neck deep in murky water in India

New Delhi: Over 1,600 people die of water-borne diseases like diarrhoea and Hepatitis in India every day.

A CNN-IBN and Consumer Voice special investigation reveals that the quality of water supplied by municipal corporations in India's metros is unfit for consumption and can cause potentially fatal diseases.

Scientists from an National Accreditation Board for Testing and Calibration Laboratories (NABL) accredited lab, the Food Research Analysis Centre in Delhi, collected water samples from Chennai, Kolkata, Delhi and Mumbai and tested them for the level of contamination.

With chemical and microbial contamination within acceptable limits, water sample collected from Mumbai fared best. In Delhi, samples taken from a Delhi Jal Board tanker, showed high levels of the disease-causing Coliform bacteria.

In Chennai, Coliform bacteria and E Coli pathogen, responsible for several water-borne diseases, were present in most samples. The water samples also showed high iron contamination.

Almost 42 per cent of the water samples collected from Kolkata recorded hardness, and some showed unsafe levels of Coliform bacteria.

"This is not acceptable by any standards. The maximum permissible limit is 10,000 and Coliform organisms of more than 11,000 is just unacceptable. The level of E coli, which is pathogenic, found in the water is 11,000," says Prof L M Nath, a public health expert.

Clearly, the water supplied to consumers by the Chennai Municipality is unfit for human consumption, showing dangerously high levels of E coli and Coliform bacteria.


"The contamination happens particularly where the pipes are old and leaky. They run alongside a drain or sewage and because we do not have continuous water supply, so when the water pump goes off, then the pressure in the pipe gets low and it starts to suck sewage," explains Prof Nath.

"The sewage water is mixed with the metro water pipelines. You can actually see the black dust in the water supply in the building in this area," says Senthil Kumar, a resident of Chennai.

Other residents like R Gonnaraj say they are scared to use this water. "That is why, we buy water from outside for drinking," he says.

Consumers in Kolkata as well, are being supplied water that is unfit for consumption.

"None of us have got the confidence on the level of purity that is required for the water to be suitable for drinking," says J M Ganguly, a resident of Kolkata.

Microbial contamination of municipal water supply make consumers in India's metro cities vulnerable to water-borne diseases like Diarrhoea and Hepatitis.

Rusting water pipelines and poor maintenance of the water distribution system infrastructure, further contaminate the water. "Now, if this type of result is not spreading Hepatitis, then it is just God's grace," says Prof Nath.

If the Government cannot provide safe drinking water in the four Metros, one wonders the quality of water in the rest of the country.

(With Raksha Shetty in Mumbai, Rohini Mohan in Chennai, Saugata Mukhopadhay in Kolkata)

This report came from CNN-IBN, India. The reader's comments also verified this report.

I live in Railway Flats, Basant Lane, Cannaught Place, New Delhi. We get water supply of 10 minutes in a day. 5 minutes in the morning and 5 minutes in the evening. The water pressure is so low that we have to install motor on the 1st Floor to pump in water. The water is murky with a faul smell. Everyone in my family was sick now and then. We spent around Rs 15,000/- to get a reverse osmosis water purifier installed so that we can drink the murky water. Its a great irony that we live so near to so called hub of the city and we are forced to consume this sort of water supply. The plight of rest of Delhihites can be imagined.

China overtakes Japan on R&D

The country is expected to invest $136bn in research and development this year after growing by more than 20 per cent in the past year, ahead of the the $130bn from Japan but still well behind the $330bn the US will invest, the OECD said.<

The report is the latest indication of the dramatic rise in research spending in China, which is beginning to cause concerns among western governments.
.

This is copied from here.

The number must be based on PPP. But it reflects the fact that R&D is booming in China.

China had the lowest performance in her history between the start of the reform and 1991 when the Gulf War happened. China invested only 0.7% of her GDP in R&D. The number has being increased since then. in 2005, 1.34% of China's GDP was invested in R&D. More cash is planned for R&D. The number will be increased to 2% in 2010 and 2.5% in 2020 which will be in par with developed countries.

The Anger Comes from Dalit in India

The deep-rooted conflicts between Musilim and Hindus in India are well known to the world. The religious conflicts caused a lot of violence, such as bombing (See the report), fighting and costed India thousands of lives (See the report).

This time the conflict did not have aanything with religion. It was caused by another great divide in India, the gap among the castes. The incident was triggered by the vandalisation of an Ambedkar statue. The Dalit emotions in the state have been simmering after a Dalit family was brutally killed in Khairlanji in September.
The dalit protests spreaded accross the cities in Maharashtra and in Mumbai. Two trains were set on fire and cities were paralysed. The more detail of this incident can be reached at here.