Russia's failed Phobos-Grunt probe was supposed to be a comeback

Russia's Phobos-Grunt probe, which was supposed to fly to one of Mars's moons and return with a soil sample, broke down shortly after launch and is now uselessly orbiting Earth. Is Russia's space industry on the verge of collapse?

Russia's unsuccessful launch of a Mars moon probe points up the problems of a once-pioneering space industry struggling to recover after a generation of brain drain and crimped budgets.

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An unmanned craft, launched last Wednesday in what was meant to be post-Soviet Russia's interplanetary debut, got stuck in Earth's orbit and may drop down into the atmosphere within days.

The failure rattled Russian space officials but came as no surprise to many industry veterans who saw the ambitious mission to bring back dirt from the Martian moon Phobos as a pipe dream.

"Unfortunately, no miracle occurred," veteran cosmonaut Yuri Baturin quipped to the state-run newspaper Rossiiskaya Gazeta.

Despite improved budgets and Prime Minister Vladimir Putin's pledge to restore pride in the sector, the Russian space industry is saddled the legacy of a lost generation of expertise, in many cases obsolete ground equipment and outdated Soviet-era designs.

It is plagued by the same corner cutting, decaying infrastructure and lack of effective quality control that are blamed for frequent disasters across Russia's industries, from coal mine and dam explosions to air crashes.

The Soviet Union began the space age over half a century ago by launching the satellite Sputnik, but Russia has been entirely absent from space beyond Earth's orbit for 20 years, while U.S. probes have voyaged into the farthest reaches of the solar system. Even newcomers India, China and Japan have sent unmanned missions to the moon and beyond.

Post-Soviet Russia's sole attempt to strike out to other planets ended in the spectacular breakup of its Mars-96 probe in the atmosphere in 1996.

Smarting from the crash, Russia withdrew from deep space for 15 years. The $165 million Phobos-Grunt probe, first conceived in the 1990s, was to be its comeback mission.

The troubles cap a humiliating string of costly botched launches that marred this year's celebration of the 50th anniversary of Yuri Gagarin's pioneering human space flight.

"It's very sad but it's a result of the difficult period we lived through in the 1990s. We are working almost from scratch," lead Phobos-Grunt mission scientist Alexander Zakharov said.

Space agency Roskosmos largely survived the funding crunch by selling tourists and foreign astronauts seats on its Soviet-design space capsules and lofting foreign satellites on rockets converted from Soviet-era missiles.

Since the U.S. space shuttles retired this summer, Russia's Soyuz are the only ships flying crews to the International Space Station (ISS), at a cost of about $350 million a year to NASA.

But Russia has nothing to be proud of in this, its new space agency chief told lawmakers last month in a gloomy speech outlining "deep" sector problems at the root of recent mishaps.

"While other countries are developing new things, we're forced to focus on ... old spacecraft," Vladimir Popovkin said.

Moscow has over-prioritized human space flight, he said, and must shift focus back to deep-space exploration and Earth observation, offering greater science and technology returns.

Source: http://rss.csmonitor.com/~r/feeds/science/~3/HKfPy5U6R7I/Russia-s-failed-Phobos-Grunt-probe-was-supposed-to-be-a-comeback

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Shadow looms over China's Internet lending market (Reuters)

SUZHOU, China (Reuters) ? One of the worst cash crunches in decades is hitting Chinese companies, but for Pan Zhengqiang, borrowing money recently has been as smooth as the well-oiled machines at his widget factory in the farmlands surrounding Suzhou.

In China, bank loans are mostly off limits to small businesses. Many entrepreneurs have long relied on funding from friends and family, but that source is drying up, too.

Instead, a boom in online sites that link up private lenders and borrowers, also known as peer-to-peer or P2P lending sites, have brought Pan and his wife Huang Yanhong a new stable stream of financing.

"Sometimes we have a sudden, short-term need for funding. We might get a new big order, or a client may delay a payment," said Huang, who like her husband is a former factory worker.

The couple have 60,000 yuan ($9,375) in outstanding loans from PaiPaiDai (www.ppdai.com), one of China's best known online lending sites.

They pay about 22 percent in annual interest -- more than triple China's benchmark lending rate of 6.56 percent -- and can get the funds in as fast as three days.

"Without PaiPaiDai, we'd have huge difficulty."

Small firms, which account for 75 percent of the urban job sin China, have borne the brunt of credit curbs as banks have preferred to lend to big, state-backed enterprises, forcing them to turn to high-interest informal loan markets and raising the risk of a credit collapse.

PaiPaiDai has more than 120 million yuan in outstanding loans to 10,000 borrowers, most of them tiny businesses like Pan and Huang's. The limit on lending is 200,000 yuan, and the average loan size is 9,000 yuan.

LUCRATIVE RETURNS FOR LENDERS

Borrowers need to upload a range of personal information, including a scan of their ID card and their household registration book, which contains all the details of the person's family, birth place, family home and education.

If the borrower is late in paying, the information, starting from the mobile phone number, is gradually released to the lender.

Less than 1 percent of its loans have gone bad, said co-founder Hu Honghui.

For people like PaiPaiDai lender Zhou Yongxin, who has lent out more than 400,000 yuan, these sites are a welcome investment channel. Stamps and coins, which he also invests in, are tricky to sell and he's been burned by the stock market.

Zhou has made about 20 percent on his investments through the site this year, with about 1 percent of loans going bad.

The lending business is risky as there is no collateral. When loans turn sour, lenders some times resort to posting information on the Internet and hounding borrowers to repay.

WARNING OF ABUSES

While online financing fills a crucial need in China, lack of regulation is leading to abuses. There are no statistics for the size of the P2P industry, but Hu of PaiPaiDai has counted more than 30 online P2P loan sites that have sprung up.

That is against a backdrop of micro-credit loans more than doubling in a year to 287.5 billion yuan by the end of June, according to data from the central bank.

Some firms guarantee principal and interest to lure money from Chinese lenders fed up with negative real interest rates on their savings deposits. Others essentially pool money into a fund, rather than offering the relatively transparent, one-to-one online matches of borrowers and lenders.

"It happens quite often that one person will borrow money from several online lending sites and then the risk is huge," PaiPaiDai lender Zhou said.

"So we hope the government will come out with some regulations for the industry."

In August, the China Banking Regulatory Commission issued a warning about P2P lending. It said some P2P lending firms have evolved into illegal financing firms, taking deposits and making loans.

The CBRC declined to answer questions on the issue.

"I think the information disclosure is very bad. Even the P2P company and the investor, they don't know whether the borrower is trustworthy or credible," said Gary Liu, deputy director at CEIBS Lujiazui International Finance Research Center, a Shanghai-based think tank.

"They don't have enough information to control the risk."

The CBRC warning alarmed some foreign venture capital investors, who had been interested in the vast potential of China's consumer finance market. A year ago, new regulations for online payment systems, the Chinese versions of PayPal, forced out some foreign investors who had taken stakes in that sector.

But foreign firms are keeping their eye on the opportunities. U.S. P2P lending site Prosper Marketplace Inc. hopes a recent $7 million investment from China-focused investment firm IDG Capital Partners will help it get to China, according to CEO Chris Larsen.

IDG also invested in CreditEase, China's largest P2P lender. Larsen said he expects a period of regulatory adjustments will eventually help the industry in China.

CreditEase does not see any regulatory threats to its business or its big foreign investors, which also include U.S. venture capital firm Kleiner Perkins Caufield Byers. KPCB did not reply to questions about its investment in CreditEase.

"We foresee more and more regulatory scrutiny. I think for a healthy industry, it's about self discipline," said CreditEase CEO Tang Ning.

Tang has built up a P2P lending business with more than 1 billion yuan in outstanding loans to over 70,000 Chinese, including farmers, students and entrepreneurs. The company has 8,000 team members screening applicants in over 50 cities across China.

Unlike PaiPaiDai, the CreditEase website does not allow new lenders or borrowers to meet directly. For Tang, how the two parties are paired up is less important than making sure both sides are real.

"How a loan is made is not legally regulated. A bank or an individual can make a credit or a collateral loan. No problem," he said.

(Additional reporting by Lucy Hornby in Beijing; Editing by Lucy Hornby and Jacqueline Wong)

Source: http://us.rd.yahoo.com/dailynews/rss/internet/*http%3A//news.yahoo.com/s/nm/20111125/wr_nm/us_china_lending

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